everyday negotiator

8/20/2019 Everyday Negotiator

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Introduction

SECTION I:INTRODUCTION

Real-Life Negotiation Situations

You feel you’ve been had. Sucker-punched. Taken for a ride. Why? You’ve been talking to your next-door neighbors about their cell phone ser

vice, and you find out that they are paying roughly half the monthly rate that you

are paying! To make matters worse, you learn that their phone has text-messaginga camera, no roaming charges, AND e-mail capability! Your cell phone does nohave these functions. And the final insult? They didn’t have to sign a contract—and you still have 18 months left on yours.

At first you get mad, thinking the phone company made a mistake that icosting you money. After all, you pride yourself on being an informed consumer—how else could this have happened? Then you ask your neighbor how he got sucha good deal. He tells you that he and his wife simply negotiated the agreemenwhen they switched providers. Boy, do you feel frustrated and foolish. You realize

how easy if would have been for you to have negotiated the same deal, if only youhad tried.

The fact is that most people miss many opportunities to negotiate in their professional and personal lives. Negotiating is a critical ability that many of us lackyet anyone can become a competent negotiator. It simply requires (1) knowingwhen a particular situation is ripe for negotiation; (2) knowing who is able to makea decision for the other party (you often need to ask to speak with the supervisoror manager in charge); and (3) knowing how to negotiate. Read this easy-to-followbook, and learn how to negotiate by practicing a few tactics presented here. As youread, you’ll be amazed at all the everyday situations in which having the ability tonegotiate effectively can enrich your life.


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2 50 Practical Negotiation Tactics

Practical Tactics for Work and Life

In this book, we provide the reader with 50 proven, practical, and easy-to-applynegotiation tactics. We minimize the jargon and long-winded stories so you canquickly learn how to use each tactic (usually in less than a day!). You do not needto wade through hundreds of pages to find a single useful tactic. In fact, mostpeople find a few interesting tactics right away, and try them out immediately.Each tactic is briefly defined and used in work and life examples—no lengthyanecdotes and no wordy theoretical discussions. Each is written to stand alone; thereader does not have to read and retain many pages of discussion just to under-stand how to use the tactic.


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Introduction 3

Tips on Getting the Most Out of This Book

Read the book through, from start to finish. It only takes about two hours. Readall 50 tactics and flag the ones you believe you can use immediately and in whasituations. (Or use the Notes pages in the back). For example:

• Nickel and Diming (Tactic #43) – Use with copier vendor to reduce toner cost• Commit the Offer to Paper! (Tactic #50) – Use with kids for household chore

and driving privileges.

Keep it handy. This book, as the title states, is a resource book. After you havefamiliarized yourself with the content, keep the book on your desk or shelf next tothe dictionary, encyclopedia, and other reference books.

Use the tactics! Practice makes perfect. Start with the ones you flagged orecorded in the Notes section. The next time you are about to enter a negotiationsituation, refer to the notes you made, and try the tactic. It won’t cost you anythingto prepare ahead, and the experience of trying it out will build your confidenceEveryone can negotiate, once they know the tactics and practice them. The firstime you realize that using a tactic gave you a significant gain, you will be ready totry more of them.

Develop your own style. The fifty tactics presented in this book are nointended to be recipes for success in any negotiation situation. Instead, they are

general methods that should be adapted to fit one’s personal style or negotiationcircumstance. As you use a tactic, record the results in the back of the book so youcan recall how it worked the next time a similar situation comes up.

Use the exercise forms in Section IV. They will help you think about howyou can use these tactics. On the form, briefly describe the situation; list the partiesinvolved (including the people who can make a decision); describe the issue to benegotiated; and finally, list the tactics that you believe might be especially helpful.

Take the Quiz! Can this book help you? Circle yes or no next to each of thten quiz questions on page 7. Score your answers: one point for each “no” on questions 1, 6, 7, and 10 and one point for each “yes” on questions 2, 3, 4, 5, 8, and9. Total your points. If your total score is a 9 or 10, you are already a successfu


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negotiator! Pass this book on to someone else who needs it. But if you scored 8 orless, start reading!

Most people come face-to-face with a negotiation situation of one type oranother on a daily basis: on the job, with family members, with neighbors, at a fleamarket. Unfortunately, few people understand that normal interactions representbargaining opportunities. Instead, they pay the sticker price, accept what is given,or engage in an unproductive argument.

This book is designed to give the reader an understanding of the negotiationprocess by presenting fifty proven, practical tactics useful in real-life situations atwork or at home. Most readers will no doubt recognize some of these strategies;some will in retrospect even remember being the victim of one or two of them.Learning how to use these tactics and knowing when to apply them will make

you a more skilled negotiator when you are faced with the opportunity to strike afavorable agreement.

Who, exactly, are the negotiators most people deal with each week in theirwork and personal life? The list will be long:

• a neighbor • a home builder • a spouse • a hotel clerk • a child • an electrician/plumber • other family members • a lawyer

• a supervisor • a vendor/buyer • a co-worker • a human resource director (who• a salesperson might make a job offer)

• a boyfriend/girlfriend • a manager

Most people expect to have to negotiate when buying a car or purchasing ahome, but many of us miss the opportunity to bargain in other situations, such asthese:

• You receive the wrong order at a restaurant.

• A co-worker asks for volunteers for a new project. • A child wants a new toy now.


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Introduction 5

• A hotel clerk tells you that your reservation was lost. • Your spouse wants to buy new furniture. • A service repair person gives you an estimate on some work. • A friend is about to select the movie he/she wants everyone else to see. • A teenager wants to buy his/her first car. • A neighbor wants to remove an old tree on your property line. • Your boss reviews your past year’s performance.

All of these situations are opportunities to negotiate. Each one has the five keycharacteristics necessary for bargaining:

1. Multiple parties. Two or more sides are involved, and each side can involvone person or several people (each representing one “side” of the issue).

2. Interdependency. The parties are interdependent: what one party doeaffects the other. There must be a conflict in the sense that what onewants is not what the other wants. Therefore, some resolution must benegotiated.

3. Mutual goals. The parties involved are interested in reaching a commongoal. Both sides want a settlement.

4. Flexibility. There are flexible elements to the situation, such as price, time

condition, or items of value, that can be negotiated. 5. Decision-making ability. The parties involved can make a decision by

themselves. In some situations, one party is only allowed to follow policyor must wait “until the manager arrives.”

When you recognize that something can be negotiated, be prepared to bargain. In some circumstances, you must advise the other party of your intention tonegotiate. For example, perhaps you can say to a hotel clerk, “Well, since you losmy reservation, what can you do for me?” Or this to a restaurant manager: “Thi

food order is wrong, and I don’t have time to wait for another. What are my alternatives?” During an employee evaluation, perhaps the employee can say, “I’d like


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time to look over this performance review and respond point-by-point, and meetwith you again.” To a neighbor you can say, “I see why you want to cut down thetree, but I believe it adds value to our house. How can you compensate us for ourloss?”

Once you’ve suggested that you see the situation as something to be negoti-ated, the other party will realize that you intend to negotiate and do not accept thesituation. You might need to follow with a statement that clarifies your desire for asettlement but indicates that you are flexible and you do intend to negotiate. Youcan then use one or more of the tactics presented in this book to achieve the bestpossible settlement. Once a settlement is reached, negotiations can be concludedwith a written or oral agreement.

Scenarios based on actual real-life situations are used to show how

each tactic can be used in business or everyday situations. Choosing andapplying the appropriate tactic to a particular situation will become easier asyou begin to use them. Keep this book handy when preparing for any type ofnegotiation, and use the forms in the back to identify the issues, the partiesand their interests, the facts, and the tactics that might move the negotiationsalong.


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Introduction 7

How good are your negotiation skills? Place a check in the box that applies toyou.

Yes

No

Self-Assessment Quiz

1. In the past, have you ever felt that you were not adequately

prepared to negotiate a job offer?

2. Do you routinely negotiate for better accommodations when

you check into a hotel?

3. When you purchased your last home or car, do you believe

that you negotiated the best possible deal?

4. In the past, have you routinely resolved differences with a

neighbor or a friend through a negotiated agreement?

5. The last time you received sub-par service or food in a restau-

rant, did you request appropriate compensation?

6. Do you wish you could negotiate a change in your job duties

or salary?

7. Have you ever found yourself in a negotiation situation in which

your best alternative was to walk away, but you did not?

