Learn how to negotiate

Corporate finance, Personal finance

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I’m not big into business or finance books. In my opinion, you can learn more about human nature, leadership, and management through reading time-proven literary classics than whatever’s currently on the non-fiction best sellers list. If I find a book worth reading, chances are it teaches a specific skill (like ) or it’s a book I’ve kept on my shelf because it’s worth multiple re-reads.

The book I’m recommending today does both of the above. I first purchased it as part of a class on negotiation while at Michigan in bschool, a class that turned out to be one of my favorites. (Note to anyone who might be contemplating business school: your best classes often turn out to be taught by real-world practitioners, not the ones with PhDs from elite schools!)

Before I ever took a class, I’d always envisioned negotiation the way Hollywood has taught us it works: two powerful guys or groups, all dressed in suits, sitting across the long table from each other playing hardball and sniffing out weaknesses in the other party. If this was what it took to succeed, I decided I might as well forget it. Neither my personality nor the way I was raised easily lent itself to this sort of fight.

The reason I liked Bargaining for Advantage is that it taught me that successful negotiation didn’t have to resort to such tactics. Sure, some people do, but if they succeed, it’s because that’s their strength. Besides, such a tactic doesn’t always work.

The book begins by explaining that your best negotiation tactic depends on knowing yourself, both your strengths and weaknesses. It presents several negotiation examples, from the boardroom to the classroom, to a tribal meeting in Africa. What I learned from both this book and the class was that negotiation is an on-going learning experience, not something you pick up and use. And the more you know yourself, the better a negotiator you’ll become. Even if you’re an introvert like me.

Another key takeaway was that contrary to popular belief, seldom is a successful deal reached purely because of money. Instead, deals are made and broken due to egos and similarities in values (or lack thereof). We did an example in class where we split into three groups. Group A represented the potential takeover candidate. Group B and Group C were the potential acquirers. Group B (my group) happened to have only 3/4 of the money that Group C had. Each group elected a leader, and Groups B and C had two chances to meet with Group A to convince them that their takeover price was the better deal.

You’d think that Group C would have an obvious advantage and win the deal, but Group A ended up choosing to work with us instead. Why? Because in electing group leaders, the leader of Group A and Group B were friends outside of class, so questions surrounding trust were less of a worry than they were between Group A and Group C. Morever, once Group C found out they had the upper hand in terms of money, they became quite cocky and ended up talking quite condescendingly to Group A. It was an eye-opening role playing experience, to say the least.

One of the things the book emphasizes the most is the importance of information, particularly in preparing for a negotiation. You must know what the other party wants and expects, who the decisionmaker is, and think ahead to where things might go wrong. A couple other exercises we did in class might illustrate this point easier.

In one, the professor handed out a sheet of paper to each person with a 20×20 grid of boxes on them. He instructed us to put a ‘1’ in the first box on the page and hand it back to him. He then tabulated how many 1s each box received and showed us the result.

The overwhelming majority of people had written ‘1’ in the upper left-hand box, but quite a few had also written ‘1’ in the upper right-hand box. Can you guess why? To the people in the class from Asian countries or countries where writing is written from right-to-left, the “first” box is naturally the upper right-hand one. (And perhaps as was to be expected, there were also one or two people who just put “1” in a random box for kicks.) This just demonstrates how easily we can make assumptions about the other party and miscommunicate without realizing it. Most of us would have assumed that the first box was the one in the upper left-hand corner, and perhaps vice versa in a different country.

Bargaining for Advantage tends to emphasize working on a more collaborative form of negotiation, not the winner-take-all kind. And some may find that angle unappetizing, which is fair. On the other hand, no one strategy works for all situations, and the more flexible you are, the better a negotiator you’ll be.

It’s a book that I’ve read more than once and will continue to read again in the future. So for anyone out there who’s ever wanted to become a better negotiator but was afraid to try, this will surely help you get on the right path.


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3 Feedbacks on "Learn how to negotiate"

Mapgirl’s Fiscal Challenge / The Story of My Raise

[…] 3) Negotiate for several things at once. Don’t limit yourself to just dollars. Make it about your whole job. Happiness at work isn’t only about money. What are the intangibles you need to make your job worthwhile, and be prepared to negotiate for that. Flexible hours? More vacation? Training? Autonomy? Take tip from SingleMa on this one. The lady is good. Real good. […]

Mapgirl’s Fiscal Challenge / Articles I liked this week

[…] Ricemutt on negotiating. Pretty good reading. Combine it with Single Ma’s post on negotiating for a new car. Two perspectives on the subject. Compare. Contrast. Discuss. […]

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