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The Actuary The magazine of the Institute & Faculty of Actuaries

Soft skills: Negotiation

One of the world’s great opportunities is the fact that most people don’t know how to negotiate. Big or small; a complex multi-level/ multi-party deal or just the sale of your car, most people erect one big barrier to their ability to succeed or fail: shoddy planning.

Usually, it means a piece of valuable information or insight that is missed, being distracted or caught up in a trivial issue, giving too much away or losing control. The following steps represent a well-tested approach to preparation — your best opportunity to negotiate well, more often.

Step 1 — Determine your negotiation objective
Too often people proceed in a negotiation without a clear idea of their objective. Your objective should be a broad statement of what you expect as an overall outcome.

Tip: If you are asked after the negotiation: “How did it go?”, your answer should be something like: “I got what I wanted on the two critical issues for me.”

Step 2 — Identify the issues for you and the other person/party
An issue is something that can be traded and can also be a factor that may affect their perception of you or the value of what you offer. Early on in your face-to-face discussions, be sure to ask directly: “What are the issues that are important to you?” In particular, which ones are critical? It’s also worth asking if they have any deal-breaker issues. It may take several discussions to get these out of the other person, and you may find that new issues come up when you least expect them.

Tip: Your mission is to understand as early as possible what the other party cares about and what they are or are not willing to trade.

Step 3 — Think about strengths and weaknesses for issues on both sides
Be practical and acknowledge your strengths and weaknesses. Would you trust someone taking a strong position on an issue that is known by everyone to be a weakness?

Tip: At this point you should be clear on what you don’t know. What steps will you need to take to get the information you need?

Step 4 — Agree the ‘attitude’ you will take into the negotiation
We all bring an ‘attitude’ to negotiating. Your attitude can come from your experience, your personal style or comfort zone. The other person has an attitude as well and you need to take this into consideration to avoid problems later. Ask yourself: “What do I want my relationship with this person to be like after the negotiation?” The world is a small place and no doubt you will be negotiating with them again. Everything you do needs to be consistent with this attitude. If you say you want to co-operate, don’t behave like a bully.

Tip: Share your attitude with the other party early on in informal discussions. The goal is to make sure you’re aligned.

Step 5 — Decide on a strategy for each issue
Not all issues are created equal. This means you will need a different strategy for each issue. For example, on issues where you are strong or that are critically important to you, be a bit tougher. On issues that you don’t care about very much or don’t impact you, be more flexible.

Tip: Don’t make negotiation harder than it needs to be.

Step 6 — Plan your bargaining position for each issue
Here is a fun tool called a ‘bargaining position model’. Get a flipchart or some blank sheets of paper. Take a sheet for each issue and draw a horizontal line across it. At the left side write your ideal position. At the right-hand side of the line write the worst possible outcome you could accept. Create two more positions in between. Repeat this for each issue and then think about what the other side might do in reverse.

Now comes the time to test whether this step is in keeping with your overall attitude. I’ve seen many people say they can be flexible on a less important issue, then put a really tough opening position on the left-hand side of the bargaining model. If your strategy on this issue is flexible, make sure your position reflects it.

Tip: Use what you discover from the model as an opportunity to have a ‘clarifying conversation’ with the other person.

Step 7 — What tactics will be used?
Tactics are the behaviours that bring your attitude to life. There is no point in saying you want a co-operative negotiation if your tactics are mean or rude. Hiding information, refusing to say what you think, stalling unnecessarily, raising new points at the last minute are all competitive tactics that annoy and frustrate people, and rarely add any value. Think about the tactics that may be used on you and how you will neutralise them.

Tip: Make sure your tactics are consistent with the attitude you agreed to take into the negotiation.

Step 8 — Plan your questions and evidence
While planning, you’ll discover gaps in your knowledge of the other person’s needs and priorities. I encourage you to talk with them directly to fill these gaps. Think about the questions they will ask you and what you need to ask them.

Tip: Your word is not enough. You may need statistics, facts, precedent, case studies or examples to support your position and make them rethink theirs.

Step 9 — Decide on your plan B
It is always good to do some worst-case scenario planning. No matter how well you planned, things can still go wrong. You will have a lot more confidence if you go into the final stages of negotiation with a plan B.

Tip: Care about the result, but not too much.
These simple but very effective planning steps will keep you focused on what’s important and the actions that need to be in place to ensure you achieve your negotiation objective sooner with less stress.


Juliet Erickson is an international communication coach and author of The Art of Persuasion and Nine Ways to Walk Around A Boulder