8. When making a major purchase, do you routinely negotiate a

last add-on before you close the deal?

9. As a parent, spouse, or child, have you ever required a written

agreement covering chores, allowance, or division of house-hold duties, etc.?

10. Do you often refrain from negotiating a better price or servicebecause you believe that you do not have good negotiatingskills?


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The Negotiation Process 9

SECTION II:THE NEGOTIATION PROCESS

Before you begin the process of negotiation, decide how complicated the issue isIf it is a relatively informal situation, the process will be fairly straightforward. Th“Quick Model” approach outlined below is good for simple negotiations. On theother hand, if the situation involves a number of detailed or complicated issuesor the stakes are relatively high, the process will probably take several weeks o

months as the parties move through all the stages.

The Quick Model

The easiest way to prepare for a simple negotiation is to identify all the issuesincluding those that are less obvious. Then classify each one into one of threecategories:

Compatible (Integrative or Win-Win) Issues: Those issues for which bothparties might have the same desirable outcomes. They’re referred to as “win-winbecause each side can achieve their goal.Examples: • office location (city, state, etc.) • primary sales territory • a starting date

Exchange Issues: Those issues that might be traded, one for another, thuallowing each side to achieve one of their goals.Examples: • a signing bonus (employee goal) traded for an annual travel budge

(employer goal). • an allocation for moving expenses (employee goal) traded for a se

number of travel days per month (employer goal).


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Distributive (Win-Lose) Issues: Those issues that the parties are directly atodds with. What one side gains, the other side loses.Examples: • an item sold by one party and bought by the other

• wage increases won by one side.

The Comprehensive Model

Negotiation is more of an art than a science. Depending on the situation and theparties involved, stages can be combined, rearranged, or even skipped altogether.The most typical stages are

Preparing to Negotiate

Planning a Strategy

Exchanging Initial Offers

Making Counteroffers (the Give and Take)

Applying Pressure

Making Progress

Reaching Agreement

The tactics are organized according to the stage at which they can be used to bestadvantage and listed as such in the Table of Contents at the front of the book,but feel free to try them when they seem most appropriate to your specificcircumstance.


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T h e N e g o t i a t i onP r o c e s s

1 1

Table 1: The Negotiation Process: Seven Basic Stages

Identifysituation

as one fornegotiation

Tactics toConsider

Stage1

Stage2

Stage3

Stage4

Stage5

Stage6

Stage7

#1–#6 #7–#14 #15–#21 #22–#31 #32–#38 #39– #46 #47–#50

Initiation Phase Negotiation Phase Resolution Phase

Key Factors –Time,

Information,Power

Preparation:

ChooseOverall

Approach tothe Process

Strategy:

GettingStarted

InitialOffer:

The "Give& Take"

CounterOffer:

Striving forConclusion

PressureBargaining:

Settlement ofImpasse

Reaching Agreement:

AchievingProgress

KeyMethods:


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Preparation 13

SECTION III:50 T ACTICS FOR SUCCESS

Stage 1: Preparing to Negotiate

In many negotiation situations, the parties have time to prepare for the actuabargaining. In other situations, such as when you’ve been served something aa restaurant that you did not order, there is no time to deliberate. You have tobe prepared to instantly recognize that the situation can be negotiated, andbegin to bargain. You can have time to prepare if you simply ask for it. Forexample, at the end of an employment interview for a management positionthe candidate was surprised to receive a job offer on the spot. The candidatewanted the job, but wisely recognized that she could negotiate the contractShe said that she was very interested, but needed forty-eight hours to makeup her mind. She used the time to talk to current employees, and developeda list of perks and conditions that she then negotiated, before accepting theposition.

To prepare for a negotiation, do as many of the following activities as youcan:

1. Have realistic objectives. Identify everything that can be negotiated, andset realistic objectives for each item. If, for example, price is a factor, determine thedesired outcome and set a minimum (or maximum) acceptable outcome, beyondwhich you will walk away and choose another alternative (see Tactic #1: KnowYour BATNA). Also determine your opening offer in light of your desired and youminimum outcomes. It is often helpful to list each specific item to be negotiated

and your minimum acceptable offer for it, as well as your desired goal and anacceptable opening offer (see Tactic #5: Listing Items). Thus, for each factor, writedown and stick to three figures:


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1. An opening offer. 2. The desired “best” offer. 3. A minimum (or maximum) “worst” offer.

2. Learn about your opponent. By whatever legal and ethical meanspossible, learn everything you can about your opponent. Talk with friends,neighbors, co-workers, past negotiation foes, even family members. If you are ableto guess or find out about your opponent’s real objectives and/or limitations, youcan gain an invaluable edge (see Tactic #2: Know Your Opponent’s Real Objectives).

3. Gather all the facts. During the heat of negotiations, presenting criticalfacts or objective criteria can turn the tide in your favor. You can usually anticipateand collect this critical information in advance during the preparation phase (seeTactic #4: Use Objective Criteria).

4. Set ground rules. In labor negotiations, the parties first agree to groundrules such as where, when, who, and how often the negotiation sessions will occur.Detailed ground rules are not needed in most everyday negotiation situations, butthere are times when they help people come to agreement. Agreeing in advanceon the location for discussions can give one side an advantage (see Tactic #3:Control the Setting), but in other situations, the critical ground rule will be abouttiming (see Tactic #6: Timing is Everything), forcing both sides to reach agreement

faster. In negotiating with family members, friends, or neighbors, one well-advisedground rule is to stop the talks as soon as anyone raises his/her voice, curses, ormakes a threatening comment.


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Preparation 15

Tactic 1: Know Your BATNA

At what point will you walk away from the negotiation? You improve your position in any negotiation if you can walk in already knowing your BATNA—youbest alternative to a negotiated agreement. The BATNA is the outcome you prefeover what the other party has proposed; if you define it at the outset, you are lesslikely to agree on something during an emotionally charged discussion and regreit afterward.

Example 1

Harvey Huff bought a new 1956 Chevrolet from a local dealer. After forty years

he finally decided to sell the car he had loved and carefully maintained in originacondition. Harvey did not need the money, but he intended to move three thousand miles away, to a condo in Arizona. The ad he placed in the local newspapeproduced only one potential buyer: Patrick Knight.

Harvey: Well, now that you’ve checked it out, how do you like it?

Mr. Knight: It’s in great condition, just as you described it.

Harvey: Any questions?

Mr. Knight: Will you take less?

Harvey: No. It’s easily worth at least $20,000. That’s the price.

Mr. Knight: $18,000, tops!

Harvey: No thanks.

Mr. Knight: Okay. $20,000. I need it for a new restaurant.

Harvey: Restaurant?

Mr. Knight: Yes. We cut off the top of the vehicle and people sit in it and geserved their meals in our “oldies dream car!”

Harvey: Never mind, I’ll keep it. I haven’t maintained it for all these years jusso you can destroy it.


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Conclusion

Harvey’s best alternative—his BATNA—was simply to hold on to the car for themoment, and either move it with him to Arizona or find another classic car col-lector who might buy it (perhaps for less) and preserve it, as Harvey had for manyyears. In this case, his BATNA was not to hold out for more money, but ratherwhat the buyer planned to do with the car.

Example 2

Shari and Jim Jaggers own a successful West Coast pottery company. The $56 milliondollar business took them 30 years to grow, and it now employs 230 craftsmen. For

the past two months, labor contract negotiations between the Jaggers and a local laborunion representing the pottery’s craftsmen have stalled. The union is demanding wageand benefit increases, which the Jaggers believe will cause them to increase prices tothe point where they will no longer be competitive with other West Coast firms.

With only two weeks remaining before a threatened strike, the Jaggers decidedto seek buyers for their land, inventory, and equipment. They learned that theirassets would be easy to sell and were worth more than originally estimated. The Jag-gers gave the union their “last, best, and final offer,” which was refused. They told theunion that their age and the fact that they had no heirs to carry on the business was

leading them to seriously consider selling out and permanently closing the doors.The union negotiators thought the Jaggers were bluffing. The owners, as a last resort,notified all the employees of their intentions. The union negotiators convinced theemployees that this too, was a power play. The threatened strike became a reality,and the Jaggers decided once and for all to sell their business assets and invest theproceeds conservatively, providing them with a very good income for life.

Conclusion

Selling their business was the Jaggers’ BATNA. When negotiations with the union becamehopeless, selling became an attractive alternative to a strike or prolonged battle.


