“The travel budget is $6.5 million a year. We’d like for you to find a way to save 10%.”
That was the mission.
The travel manager went on to bring the budget down to $2.5 million – and all this at a time when travel was at an all-time company high point. Higher volume, greater perks, and lower rates.
How did she do this?
She looked at every avenue of spending and took it back to the source. This meant negotiating new air, car, hotel, and agency contracts. It meant educating travelers for better practices. The company ended up with massive savings and a higher level of service.
And the win for the air, car, hotel, and travel agencies? Increased volume, increased business, and a loyal corporate client.
This shows how negotiation can create a win-win situation.
Negotiations are a part of everyday life and business.
Negotiation is where both parties give up some margin. Done well, the seller will come away with a healthy profit margin; and the buyer will come away with a fair deal, for example.
In the workplace, negotiation happens daily. Whether it is negotiating contracts, determining a salary, or sharing the workload, good negotiation skills are necessary to good business.
Here are some ways you can be an effective negotiator.
It is ironic, but negotiating means first knowing your non-negotiables. As an individual or an organization, what are your core values? Any agreement you make that violates those core values would be a loss, so in order to win, you must know your core values.
It is a statement of the obvious, but negotiation is a two-way street. It requires the engagement of both parties in order to be effective. This requires solid communication skills, where you not only speak, but listen; and where you not only understand your wants, desires, and needs; but also, those of the other person. It is from this vantage point that you can begin to make progress.
Giving and Gaining
Negotiation at its core is an act of giving and receiving. You give up something from your side of the equation; and you gain something in return. A good negotiator will go into a session ready to give to the other person. If one person is not willing to share in the spirit of giving, you don’t have negotiation; you have a stalemate. In a stalemate, no one wins.
Negotiation requires a modicum of creative thinking. For example, you are negotiating a pay raise. The employee may say, “I have been directly responsible for $100,000 worth of new sales this quarter. I feel I deserve a pay raise.”
As the leader, you know the budget is tight. You know that a salary increase is just not feasible. Yet you value this employee a great deal. Ask yourself what you can give to them instead that would both communicate value to them and be of value to them.
“My hands are tied regarding budget constraints. However, I recognize the value of your tremendous efforts and would like to reward them. I propose, for now, that we keep your salary at its current level; but add a commission component to it. That way, as you continue to add value to the organization, there will be offsetting revenue to support it.”
Good negotiation takes time. Allow time for the conversation that needs to occur, time for reviewing and researching solutions, and time for the person to think about your offer. You will want to set boundaries, so negotiations do not go on indefinitely; but allow time for each party to process options and ideas.
A key negotiating tool is to identify the personality and motivations of the person with whom you are negotiating. Find out what is important to them, and ask yourself, “What in this equation can I give to them that will address their motivations?”
Perhaps you have a high-performing employee who has a habit of coming in late to work. Identify why this is happening. Is it because family is important to them, and they have children to take to school? Is it because they work best in the evening and they are late in the morning because they worked all night on a project?
Identifying the “why” will help you identify a solution. In this case, you may be able to propose a shifting of schedule that creates a win-win for the employee and for the company.
Assess the situation objectively. Look at it from all angles, including that of your opponent. A key consideration is to get to the root of the problem and negotiate terms for addressing that. Very often, the surface disagreement is not the problem. Negotiating surface disagreements is a fast track to nowhere. For real resolution, get to the root of the issue and address that.
Good negotiation requires transparency, and transparency can be uncomfortable. Therefore, mediators are often called in to broker agreements. But sometimes transparency is the one thing that engenders trust on the part of the other person and helps them see why you cannot do something they feel you should do. Be transparent, and then talk about what you can do.
End with a Win-Win
The goal of any negotiation should be to create a win-win situation. Failure to negotiate or to give up any margin means no one wins. Coming to an agreement on terms means everyone wins.
Negotiation is a learned skill, and a very important one. For more resources on how to communicate well and negotiate effectively, click here to learn about the Maxwell Method of Communication Impact Report.
As the CEO of Strength Leader Development, Deb Ingino is a highly sought-after international executive mentor, coach, trainer and speaker. Deb is well versed in global business operations and helps business leaders and their teams to discover and leverage their strengths, so they can create highly collaborative teams that deliver great results. With a refreshingly direct style, Deb helps leaders and their teams to deliver profitable results. Connect with Deb to learn more about her mentorship and coaching programs to equip you with advanced strategies to elevate your results.