How to Negotiate: Six Mistakes to Avoid

Last Updated Aug 16, 2011 3:27 PM EDT

This month's issue of Stanford Knowledgebase-a roundup of recent research from Stanford faculty-has some interesting pointers on negotiation. It's based on research by Margaret Neale, a professor of organizations and dispute resolution at Stanford Graduate School of Business. Neale presents six common mistakes negotiators often make. Whether you're trying to put together a joint venture with another company or trying to get a better job offer out of another firm, staying out of these traps will help you get the best deal.
  1. Poor planning. Before you go into a negotiation, set your priorities. At what point are you willing to walk away from the bargaining table? If you fail to reach an agreement, what's your backup plan? Also, is this the only session you'll have to work things out, or is it just the first step in a longer negotiation? Then try on the other person's shoes: What are their preferences, timeline, and alternatives? Once you sit down to negotiate, ask a few questions to make sure you do indeed understand their priorities and point of view.
  2. Looking at the negotiation as a zero-sum game, or, as Neale puts it, "thinking the pie is fixed." Neale says that in many negotiations, people fail to realize that both sides want the same thing. An employee who gets promoted may also want to be transferred to San Francisco. But once he or she gets the promotion, they may suggest or accept a transfer to Atlanta, thinking they can't get everything. But what if the boss really does want them to go to San Francisco? Yes, this sounds unlikely. But Neale says her research shows that in 20 to 35 percent of negotiations, people actually fail to find common ground that already exists, and miss opportunities to get what both sides want.
  3. Improper framing. Neale uses the example of negotiating a new deal with a subcontractor to illustrate this one. You may currently be paying the subcontractor $10 an hour, but you know competitors are paying $12. You're willing to go to $11 an hour, but not $12. You want to pitch this to the subcontractor by emphasizing that you're raising your rate. Then, point out all the non-monetary ways your contract is better than the one offered by your competitors. The worst approach would be to say, "Well, we know those guys across the street pay $12 an hour, but we can only afford $11."
  4. Ignoring cultural differences. Neale says the developers of a U.S.-based theme park, trying to get approval to build a similar park in Europe, took the European officials on a junket to the existing U.S. park. The European officials were horrified. The commercialism of the park was not something they wanted for their quaint countryside. If the Americans had had someone on the ground in Europe, they might have been able to come up with a proposal for a theme park that would incorporate the U.S. park's strengths without causing a culture clash.
  5. Fixating on anchors. Essentially, this is the inability to call a do-over. If the other person makes an offer that you really can't consider or use as a starting point, Neale suggests telling them to get back to you when they're ready to make a 'reasonable' offer. That second offer then becomes the starting point for negotiations. The fact that the other party has come up in price to get to a 'reasonable' point is irrelevant-you start negotiating from the reasonable offer, not the unreasonable one.
  6. Caving in too quickly. "Never give anyone their first offer; it makes them crazy," says Neale. That's because they naturally wonder if they should have asked for more, and wonder if they did a bad job negotiating. So whatever that first offer is, at least ask for a concession. The other person may refuse, but believe it or not, they'll feel better about the deal in the end.
If the negotiation goes well for you, don't gloat! It's a small world, and it just takes one job-hop for your opponent to become your partner next time around.

Do you find it difficult to be a tough negotiator? What advice do you have for those who hate to negotiate?

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Kimberly Weisul is a freelance writer, editor and editorial consultant. Follow her on twitter at www.twitter.com/weisul.
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    Kimberly Weisul is the co-founder of One Thing New, the free email newsletter for smart, busy women. She was previously Senior Editor at BusinessWeek, responsible for all coverage of entrepreneurship and for launching BusinessWeek SmallBiz, a bimonthly magazine. She is also a freelance writer, editor and editorial consultant.

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