Habitual Ritual Guarantees Negotiation Success
All experts have a “habitual ritual” they perform before they engage in a specific activity – athletes before a big game, public speakers before a presentation and … negotiators before a negotiation. Find out about the habitual ritual of successful/effective negotiators so you can optimize your outcomes the next time you’re called to the table.
Successful/effective negotiators have made “habitual” a particular “ritual” – and that ritual is good preparation and planning.
No matter how simple or straightforward you think it may be, every negotiation is different. Each comes with its own challenges. Unexpected twists and turns can arise, and if you’re totally in the dark, you aren’t able to respond appropriately in order to save the negotiation and arrive at a result you’re happy with.
It comes as so surprise then, that successful/effective negotiators thoroughly prepare and carefully plan before any negotiation takes place. It’s what they practice. And like any good practice, they’ve made it a habit. It’s become their “habitual ritual”. And it should be yours too.
Now, just what does this preparation and planning entail? Arguably the most important element in this habitual ritual is setting a profitable, justifiable and realistic settlement range.
How do you go about doing that?
You begin at the end.
Establishing Your Settlement Range
At the end of a negotiation, what do you have?
An agreement on a settlement. (Provided it goes well, of course.)
So the first step in your preparation and planning ritual is to establish your settlement range. A settlement range has a:
- MAR (most acceptable result)
- LAR (least acceptable result)
- Concession strategy (prioritized list of possible trade-offs)
MAR – Your Most Acceptable Result
“An opening offer, if viewed by the other side as extreme,
can diminish and even destroy trust.
An offer that is explained and justified
will probably preserve trust, and may enhance it.”
Your MAR is your maximum supportable position. This is your opening offer. It should be an optimistic estimate of what’s possible and be at or beyond your estimate of your counterpart’s least acceptable result. Most importantly, it must be credible, based on independent standards (published market comparables, professional opinions etc.). It must also take into account the options you have (or don’t have) in case an agreement is not available.
Your LAR – Your Least Acceptable Result
“The reason you negotiate is to produce something
better than the results you can obtain without negotiating.
What are those results? What is that alternative?
What is your BATNA – your Best Alternative To a Negotiated Agreement?
That is the standard against which any proposed agreement should be measured.”
Roger Fisher and William Ury
Your LAR is your absolute bottom line. It is your “walk-away” or “no-deal” point. Any agreement that forces you to settle below your LAR must be considered unacceptable – in other words, a losing proposition. At this point, no deal is better than a bad deal.
Setting your LAR must be done realistically. And keep in mind that different people or organizations given the exact same set of circumstances, may actually come up with very different LARs. Remember, the primary reason for negotiating in the first place is to achieve a result that’s better for both parties than the result you could achieve without negotiating. So when you’re setting your LAR, it’s important to consider what Roger Fisher and William Ury (Getting to Yes. Boston: Houghton-Mifflin, 1981) referred to as your BATNA (Best Alternatives To a Negotiated Agreement). In other words, if you’re unable to reach a mutually acceptable agreement, what are your best options? If you have lots, you can probably set your LAR higher than if you have few or limited options available.
To a large extent, the relative power of both sides in a negotiation depends on how attractive the option of not reaching an agreement is to each party. So, wherever possible, don’t enter a negotiation without options. But if you do find yourself in a situation where you have very few or none at all, it’s important in the planning stage to explore how to conceal your need for a deal.
Concession Strategy – Your Prioritized List of Possible Trade-Offs
“Concessions, unilateral or otherwise,
are only influential in building trust or encouraging reciprocity
if the receiver views them as concessions.”
Your concession strategy must be carefully considered. You need to prioritize your trade-offs (concessions you are willing to make in return for concessions from the other side). If you’re going to say “no” to a concession or if you’re going to ask for something, it’s important that you explore these intentions early on. If you have non-negotiable items, be clear about them as soon as possible, but try not to be overly insistent at this stage, since your counterpart may try to use your non-negotiables in order to get other concessions later.
Want more power?
Take the necessary time to think about and plan your concession strategy before the negotiation. If you don’t, you’ll be forced to engage in this kind of complicated thinking during the negotiation and your counterpart may interpret this as hesitation. We all know the famous saying when it comes to hesitation, right? “He who hesitates is lost.” This can seriously weaken your position.
If your counterpart is an experienced negotiator, he/she will have already planned MARs, LARs and concession strategies. If so, the negotiation itself becomes a tug-of-war between the settlement ranges.
In positional negotiating, your goal is to maximize your share of the bargaining range (the distance between the two opening positions) by settling at, or close to, the other person’s LAR.
In interest negotiating, your goal is to find a fair, equitable and mutually acceptable result within the negotiation settlement range (the area of overlap between the opposing LARs) that satisfies the interests of both parties at the lowest cost to one another. Here’s some motivation for you: experience has shown that the final settlement often falls mid-point within the negotiation settlement range. Given that this is so, you can adopt a Results with Relationship attitude and still wind up with a fair, mutually beneficial result.
The Domino Effect
“The power and magic of negotiation is that it is far more than a contest.
It has the potential to be a win-win process.”
Chester L. Karrass
When you’ve planned and prepared, you feel ready. You know everything there is to know about your counterpart and the negotiation you’re about to engage in. You’ve thought things through. You know your top line, your bottom line and what you’re willing to give up. You’re confident. You walk in with your game face on.
Proper planning and preparation give you the edge you need to arrive at a successful and effective outcome – one that gives you Results with Relationship.
And that’s why you need to make it your…
Dr. Don MacRae is the author and passionate leader of Situational Communication® and the CEO of Lachlan Enterprises Incorporated (The Lachlan Group).
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