Negotiate Your Way to Better Profits

As a skilled bodyworker, you may not think of yourself as a negotiator, but Harvard Business School professor Michael Watkins says you are: “Whatever your profession, a good part of your time is spent negotiating.”

He’s right: there is no business skill more essential to the success of any professional than the ability to carry out a skillful negotiation. Whether you’re dealing with prospects, clients, suppliers, landlords, or employees, you are involved in the process we call negotiation. Developing this important skill can greatly increase the earning power of your practice.

In his book Breakthrough Business Negotiations, Watkins teaches his students to break the process down into four steps. Here’s how to put the “breakthrough” approach to work for you:

1) Diagnose the Situation

“The first step in preparing to negotiate from a position of strength is to diagnose the situation thoroughly,” says Watkins. In particular, you need to learn:

a) Who are the players? Who will, or could, participate?

The key parties to a negotiation may seem obvious, and sometimes they are—but not always. There may be players in the background who can influence the outcome, or new players may enter the discussions and influence the talks. If you’re negotiating with a supplier or for a new lease with your landlord, for example, the cast will probably consist of just the two of you. However, if you’re negotiating with an organization, you need to know if the person or persons you’re dealing with have the authority to make a deal.

b) What are the rules of the game?

Watkins suggests that you take time to consider the following questions before you enter into negotiations:

            • What laws and regulations might apply here?

            • What social conventions will shape the parties’ behavior?

            • Are there professional codes of conduct that apply?

            • What other rules of the game may influence the parties’ behavior?

            A clear understanding of these rules will help to start you off from a position of strength.

c) What are the issues that will be, or could be, negotiated?

“It’s easy but dangerous to treat the agenda as fixed,” says Watkins. To do so risks failing to take action to shape the course of events in ways favorable to your objectives.

d) Defining your walk-away position

The next step is to define your walk-away position. What is the least you are willing to accept to enter into an agreement? Establishing this value as a benchmark and keeping it clearly in your mind will help you to avoid getting so caught up in the heat of negotiations that you turn down an alternative deal that was better than your walk-away position.

2) Shaping the Structure

Once you have diagnosed the situation and have a clear idea of who the players will be, the issues to be resolved, and the rules to be followed, it’s time for you to shape the structure of the negotiations. Watkins calls this step “design work.” Here are the key things he feels you should address before negotiations begin:

a) Self-Assessment

In past negotiations, have you tended to accept the situations and structures as the other party presented them? If so, you should be determined not to fall victim to that pitfall again. One simple way to shape the game is to invite other players into the negotiation. For example, in negotiating with your landlord for a new lease, you might invite your lawyer or your accountant to join in. You must also take great pains in building, maintaining, and improving your position. Knowledge of your walk-away position will add hidden power to your position.

b) Setting the Agenda

Influencing the makeup of the agenda is a crucial step in successful negotiations. By helping to define the issues to be discussed and setting their priorities, you put yourself in a position of strength when the discussions begin. “Good negotiators don’t just play the game,” says Watkins, “they shape the game.”

c) Controlling Information

Information is power. Arguably, there is no other activity where this old axiom is truer than in negotiations. Exerting control over who gets access to what information is another way to gain a position of strength in discussions. In negotiating a new lease with your landlord, for example, you would probably want to share the fact that you have been looking at another location. On the other hand, if you knew of a potential tenant who would like to move into your building, sharing that information would be poor strategy.

3. Managing the Process

The third step to negotiating is determining the best way to handle the actual face-to-face negotiations. Among the important steps in this phase are:

a) Sensitivity to Early Interactions

“How a negotiation begins,” says Watkins, “tinges everything thereafter. Initial impressions, based on limited information, persist and are resistant to change.” Watkins stresses that mutual respect at the beginning of the process increases the likelihood of eventual agreement, but bad blood at the beginning of the discussions can poison all that follows.

b) Tipping Points

You should keep yourself aware of thresholds in negotiation that Watkins calls “tipping points.” These are the sensitive points in the talks where even tiny concessions or refusals can lead to major shifts in positions. “Be very careful when raising issues that are hot buttons for the other side.”

c) Emotions

Emotions, either real or feigned, play a part in most negotiations. Emotional outbursts of any sort can easily escalate, generating emotional conflicts that make rational judgments all but impossible. “Once strong emotions are triggered,” says Watkins, “they dissipate slowly.” In their book Getting to Yes, Roger Fisher and William Ury note, “The ideal stance is to separate the people from the problem.” However you do it, keeping your own emotions under tight control during negotiations will give you an important advantage. As one negotiator puts it, “When you lose your temper, you lose.”

4. Assessing the Results

Once negotiations have begun, Watkins suggests that you step back periodically to evaluate how well you’re doing. “Appraising an ongoing negotiation is partly about whether you’re meeting the goals you set for yourself,” says Watkins. “Clearly identifying your goals while preparing to negotiate is only half the battle; you have to keep those objectives firmly in mind as you go forward.” Among the questions you should ask yourself at this stage are:

a) Do you have a clear view of the situation?

A clear understanding of the negotiating situation is essential to bargaining success. If your view is incomplete or flawed, you are unlikely to meet your objectives. This is the point at which you should reexamine your assessment of the points discussed under Diagnosing the Situation: Who are the parties? What are the rules? What issues will be negotiated?

b) Are You Channeling the Flow?

“Channeling the flow of a negotiation is like directing the course of a river,” says Watkins. “You can dam it or you can reroute it.” Inevitably, one of the parties to a negotiation will do more than the other to control the agenda of issues and their priorities. According to Watkins, the biggest mistake you can make is to approach the game as fixed. “Don’t allow the other party to channel the flow by default,” he says. “Make certain that you are an active participant in this important part of the negotiation process.”

c) Are You Learning?

Every negotiation is an opportunity for you to learn. However, learning does not come automatically simply because you went though a negotiation. “Learning takes place only when you take the time to reflect on your experience,” says Watkins. When negotiations are over, ask yourself, “What went well? What could I have done better? What did the other side do well and what did I learn from them?”

William J. Lynott has an extensive background in management consulting, marketing, and finance. He’s written more than 900 articles appearing in a wide range of consumer magazines, trade publications, and newspapers in 17 countries. Contact him at lynott@verizon.net.

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