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Preparation 17

Tactic 2: Know Your Opponent’s Real Objective

Each party in a negotiation will know, at some point, what the other party’s desiredoutcome is. Just as important is the why. You have an advantage and are in a positionto produce a better agreement if you understand what motivates your opponenand what “hidden” interests lie behind their position. A person who has to sell hehome because her company is relocating her, for example, might not be willing tolower her asking price because she knows that her company has agreed to buy thehouse if she can’t sell it. This is a good thing to know, because if the company doenot provide relocation benefits, she might have to take a lower offer just to be ableto move. If you are the party making the offer on the house, it’s to your advantagto know what is behind a seller’s decision to put it on the market.

Example 1

Tom had always admired John’s 1861 Confederate rifle, and told John severatimes to let him know if he ever wanted to get rid of it. John assured Tom that thiwould never happen, so Tom was surprised when John called him out of the blueone day with a proposal.

John: Tom, you still interested in my rifle?

Tom: Of course. Are you finally ready to sell it? John: Yes, I think so. Make me an offer.

Tom: Gosh, I’ll have to think about that. How much are you thinking it’worth?

John: Well, I guess I couldn’t take less than $20,000. It is extremely rare—one oonly 100 made with that bore and handle.

Tom: $20,000? That’s more than I planned. What changed your mind about getting rid of it? It is still in perfect condition, right?

John: Sure, sure, it’s still perfect. I’ve been thinking of getting rid of it for a while Just running out of space, you know.


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Tom: Okay. Well, let me think about it and I’ll get back to you. (Tom investigated the “market” for a restored 1861 Confederate rifle by

calling a few other collectors. One of them mentioned that someone who isnegotiating with him to buy a restored Winchester rifle for $18,500 had an1861 for sale. Was Tom interested? Tom declined, but thought this mightexplain John’s sudden interest in selling the rifle.)

Tom: John, I’ve been thinking about your offer. I don’t think I can go higher than$18,000, but I could get the money to you right away.

John: Well, if you could come up a little—say $18,500—we’d have a deal.

Tom: Okay, let’s do it.

ConclusionTom entered into the negotiations suspicious of John’s motives. Without sometrust, parties to a negotiation are not likely to reach agreement. When Tom foundout why John decided to sell his rifle, it made the negotiations easier. No longerworried about John’s motives, Tom now felt comfortable negotiating the price.

Example 2

Rick, the owner of a small manufacturing company, has begun negotiations to sellhis firm to BigManu Company. He is two years away from retiring and does notwant his business to fail before he does, fearing that this will put all of his employeesout of work. Rick needs to remain president of the company for the next two years,but then he will be happy to retire. He doesn’t want BigManu to know this becausehe thinks it will hurt his negotiating position, so he is making it a condition of thesale that ALL current employees must be retained for a minimum of two years.The sale price for the company has not yet been agreed to, and now the two-yearrequirement has become a stumbling block in the negotiations.

BigManu: Rick, we really want to buy your company, and we’re committed tokeeping it open as a major division of our company. However, we


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Preparation 19

cannot guarantee to you that ALL of your employees will be retainedfor two years. We just can’t make good operational decisions with ouhands tied.

Rick: These people are the best at what they do. Working as a division oyour company, they will make you plenty of money and more thanmake up for any “operational” difficulties it might cause you. I juswant them to have a real chance to show you how good they are. Without this commitment, I just can’t go through with this sale.

BigManu: You know we want you to stay on and manage this division for us You’ll be in place to participate in our employment decisions. Withinthe parameters of efficiency and effectiveness, you will have a say inhow the employees are treated.

Rick: I built this business from the ground up, and I hired every one of thespeople. I need to give them some sense of comfort if this deal goethrough.

BigManu: We just don’t see a way to give you what you want on this. Let’s talklater.

(Between negotiating sessions, BigManu’s negotiating team concludedthat they were in the dark as to why this two-year requirement was soimportant to Rick. In hopes of pushing the deal forward, they decidedto put their price on the table and revisit the issue after a price waagreed upon. The price they gave Rick was actually more than he hadexpected, and he accepted it subject to agreement on the two-yeaemployment guarantee clause.)

BigManu: Okay, let’s talk about the job guarantee you wanted. We still can’t finda way to do it, and we think it’s an odd request anyway. What is iyou’re afraid is going to happen?

Rick: I am convinced that with a two-year time frame, my employees wilprove to you that they are uniquely able to run this place. I just don’want it to change after I’m gone.


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BigManu: We intend for you to stay and become a big part of our company.Surely you’ll be able to “protect” your people if they are as good as yousay. This wouldn’t have anything to do with your own plans for thefuture, would it?

Rick: Well, to tell you the truth, I’m hoping to retire in two years. I certainlywant to do all I can until then to protect my people.

BigManu: Why don’t we guarantee to you that you will stay for two years? Thatway, you’ll have a guaranteed “in” to protect your people, but we won’tbe completely tied to operations as they are now.

Rick: Well, that might work. Let me get back to you.

ConclusionBy masking his real objective (giving himself two more years as president beforeretiring), Rich almost lost the deal. Once Rick realized that he no longer riskedanything at the negotiating table by making his need known, he agreed to allowBigManu to accommodate him without limiting their ability to make businessdecisions.


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Preparation 2

Tactic 3: Control the Setting

There is a logical reason why professional negotiators setting ground rules agree toconduct the talks at a neutral site, such as a hotel conference room. Inexperiencednegotiators fail to realize that the other side has an advantage if the meeting is heldon their home turf: they are more comfortable; they have the information theyneed at their fingertips; they control the breaks and environmental factors, and soon. (Think of the showroom tactics used by car dealers.) Prepare for the negotiations by controlling the setting—to your advantage or to mutual advantage, bunever to THEIR advantage!

Example 1

(Two ten-year-old girls are talking.)

Bailey: Let’s take all our Beanie Babies to my house to trade!

Cybil: Okay.(thirty minutes later)

Bailey: So, Cybil, I’ll give you my duck and frog for your whale and horse!

Cybil: I already told you that I don’t really like that frog much!

Jenny: (Bailey’s sister)

What? Bailey, how can you trade the frog—he’s your best one!

Dede: (Bailey’s other sister)

Yeah, the frog is everybody’s favorite.

Mother: Hush, girls. Make up your minds, and go play somewhere!

Cybil: Well … Okay, it’s a deal. I like the frog, too.


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Conclusion

Bailey, although only ten years old, knew that her sisters liked the frog best andthat they would help convince Cybil of its “value” and help Bailey make the trade.That’s why she wanted to go to her house.

Example 2

Two five-person negotiating teams had been trying to work out a deal for over amonth. The firm deadline was only four days away. Both sides desperately neededto settle a property dispute. The chief negotiator for Team A publicly challengedTeam B to “negotiate non-stop, around the clock, until we have a settlement.”

The chief negotiator for Team B agreed, as long as they met in the boardroom ofTeam B. Team A agreed to change the meeting place.

About thirty-six hours later, Team A was whipped physically and emotion-ally. Team B, having set up beds, meals, and other conveniences in the adjoiningroom, was still going strong. After forty hours of negotiating, Team A agreed toa settlement almost identical to the one rejected days before. Team B had clearlyused its home turf to gain a substantial advantage. When negotiations resumed intwo months over another piece of property, not one member of Team A was cho-sen to return to the table. They had all been replaced after their decision to negoti-

ate “around the clock” in Team B’s boardroom became known. They were blamedfor accepting the same deal that had been rejected only days earlier.

Conclusion

Team A did not realize the practical advantage they gave Team B when they agreedto negotiate in B’s boardroom. The physical and emotional demands of 24-hour,non-stop negotiations wore down the members of Team A, while members of

Team B were able to stay fresh, in their own familiar setting.


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Preparation 23

Tactic 4: Use Objective Criteria

Use objective criteria to judge the quality of each side’s proposals—you will probably improve your chances of coming away satisfied. If you think that the otheparty knows more than you do, you are likely to resent them for it and hold outrather than give them the “advantage.” This can hold up an agreement and cosyou in the end. Prepare for the negotiations by having an outside authority measure or weigh in on each side’s position, based on objective criteria (think propertyappraisals in real estate).

