The Six Styles of Negotiating
THERE ARE SEVERAL different ways to negotiate, but you must be clear about the negotiation style you are using and the output or result that you are striving for.
Win-Lose Negotiating
The first style, called “win-lose negotiating,” is when party A gets what he wants and party B loses. This is the aim in Type I negotiating, as discussed in Chapter Three. It is the negotiating approach that is used in a single transaction, where you want to sell at the highest price or buy at the lowest price. Your focus in this type of negotiating is not making friends or establishing long-term relationships. It is simply to get the best deal possible. You do not particularly care if the other person is unhappy or dissatisfied with the price or terms. Your goal is simply to win. Of course, this is not the kind of negotiating that leads to additional business or transactions, except in special cases, such as when you are pawning your property to get fast cash. In this case, the pawn broker is the winner, paying a fraction of the value of the item, and the person pawning the item is the loser, receiving a fraction.
Lose-Win Negotiating
The second style of negotiating is “lose-win negotiating,” and it is the opposite of win-lose negotiating or simply the reverse of the first style. Party B gets what he wants and party A loses. B’s needs are satisfied and A’s needs are not satisfied. This approach to negotiating is used when each party sees the other party as an opponent or adversary, to be bested with any means available.
Lose-Lose Negotiating
The third approach is “lose-lose negotiating.” In this situation, two parties enter into a deal where neither one of them is satisfied, because neither party gets much of what was hoped for. This type of negotiating is often accompanied by antagonism, animosity, and arguing.
For example, the husband comes home and says to his wife, “Let’s go out for dinner tonight. Where would you like to go?”
She answers that she would like to go out for seafood. He replies that he is sick of seafood and would prefer Italian food. She says that she has had too much Italian food lately and is not interested. To keep peace, they finally agree to go out for Chinese food, which neither of them particularly wants, but it seems like the only compromise that would work in this case.
This is lose-lose negotiating. The wife doesn’t get what she wants and neither does the husband. But they accept the results of the negotiation because at least they get something rather than nothing.
Compromise Negotiating
The fourth type of negotiating is called “compromise.” In a compromise negotiation, both parties get something and are therefore better off, but neither party’s needs are completely met. At the end of the negotiation, both parties walk away with a bad taste in their mouth. They are not so unhappy as to refuse to enter into an agreement, but they are not particularly excited about the results of the negotiation.
No-Deal Negotiating
The fifth style is called “no-deal negotiation.” In this situation, you and your counterparty both present your positions, needs, and interests and find that you cannot come to an agreement. You are too far apart. You agree to disagree. You go your separate ways with no animosity or unhappiness. The door remains open for the two of you to negotiate at a later time when conditions are different.
For example, you want to buy a particular item, but the asking price is too high. You offer a lower price but the other party refuses your offer. You are not willing to go any lower, and he is not willing to go any higher. There is no deal.
Win-Win Negotiating
Finally, there is the best kind of deal: a “win-win negotiation.” This is what you are aiming for. In a win-win negotiation, both parties feel that they have won. Both parties feel that they have entered into an excellent deal. Both parties are happy, satisfied, and eager to fulfill their commitments and to enter into additional deals on the same or similar bases.
In most cases, win-win negotiating requires coming to a third alternative that is better than either had initially thought of. Both parties enter into the negotiation with a series of ideas, interests, and positions fixed in their minds. Often they find that it is impossible to compromise between the two separate positions. But then they find a third alternative that is in most cases different from what either party had thought about when they entered into the negotiation in the first place.
A win-win negotiation occurs when the third alternative turns out to be superior to what either party had come to the table with in the first place.
Look for a Win-Win Solution
Some time ago, I was negotiating a real estate development agreement for 330 homes with the members of the town council. My clients had purchased the property on the edge of the town and had done all the design work for the subdivision. However, the town fathers were demanding $10,000 per lot, a total of $3.3 million in cash, upfront, for offsite improvements. This was not an unreasonable amount because the town would have to spend a lot of money to accommodate the new subdivision. The problem was that my clients did not have the cash to pay upfront.
Just when it appeared that we had reached an impasse, and my clients were beginning to think the deal was slipping through their fingers, I proposed a win- win solution. “It seems the final point has to do with the $3.3 million,” I said. “Here is my solution. We hereby agree to give you the $3.3 million that you request.”
Then, I went on to say, “We will agree to everything we have discussed over the last three days, including paying the town $3.3 million, but we need one small concession from you. We would ask that you agree to receive the $3.3 million at the rate of $10,000 per lot as we sell them to home builders and developers.”
There was silence in the room. Finally, the mayor broke the silence. “Well, of course we would like to get the entire amount upfront,” he said, “but if partial payment as you sell the lots is the best you can do, we can live with that.”
The deal was done.
The reason I tell this story is because this is the sort of thing that happens over and over again when you seek a win-win solution. Be prepared to think outside of the box. Be clear about what each party absolutely must have in a negotiation, and then see if you can’t find a way to achieve those mutual goals so that everyone feels like a winner.
