Good negotiating involves give and take. It applies to work and home, friends and family and is an important part of relationship starting and building. Being good at it takes practice and patience, both of which many people do not have. In the business world, negotiating is the key to getting what you want, if you can do it effectively. This is where give and take comes in. If you’re never willing to be flexible and give more than you may want to, you may become known as rigid and unyielding, and people may not want to meet your needs.
So how do you give without giving too much? How do you compromise without being walked on? Strategic tactics like Most Preferred Position (MPP), Least Preferred Position (LPP), and Best Alternative to a Negotiated Agreement (BATNA) come into play. All of these can be seen in the common occurrence of buying a car. An example of the most preferred position is when you go to a dealership, thinking that you may want to purchase a new car, but you know that you refuse to pay more than x. You could go to any number of car dealerships in the area, and on any given day, can likely get a dealer to agree to your (reasonable) price. The car dealer however, is in the least preferred position. They have little leverage. There’s little they can offer you that another dealership down the street can’t. Now what if you found a car that you absolutely love, and it’s the only one in 500 miles with the color and options you want. Unfortunately, its $50/month out of your price range and you’re just not sure you can swing it. The dealer says he absolutely cannot lower the price of the car any further. An example of a best alternative could be if you had a car you were trading in, and the dealer was able to increase the trade-in value of your car to bring the price of your new car down. Another example could be if the dealership gave you free oil changes or free car maintenance for a year. Or perhaps they included the $1,000 navigation system you wish you had but couldn’t afford.
As with everything, negotiation is perfected by doing. It may be helpful to sit in with others as they negotiate a deal from start to finish. If it’s a co-worker, ask how you could better collaborate with them. If it’s a manager, inquire what extra you need to do to get that raise, more responsibility, or a higher title. Some find success with disclosing little upfront; others by being transparent from the beginning. Some get right down to business; others build a personal relationship through informal meetings and conversations. After spending some time in the business world, you learn very quickly that someone you meet will know someone you know. Whether you think you may or may not work with a person again, be fair and reasonable because you never know when you may want to cross that burned bridge.
G. Richard Shell indentified 5 approaches to negotiating in Bargaining for Advantage: Negotiating Strategies for Reasonable People: accommodating, avoiding, collaborating, competing, and compromising. What’s your negotiation style?
As written for YoungEntrepreneur, September 20, 2010