Example 1

When Larry’s cousin offered to help Larry finish the renovation on his bathroomLarry was thrilled. After all, Will is a licensed plumber, and he and Larry havealways gotten along. Things turned sour, though, when Will presented Larry withhis bill. Larry had expected to pay him for his time, but was shocked at the amounof the bill. It was twice as high as the estimates Larry received from other plumberbefore they started the project. This uncomfortable negotiation followed:

Larry: Will, about your bill. I was kind of surprised at how high it was.

Will: Larry, I gave you my “family” rate. Believe me, I would have charged any

one else much more.Larry: But Will, I did get some estimates from plumbers, and they were much

lower than this.

Larry: Just make sure you’re comparing apples to apples. When you first told mabout your project, I anticipated much less work. When we got into it, ibecame clear that all of those pipes had to be pulled and new ones put in

Larry: Well, these plumbers certainly acted like they understood the work whenthey gave me their estimates!

Will: Tell you what. Let’s get the guys back in who gave you estimates, andshow them the actual work that got done. If they tell us that they eithe


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disagree on the need for that work or that they would have done it for less,I’ll revise my bill to meet the lowest estimate you get.

Larry: That sounds fair.

Conclusion

When the other plumbers looked at the work, they had to agree that their earlyestimates were low. Had they actually prepared bids on the work, they said, theywould have had to revise the figures. The estimates would have been higher thanwhat cousin Will charged.

Settling on the right objective criteria upon which to base a negotiationrequires that both parties think through their options. Comparing the estimates to

Will’s actual costs would have been counterproductive, because (as Will pointedout) it wasn’t an apples-to-apples comparison.

Example 2

After Stuart was appointed to the college’s Board of Trustees, he used his financialexpertise to analyze the investments of the college’s endowment fund. He was dis-appointed in the performance of the fund, and decided to bring the matter up ata Board meeting. The college’s budget officer was understandably offended; whileshe wasn’t an expert, she had been investing the college’s endowment funds formany years, and no one had ever questioned her performance. The chairman ofthe Board suggested that Stuart and the budget officer meet to discuss the invest-ment policies and practices as they relate to the endowment funds.

Budget Officer: I don’t know what your problem is. I have been very diligentabout making sure that the fund makes the most money it canwithout putting us at risk. I find your suggestion to the Boardthat I haven’t been doing my job right to be very insulting!

Stuart: I’m sorry. I certainly didn’t mean to offend you. From a look atthe portfolio, my first reaction was that some of the investments


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Preparation 25

were stale. I don’t question that they were sound at one timebut some of these stocks have really lost their value. I find that amore aggressive investment strategy produces a better return.

Budget Officer: Yes, but such a strategy also increases risk and costs more moneyto administer, considering commissions and all. As you knowthe college is a private institution, and its resources are limited

We just can’t make up losses to the endowment fund withouconsiderable impact on our annual budget.

Stuart: Yes, there might be increased risk and some expenses for commissions, but I think they more than offset the gains. I have asuggestion. Why don’t we ask two investment advisors who havsome alumni ties to the college to do a mock investment of theendowment fund for a month or two? We won’t tell them aboueach other and they won’t actually do any real trades, but wcan ask them to plan and cost out each move. At the end of twomonths, if both of them demonstrate a similar strategy and produce better results after expenses, then you and I can talk abouchanging our investment strategy. Okay?

Budget Officer: Okay, but I want to be involved in the discussions with themabout what we’re asking. I don’t want you directing how they’re

going to go.Stuart: No problem. Now, how can we identify the right parties?

Conclusion

The two-month experiment did produce the results Stuart had anticipated, andthe budget officer was comfortable that the risk and expense of such a strategy wasmall and worth the effort. In this situation, Stuart realized that the budget offi

cer needed very-specific “criteria” (such as the actual experience of investing theschool’s endowment fund) rather than relying on an investor’s experience, becausshe did not have the background in investments necessary to trust such advice.


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Tactic 5: List All Items to Be Negotiated

Break down the issues to be worked out into separate items ahead of time, and askthe other party to add to the list. Once you both agree on the list of things to benegotiated, you should each put together a “package” of several items on the listand work out a win–win agreement for these things. This strategy can build trustin the negotiation process itself.

Example 1

Shari, a sixteen-year-old who lives with her parents and three younger sisters, hasasked her mother for a $10/week increase in her allowance.

Mother: That’s a large increase—and we just raised it last year!

Shari: Well, I need more money for clothes and CDs, and for going out withmy friends.

Mother: But your allowance is based on what you earn in your weekly chores,not on what you want to spend.

Shari: Well, what else can I do, besides washing the dishes every night andcleaning my room?

Mother: You could cook dinners, baby-sit your sisters, cut the grass, wash thecars, clean the whole house—should I continue?

Shari: Whoa! I want to stay out longer—past my curfew of 10:00—not workmore!

Mother: Well, if I give you an increase, your little sisters will want equal treat-ment. It will cost me more than $10—about $35 per week.

Shari: I’m four years older than the next-oldest. You can’t treat me the same!

Mother: Well—so we’re talking about several issues, not just an allowanceincrease! There is: (1) a $10 increase; (2) a later curfew; (3) more chores;and (4) different treatment from your sisters!


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Preparation 27

Shari: Right!

Mother: So … I suggest no allowance increase, but unlike your sisters, I’ll pay you $10 to babysit every Wednesday night, while your Dad and I go out

And if you clean the whole house on Saturday, you get to stay out anhour later that night.

Shari: (pause) I like it!

Conclusion

Shari’s mother helped negotiations along by listing all of the items being discussedThen a “win-win” solution could be determined. Shari got the $10 she wanted and

a later curfew, while the mother won a Saturday house-cleaning and a night oueach week. An allowance increase, which the other children would have requestedas well, was avoided.

Example 2

The union and management negotiating teams opened discussions with a list of 48demands. The union’s chief negotiator, in the first session, opens by proposing thlist of items. Management agrees, since all of their items were included as requestedNow it is time for each side to list their desired outcome for each item. The tradingof items (where initial demands are discussed and agreed upon) begins.

Union: We will agree to your proposal on item #6 (the number of paidholidays) and item #14 (the new overtime hourly rate), if you agreto our proposals on item #3 (the paid vacation schedule), item#11 (the clothing allowance), and item #23 (the wellness programvoucher).

Management: (after calculating the total value of the five items during a break period) We agree to your package of five items. Now we have a packagdeal to propose …


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Conclusion

In most labor negotiations, the two sides will at this point sign and date the list ofproposed items, thus removing them from the discussion table. Then negotiationscan resume on the remaining 43 items; other trade-offs are proposed and agreedto until only a few items remain.


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Preparation 29

Tactic 6: Timing Is Everything

The exact month, day, time of day, and general circumstances under whichnegotiations take place can substantially impact the outcome. The external pressures put on the parties involved (which might not be related to the issues undenegotiation) can sometimes be used to advantage if you know about them. Prepare carefully, and do your homework. Timing is everything!

Example 1

Bob Hillard had been coveting a turquoise 1963 Chevrolet Impala Supersport convertible for several years. One day, as he left the supermarket, he saw an elderly

man get in his dream car and drive away. Bob followed the man home, whichturned out to be only a few blocks from his own house. As the man got out of hicar, the following conversation occurred:

Bob: Hello, my name is Bob Hillard. I live a few blocks from here, on Briarwood Road.

Car owner: Hi! What can I do for you?

Bob: I’ve admired your ‘63 Impala for years. Would you possibly be interested in selling it?

Car owner: No, I love this car—restored it myself.

Bob: Not even for, say, $12,000?

Car owner: No. That’s a generous offer, but money doesn’t mean anything to mat this point in my life …

Bob: Well, thanks. It was nice meeting you. (For the next three years, Bob made it a point about once a month to g

out of his way and drive by the man’s house, just out of curiosity. One day

he noticed a FOR SALE sign in the yard. He stopped and knocked on thedoor.)


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Bob: Hello! I noticed your FOR SALE sign, and wondered if your ‘63Impala might also be for sale …

Car owner: (obviously not remembering Bob) Well, as a matter of fact, I’m moving

to California to live with my daughter. I can’t take it with me, so Iguess I will be selling it.

Bob: Can I see it?

Car owner: Sure. Follow me.

Bob: (after a careful inspection) It’s a very nice car! I’ll give you $12,000,and I promise to take good care of it.

Car owner: Well, that’s a fair price. Can you come back on Monday at10:00 a.m. to seal the agreement at the courthouse?

Bob: Sure. Then it’s a deal?

