Being able to negotiate effectively is a very useful life and business skill. Of course, not every leader needs to engage in formal negotiations as part of their role. Even so – in this article, I wanted to pass on three negotiation concepts that can be useful for any leader, even if your job doesn’t involve buying or selling.
I spent many years working in project management and consulting roles, where negotiation is common. Sometimes, I was negotiating with suppliers to buy something, or clients when I was trying to sell something.
However, I also often found myself negotiating my workload, or for people’s time, resources or attention. There are many situations where negotiation is handy.
In addition to my work experience, I learned some handy negotiation concepts during my MBA and also as part of various training courses, so I’ll pass on a few of these which you’ll hopefully find useful too.
Why Do Leaders Need to Negotiate?
Often we think of negotiation in the context of buying or selling things. While this is true, there are also many other situations where leaders can use negotiation skills, even if they aren’t exactly a buyer or seller.
Some of these situations include negotiating:
- With senior leaders or colleagues for additional resources such as people, materials or equipment
- A proposed salary when applying for a new role
- Priorities and workloads, to focus and prevent teams from becoming overwhelmed; or
- With team members who are asking for benefits including raises, development opportunities or changes in working conditions.
Essentially, negotiation will help you to get what you want… but ideally it will also help you to give other people what they want, too.
In the best cases, you can achieve a “win-win”, where both parties benefit from being involved in the negotiation.
Useful Negotiation Concepts For Your Leadership
Let’s take a look at some useful negotiation concepts that you can apply in your leadership.
Hopefully, you can use these to plan and prepare if you’re going to need to negotiate for an outcome in your workplace.
1. Negotiating to Solve Interests, Rather Than Positions
When somebody wants something, they often speak in terms of what seem like fixed positions.
For example, “I want a salary of $80k” or “I’ll only pay $500” are positions, because they state a specific number and don’t really speak to why that number is important.
Instead of dealing in positions, it’s useful to start thinking in terms of interests instead. I consider an interest to be the underlying need that a person is wishing to address.
When somebody says they want a salary of $80k, an example of an interest could be the need to feel fairly compensated, or to be able to afford their current lifestyle.
When someone says they won’t sell their product for less than $1,000, an underlying interest could be that they need money to pay their business expenses.
It’s Easier to Solve an Interest, Rather Than a Position
Why is it easier to provide a solution for an interest, than a position?
Because a position is very specific, but when addressing an interest, you can get more creative.
Consider the previous example of the person who wants $1,000 for their product. Their underlying interest came from needing to pay their business expenses.
This person might actually accept $900 if you also offer to leave them a positive testimonial for their website. This testimonial helps to solve the underlying need because it may help to drive future business.
And the person who wants the $80k salary is looking to be fairly compensated. You may have a limited budget for the role, so can only offer $75k.
However, what if you also agreed to provide them with free car parking? It’s possible that this would help to address their underlying interest.
The takeaway for leaders here is to get creative. Engage in conversation to try to determine the underlying needs of the other person. This is the “why” that is driving the person’s position.
This will provide you with a wider range of potential solutions when you’re trying to negotiate an outcome.
Learn More: Want to Build Empathy? Use the Iceberg Model.
2. Understanding Your Currencies
Another of the negotiation concepts that I find very useful is to start thinking in terms of currencies.
We often think of currency in terms of money. Cold, hard cash. Or digits in a bank account.
But actually, we usually have much more to offer than that.
I think of a currency as something of value that you have to trade.
I was delivering training to a group recently who were in the business of selling software and hardware products to companies. When they started to list out all their currencies, it turned out there were quite a few.
The first currency they thought of was the sale price of the services, in dollars per year.
But there were many others, such as:
- The term of the contract, which could be annual, or 3 or 5-yearly
- The number of units the client was going to buy
- Payment terms – monthly, quarterly or yearly
- Additional services, such as providing training to use the system
- Support hours – 24 hour support, 9-5 support or other options.
This is useful information to know, because it means when you are negotiating with somebody, these are the things you have to offer. And these can be part of the solution that addresses the underlying need.
An Example: Dealing With Employee Demands
Let’s say a team member comes to you wanting a pay rise. They are a high performer, and you like having them in your team.
Their request isn’t unreasonable, but unfortunately, there isn’t much budget for a pay rise right now. Sound familiar?
They want a 10% increase, but you can only really provide 5% at the moment.
So, what do you have to offer in terms of currencies?
Well, let’s take a quick look at some possibilities:
- Salary. You could potentially provide them with that 5% increase that you have available.
- Training. Training budgets are often separate from salaries. Could you offer them training opportunities that they would find valuable?
- Leave. Additional days of annual or study leave might be something your team member could find valuable.
- Opportunities. Are there opportunities to get involved in new and exciting projects in your organisation, where the team member will learn new skills and gain experience?
- Reduced work hours. Would the team member perhaps value working 4.5 days per week, instead of the full 5 days, while maintaining the same salary?
- Coaching and mentoring. Could a suitable coach or mentor be offered that would help them improve their skills and performance, leading to better opportunities down the track?
Now, you might be thinking… “they just want the money”, but this is thinking in fixed positions. It all depends on what their underlying interests are (see point 1 above).
It might just be that a combination of the above items could be attractive for this particular team member. That’s why it’s so important to understand what currencies you have to offer when you’re trying to negotiate something.
3. Knowing Your BATNA
BATNA is a common term when it comes to negotiation concepts, standing for Best Alternative to a Negotiated Agreement.
This basically means:
“What is your best available option other than relying on this negotiation?”
For example, let’s say you apply for a new job at a different company. In your current role, you earn $90k. In your interview, the first company offers you $100k per year.
You haven’t accepted the first offer yet, and you have another interview with a second company.
Your BATNA in this case would be the $100k offer. This is because if the interview with the second company doesn’t work out well, you already have the $100k offer on the table.
In other words, even if you can’t negotiate a good deal with the second company, you’re best alternative is the offer you already have on the table. This helps you to determine your walk-away point.
If you have a very strong BATNA, then you can feel more confident negotiating with the second company, because you know the first offer is already available for you.
On the other hand, if the first offer wasn’t very good, you need to get a better offer in the second interview, which puts you in a weaker position in the negotiation.
This example is relatively simple, in that we are only looking at one issue – salary. In real life, your BATNA might be comprised of different components that help you work out your walk-away point. For example, a new role could involve different levels of seniority, prestige or other perks than just a salary.
A Different Example of BATNA
Let’s quickly look at another example.
You need someone to help on a project, so you decide to approach a senior executive to ask them to provide one of their people to help you out. Sam is the person you have in mind, and she’s great.
So what could your BATNA be? Well, you might also know of another person (Tori) who is available who can help you, from your colleague’s team.
She’s not quite as experienced as Sam, but she is available and willing to help. This other person becomes your potential BATNA.
The advantage of knowing this is because if the other party in your negotiation starts to make demands that are worse than your BATNA, you know you can walk away from the table.
For example, the executive in the negotiation may agree to provide you with Sam for 6 months, if you permanently give up a role in your team to them following this period. This seems like a bad deal, so you can walk away and have Tori help you instead.
Use These Negotiation Concepts to Help Your Leadership
These three negotiation concepts are relatively simple. They certainly won’t make you into a master negotiator overnight, but I like them because I feel they can be applied to a range of situations in the workplace.
Understand your currencies, solve interests instead of positions and understand your BATNA and you’ll be in a good position to negotiate whatever outcomes you need in your workplace!
Do you find these negotiation concepts useful? Why or why not? Let me and all the thoughtful leaders know in the comments below!