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Further Thoughts On Negotiating

By Michael Hanks, Esq.

In a prior column, I set forth certain ideas and suggestions to help you improve your negotiating skills. Since negotiations are an essential part of business, it is critical that you become as skilled a negotiator as possible. These skills will reap benefits not only in your business, but in day-to-day matters as well. Consider these additional points in your next series of negotiations.

  1. Negotiate with a Decision-maker. It is critical in any negotiation to deal directly with the person with authority. Failure to observe this rule will give the other side the ability to avoid hard decisions by claiming the necessity to take the matter to a superior or a committee. It will also permit them to profess a desire to accept your offer, but frustration over their inability to do so. Once your offer is taken to the decision-maker, it is easily rejected and a new counteroffer made, all relayed by the same proxy. The process is cumbersome and ineffective, and places you in a distinct disadvantage.You should establish up front before any negotiations begin whether the person you are dealing with has authority, and if so, how much. If the person lacks sufficient authority, you should demand to speak with his or her superior directly and ascertain the superior’s level of authority as well.
  2. Know Your Downside. It is also critical in decision-making to know the consequences of each decision. Prior to commencing negotiations, and certainly prior to acceptance of any offer, you should know the full consequences of accepting or rejecting the offer. Only then can you truly evaluate its merits. In analyzing the options, you must be coldly realistic, even if that leads to uncomfortable anxiety regarding your choices. Since you will live with the consequences of your actions in any event, evaluating them beforehand is crucial.
  3. Make Sure You Know All Of Your Options. Life seldom presents only two clear black and white choices, especially in business. In any given situation, you may, in fact, have numerous options, some or most of which you have never examined and may not even be aware of. A brainstorming session with your staff (or with sympathetic colleagues) wherein all things are considered will prove very valuable, if for no other reason than to identify the clearly preferable option. Again, you need to be both creative and coldly realistic in identifying your options.
  4. Heed Objective, Informed Advice. In an earlier column I discussed ways in which a good business attorney can act as an advisor to a small businessman lacking a formal “board of directors”. My most successful clients typically will consult with me in advance of any significant business decisions and ask for my objective opinion. They will also take that opinion into account, even if they eventually pursue another option. The value of experience and objectivity in decision-making cannot be over-emphasized. Using an experienced attorney in this manner can often avoid significant legal problems in the future.
  5. Include All Costs In Your Considerations. This is related to the theme of knowing your options. In your evaluations, you should make certain that all costs (direct, indirect, known, and hidden, monetary and non-monetary) are fully evaluated. Again, a frank and candid brainstorming session with independent, objective counsel is the single best way to make certain that you, as the decision-maker, are fully informed. Not considering costs in advance will not mean that you can avoid living with them. It will simply mean that you may be unprepared to live with them once those costs are imposed.
  6. Leave Your Ego At Home. In the typical business decision, ego should play very little part. It is irrelevant whether the other side feels beaten. It is also irrelevant whether the other side is impressed with your power, knowledge or skill. The only important thing is to negotiate the best deal possible. Pride may prevent you from remaining focused on this objective. In my experience, the best business people usually have the smallest egos, and vice versa.
  7. Do Not Get “Time Trapped”. Experienced negotiators will often use time to trap the other side into a hasty decision. This is usually accomplished by the presence of two factors:
      • An awareness on the part of the other side that some time deadline exists; and
      • The ability of the other side to use up most of the time by delaying tactics, and prevent a hard offer at the last minute, subject to immediate acceptance.

    In its simplest form, the other side will delay responding to an offer until the last minute, in hopes that the other side will feel they have no choice but to accept whatever is counter-offered since time is running out. If you find yourself in this position, consider the following:

    • Make certain a deadline is truly a deadline. Many deadlines are simply artificial constraints imposed by the parties without good reason. Unless a deadline is truly that, feel free to extend it.
    • If a true deadline exists, control negotiations so that you have sufficient time to consider any counteroffers in advance of the deadline. This can be accomplished by requiring, as a condition of negotiations, that the other side respond by a certain date, and by refusing to consider any counteroffers made at the last minute.
  8. Finally, Keep Your Eye On The Prize. In any negotiations, you typically have one or two major objectives, and perhaps a number of minor objectives. If you properly explore your options, know your downside, and have candidly evaluated your situation, you will know which objectives have to be achieved and which objectives are less critical. You must stay focused on your primary objectives and if you are able to achieve them, you should consider the negotiations successful.

To speak directly with Attorney Michael Hanks about a business, real estate, estate planning, elder law or prenuptial agreement matter, contact the Law Offices of Michael Hanks at (916) 635-0302.

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