Car owner: Yes. I’ll see you on Monday.

Conclusion

While Bob did not achieve his goal during his first negotiation effort, the timing of his second effort was perfect and it enabled him to negotiate for the car of hisdreams.

Example 2

It was Sunday, December 31st, and a twelve-member board of a large non-profitorganization was holding a special meeting to decide whether or not to enter into amulti-million dollar capital project with a partner organization. The partner organi-zation, for tax reasons, had issued a deadline of December 31st, beyond which theproject would have to be abandoned. The board members had met twice before,and the vote was a 6-6 tie each time. A majority was needed to pass the partnershipagreement; if a seventh vote could not be found by the pro-agreement side, theproposal would die at midnight. A third vote at 3:00 p.m. resulted in another 6-6


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Preparation 3

deadlock. Both sides caucused: The leaders on each side met to negotiate a compromise. That effort failed. Then, during an hour break in the meeting, the leadeof the pro-partnership side heard someone say that the meeting needed to end by5:30 p.m., because one member of the anti-partnership side had to leave at thatime to attend a church service he had not missed in 27 years. When the meetingresumed at 4:00 p.m., the pro-project leader told his members to filibuster untihe gave a signal and called for another vote. At 5:30 p.m., as predicted, a member of the anti-project group left the room. A member of the pro-project groupquickly called for a vote after the leader gave a signal. The measure passed 6–5 a5:45 p.m., and the meeting was adjourned.

Conclusion

The leader of the pro-project group recognized that they might have a uniquetiming advantage. He planned for it accordingly, and it worked. For weeks, theproject had been stalled by 6–6 votes; in the end, timing was everything.


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Planning a Strategy 33

Stage 2: Planning a Strategy

The next stage is critical: Choosing a strategy. Before you can do this, youmust first evaluate your needs and those of your opponent, as well as their bargaining history and financial and political positions. Look at the personalitieof each negotiator and see which side will be more vulnerable to pressurbargaining (Stage 5). Are there any outside people who might influence the process, such as a third-party negotiator, or someone’s colleague or spouse? Thirdparties such as other buyers or governmental agencies might have to approve theagreement before it becomes final. Be sure you are aware of this at the beginningas it can substantially alter the negotiations between two primary parties, such aa buyer and a seller or a city and its union. In some cases, a third party can serve

as a mediator (a legislative body, for example, might step in and help settle negotiations between a union and administration negotiators. Third parties sometimehave their own hidden agendas, such as actively trying to keep one of the two parties from winning a contract or influencing a colleague or spouse to accept an offefor personal reasons. Identify all outside influences and hidden agendas before youdevelop your strategy.

After you have evaluated these factors, decide whether the negotiations shouldbe continuous, or one-time-only. Some of the tactics listed in this book are onlysuitable for single-session negotiations, such as Tactic #19 (Make a First and BesOffer ); Tactic #33 (Bluff ); Tactic #43 (Nickel and Diming); and Tactic #48 (Wal

Away).The overall strategy chosen does not limit the use of other tactics, but in prac

tice it will likely influence the whole process. For example, if you want to begin ina friendly, cooperative manner, Tactic #12: Find Common Interests can be helpfulIf you prefer to take a firm and direct approach, then Tactic #13: Set a Deadline oTactic #11: Have an Expert Witness might be helpful. A neutral, uncaring approach(Tactic #9: Control Your Emotions; and Tactic #10: Make a Reciprocal Buy-Sell Offer

are also useful alternative strategies. A favorite strategy of some successful negotiators is to start with an extremelylow or high offer (Tactic #7: Decide How “High” is High) in the hope that the othe


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side is either caught off-guard or (in some rare cases) a negotiator will be able toachieve an unexpected fantastic settlement. For example, let’s say a homebuyernew to an area is shown a house that was owned by someone who had been trans-ferred to another country. His teenage sons had “trashed” the house. The buyerloved the location, but the inside was a complete turnoff. Weeks later, the seller’sagent called the buyer about the property. The buyer said he wasn’t interested.The agent explained that the seller was desperate. “Please make any offer—theyare motivated!” The buyer responded, half-serious, with “All right. I offer half theasking price.” The agent took the offer to the seller. The desperate owner agreed,and the buyer was able to completely renovate the house and still have a greatdeal.

Another strategy often employed by parents with their children (and inves-

tigators with suspects) can be easily used when one side has two negotiators (seeTactic #8: Use the Good Guy/Bad Guy Routine). By assuming opposing roles, twopeople on the team will be more successful because they evoke different emotionsfrom the other side. If there is a significant weakness in your position, you shouldconsider disarming the other party by acknowledging the weakness at the start sothat you can reduce the impact of the weakness if it is used by your opponent (seeTactic #14: Don’t Always Hide Your Weakness).


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Tactic 7: Decide How “High” Is High

Your first demand in the negotiation process is the most important decision youwill make, so think this through well ahead of time. You are not likely to get morthan you request, so do not underestimate what you might be able to achieveHowever, your request must not be so low that the other party concludes that youare not negotiating in good faith. Your demand should be high enough to give youroom to compromise, but not so high as to end the negotiations before they beginBe realistic, and then look at the demand from your opponent’s perspective. If youconsider the demand ridiculous, it is likely that your opponent will, as well.

Example 1

Carol has been unhappy with the house she and her husband bought six years agoShe has had it on and off the market for the last five years, with no success. Eachtime, her real estate agent told her that they were probably not going to get a buyebecause she is asking too much. Carol wants $160,000, and just refuses to reducit. Finally, one buyer shows some interest.

Buyer: We really like the house, but quite frankly, we think $160,000 is veryhigh. After all, six years ago you bought it for $60,000. The market hasn

gone up that much in six years.Carol: Maybe not, but the house has increased in value. First, we’ve put a con

siderable amount of money into a new air-conditioning system and inredecorating. We also think that the neighborhood has improved over thlast few years.

Buyer: The air conditioning might have increased the value of the house, but thredecorating is of little value. Anyone buying the house would want tochange wall colors or add new carpets. And I don’t see a lot of difference inthe neighborhood. It’s a good neighborhood, but certainly not exceptionain any way. Surely there’s some flexibility in your asking price.

Carol: We really want to sell, but we simply can’t take less than $160,000.


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Buyer: What if we offered you $100,000?

Carol: We really can’t take less than $160,000.

Buyer: Good luck!!

Conclusion

The buyer expected Carol to counter the $100,000 offer by coming down in priceat least a little. When Carol refused to budge, the buyer took it as a signal thateither Carol didn’t want to sell, or she has unreal expectations. In any event, Caroldrove off a potential buyer by setting an asking price that was just too high.

Example 2

The law firm of Bits & Bites was a Sioux City institution, enjoying a statewidereputation for quality representation. Neither Edward Bits nor Edmund Bites, thefounders of the firm, were still alive. The firm now had over twenty-five law part-ners who owned the firm and continued to benefit from the reputation and namerecognition of Bits & Bites. A new law partnership from a nearby city contactedBits & Bites and offered to “buy” the rights to the name to use in their law officein their city. The partners are interested in selling the name, but they have no

idea what the value of their firm’s name might be in this nearby city. Inquiriesto other law firms were not very helpful because in almost all of the instances,the transaction also included some degree of consolidation of the law firmsinvolved—not just the use of the firm’s name. The other law firm was preparedto pay $100,000 immediately, and then $10,000 or 1% of profits (whicheveris less) over the next ten years in order to use the name. Here’s how the initialnegotiations went:

Partners: Well, we are certainly interested in your request to “buy” our

firm name to use in your city. We’re curious, though, as to howyou think the name is going to benefit you.


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New law firm: We are establishing a partnership of ten lawyers—the top twomoneymaking attorneys in each of five local firms. In everyinstance, one of these two attorneys carries the surname of thefirm they are leaving. So, it would be impossible to create a newname out of the names of our key partners. And even thoughyou don’t have an office in our city, you have a very solid reputation there, because you are in the state capital and your firm hahandled a lot of high-profile political cases.

Partners: We should assume, then, that you anticipate to build very profitable law firm, starting with the ten partners youdescribe.

New law firm: Yes, we do. Using the Bits & Bites name can only enhance ouprofitability. And we, of course, expect to pay for that.

Partners: Well, we want $500,000 initially, and then 10% of your profiteach year for as long as you use the name. If at any time we feethat you have “harmed” our name, we reserve the right to withdraw our permission, but we get to keep all of the money we’vereceived up to that point.

