Develop a range of techniques to achieve win-win outcomes at an upcoming IMechE training course, Negotiation Skills. Next running in London from 3-4 August, the workshop will help you identify variables, appreciate the value of preparation and consider strategy and tactics.
We spoke to course trainer Andy Webber about what to expect. Here are his four initial tips to help you succeed in negotiations.
Don’t wing it!
Some people take pride in the fact that they wing it. The classic joke is: Q: How long do you take to prepare for a negotiation? A: It depends how long the flight is! But in failing to prepare properly, we actually cost ourselves money.
The old phrase ‘knowledge is power’ is true. And in a negotiation, the balance of power is important; if I’m in a stronger position than you, I’ll tend to get a better deal. Preparing – and therefore knowing more, understanding the situation better – gives you power.
Have a flexible strategy – and flexible objectives
Negotiations involve movement. If you’re not moving, you’re not negotiating; you’re just making a demand. It’s wise to have an objective that isn’t static.
Your strategy should include a like, an intend and a must. The like is the best-case scenario, where everything goes beyond well. The intend is what you think you will realistically get. And the must is the result you have to get, even if it’s all going pear-shaped.
It is useful to have that triple objective. That range helps you focus during the negotiation.
Have a back-up plan
Possibly even more important than that is what is known as your Batna, the Best Alternative To a Negotiated Agreement. If you are selling something, you might have other customers. If you are buying, there are other suppliers.
Sometimes suppliers are limited, however. If you are buying a fairly specialist component, it might not be so easy to simply find another supplier.
In that situation, you have to be a bit more realistic. Let’s say there is only one source. Going back to the power balance, that puts you in a really bad position and could force you to pay any demand they make.
You have to consider what you will do if you can’t make an agreement with them. Your gut instinct might be that you have to go with them as there are no other suppliers, but there is always a way: you could upskill internally to make it yourself, you could acquire the supplier, you could invest in a different supplier to enable them to make the component. None of these are attractive; they are very costly options. But if you haven’t thought about it, you don’t know what the value of the existing supplier is to you, and therefore what you should pay. Batna helps you be realistic about your alternatives, so you know how far to go with the first option.
Don’t confuse price and value
Value and price are completely different things. Value is what you get out of the consumption or use of something, and its price basically determines whether or not you buy it. If I am going to get £10 of value out of something that costs £12, then no, thank you. If it costs £8? Yes, please.
The classic example is: how much would you give me for a glass of water? If we’re sitting in an office with a water fountain, you would say: ‘Nothing, because I can just get up and get a glass of water.’ How much would you give me for a glass of water if you’ve been in the desert for three days? The glass of water is the same glass of water. Nothing’s changed about that; it’s your circumstances – and therefore how you value it – that have changed.
When we negotiate, we sometimes forget that. If something appears to have very little value to us, we assume that it also has very little value to them, which is a massive mistake. We need to understand how they value something, put ourselves in their shoes, then work with that value instead of a price.
IMechE’s Negotiation Skills course next runs in London from 3-4 August. Learn more, book your attendance or check for further dates on the course page.
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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.