| The way that you conduct yourself in a | | | | the annual cost of the increase to the |
| negotiation can dramatically the outcome. | | | | company. Insurance premiums as a monthly |
| I've been teaching negotiating to business | | | | amount rather than an annual cost. The price |
| leaders throughout North America since 1982 | | | | of land expressed as the monthly |
| and I've distilled this down to five | | | | payment.Businesses know that if you're not |
| essential principles. These principles are | | | | having to pull real money out of your purse |
| always at work for you and will help you | | | | or pocket, you're inclined to spend more. |
| smoothly get what you want:Get the Other Side | | | | It's why casinos the world over have you |
| to Commit FirstPower Negotiators know that | | | | convert your real money to gaming chips. It's |
| you're usually better off if you can get the | | | | why restaurants are happy to let you use a |
| other side to commit to a position first. | | | | credit card although they have to pay a |
| Several reasons are obvious: Their first | | | | percentage to the credit card company. When I |
| offer may be much better than you expected. | | | | worked for a department store chain, we were |
| It gives you information about them before | | | | constantly pushing our clerks to sign up |
| you have to tell them anything. It enables | | | | customers for one of our credit cards because |
| you to bracket their proposal. If they state | | | | we knew that credit card customers will spend |
| a price first, you can bracket them, so if | | | | more and they will also buy better quality |
| you end up splitting the difference, you'll | | | | merchandise than a cash customer. Our |
| get what you want. If they can get you to | | | | motivation wasn't entirely financial in |
| commit first, they can then bracket your | | | | pushing credit cards. We also knew that |
| proposal. Then if you end up splitting the | | | | because credit card customers would buy |
| difference, they get what they wanted.The | | | | better quality merchandise, it would satisfy |
| less you know about the other side or the | | | | them more, and they would be more pleased |
| proposition that you're negotiating, the more | | | | with their purchases.So, when you're |
| important the principle of not going first | | | | negotiating break the investment down to the |
| becomes. If the Beatles' manager Brian | | | | ridiculous because it does sound like less |
| Epstein had understood this principle he | | | | money, but learn to think in real money |
| could have made the Fab Four millions more on | | | | terms. Don't let people use the Funny Money |
| their first movie. United Artists wanted to | | | | Gambit on you.Concentrate on the IssuesPower |
| cash in on the popularity of the singing | | | | Negotiators know that they should always |
| group but was reluctant to go out on a limb | | | | concentrate on the issues and not be |
| because United Artists didn't know how long | | | | distracted by the actions of the other |
| the Beatles would stay popular. They could | | | | negotiators. Have you ever watched tennis on |
| have been a fleeting success that fizzled out | | | | television and seen a highly emotional star |
| long before their movie hit the screens. So | | | | like John McEnroe jumping up and down at the |
| they planned it as an inexpensively made | | | | other end of the court. You wonder to |
| exploitation movie and budgeted only $300,000 | | | | yourself, "How on Earth can anybody play |
| to make it. This was clearly not enough to | | | | tennis against somebody like that? It's such |
| pay the Beatles a high salary. So United | | | | a game of concentration, it doesn't seem |
| Artists planned to offer the Beatles as much | | | | fair."The answer is that good tennis players |
| as 25 percent of the profits. The Beatles | | | | understand that only one thing affects the |
| were such a worldwide sensation in 1963 that | | | | outcome of the game of tennis. That's the |
| the producer was very reluctant to ask them | | | | movement of the ball across the net. What the |
| to name their price first, but he had the | | | | other player is doing doesn't affect the |
| courage to stay with the rule. He offered | | | | outcome of the game at all, as long as you |
| Epstein $25,000 up front and asked him what | | | | know what the ball is doing. So in that way, |
| percentage of the profits he thought would be | | | | tennis players learn to concentrate on the |
| fair. | | | | ball, not on the other person.When you're |
| | | | negotiating, the ball is the movement of the |
| Brian Epstein didn't know the movie business | | | | goal concessions across the negotiating |
| and should have been smart enough to play | | | | table. It's the only thing that affects the |
| Reluctant Buyer and use Good Guy/Bad Guy. He | | | | outcome of the game; but it's so easy to be |
| should have said, "I don't think they'd be | | | | thrown off by what the other people are |
| interested in taking the time to make a | | | | doing, isn't it?I remember once wanting to |
| movie, but if you'll give me your very best | | | | buy a large real estate project in Signal |
| offer, I'll take it to them and see what I | | | | Hill, California that comprised eighteen |
