One Essential Tactic For Successful Negotiating

FROM A LECTURE SERIES BY Professor Seth Freeman, J.D.

Good negotiating, it turns out, isn’t just about talking. It’s about listening, too.

Image of people negotiating and shaking hands

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According to many studies, new negotiators tend to focus on their needs. Their problems. Their demands. But the truly skilled negotiator seeks to understand the other negotiator. In fact, it’s essential.

There are four key reasons why.

  1. It builds trust.
  2. It lets you avoid needless misunderstanding.
  3. It lets you discover the other negotiator’s strengths and weaknesses.
  4. It lets you discover hidden solutions.

It’s important to understand the high and demanding art of really getting where the other person is coming from in the conflicts, transactions, and negotiations we face.

Essential Needs

So where’s the best place to start?

First, a skilled negotiator has to recognize there are some things every negotiator – not just himself or herself – wants. And when you think about it, these required needs aren’t that difficult to understand. In fact, they’re quite obvious.

They include

  • respect,
  • face-saving, and
  • the chance to be heard.

Studies find that skilled negotiators spend much more time looking for ways to give their counterparts these things than mediocre negotiators do.

Here’s an illustration of the importance of this idea.

An Embarrassing Tax

Image of three people negotiating
a skilled negotiator has to recognize there are some things every negotiator – not just himself or herself – wants.

Years ago, a consultant received an assignment from the New York City tax authority. Its tax collectors were having difficulty with an obscure charge called a sidewalk grate tax. It turns out that if you own a small store in New York City, you typically have a metal door on the sidewalk leading to the basement where you store supplies.

Incredibly, the city charged an annual $10,000 tax on each owner’s sidewalk grate. Who knew? Every three years, the tax authority would send delinquent store owners a collection letter informing them they owed the city $30,000 for the grate tax.

At the bottom of the letter was this: “If you wish to discuss the matter, please contact this agent at this number.”

Not surprisingly, many store owners called and demanded a meeting. They were outraged and embarrassed by this tax that, of course, they hadn’t budgeted for. The tax had the potential to drive them out of business.

Listening to NYC store owners reaction to a tax perceived to be unfair proves to be a useful negotiation tactic.

A Bad Offer

The open secret among the tax collectors was that they knew this was a bogus and unfair tax, and it really wasn’t worth suing over. So when a store owner came to meet with a tax collector, before the owner even said anything, the tax collector would routinely say, “Look, while you do owe us the full $30,000, I’d be willing to settle today for $15,000.”

But to the collectors’ dismay, the store owners would routinely refuse. Often, the tax collectors reported, the store owners seemed stubborn, obtuse, and pugnacious.

“What was wrong with these people?” the collectors wanted to know. “We are offering them 50% off a debt they clearly owe. What more do they want? Why are we making so few settlements?”

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Time to Listen

As the consultant investigated, she soon discovered the underlying problem: Even more than money, the store owners wanted someone in authority to get how outraged they were at such an obscure, ridiculous, and painful tax.

Image of woman negotiating
Listening to NYC store owners reaction to a tax perceived to be unfair proves to be a useful negotiation tactic.

“Put yourself in their position,” she counseled. “You’re barely making it in a business; you’re harried by a dozen hidden costs and taxes every month, it seems. Then one day you open up a scary-looking official letter from the taxman that makes you feel like a deadbeat for failing to pay some fee that no one in his right mind would ever expect; a tax that could kill you. How would you feel? Mere money wouldn’t mollify you. You’d want someone to take the time to hear how furious you are—and respond accordingly. So when the tax collector doesn’t even listen and just jumps to a settlement offer, it may only further humiliate and frustrate you, and deny you any sense of victory. No wonder they are telling you to stick it.”

The consultant’s advice: “Make any settlement offer you want, but first, let the store owner blow off steam for a while; show him you really get his frustration, and then discuss the numbers.”

In all likelihood, not only did this advice actually accelerate the settlement process, it quite probably meant the tax collectors didn’t need to offer such big discounts.

It’s a simple story, but it’s one that sheds light on a critical idea about the art and craft of negotiation: Take the time to listen to the other side.

From the lecture series The Art of Negotiating the Best Deal
Taught by Professor Seth Freeman, Ph.D.

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