New law firm: (surprised) Well, that is a very high number. We weren’t reallythinking about that amount of money. I guess this is just nosomething we’ll be able to pursue.

Partners: (concerned about loosing the opportunity) Wait, that’s just ouinitial figure. What number were you thinking about?

New law firm: Well, I’m kind of embarrassed now, because we were not evenclose to that number. To offer it now would be an insult. Let’

just pretend this didn’t happen.

Partners: We probably won’t be insulted. Give us some range.

New law firm: I really don’t feel comfortable doing that now. Thanks so muchfor meeting with me.


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Conclusion

Bits & Bites lost an opportunity here because their initial demand was so unreal-istic with what the prospective firm thought the “naming rights” should cost. Itimmediately dropped the idea, rather than negotiate. Both parties were probablyat a disadvantage, because there was no “objective” criteria available to help themset a reasonable price. Either side could have asked for too much. In this situation,Bits and Bites should have let the prospective firm make the first offer, since theyhad initiated the contact. The price they were willing to pay would have indicatedwhat the naming rights were worth.


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Tactic 8: The Good Guy/Bad Guy Routine

The “good guy/bad guy” routine is a useful one. One member of your team actsfriendly to people on the other side (the good guy) in order to gain their trust andsupport, while another acts difficult, angry, threatening, etc. (bad guy) and impliethat his or her side will hold firm on their demands. Your opponents will want toavoid confrontation and unpleasantness with the “bad guy” and are likely to bmore willing to cooperate with you.

Example 1

Peggy: So, Andy and Paula, you’re really moving! I hate to see you leave

I heard that you want to sell your riding mower.

Andy and Paula: Yes, we won’t need it at the new condo.

Peggy: So, what’s your price?

Andy: $1,200. Half what it cost us new, only three years ago.

Peggy: That’s fair, and I know how you take care of things, so I’ll take it

Paula: Go ahead and ride it home. And take the leaf-catcheattachment and the gas can.

Andy: No, I want to keep those. I can use them.

Peggy: I assumed they went with the mower, since they are sitting ouin the driveway with it.

Andy: I want them…

Paula: Go ahead and take them, Peggy.

Andy: No, not for $1,200! We should get $1,400 if the catcher andcan are included. They cost about $300.

Peggy: I’m hearing one thing from Paula and another from Andy. don’t know what the deal is now. I’ll go home and you can calme if you two can reach an agreement.


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Conclusion

Peggy thought she was getting the old “good guy/bad guy” routine, perhaps evenunintentionally. She realized that it put her in an impossible negotiating position.She very wisely recognized the routine and forced Andy and Paula to give her aclear, firm offer if they decided to continue negotiations.

Example 2

Sandy (business owner): Miguel and Liz (representatives of a computer firm), we’rehere to negotiate a new service agreement. For the pastthree years, we’ve been fairly happy with your respon-

siveness, the quality of the technicians’ work, and yourtraining programs.

Miguel: Well, Sandy, your account has taken too much time. Youare located outside our primary service area, causing ourreps to spend hours on the road.

Liz: But we still want to renew your contract.

Miguel: But not at this ridiculous rate. And we need to add a clausethat holds your company responsible for machine dam-ages. We estimated that it has cost us more than $50,000in service calls last year alone because your damn peopledon’t take care of the equipment. And we want to changethe 24-hour service response time to 48 hours. And cutthe training hours from 55 to 20.

Sandy: What? First of all, your rate of $3,000 per month is oneof the highest in town.

Miguel: I’ve figured $4,200 will be about right…

Sandy: I can’t begin to pay that!

Liz: Calm down, Sandy. Let’s talk.


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Miguel: No, I’m going on to lunch. I’ll stop back about 2:00 p.mI hope you can meet my terms, Sandy. If not, I’m afraidour relationship is over.

Sandy: Liz, these terms will put me out of business—I’m a smal20-person operation.

Liz: Sandy, I want to keep you as a customer, but Miguel’s rightOur customer base has grown, and it’s not efficient enoughanymore for us to handle smaller firms—especially thoseoutside our region.

Sandy: What can I do?

Liz: Let’s try to negotiate something reasonable before Migue

gets back. (Three hours later)

Miguel: I’m back. Any luck, you two?

Liz: Good news, Miguel! We’ve worked out a deal I think youcan live with. I’ll explain on the way back to the office.

Conclusion

Miguel and Liz used the good guy/bad guy tactic in the classic form: Miguescared and threatened their opponent, Sandy, with a position he knew waunreasonable. Then he left so Liz could convince Sandy that they needed toquietly reach an agreement she could “sell” to Miguel later. Sandy believed that shwas able to avoid a terrible deal and negotiate a fairly good one, even though it wafar above the previous contract.


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Tactic 9: Control Your Emotions

Stay cool. A display of temper or frustration can indicate to your opponent thatyou are uncomfortable with your side’s negotiating position and they will assumethat it is weak. This will put you at a distinct disadvantage from this point on, andmight even harden your opponent into an unfavorable position (for you or for bothof you). Be sure that the emotion you display is calculated and strategic: A strategicflare of temper at an “insulting” offer made by your opponent can buy you timebecause you can make an abrupt exit from the room without having to respondto it in any substantial way. Your opponent might conclude that they have made aserious misjudgment and want to make a conciliatory move to get you back to thebargaining table. Control your emotions and use them to your advantage!

Example 1

Mike prided himself on being an informed and educated consumer. He had, infact, made some very good purchase decisions for his small business, such asdeals on computer packages and phone services. So, when he discovered that thelong-distance company serving his home phone was charging him four times therate currently being marketed by that company, he was very unhappy. The faultwas partly his because he did not stay on top of changes. He decided that the best

approach was to act indignant when he spoke to the company representative.Here’s how the phone conversation went:

Customer representative: Over-the-Air Long Distance. How may I help you?

Mike: Hello. I have a problem with my recent bill and mybilling rate. It seems that the rate you are chargingme on my home phone is $1.00 a minute, but I recentlywas sold a $.10 a minute rate at my office location. Inoticed this, because we have had a sick relative out of

town and we used long distance a lot this past month.


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I expected the bill to be higher than usual, but this waquite a shock.

Customer representative: Let me pull up your account, Mike. Well, I see tha

the rate you are being charged is the rate we offer forthe type of service you have with us. It hasn’t beenincreased at any time.

Mike: I realize that that might be the rate I started paying when I first took your service over eight yearago, and I also realize that if I had examined my bilclosely, I would have known I was paying too muchBut as a very good customer of yours, I would thinkyou would have given me the best rate you offer newcustomers.

Customer representative: The company might have had any number of different introductory rates and incentives for people tobuy our service over the course of eight years. Hadyou brought this to our attention before, we certainlywould have discussed your options.

Mike: (beginning to sound irritated, although he wasn’t reallyangry) Are you suggesting that it was my responsibilityto advise you when one of your “offers” was availableto lower my rates? How would such information evencome to my attention? More importantly, how wouldanyone who might only have residential service evenknow to ask?

Customer representative: Well, of course it is not always possible to givexisting customers some of the “offers” we have outBut I am able to offer you a $.10 per minute rate on

your long-distance service, to begin now.


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Mike: I would imagine so. But I’m looking at a $500 long-distance bill, which should rightly be $50. I wouldhope that you would credit my account for this bet-ter rate for past service. I am, after all, a long-timecustomer of your company, and I should be treatedwith more respect!

Customer representative: I’m sorry, but I can’t do that. I …

Mike: (interrupting and in a stern, controlled voice) I needto talk to someone who can do it immediately. Is yoursupervisor there?

Customer representative: I’m certain that he cannot adjust your account retroac-

tively, either. The best we can do is fix the rate for thefuture.

Mike: (with a much angrier tone) Madam, don’t think this isdirected at you personally, but I am very angry withOver-the-Air Company, and I want to speak to some-one in authority so I can terminate my service. If youcan’t get me someone to talk to, there’s no reason forthis conversation to continue.

Customer representative: Wait—I’ll get my supervisor. We certainly don’t wantto lose you as a customer.

Conclusion

The supervisor waived the long-distance charges for the $500 bill and adjustedMike’s rate to $.10 per minute. In doing so, she kept Mike as a residential cus-tomer as well as a business customer. Mike’s willingness to show a measured

“flare of temper” brought results. He was walking a thin line, however, betweencontrolled, strategic anger and abusive behavior. The latter would not haveproduced the desired results.


