Several years ago I was asked to run a negotiation workshop for the sales staff of a major magazine publisher. It was—and is—a much-admired company, so I welcomed the chance to get an inside look at how it operates.
I met in advance with senior management to learn what’s negotiable when they sell their advertising pages and how they judge success. One guy sketched what he described as a typical deal, but the woman sitting next to him said, “That’s crazy. I’d never approve those terms.” The two of them went back and forth about where the company should draw the line between saying yes or no to a deal.
Trap #1: Negotiating without a license.
I got into the exchange. “I think we’ve surfaced a problem here,” I said. “No matter how skillful your sales people are, how can they succeed if they don’t know whether a deal made will get them a pat on the back or kick somewhere else?”
I see other versions of the same dynamic time and time again. Upper management lacks consensus about goals and objectives. Their negotiators in the field have to guess at their peril about what’s acceptable and what isn’t. That’s risky for them and bad for their companies. In any negotiation, the old adage applies: If you don’t know where you’re going, any road will take you there.
Before you negotiate—whether with a client, customer, or vendor—confirming the scope of your authority with your own manager is imperative. The license that you’re granted must:
- Identify what you’re aiming for, both short and long term;
- Allow enough creativity to let you craft agreements that meet the legitimate needs of your counterparts;
- Set your walk-away. (Not everything is negotiable. Coming home empty-handed sometimes will be the best possible outcome.)
You have to nail down all these points. If you don’t, you set yourself up for criticism and second-guessing.
Solid preparation is only part of the story, though. After the negotiation is done, learning the right lessons from your experience is a great way to improve your performance. Doing after-action reviews requires discipline and honest self-reflection, but it’s standard practice in the military and, increasingly, in medical teams.
It’s also a cornerstone of the Negotiation Mastery course that I’ve created for Harvard Business School’s digital learning platform, HBX.
Trap #2: Squandering the chance to sharpen your skills.
In a nutshell, all it requires is doing a before and after comparison of your strategy—identifying what worked well and what, in hindsight, you’d now do differently. If you’re diligent, you’ll soon develop a repertoire of best practices to draw on for future negotiations. A simple journal will suffice. (I’ve also developed an app—Negotiation 360—that provides a structure for self-assessment and learning on Apple and Android devices.)
It’s bad enough to waste this opportunity when you’re negotiating on your own. It’s even worse when companies overlook the chance to collect and share the best practices of all their negotiators.
There’s a third kind of trap that is especially costly in an organizational setting. It’s illustrated by a scenario I present to my on-campus and online students. I’ll pose it to you here.
Imagine that you’ve been negotiating the sale of some property owned by your company. When the buyer made an attractive offer, you orally accepted. Your boss is pleased with the terms you reached, but wants you to back and tell the buyer they have to sweeten the deal a bit “to get buy-in back at the office.”
Which of the three following options is closest to what you would do?
A. Do exactly as he says. It’s a familiar bargaining tactic, after all.
B. Ask the buyer if they can sweeten the price, though make it clear your request isn’t a deal breaker.
C. Tell your boss that you’ve already given your word to the buyer and you’re uncomfortable going back on it.
Trap #3: Betraying your values.
This scenario always sparks a lively discussion. Most people—though not everyone—favor Option C, telling the boss that as a matter of personal integrity, they don’t want to play the good-cop/bad-cop game. That’s easy to say, of course, when the question is only hypothetical. In actual practice, standing up to your boss may be harder. He or she might say, “So, are you working for us, or are you working for them?”
Nevertheless, every time we negotiate, whether for ourselves or on behalf of others, we should consider what—if anything—we owe others in regard to fairness, honesty, and the use of pressure tactics. Reasonable people can debate what principles apply and whether they vary case to case.
Sometimes the choice may be hard—as in this scenario, when the desire to be fair to others must be weighed against the responsibility to serve the interests of those who employ you. Such decisions shouldn’t be made on the fly. They need to be worked through in advance, especially when you’re representing somebody else.
Your boss needs and deserves to know your own moral compass, specifically, what you are and are not willing to do for the company. Having such a conversation may not be easy, but it’s far better to have discussions over general principles, than to deal with them piecemeal. If you take the latter route, over time you risk compromising your values.
Michael Wheeler has taught Negotiation in Harvard Business School’s MBA program since 1993. He also teaches in a wide variety of on-campus executive courses, including Strategic Negotiation.