| can do for you with them." Instead, his ego | | | | four-unit buildings. I knew that I had to get |
| wouldn't let him play dumb, so he assertively | | | | the price far below the $1.8 million that the |
| stated that they would have to get 7.5 | | | | sellers were asking for the property, which |
| percent of the profits or they wouldn't do | | | | was owned free and clear by a large group of |
| it. This slight tactical error cost the group | | | | real estate investors. A real estate agent |
| millions when the director Richard Lester, to | | | | had brought it to my attention, so I felt |
| every one's surprise, created a brilliantly | | | | obligated to let him present the first offer, |
| humorous portrait of a day in the group's | | | | reserving the right to go back and negotiate |
| life that became a worldwide success.If both | | | | directly with the sellers if he wasn't able |
| sides have learned that they shouldn't go | | | | to get my $1.2 million offer accepted.The |
| first, you can't sit there forever with both | | | | last thing in the world the agent wanted to |
| sides refusing to put a number on the table, | | | | do was present an offer at $1.2 |
| but as a rule you should always find out what | | | | million-$600,000 below the asking price-but |
| the other side wants to do first.Act Dumb, | | | | finally I convinced him to try it and off he |
| Not SmartTo Power Negotiators, smart is dumb | | | | went to present the offer. By doing that, he |
| and dumb is smart. When you are negotiating, | | | | made a tactical error. He shouldn't have gone |
| you're better off acting as if you know less | | | | to them; he should have had them come to him. |
| than everybody else does, not more. The | | | | You always have more control when you're |
| dumber you act, the better off you are unless | | | | negotiating in your power base than if you go |
| your apparent I.Q. sinks to a point where you | | | | to their power base.He came back a few hours |
| lack any credibility. | | | | later, and I asked him, "How did it go?" |
| | | | |
| There is a good reason for this. With a few | | | | "It was awful, just awful. I'm so |
| rare exceptions, human beings tend to help | | | | embarrassed." He told me. "I got into this |
| people that they see as less intelligent or | | | | large conference room, and all of the |
| informed, rather than taking advantage of | | | | principals had come in for the reading of the |
| them. Of course there are a few ruthless | | | | offer. They brought with them their attorney, |
| people out there who will try to take | | | | their CPA, and their real estate broker. I |
| advantage of weak people, but most people | | | | was planning to do the silent close on them." |
| want to compete with people they see as | | | | (Which is to read the offer and then be |
| brighter and help people they see as less | | | | quiet. The next person who talks loses in the |
| bright. So, the reason for acting dumb is | | | | negotiations.) "The problem was, there wasn't |
| that it diffuses the competitive spirit of | | | | any silence. I got down to the $1.2 million |
| the other side. How can you fight with | | | | and they said, 'Wait a minute. You're coming |
| someone who is asking you to help them | | | | in $600,000 low? We're insulted." Then they |
| negotiate with you? How can you carry on any | | | | all got up and stormed out of the room.I |
| type of competitive banter with a person who | | | | said, "Nothing else happened?"He said, "Well, |
| says, "I don't know, what do you think?" Most | | | | a couple of the principals stopped in the |
| people, when faced with this situation, feel | | | | doorway on their way out, and they said: |
| sorry for the other person and go out of | | | | 'We're not gonna come down to a penny less |
| their way to help him or her.Do you remember | | | | than $1.5 million.' It was just awful. Please |
| the TV show Columbo? Peter Falk played a | | | | don't ever ask me to present an offer that |
| detective who walked around in an old | | | | low again."I said, "Wait a minute. You mean |
| raincoat and a mental fog, chewing on an old | | | | to tell me that, in five minutes, you got |
| cigar butt. He constantly wore an expression | | | | them to come down $300,000, and you feel bad |
| that suggested he had just misplaced | | | | about the way the negotiations went?"See how |
| something and couldn't remember what it was, | | | | easy it is to be thrown off by what the other |
| let alone where he had left it. In fact, his | | | | people are doing, rather than concentrating |
| success was directly attributable to how | | | | on the issues in a negotiation. It's |
| smart he was-by acting dumb. His demeanor was | | | | inconceivable that a full-time professional |
| so disarming that the murderers came close to | | | | negotiator, say an international negotiator, |
| wanting him to solve his cases because he | | | | would walk out of negotiations because he |
| appeared to be so helpless.The negotiators | | | | doesn't think the other people are fair. He |
| who let their egos take control of them and | | | | may walk out, but it's a specific negotiating |
| come across as a sharp, sophisticated | | | | tactic, not because he's upset.Can you |
| negotiator commit to several things that work | | | | imagine a top arms negotiator showing up in |