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Example 2

The contract negotiations between the employees of a fireworks plant and its ownehad been stalled for about three weeks over the issue of mandatory overtime. Thmost-senior employees want to have the right to refuse overtime and have thoseless-senior employees take the overtime. The owner was afraid that if the mostsenior employees routinely passed up the overtime and the overtime pay, theywould become dissatisfied with their pay and want their base pay increased. Theowner told the employees that he was worried that during the overtime shifts, lesssenior employees might be at greater risk of injury because they have to handlexplosives. The employees’ negotiator finally decided to use “indignation” to breakthe stalemate.

Owner: I’m just not willing to let my best people refuse to workthe extra shifts during our busy season. They will be putting the plant AND their fellow workers at risk by nobeing here.

Employees’ negotiator: (with a stern voice) You have been saying this for threweeks, and it’s getting old. Just admit that what youreally don’t want is for your best employees to realizhow much of their pay is from the overtime they work

and that they should be asking for a fairer base wage fothe work they do for you.

Owner: Now, that’s just not fair, and it’s not what we’re eventalking about. Working with fireworks is working withexplosives, and you just can’t be too careful. On thosovertime shifts, I’ve got to have the employees with themost experience to protect this place.

Negotiator: (now beginning to get irate) You talk about the risk to

your plant if the less-experienced workers are there onovertime shifts without the senior employees. Where aryour managers? Where is the training necessary to mak


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sure these employees can protect themselves? Are youtelling me that your employees are being put in dangerousconditions without adequate training and safeguards?

Owner: No, not at all. But the fireworks business is a businessthat involves risk. No one who takes a job with us can beunaware of that. But we protect our people.

Negotiator: Then you can’t have it both ways; either the employeesare properly trained, or they’re not. Either they are prop-erly protected, or they’re not.

Owner: All I’m saying is that the most-senior employees have tobe on the overtime shifts. That’s all. The safety of the

plant demands it!Negotiator: (standing up to leave) This is just ridiculous. You are not

addressing the real issue for you: money. Until you’reready to talk about that, I’m not coming back. (He beginsto walk out.)

Owner: Now, now, don’t be so hasty. Sit down, sit down. What ifwe were to agree that the senior employees could refusehalf of the overtime offered to them, but not all?

Conclusion

The owner was on shaky ground with this one. After the employees’ negotia-tor threatened to walk out, he became more reasonable. The negotiator was alsorunning a risk with his flare of temper. Had the owner let him leave, thenegotiator would have had to find a way back into the negotiations withoutlosing ground. The end result was that the most-senior employees did win theright to refuse overtime. In practice, though, most of them continued to take all

the overtime they could get.


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Tactic 10: The Reciprocal Buy-Sell Offer

What do you do when both sides seek to own something when there is only oneand it can’t be divided equally? You have three options: 1) Both parties can “bid” toown it, with the highest bidder paying the amount to the other side in compensation for their loss. 2) They can flip a coin, with winner taking all. 3) They can agreeto sell the object to a third party, and split the proceeds.

A fourth option, called the “Reciprocal Buy-Sell Offer,” is the recommendation of Howard Raiffa, a well-known negotiations professor from HarvardUniversity. The first party decides on a price for which he or she will either buyor sell the object to the second party. The second party then decides to either buyit at that price and pay the first party, or sell it to the first party and consequently

receive the full amount from the first party—thus giving up the object. The following examples explain how it works:

Example 1

Susan and Mary Anne learned from their brother Mike that their recently departedparents’ estate included a somewhat valuable antique coffee grinder. Both sisterscovet it. All the rest of the estate has been divided among the family. Mike, theexecutor of the estate, has decided to use the “reciprocal buy/sell offer” process to

settle this last piece of the estate.

Mike: Mary Anne, you’re the oldest, so you set a price at which you agreto buy or sell the coffee grinder. I’ll give you 48 hours to decide thprice. Then Susan, you will decide if you want to buy it for that priceor receive that amount from Mary Anne (but lose the grinder).

(two days later)

Mary Anne: Well, Susan, my kids and I looked on eBay and everywhere else andfound out that coffee grinders in perfect condition sell for abou$500. However, since this one is in perfect shape and it was Mother’s, I’m willing to pay or let it go for $800.


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Susan: Well, I choose to buy it. Here is my check for $800. I’ll pick it uptonight.

Mike: Thanks for making this last step as easy as possible.

Conclusion

The “reciprocal buy-sell offer” process caused both Mary Anne and Susan toresearch the market value of the coffee grinder, and then decide how much more“emotional value” it held. They thus were able to determine the highest price eachwas willing to pay for it or receive for it. Both sisters felt that the process enabledthem to resolve the issue fairly.

Example 2

Howard Raiffa described a consulting situation in which he used the “reciprocalbuy-sell offer” process in his book, Lectures on Negotiation Analysis. Two businesspartners had been working together for ten years to build a successful business,but each partner had grown to dislike the other and wanted to end the partnership(but continue to own the business without a partner). Both came to Raiffa to helpnegotiate a settlement. They accepted his suggestion to use the “reciprocal buy-sellstrategy.”

Howard: Since in this case you are talking about a multi-million-dollarbusiness, I suggest a slight modification to the process. You willboth agree, in writing, to submit a sealed offer to buy/sell thebusiness sixty days from today. After I open the bids, the lowerbidder must agree to sell his half-interest to the higher bidderat a price that evenly splits the difference between the two bids.

Agreed?

Abe and Bobby: Sounds good! Let’s draft and sign a written agreement detailingthe process, which will bind us to the outcome.

(sixty days later)


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Howard: Abe, your bid is $170 million; Bobby, your bid is $190 million Abe, you agree to sell your half-interest to Bobby for $180 million, and to close within ninety days.

Abe: Agreed. I will arrange to sell him my half-interest for $180 million, and we close by July 1st.

Bobby: And I will arrange financing to pay you $180 million to becomsole owner.

Conclusion

Both parties wanted to keep the business, but only if they could become the solowner, and both men had carefully estimated the market value of half the business. Bobby was willing to pay more than Abe to remain sole owner. The reciprocal buy-sell tactic enabled one of them to achieve his goal of sole ownership andallowed the other to feel that he had an opportunity to purchase sole ownershipThe partner who was out-bid in a fair process received a fair settlement: $10 million above what he was willing to pay.


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Tactic 11: Use an “Expert Witness”

Establishing yourself as the expert on a certain topic in order to get what you wantcan be an effective tactic in the appropriate situation. It can also work in reverse:establishing the other person as the expert, and forcing him or her to control thediscussion of the issue.

Example 1

A young couple were discussing a possible purchase of new furniture for theirliving room. They both expressed an interest in finding a couch that offered themost “interior” space. The wife was determined to buy the least-expensive brand

rated excellent by consumer publications.They knew that sitting on dozens of couches in a single day would be confus-

ing and would make it difficult to determine which one is the most comfortableand roomy. The couple decided to limit their selection to those rated “excellent,”but there were substantial differences in price—differences that the wife did notsee as a problem. The husband found the dimensions of the couches in the bro-chures and Web sites, and created a spreadsheet to compare the five best-ratedcouches on their list. Based on seating capacity, the one he wanted (one of theleast-expensive) was superior. When it came to comfort, the one that was the most

expensive was superior. Looking at these statistics, he decided upon a strategy:First establish himself as the “dimension expert,” and then argue for the frugalalternative. When he showed his wife the detailed spreadsheet, she glanced at itand immediately deferred to his opinion. This strategy worked, and the husbandfelt like he saved them hundreds of dollars.

Conclusion

The husband became the “expert” in this situation by doing the homework. He thusended up having greater negotiating power. This approach can also be reversed:The wife in this situation is a banker, so when the husband wants them to make an


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investment decision or deal with an error in a bill, he argues that she is the expertand should therefore handle the problem. He claims to lack the knowledge oinsight to do the work—which he is then able to avoid!

Example 2

A negotiator can often gain a valuable advantage on issues such as medical insurance or labor contracts by doing the homework and becoming an “expert.” If youspend many hours learning about Health Maintenance Organizations (HMOs)Preferred Provider Organizations (PPOs), and Point of Service (POS) plans, yougain an edge when negotiating a new plan for your company. Many bargainers onthe other side will not know their HMOs from their PPOs or their POSs and are

likely to leave important details up to “the expert” to decide—just as the negotiatoplanned! After explaining in some detail what each of these three types of insurance plans are, a negotiator in a similar situation was able to get the other side toagree to include a plan that they had opposed only days before!


