Business Meltdown: How To Use Your Negotiation Skills To Guarantee Your Security

One can see an air of uncertainty in the world financial markets wherever you go - for the first time - regardless of where you find yourself in the world.

Warren Buffet stated that it is only when the tide goes out that you can see who is naked. In other words, it is easy to be thriving when the economy is doing well; it is only in tough times that we can easily distinguish quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the current economic situation?

Use 'Loss Framing'

People are more motivated by evading loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking when trying to avoid a loss whilst they are more likely to be risk averse when pursuing gains. In the way that we negotiate, we can make the other side aware of the items that they stand to lose if they don't move in our direction and otherwise gain if they do.

Create Alternatives

In times of difficulty it is very important to look at other options so as to strengthen our negotiation position. Creating options are key in the context of negotiation and the power of options to concluding a deal is the key driver of our negotiation power.

We normally wait until we know that we are not going to be able to do a transaction before we start thinking about alternatives. We risk entering into a less than ideal transaction and if we have not explored all the options. Similarly, thinking about the alternatives available to your counterparty in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have strong options available then they will be more aggressive and if they don't, they will tend to be more accommodating.

Use Reciprocation

Reciprocation is a key principle of powerful persuasion skills, because we are prone to return to others the sort of behaviour that they demonstrate towards us. In times of economic uncertainty it is important that we act in the interests of the other side if we would like them to act in our best interests. Use this principle to your advantage by acting first and using the principle of reciprocation. One note of caution and make sure that you record the indebtedness with your counterparty.

Move from price to value

It is important to take the focus off price and home in on the Total Cost of Ownership. For all services, products and solutions that we buy or sell, there is always a trade off between value & price. If we only focus on the price, the best that we will do is to haggle and it is only once we start to explore the entire lifecycle of the service, product or solution that we buy or sell, that we begin to uncover opportunities for negotiation. Before you even state price in negotiation, evaluate your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and possible risks or negative consequences that may happen when your counterparty doesn't reach an agreement with you.

Don't forget that the magic in negotiation is found in the quality of your preparation. In times of economic uncertainty it is vital to dedicate enough time to planning your negotiations.