“Do you negotiate everything?” a friend recently asked me. “And even if everything is negotiable, should you? When and where should you turn it off?”
These questions raise critical issues all negotiators should consider.
First, let’s define what we mean by “negotiation.” I usually define it as the communication between two or more parties attempting to satisfy their respective interests. I want something, and you want something. The negotiation is an attempt for both of us to get what we want.
Of course, this definition covers a broad spectrum — from traditional negotiations, such as the sale of a business or trying to get a raise, to such common activities as a waiter seeking a tip or even a baseball player challenging an umpire’s call.
Because many do not consider these latter types of activities “negotiations,” and because they don’t really address the original question above, let’s focus here on the more traditional notion.
And let’s drill down to what many consider the formal part of the negotiation: the offer-concession stage.
In other words, when should you counter an offer (thus negotiating), and when should you just accept it (thus not negotiating)? And when should you build into an offer some room to concede (thus negotiating), and when should you just give a firm offer and figure that’s it (thus not negotiating)?
Here are three criteria to use in making these determinations:
1. Research the negotiation traditions and patterns.
When was the last time you negotiated the price of a shirt in an American department store? Probably never. Yet would you negotiate the price of that same shirt if you were in Mexico and saw it for sale in an open market? Probably.
Why? Because the U.S. retail industry years ago convinced us that the listed price is a set and nonnegotiable price. Yet we expect items in Mexican markets to be negotiable.
So what should you do? Research the negotiation traditions and patterns in your specific situation. Do most individuals and experts in that area view that situation as negotiable? Stick with the pattern.
Of course, this doesn’t mean it can’t be negotiable. But if it’s unusual to view it that way, then treating it as a negotiation may be considered in poor taste — even counterproductive.
Also, research the individual or corporate reputation of your potential counterpart. Even though most consider buying a new car to be a classic negotiation, Saturn has carved out a niche among purchasers who hate car price negotiations. For Saturn, as in the general U.S. retail industry, the price is the price.
2. Decide whether it’s worth your time.
Let’s say you recently applied for a $100,000 home equity line of credit from your longtime bank to finance your kitchen renovation. Your banker subsequently sent you a rate sheet listing the applicable interest rate. In effect, your banker is saying “the price is the price,” and it’s not negotiable.
But your research has identified an online bank that will give you a half-point better rate, and this is a big deal to you.
Should you negotiate and ask for a discount? Absolutely. It doesn’t cost you anything to ask, except a minute of your time. And you may be surprised at what is negotiable. It may be well worth it.
Keep in mind that the bigger and more important the financial or other stakes, the more likely it’s negotiable, and the more likely it’s worth your time to try.
Minimum-wage workers usually don’t negotiate their hourly rate with their employers. But those same employers negotiate the salaries of their top executives.
3. Pick and choose your relationship issues.
One of my recent seminar attendees took issue with my characterizing many family interactions as “negotiations” and my recommendation that they strategically prepare for significant family conversations as such. She had a good point.
Many don’t like to consider common interactions between parties with long-term personal relationships “negotiations.” Why? Because this characterization to some implies a formality and level of strategic forethought that seems inconsistent with the open and honest communication dynamic that ideally exists in these relationships.
So what should you do? Don’t get caught up in whether it’s a negotiation or not. Instead, carefully pick and choose the significant interpersonal relationship situations where it makes sense to take a little more time to consider how to communicate (or negotiate) most effectively. There’s a lot of good negotiation and communication research in this area.
My wife sometimes suggests I negotiate too much. She’s probably right. But if you’re going to err here, I would rather negotiate too much than too little. Except, of course, if it’s with your spouse.
Published October 5, 2007 The Business Journal