How to negotiate your way to success
Careers can be made at the negotiating table, where the ability to deftly balance desires with concessions can be the linchpin to striking a deal that transforms a relationship, department or even an entire company.
Despite its importance, negotiation seems to be an area where CGMA designation holders feel some improvement is due. A recent CGMA Magazine web poll asked readers for reflections on seven people skills that are integral to business success. Respondents pointed to negotiation as the biggest weakness for themselves and their teams.
Across all levels of seniority, participants ranked their abilities as problem-solvers as strongest among their people skills.
Roughly one-third of executives and senior managers ranked negotiating skills last among their business-related people skills, according to the poll, which drew 937 responses. Lack of confidence with negotiating was even stronger amongst more junior team leaders, with 42% pinpointing it as their weakest people skill. Finance staffers were tentative about their skills but slightly less concerned (36%).
Fortunately, there are tactics and strategies that can help anyone improve performance at the bargaining table. Here are a few:
Break it down, reduce noise and focus on the tough stuff. Start taking pieces off the table that the two parties can agree on, one step at a time, says Bob Gaby, CPA/CITP, CGMA, a principal at Arxis Technology.
“Ultimately, you’re left with maybe two or three things that the parties aren’t in agreement on, and it’s a matter of compromise at that point.” From there, focus on where you have disagreement, and then understand how you can make it a win-win.
Know where both sides are coming from. “Understand what the other side of the issue is and where the value is for them to find that middle ground,” says Mick Armstrong, CPA, CGMA, the CFO of Micro 100 Tool Corp. “Because, in negotiating, both sides have to come away with something.” When the process is too one-sided, it may hurt in the long run. “Maybe you do have all of the power,” he says. “But on a go-forward basis, you don’t have a relationship to work with. Whereas if you’ve understood both sides of the issue, and particularly if it’s an internal negotiation, you build a team and you build a working relationship.”
Decide what is ideal, acceptable and your breaking point before beginning. Knowing what you want sounds simple, but it’s a powerful element of a successful negotiating environment, says Bob Gibson of Negotiation Resources, a US negotiations consulting firm. Having specifics on what success, a compromise and a non-starter would look like reduces the number of judgement calls that have to be made under duress, which helps prevent mistakes.
At times, hard-nosed tactics are needed, but often a little kindness goes a long way. Sharing rather than hiding some information, being transparent instead of bluffing and offering expertise instead of letting your opponent fall into a trap can reap benefits at the bargaining table, suggests Tony Monaghan of the Australian negotiation consultancy ENS International. When the person with whom you are negotiating is at ease, appreciative or happy, “they are not scrutinising as closely, feeling the future is safe, and forward momentum continues even in the face of some obstacles,” Monaghan says.
Be equipped with trades or swaps. Negotiations typically require concessions from both sides. Gibson says it’s best to identify a few trade-offs you’re willing to make before the negotiation begins. That way, if you ask for a concession, you have something readily available that you can offer to trade for it, namely one of your swaps. That demonstration of reciprocity can help grease the wheels of a good negotiation. Thinking about swaps ahead of time also may allow you to identify a trade that your opposite number views as a concession, but that is really of little consequence to you.
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