“Like it or not, you are a negotiator…everyone negotiates something every day,” writes Roger Fisher, William Ury, and Bruce Patton in their book on negotiating, Getting to Yes: Negotiating Agreement Without Giving In.
It’s true. Whether we’re representing a multi-billion dollar company in a high-stakes deal, haggling over the price of a used car, or trying to convince a toddler to eat her lunch, most of us come to the bargaining table daily.
And success in any negotiation comes from education, preparation, and practice. In fact, about 90% of negotiations is in the planning, says Jared Curhan, a professor at Massachusetts Institute of Technology’s Sloan School of Management, during his two-day negotiation for executives course. Because in order to create real opportunities in negotiations, we have to understand the fundamental principles to help identify our goals and the interests of the other parties involved, and to prepare effectively.
Below are seven questions you should ask yourself to help organize your ideas when preparing for a negotiation. These questions were derived from what’s called the Seven Elements framework, which was developed after decades of work done by researchers coming from Harvard, MIT, and Tufts at the Program on Negotiation (PON). Many of these underlying principles were introduced to the world in the book Getting to Yes mentioned above, which emphasizes that negotiations don’t have to be a one-shot, sink-or-swim, win-lose battle.
1. What do the people affected by negotiation really want?
If you always had the answer to this question, it’d be a lot easier to navigate negotiations. Unfortunately, getting to this answer isn’t always straightforward, so it’s important to identify potential stakeholders–not just those sitting at the table, but also parties who are unseen but clearly present, like clients–and their needs, wants, and motivators. These basic interests are the drivers in any negotiation, and identifying and prioritizing them can help you identify common interests.
By understanding the other parties interests, you can identify key differences ahead of the negotiation and prepare for any surprises that may arise. At the same time, don’t forget to identify your own underlying interests–both monetary and non-monetary, short-term and long-term–and how you would prioritize these interests.
The more you understand the interests of every party involved, the better the chance you have to help them get what they want, which in turn, can often help you get what you want.
2. What am I going to do if I don’t reach a deal?
Before any negotiation, ask yourself, what you will do if you don’t reach agreement at the current bargaining table. What are some realistic courses of action available? Researching and knowing these alternatives–yours and theirs–is your source of power.
In order to identify the best alternatives, you need to know what’s called your “Best Alternative to a Negotiated Agreement,” or BATNA. For example, if you are trying to buy a house, what other homes have similar characteristics? If you’re a job candidate, what other jobs might you be interested in, or that you might be qualified for? In other words, what are your fallback alternatives or backups if the current opportunity doesn’t work out?
Aside from your BATNA, you must also figure out your “walk-away number,” or what’s called your reservation number or value. This is the absolute highest number or value, as a buyer, or lowest number or value, as a seller, you would agree to. Keep this in mind, but beware that you anchor yourself to this number, says Curhan.
Finally, it can only be beneficial if you also knew the other party’s likely BATNA and/or reservation value, but how do you figure this out?
“When we negotiate, we are trying to test different ideas and listen and watch the counterparts’ reactions to the ideas, and see what’s going to fly,” Curhan says. “That’s where the negotiation process fits the conventional wisdom of the poker game where the parties are trying to block each other.” A better tactic would be to share information, but that requires a trusting relationship on all sides.
3. How can we create value by capitalizing on shared interests?
Imagine that you asked your boss for a raise. If they say no, consider the reason why they might be giving you that answer. Then try to figure out if you can get to “yes” by satisfying your boss’s interests. In negotiations, many of us focus on claiming value, but often neglect to consider the possibilities when we create value, which can maximize gains for all parties involved.
“We learn that communicating can help you see what [the other party’s] preferences really are,” says Curhan. “Once you find that out, there may be a lot of ways to address their preferences that don’t cost you as much.”
He adds: “There’s a direct way which is to ask them what they want. Then there’s the indirect way which is kind of trial and error process of making offers, usually a bundle of offers across multiple issues and through comparing which bundles they prefer, you can determine which they value most.”
Before going into that discussion, you’ll want to establish good rapport. Discuss shared interests upfront. Make sure the other parties understand that the “pie” is a big and expanding one.
4. What criteria seem most relevant and persuasive?
As humans, we all have a cognitive need for fairness. We want to be treated fairly, so when we feel like the other party is taking advantage of us, we’ll likely reject the offer, even the alternative is economically a worse deal.
In order to put forth proposals that are seen as fair, negotiators should use criteria that all parties are familiar with. For instance, if you are selling your home, think of all the ways that you can propose the value of your home, such as assessed value and proximity to good schools. Or consider using tactics of influence. For instance, letting the other party know that homes typically sell within a week of being listed in the neighborhood can drive the conversation with scarcity in mind, which is a legitimate argument.
When establishing legitimacy, it’s important to know the standards of practice or objective criteria that seem the most relevant and persuasive, and possibly the standards the other parties will likely use.
5. Is this a one-round or multiple-round game?
Depending on whether you think the relationship has a future or not will determine your behavior. For instance, rationale behavior in the short-term may seem irrational in long-term relationships.
Generally it doesn’t make sense for most people to act against their own self interest. Except, it might make sense in long-term relationships, because you need the other person to succeed in order to succeed yourself.
So if it’s best for your self-interest to always choose Option A and it always hurts you when the other party chooses Option B, your goal in a short-term relationship might be to choose A, but in a long-term one, to merely prevent the other party from choosing B. And sometimes, the best way to do that it not by choosing the option that only allows you to perform better, or Option A, because that’s not leading by example.
Instead, maybe you’ll consider a tactic called “logrolling” which is when you yield to issues that you care about because you know the value is greater for the other party.
6. What’s the best way for each side to communicate what they want?
Good communication is at the core of every successful negotiation. Consider this common problem in negotiations: you might think you’re creating value for someone by giving them something you think they want, but in reality, it might not be the most valuable thing to them; yet subsequently, is extremely costly to you.
“This scenario suggests that people make assumptions in negotiations that are not always true,” explains Curhan. “And those assumptions may be an assumption that when you want something, when you have an objective in a negotiation that your counterpart may not want what you want. And that’s an assumption that’s often amiss, often not true and yet it persists.”
Curhan says having these assumptions can change how people approach negotiations, and it can change their attitudes toward negotiations. Through clear and trustworthy communication, we can learn what the other party’s preferences really are.
“Once you find that out, there may be a lot of ways to address their preferences that don’t cost you as much,” says Curhan.
7. What commitments should you plan to make?
The best outcomes in any negotiation comes when we prepare ahead of time, and in doing so, you are able to predict a realistic outcome of the meeting. Through this kind of preparation, we eliminate surprise and the likelihood of a low subjective value, which research tells us can lead to low economic outcomes, or objective value, in future negotiations, because we feel we haven’t been treated fairly in the initial negotiation.
Before any negotiation, given time and resource constraints, consider determining what commitments, which can be a formal contract or a verbal agreement, are you willing to make.
The next time you’re about to sit down at the bargaining table, remember that none of us are born great negotiators, which is exactly the reason why most of us dread it. However, like everything else in life, through practice and preparation, our understanding and skills can improve and maximize to garner better, more favorable, win-win results.