All of us negotiate on some level every day. We negotiate with our spouses over who picks up the kids, with a co-worker regarding who goes to lunch first or with a bank officer regarding terms of a loan. While some people enjoy the negotiation process, others approach it with fear and loathing.
To be successful in business, you need to be able to hold your own in a negotiation. Whether negotiating an associate contract, an equipment lease or construction costs on a new barn, doing some homework in advance leads to a better outcome.
Enter a negotiation armed with facts. If you are an associate, before you demand a $10,000 pay increase, understand what you contribute to the practice, how doctors with similar experience in similar practices are paid and how you will increase your value to the practice in order to justify the raise you are requesting. Assuming you are paid fairly now, you will need to increase your production by as much as $50,000 to justify a $10,000 raise. How will you accomplish that?
To prepare for a negotiation with a vendor, determine what you spent with his or her company last year, plus how much you spent with competing vendors. Knowing the total amount of business you represent gives you more information about your total value to that vendor, and what he or she may be willing to do for you.
In any negotiation, it is important to understand the levels of power or who holds the stronger position (boss/employee, buyer/seller, parent/child). If you are negotiating from a position of strength, you are likely to get more of what you want by virtue of having more power. If you have the weaker position, use some ingenuity to come up with creative solutions in advance of the meeting. Consider counterpoints the other party may make. Be prepared to make a few concessions to get what you really want.
Know Your BATNA
If this negotiation fails, what is your best alternative course of action? If you are buying a car, your best alternative to a negotiated agreement (BATNA) could be to buy a different car, use mass transit, rent a vehicle for a week or two, or carpool with your spouse or a co-worker. If you are a business owner negotiating a starting salary for a new doctor, your BATNA may be to hire another candidate, to continue your search, to work longer hours yourself or to turn away business. Your power position increases with each BATNA you identify. If negotiations turn ugly, you won’t feel trapped into accepting less than you need.
Once you’ve identified your BATNA, look at the situation from the other person’s perspective and consider what his or her BATNA may be. In the salary negotiation scenario, the candidate’s BATNA may be to accept a position with another practice, to accept a job with a pharmaceutical company, start a practice of his or her own or perhaps pursue additional education. You don’t have to solve the other person’s problems, but knowing (or making an educated guess about) what the other party needs increases the likelihood that you can come up with a solution to satisfy both of you.
Choose an Approach
Different situations require different tactics. If you are negotiating the price of a car with someone with whom you have no ongoing relationship, you can use whatever tactics you choose. You may never see the person again, and you don’t need him or her to like or respect you. Feel free to make unreasonable demands, stomp your feet or storm away in a huff, assuming that’s your style. If you don’t get the deal you want here, there is always another dealership down the road.
However, playing hardball in your practice can backfire when you need to work with the same people every day. If the situation involves a co-worker or vendor, you may not have the option to walk away if an agreement can’t be reached. Don’t go to the mat for small wins if long-term trust is important. As negotiations near the finish line, don’t try more lob-ins. If you get concessions on your salary, this is not the time to ask for more benefits. It is far better to put all the issues on the table early. If you constantly add new conditions, or try to reopen points of prior agreement, you will teach the other person not to trust you.
When negotiating with colleagues and business partners, maintain a calm, professional attitude. If you are overly nervous, angry—or worse, desperate—you won’t be able to think on your feet. Further, a negotiation impasse may require an alternative solution, and creativity is hard to come by in an emotionally fraught meeting. Professionalism implies respect for the negotiation process and excludes competition for its own sake. You may delight in verbal sparring, but the other party may resent it. Negotiation is not a prizefight, and bloodied combatants rarely want to repeat the experience, especially not with you. Don’t be ruthless in getting your way. If your counterpart is miserable, you can’t expect a good outcome. When you have an ongoing relationship with the individual or company with whom you are negotiating, your goal shouldn’t be to win at all costs.
This doesn’t mean you have to be a pushover. When you are tempted to concede to another’s demands, consider how the outcome may affect others. In a practice that is not highly profitable, granting all the demands of one associate will reduce the resources available to reward other associates, staff, and even the practice owner. When you are involved with a contractual negotiation, consider the duration of the agreement. Making a painful concession may be acceptable for a year, but if the agreement covers four or five years, what was palatable for one year may create unanticipated resentment over time.
Evaluate the Results
Sometimes the rush of the negotiation and the effort to respond to every objection causes us to lose sight of the objective. Before you walk away from the table, review the negotiated terms and compare them once more to your BATNA. Regardless of the power position you held at the start of the negotiations, you always have the power to withdraw if the stakes get too high. Sometimes the best deal you can make is to walk away from a bad one.
Once an agreement is reached, move on. Don’t revisit past issues or complain about sacrifices you made. Take ownership of the successes and failures of the process. Reflect on your negotiation strategy. What worked? What didn’t? What could you do next time to achieve a better result?
Don’t think of negotiating as a win/lose interaction where the only way you get more of what you want is for the other party to get less of what he or she wants. When the negotiation involves someone whose respect is important to you and you wish to maintain, look at the process as an opportunity to collaborate rather than as a confrontation. Share information about what you want and why, and be open to hearing the same from the other side. Balance your needs with the needs of the other party to come up with a resolution that is fair to both of you. The goal is a win/win solution.
Leslie A. Mamalis leads Summit Veterinary Advisors’ equine business consulting services. She is based in Littleton, Colorado.