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Tactic 12: Find Common Interests

You are more likely to come away with a satisfying outcome if you and the otherparty set the stage for agreement. This is done by deciding at the outset what youboth have in common: You both want to reach an agreement; you both wantto complete negotiations by a certain date; neither of you want to be embar-rassed at the outcome; you want to reach an agreement that is favorable to anoutside party; and so on. These positive things are part of your goals and objec-tives; point them out at the very beginning of negotiations and refer to themthroughout the process, particularly when things seem to be at a standstill. Be clearon what you have in common at the start.

Example 1

When Russ and Bill got home from school, they saw that there was one piece ofcake left over from their mom’s bridge party. They immediately began to fight overit. The two boys fought over the last piece of everything, and their mother wastired of it. Usually, she made them share whatever it was, and neither boy was veryhappy. This time, she decided to try something different.

Mom: I’ve decided that I’m not going to cut this piece of cake in half and give you

both some. That simply rewards your continual squabbling. Unless youcan convince me otherwise, the last piece of cake will get thrown away.

The boys quickly huddled, and then asked their mom for a chance tonegotiate with each other. When they boys returned, here’s what theysaid to her:

Russ: I think I should be rewarded with the piece of cake, because I am so con-scientious about my paper route. I also took out the garbage last weekwithout being asked twice, I missed dessert the other night because Ihad to get to baseball practice, and I really love the banana/butternut/ sour cream frosting on this cake. If this was chocolate icing, like weusually have, I wouldn’t care so much.


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Bill: I think I should be rewarded because I cleared the table for Russ thother night when he had to get to baseball practice. I got an “A” on mybook report that I really had to work hard on and when you got homefrom the store last week, I helped with the bags without being askedtwice. The last cake we had was chocolate cake, and that’s not my favorite either. This cake is white cake, and I really like white cake.

Russ: We realized that if we cut the cake lengthwise, I can have the part withthe icing and Bill can have the part with the cake and filling.

Mother: That sounds like a wonderful solution.

Conclusion

Once the boys realized that they had a common interest—not letting the cakeget thrown away—they were able to negotiate a solution both of them could livewith.

Example 2

Marilyn’s Memorabilia Store was located along the main commercial street of a res

idential neighborhood. It was the type of shop the nearby residents preferred, andbetter than a fast-food restaurant with late-night hours and a drive-through window. Marilyn originally set her shop’s hours for 10:00 a.m. to 3:00 p.m. becausethere is no parking along the street during morning and evening rush hours, andher children were in school, so these hours worked out well. Now that her childrenare in college, she opens her shop at 7:30 a.m. and keeps it open longer so she canattract customers on their way to and from work. Customers have started to parkin nearby apartment lots. One day, she got a visit from some of the residents.

Residents: Marilyn, your new shop hours have caused your customers to parkin our parking spaces. We really want you to go back to your originatimes, so that your customers can park on the street.


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Tactic 13: Set a Deadline

Be sure you know well ahead of time what the deadline is for completion of negotiations. Deadlines can be imposed externally (such as the government’s deadlineto get a tax break) or internally (set by one side, such as a deadline beyond whichthe union will strike or the date that an outside party has set to withdraw an offethat is in both your interests). Deadlines can also be set by both parties to a nego-tiation when they want to put some pressure on themselves to come to agreemenas quickly as possible. A deadline can help you make the best possible agreemenin the shortest amount of time, but it can also work against you if you set one thais unrealistic or you fail to plan for it adequately.

Example 1

Four adult children have gathered at the home of their recently deceased mother

Jenny: Okay, how should we go about dividing up the furniture andpossessions?

Everett: I can’t talk about it.

Sue: Well, we can each take turns selecting things …

Everett: Like each tool or dish. That will take days!

Mary: I haven’t been in this house for twelve years. How can I do that? You allive in this town and you know this house. I don’t.

Sue: Well, let’s all take a few hours to look around.

Everett: A few hours? I can’t—I’ve got to leave shortly for the drive home.

Mary: We just don’t have the time …

Jenny: We’ve got to do this—the house is sold!

Everett: Okay, let’s all take two hours to look around and make a list of thing

we might want. Then we can sit down at this table at 3:00 p.m. andstart choosing things, one at a time: the youngest, the first, etc. But a


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5:00 p.m., if we are not finished, we all leave. Sue, being the oldest, cansell or give away what is left. All of us must come back before Saturdayto take what is ours—agreed?

Sue: Okay.Mary: Agreed.

Jenny: Okay.

Conclusion

The mutually agreed-to process and self-imposed deadline was a fair methodof negotiating—a lot better than the four of them arguing over their mother’s

possessions.

Example 2

Allan: As the negotiating team for the city, we cannot agree to these develop-ment plans submitted by your company until we have reviewed how theywill affect the historic buildings.

David: I understand your concern, and I appreciate your interest in the historicstructure. However, this is December 29; if I cannot carry a negotiatedand signed deal to my board by noon on December 31, then the wholedeal is lost because my company will lose $10 million in tax benefitsunder a federal law that expires on midnight, December 31.

Allan: What! Why did you not tell us this before?

David: We never thought you would take three months to get to this point. Andbesides, your attorneys know the tax laws.

Allan: Let me confer with the city attorneys.


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(One hour later.)

Allan: I understand the December 31 deadline, and I don’t like it. Obviously, wcan’t get the reports we wanted in 48 hours. Let’s continue.

Conclusion

Knowing the external deadline gave David a significant negotiating edge. He waitedto bring it up until it was clear that doing so would help him get the settlemenhis side desired.


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Tactic 14: Don’t Always Hide Your Weaknesses

Be sure you know what your strengths and weaknesses are, as well as those of theother side. The objective is to negotiate from a position of strength, and this usuallymeans having all the right information. Have a clear goal in mind AND all the informa-tion you need to make your points, but remember that both sides have weaknesses,as well as strengths. There will be times during a negotiation when you will want tocatch your opponent off-guard, and one of the ways to do that is to reveal a weak-ness at the beginning, before your opponent tries to catch you off-guard. Controlthe use of the information, and you can neutralize its effect on the negotiations.

Example 1

Jason likes to play video games as soon as he gets home from school and do hishomework later, while watching TV. His mother disapproves of his study habits,but his grades are good, so he was able to prevail upon her to let him continue.Unfortunately, first-quarter grades are coming out at the end of the week, and

Jason knows he is getting a D in Spanish. He knows that a D will mean that he willhave to change the way he studies. He decided to preempt the discussion in orderto make the best deal.

Jason: Mom, we need to talk. Now, don’t get mad, but I have a problem in mySpanish class.

Mom: What’s that?

Jason: A few weeks ago I lost my workbook, and I missed some assignments.

Mom: I gave you money to buy a workbook a few weeks ago. Did you buy it?

Jason: Yes, but that was actually a different workbook. We had one at the begin-ning of the semester that we were using pretty often. One day mine disap-peared. I bought the second one, and we used it a couple of times. Then

the teacher went back to the first one. I’ll need to buy it again.Mom: All right, I’ll give you money for it. But don’t lose it again.


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Jason: Another thing. Since I missed some assignments, I’m getting a D in Spanish for the first quarter—but it’s not because I’m studying in front of thTV. It’s because I didn’t have the book. The work I did turn in was fine, sothere’s no reason to think I need to change my study habits.

Mom: Well, I’m sorry, but I think you do need to change your study habits. don’t think you’re taking your schoolwork seriously enough.

Jason: Spanish is just one class, and the D is directly related to my losing thbook. All of my other classes are A, B, or borderline B- (maybe C+). Andthose are hard classes—Algebra, Environmental Science, English. Obviously, my study habits are okay. And I know I have to be better about getting in all of my assignments. I think you need to give me the rest of thesemester before making me change the way I do my schoolwork. If I don’pull the D up to a C or better, then I’ll agree to make changes.

Mom: Well, all right. I’ll give you more time. But that Spanish grade needs tocome up to a B!!

Jason: Okay, I think I can do that. Thanks, Mom.

Conclusion

All of Jason’s grades did improve over the next quarter. Although his Spanish grad

was only a C+, he was able to continue

everyday negotiator

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