| against them in a negotiation. These include | | | | the White House, and the President saying, |
| being the following: A fast decision-maker | | | | "What are you doing here? I thought you were |
| who doesn't need time to think things over. | | | | in Geneva negotiating with the |
| Someone who would not have to check with | | | | Russians.""Well, yes, I was, Mr. President, |
| anyone else before going ahead. Someone who | | | | but those guys are so unfair. You can't trust |
| doesn't have to consult with experts before | | | | them and they never keep their commitments. I |
| committing. Someone who would never stoop to | | | | got so upset, I just walked out." Power |
| pleading for a concession. Someone who would | | | | Negotiators don't do that. They concentrate |
| never be overridden by a supervisor. Someone | | | | on the issues, not on the personalities. You |
| who doesn't have to keep extensive notes | | | | should always be thinking, "Where are we now, |
| about the progress of the negotiation and | | | | compared to where we were an hour ago or |
| refer to them frequently.The Power Negotiator | | | | yesterday or last week?" |
| who understands the importance of acting dumb | | | | |
| retains these options: Requesting time to | | | | Secretary of State Warren Christopher said, |
| think it over so that he or she can | | | | "It's okay to get upset when you're |
| thoroughly think through the dangers of | | | | negotiating, as long as you're in control, |
| accepting or the opportunities that making | | | | and you're doing it as a specific negotiating |
| additional demands might bring. Deferring a | | | | tactic." It's when you're upset and out of |
| decision while he or she checks with a | | | | control that you always lose.That's why |
| committee or board of directors. Asking for | | | | salespeople will have this happen to them. |
| time to let legal or technical experts review | | | | They lose an account. They take it into their |
| the proposal. Pleading for additional | | | | sales manager, and they say, "Well, we lost |
| concessions. Using Good Guy/Bad Guy to put | | | | this one. Don't waste any time trying to save |
| pressure on the other side without | | | | it. I did everything I could. If anybody |
| confrontation. Taking time to think under the | | | | could have saved it, I would have saved |
| guise of reviewing notes about the | | | | it."So, the sales manager says, "Well, just |
| negotiation.I act dumb by asking for the | | | | as a public relations gesture, let me give |
| definitions of words. If the other side says | | | | the other side a call anyway." The sales |
| to me, "Roger, there are some ambiguities in | | | | manager can hold it together, not necessarily |
| this contract," I respond with, "Ambiguities | | | | because he's any brighter or sharper than the |
| . . .ambiguities . . . hmmm, you know I've | | | | salesperson, but because he hasn't become |
| heard that word before, but I'm not quite | | | | emotionally involved with the people the way |
| sure what it means. Would you mind explaining | | | | the salesperson has. Don't do that. Learn to |
| it to me?" Or I might say, "Do you mind going | | | | concentrate on the issues.Always Congratulate |
| over those figures one more time? I know | | | | The Other SideWhen you're through |
| you've done it a couple of times already, but | | | | negotiating, you should always congratulate |
| for some reason, I'm not getting it. Do you | | | | the other side. However poorly you think the |
| mind?" This makes them think: What a klutz | | | | other person may have done in the |
| I've got on my hands this time. In this way, | | | | negotiations, congratulate them. Say, |
| I lay to rest the competitive spirit that | | | | "Wow-did you do a fantastic job negotiating |
| could have made a compromise very difficult | | | | that. I realize that I didn't get as good a |
| for me to accomplish. Now the other side | | | | deal as I could have done, but frankly, it |
| stops fighting me and starts trying to help | | | | was worth it because I learned so much about |
| me.Be careful that you're not acting dumb in | | | | negotiating. You were brilliant." You want |
| your area of expertise. If you're a heart | | | | the other person to feel that he or she won |
| surgeon, don't say, "I'm not sure if you need | | | | in the negotiations.One of my clients is a |
| a triple by-pass or if a double by-pass will | | | | large magazine publishing company that has me |
| do." If you're an architect, don't say, "I | | | | teach Power Negotiating to its sales force. |
| don't know if this building will stand up or | | | | When I was telling the salespeople how they |
| not."Win-win negotiating depends on the | | | | should never gloat in a negotiation, the |
| willingness of each side to be truly | | | | founder of the company jumped to his feet and |
| empathetic to the other side's position. | | | | said, "I want to tell you a story about |
| That's not going to happen if both sides | | | | that." Very agitated, he went on to tell the |
| continue to compete with each other. Power | | | | group, "My first magazine was about sailing, |
| Negotiators know that acting dumb diffuses | | | | and I sold it to a huge New York magazine |
