Successful business negotiations require a specific skill set. However, these skills have more to do with diplomacy and understanding than many business leaders might think. Here are five professional skills that can help you close business deals profitably, quickly, and amicably.
When you strip everything “extra” away, business boils down to negotiation. Business depends upon the willingness of two or more people to reach a mutually-beneficial agreement. Cooperation is the decisive organizing principle of enterprise. Unfortunately, this fact contradicts what many business leaders have been taught regarding the competitive modern marketplace. Consider the often-referenced ‘invisible hand of economics,’ for example.
This theory suggests that in order for an economic system to function best, it must be built by those concerned with their own self-interests. But while there’s certainly something to be said for Adam Smith’s laissez-faire economics, modern business could prosper from focusing less on competition, and more on cooperation—especially when it comes to negotiating business deals.
Studies have shown that negotiators who focus on establishing relationships of trust and collaboration, and who refuse to view other negotiators as opponents, gain on average 42% more value per negotiation. The strong-arm tactics many negotiators depend upon are simply not effective over the long-term; instead, they result in resentful clients eager to find more accommodating business partners. The end result of selfish negotiations is a constant turnover of clients and an increasingly negative reputation for your business.
Business negotiation doesn’t generally require combative behavior, but it does require certain professional skills. These skills will help you get what you want without having to sacrifice your business relationships or organization’s reputation to do so. We’ve identified five of these professional skills that are most important to conducting business deals, which we’ll discuss here:
1. Organization: Over 50% of business leaders admit to losing approximately nine hours per week as a result of disorganization. Disorganized employees who earn approximately $50,000 a year can cost companies an estimated $11,000 a year in lost hours. These stats show the threat of disorganization to any business. That threat isn’t confined to the office—business negotiators who fail to keep their information organized are likely to demonstrate that fact to the other party, damaging their own credibility. At the very least, disorganization causes delays in the negotiation process, and business leaders value few things more than their time. Approach the table with your facts and data firmly in mind, and have ready access to any information you don’t already know by heart, so that you can quickly answer questions and support arguments. In fact, be ready to provide as much data as possible: According to Columbia Business School professor Gita Johar, a surplus of information can help listeners “resolve that discord and solidify their opinions.” Organization is essential to helping clients and partners recognize the benefits of doing business with you, so it’s the first step towards mastering business negotiation.
2. Clarity: Whether for external or internal communication, clarity is something every organization should strive for. In a survey by HR magazine, 46% of the employees surveyed claimed they regularly received confusing or unclear directions from management, and 36% claimed it happened as often as three times per day. As a result, these employees estimated they wasted roughly 40 minutes every day trying to decode unclear instructions.
In a negotiation setting, lack of clarity can be more than just a nuisance; it can be a very real danger. 95% of buyers already think that salespeople talk too much and you're already swimming upstream before you even shake hands. Unclear agreements may lead to misunderstood roles or even legal disputes further down the line. Combat ambiguity by thoroughly documenting any agreement that is reached. This may seem tedious, but by drafting detailed and legally binding contracts—rather than relying on verbal agreements—you ensure that both sides completely understand what is expected of them. You may also wish to record the meeting for future reference—just be sure that you have both parties’ consent before doing so.
3. Reasonability: According to Professor Karen Walsh of the Thunderbird School of Global Management, 40% of people believe they are cooperative and trusting. Yet, when asked about their counterpart, people “tend to believe that the other party is just looking to win.” As a result of this suspicion, many business negotiators will choose to go on the offensive, hoping to cow the other party into submission before they can act themselves. However, a negotiator who is unable to trust is also unable to collaborate effectively. Negotiation is built on compromise. As such, it is an often-overlooked talent that can help establish successful, long-term partnerships. The old-adage, you catch more flies with honey than with vinegar certainly applies.
Try to place yourself in the shoes of your counterpart. What do they want? What are they willing to give? Remember that he or she is also interested in closing this deal, so there’s no reason why the two of you should be working against each other. Be reasonable and make concessions where possible, and you’ll most likely see the other negotiator is willing to do the same. On the other hand, reasonability doesn’t mean exploitability; if the other negotiator refuses to make concessions, you may have to accept that this partnership isn’t going to work. If so, cut your losses and move on.
4. Dependability: It’s certainly not something to be proud of, but human beings are generally comfortable with lying. According to a study by the University of Massachusetts, 60% of adults will lie at least once during a 10-minute conversation, and 40% of job applicants lie on their work applications. That said, when it comes to business deals, honesty should be the only policy. Any agreements you make or contracts you sign are only as good as your willingness and ability to carry them out. So, before you make any promises, be sure you can deliver. It’s always better to have a deal fall through than to renege on a contract after it’s been finalized. Be as dependable as you expect the other negotiator to be, and you’ll be able to develop a reputation that positively affects any future business deals.
5. Charm What makes business negotiations so difficult is that they often rely on person-to-person communication. And while this may make it easier to share and understand information than over the telephone or through emails, it also lends itself to other problems. 55% of communication comes from facial expressions, while only 7% is carried in actual words, which means the danger of unintentionally sharing information, opinions, or feelings is significantly higher when meeting face-to-face. Couple that with the fact that 65% of senior level executives say subjective factors that can’t be quantified make a significant difference in evaluating business proposals, and you’ll see that emotion plays a large part in how well your proposals will be received.
In essence, if the other party decides he or she likes you, you’ll be much more likely to close a deal advantageous to everyone. So, work on your smile, look your best, and above all be friendly, because a little bit of charm might just mean the difference between successful negotiations and complete failures.
Business negotiation relies on the willingness of two parties to come together for their mutual benefit. However, more often than not, those involved fail to recognize the person sitting across the table as a potential ally. Instead, they focus all of their energy into confronting and defeating this ‘opponent,’ when they should be nurturing a relationship of trust. It's good to remember that even your tone of voice is as important as the content coming out of your mouth.
To successfully negotiate requires more than willingness; it requires specific professional skills. Luckily, these skills can be learned. By concentrating on developing the organizational and soft skills necessary to promote constructive negotiation, you’ll give your company an advantage that will continue to have a positive impact for years to come.