Negotiating Skills - Part 1

According to the Oxford American Dictionary the word negotiate means "to try to reach an agreement or arrangement by discussion." But what do they know? Good negotiating takes a lot more than just discussion. In my next several articles I will discuss the fine art of negotiating.

This first article will focus on leverage, the next one on information gathering, followed by an article on credibility and one on judgment. Honing your negotiating skills will enhance your value to your employer. It will also provide personal benefit.

First let's talk about leverage. Leverage is the influence you can bring to bear in a negation. You need to know where you stand. Most bargaining situations contain a variety of factors that give each party advantages and disadvantages. Some important leverage factors are: necessity, desire, competition and time.

Necessity is simply the need to make a deal. The party that has a lot invested in the deal - both time and money - will be at a disadvantage. It is essential that you know the other party's urgency as well as recognizing your own.

Sometimes necessity is not present, but desire is. One party will likely want what the other is offering. The level of that desire determines the leverage they will or will not have. For example, suppose you recently sold your boat and are looking for a new one. Your desire to replace the old boat will have a strong impact on your leverage in bargaining the price of a new one. If your desire is strong, you will likely pay more than you should.

Beyond necessity and desire, the presence of competition also influences leverage. Competition can put pressure on a buyer to pay top dollar. Say you found a boat you want to buy, but the owner has several potential buyers. The presence of these buyers gives him tremendous leverage. Conversely, competition can put pressure on a seller who knows that several others are vying for the business. For example, your long distance carrier will feel pressure at the negotiating table if they know you are talking to alternate providers.

Finally, time pressure must be considered. The side that is feeling crunched for time will be pressured into agreeing to things. Imagine you are negotiating a local service contract close to the end of the month. The sales rep may want to close the deal to fulfill their quota. Because of this, they will be eager to make concessions.

It is very seldom that both parties come to the negotiating table with equal leverage. A savvy negotiator will take advantage of all the leverage he or she can get. Try not to get involved in dealing where you need a specific outcome. Don't let on to others how strongly you want a deal. It will give them leverage against you. Be aware of competitors offering the same goods or services you are negotiating, and make sure the other party knows you are aware. And finally, go to the table before you are in a time crunch. Preplanning will work in your favor.

Next month I will talk about information gathering and how it can help you make a good deal.