From the moment as a kid you realized the only way you'd convince your parents to let you have ice cream before dinner is if you agreed to clean up your room or something just as tedious or boring, you had learned the concept of negotiation. Ever since then you've been trying to get better at it in order to get what you want and not give up more in exchange. (Come to think of it, I never did win that ice cream negotiation.)
There are many resources available to help you develop better negotiation skills. From tips and lists from academics who study this stuff, to full service entities that'll put you on the right track (tip of the hat to Marty Latz who helped me hone my own skills), to words of wisdom from friends, colleagues and strangers on the street. Seems everywhere you turn there's an opinion of how to beat the other guy at the cutthroat game. Some of this stuff is great, some of it, not so much.
This column will take a more laid back approach, with general suggestions and possibly a different perspective on just what the “game” of negotiation really is.
Winner, loser, is anybody keeping score?
The first idea I want to offer is the consideration that maybe it's not a game at all. At least not always in the sense that the end result has to have a victor and a vanquished in the board room. Rarely it is the case that you'll never have to see your “opponent” ever again and you are in a position to get everything you can out of them before you leave the arena. That's probably the attitude where the phrase, “To the victor belong the spoils,” usually feels appropriate. Unfortunately that exact circumstance is rare. Usually, as in the following years elections since New York senator William L. Marcy coined that proverb in 1831, you end up having to face the same opponents, or very similar ones again and again.
Unless you're extremely lucky and can win every negotiation regardless of your stance, eventually you'll be in a position where you won't win and your opposition will be able to take YOU for all your worth. (And if you are that lucky to always win you should be in Vegas, not at a negotiation table.)
Bargaining positions, power and the importance of knowing electrical circuitry
In negotiation there is often an assessment of the merit of each side's positions. These bargaining positions are used to determine how hard you can resist the other side's demands while pushing for your own against their hesitance to concede. It is often articulated as “who has the power in the room?”
There have been proposed many ways of assessing this factor. Some people think they can determine who has the power by who is the best or sloppiest dressed, who arrives last, speaks first or even who has the most number of lawyers in the room (as if lawyers could make any difference – oops, did I say that out loud?). These beliefs have lead to some very bizarre, almost ritualistic behaviors by some in attempts to appear most powerful.
Let me let you in on a little secret. Power does exist but it can rarely be assessed by external measures. In fact, if someone tries very hard to look powerful it is likely that they aren't really as powerful as they need to be. And power is measured differently, at different times, for different things throughout a negotiation. Recognizing that will smooth some of the bluster, allow you to look past some momentary retreats you might be forced to make and focus on what you came to accomplish.
And even if the apparent power of the other side is daunting, it is good to remember the wisdom of the electrician. The most elaborate and powerful electrical system has to value a well placed, five cent fuse. If you own the fuse, even the most powerful must come to you to make it all work.
Even if it's not a game you must have goals
What determines the relative success of any negotiation is not how much stuff you walk out of the room with, it's did you achieve the goal you set out to? There's a lab experiment where a monkey reaches through a small hole in a plexiglass cube and grabs hold of the luscious banana he sees sitting there. He can't pull his hand out of the hole while holding onto his prize, but, he won't let go of it. He has hold of the best banana he's ever seen. But he can't eat it. Did he still win?
Both sides have goals to achieve. They are likely different and not incompatible so if well negotiated it is often the case that both sides' goals can be achieved successfully. But the negotiation process can be an intimidating one, requiring a lot of quick thinking and on the spot decision making. It can be overwhelming and if you enter the arena unprepared it could be quite easy to make a big mistake in the heat of the moment.
The heart of negotiation
At its heart a negotiation has a singularly targeted end aim. An offer is made and accepted. Although most don't think of simple exchanges like that as negotiation, as long as both sides could walk away from the deal but instead decide to accept the terms and results, then a negotiation was part of the process. It's the thinking, “Is this worth it to me?” that makes it a negotiation.
What complicates negotiations is that they are rarely a single offer/acceptance situation. There are initial offers that may come after extensive discussions about details before the actual offer is on the table. Then can come counter-offers which are anything amounting to another offer that follows from a rejection of a previous offer on the table that keeps the discussion going. During those inter-offer discussions is where a lot of the power-play or give and take takes place. Subtle (or not so subtle) pressures to accept the current offer, or to change the terms to more acceptable ones (proposing a counter-offer) can come from the different stances each side takes. This quick back and forth and reconsideration of terms that are in flux can make anyone's head spin and may lead to an insufficient consideration of all the impacts such a change might precipitate into the rest of the deal.