| that competitive spirit and opens the door to | | | | publisher. I flew up there to sign the final |
| win-win solutions.Think in Real Money Terms | | | | contract, and the moment I signed it and |
| but Talk Funny MoneyThere are all kinds of | | | | thanked them, they said to me, 'If you'd have |
| ways of describing the price of something. If | | | | been a better negotiator, we would have paid |
| you went to the Boeing Aircraft Company and | | | | you a lot more.' That was 25 years ago and it |
| asked them what it costs to fly a 747 coast | | | | still burns me up when I think about it |
| to coast, they wouldn't tell you "Fifty-two | | | | today. I told them that if they had been |
| thousand dollars." They would tell you eleven | | | | better negotiators, I would have taken less." |
| cents per passenger mile.Sales-people call | | | | Let me ask you something. If that magazine |
| that breaking it down to the ridiculous. | | | | publisher wanted to buy another one of his |
| Haven't we all had a real estate salesperson | | | | magazines, would he start by raising the |
| say to us at one time or another, "Do you | | | | price on them? Of course he would. However |
| realize you're talking $.35 a day here? | | | | harmless it may seem, be sensitive to how |
| You're not going to let $.35 a day stand | | | | you're reacting to the deal. Never gloat and |
| between you and your dream home are you?" It | | | | always congratulate.When I published my first |
| probably didn't occur to you that $.35 a day | | | | book on negotiating a newspaper reviewed it |
| over the 30-year life of a real estate | | | | and took exception to my saying that you |
| mortgage is more than $7,000. Power | | | | should always congratulate, saying that it |
| Negotiators think in real money terms.When | | | | was manipulative to congratulate the other |
| that supplier tells you about a $.05 increase | | | | side when you didn't really think that they |
| on an item, it may not seem important enough | | | | had won. I disagree. I look upon it as the |
| to spend much time on. Until you start | | | | ultimate in courtesy for the conqueror to |
| thinking of how many of those items you buy | | | | congratulate the vanquished. When the British |
| during a year. Then you find that there's | | | | army and navy went down the Atlantic to |
| enough money sitting on the table to make it | | | | recapture the Falkland Islands from the |
| well worth your while to do some Power | | | | Argentineans, it was quite a rout. Within a |
| Negotiating.I once dated a woman who had very | | | | few days, the Argentine navy lost most of its |
| expensive taste. One day she took me to a | | | | ships and the victory for the English was |
| linen store in Newport Beach because she | | | | absolute. The evening after the Argentinean |
| wanted us to buy a new set of sheets. They | | | | admiral surrendered, the English admiral |
| were beautiful sheets, but when I found out | | | | invited him on board to dine with his |
| that they were $1,400, I was astonished and | | | | officers and congratulated him on a splendid |
| told the sales clerk that it was the kind of | | | | campaign.Power Negotiators always want the |
| opulence that caused the peasants to storm | | | | other parties thinking that they won in the |
| the palace gates.She calmly looked at me and | | | | negotiations. It starts by asking for more |
| said, "Sir, I don't think you understand. A | | | | than you expect to get. It continues through |
| fine set of sheets like this will last you at | | | | all of the other Gambits that are designed to |
| least 5 years, so you're really talking about | | | | service the perception that they're winning. |
| only $280 a year." Then she whipped out a | | | | It ends with congratulating the other side.If |
| pocket calculator and frantically started | | | | you let these five principles guide your |
| punching in numbers. "That's only $5.38 a | | | | conduct when you're negotiating, they will |
| week. That's not much for what is probably | | | | serve you well and help you become a Power |
| the finest set of sheets in the world."I | | | | Negotiator.Roger Dawson |
| said, "That's ridiculous."Without cracking a | | | | |
| smile, she said, "I'm not through. With a | | | | Founder of the Power Negotiating Institute |
| fine set of sheets like this, you obviously | | | | |
| would never sleep alone, so we're really | | | | 800-932-9766 |
| talking only 38 cents per day, per person." | | | | |
| Now that's really breaking it down to the | | | | Dawson is the author of two of |
| ridiculous.Here are some other examples of | | | | Nightingale-Conant's best selling |
| funny money:Interest rates expressed as a | | | | audiocassette programs, Secrets of Power |
| percentage rather than a dollar amount. The | | | | Negotiating and Secrets of Power Negotiating |
| amount of the monthly payments being | | | | for Salespeople. This article is excerpted in |
| emphasized rather than the true cost of the | | | | part from Roger Dawson's new book - "Secrets |
| item. Cost per brick, tile, or square foot | | | | of Power Negotiating", published by Career |
| rather than the total cost of materials. An | | | | Press and on sale in bookstores everywhere |
| hourly increase in pay per person rather than | | | | for $24.99. |