Two key points to keep in mind entering into negotiations
Going into a negotiation as prepared as possible will help you weather these quickly changing waters. There are obvious preparations to be done such as doing your research into your opposite parties true strengths and abilities to meet your needs, their industry and business reputation, the timing issues for everyone involved and many other aspects specific to your deal goals and theirs. But there are a couple of tips I provide all my clients that can help them in the actual heat of the negotiations to remain cool and not be so pressed to make quick decisions that could lead to disaster. (Note, you can still make decisions that can lead to disaster, but, at least you'll be better prepared to avoid some of that if you take these steps.)
Shut up so I can say, “Yes.”
Before going into a negotiation for something you want you should sit down and consider exactly what would make you feel successful in those negotiations for each element of the deal important to you. Not only consider the “whats” but also the “what levels” would be satisfactory. Example: If you are negotiating to sell a script would you feel like a success if the price tag were $150,000? If that would make you feel good then when the other side finally makes their offer and it's north of that number you can just sit there, try not to smile and wait until they stop talking to accept the terms.
Have a drop dead line
Similarly, you should know at what level you would never accept the terms and the most prudent thing is to walk away from the table since you'll never agree with what they are offering. This drop dead line should be an indication that even if you continued negotiations and fought hard to get them to raise their offer it would likely never come close to the level that you would feel best getting. These efforts are seldom worth it and you'll likely feel unhappy about the whole thing from then on. Better to just walk away.
Now these pre-defined points of decision need only be arrived at for the main points of your deal, the things most important to you. And they should be realistic, not pie in the sky, more like a slice of pie a couple feet off the ground. Maybe a fork too. It can still be damn fine pie.
And what happens if the offer falls in between these two points, this absolute “yes” or absolute “no”? That's where the negotiations can continue. That's where you know that you might be able to reach an understanding. You may not get them to reach your top goal, but, you may manage better in some aspects than you expected. You'll have to consider these in the mix of the negotiations, but, at least the big decisions are already done before you walk through the door. And you'll find that having thought about all your true desires realistically before hand the rest of your decision making will be more informed while you are sitting in the room.
It's not negotiating a deal, it's building a relationship and career
No negotiation is in a vacuum. Life and business go on afterward. You must realize that how you (or your representatives) act in a negotiation will have an influence in how the industry perceives you in a working relationship. If you go into every negotiation with a “get all you can” approach, you might find that people are reluctant to collaborate with you fully. You may find opportunities closed off to you even if you win the negotiations today. For some, this isn't a problem as their power in the industry builds with each success, but, once that power fades or falters (as it seems to always do eventually) the reputation lingers.
After the dust settles, you still have a relationship and career to consider. A reasonable and well tempered attempt at negotiations that fails actually can be a benefit for a future deal discussion. And this isn't the same as accepting a bad deal just to not ruffle feathers. As long as you are reasonable and the pie is only two feet off the ground, it's okay to say no. You can still be respected for that. Also remember, eventually the balance of power... changes. The weaker position today may be the stronger one in the negotiation in the future. And then you'll just have to wait for them to shut up so you can say “Yes.”
A few last thoughts
There's a lot more that goes into successful negotiation, much more than could be covered in a single article. I'll leave you with a few definitions and considerations to take with you into your next one.
A term you may run across, if not by name then more likely by situation, is ego nickel. That's where the other side is asking for something in a negotiation that costs you nothing or not much that you value. It's easy to concede it to them. They'll take it as a valuable exchange and may grant you something you do value in kind.
Compromise is NOT a dirty word. In fact, if you consider the definition of compromise as actually considering the goals of others within the context of your own then you'll realize that compromise is at the heart of a successful negotiation.
People approach negotiations differently in different cultures and contexts. There are significant differences in international negotiations dependent on the dominant expectations and practices of each country. Some countries start business discussions right away. Some cultures languish and enjoy the niceties of personal, social matters for the bulk of the meeting, getting to know the people they will be dealing with long before they discuss the deal points, if at all. Some nations never want to discuss the deal in concrete terms until the very, very end, but, will talk in extended generalities for most of what is considered the negotiation process. All of these and many more can be encountered as you deal with different cultures and different people may vary from the norm of their own culture. Know who is across the table and what their preferred style may be and you will have a better shot at reaching a deal.
Now can I have that ice cream?
- More articles by Christopher Schiller
- Breaking & Entering: In Good We Trust - Get It In Writing
- Behind the Lines with DR: Extra Credit
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