How to Get a Good Deal in a Negotiation

What are the key characteristics that define a good deal for us? Peter Dreyer examines how we can define a good deal in a negotiation, or dispute.

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How to Get a Good Deal in a Negotiation

Here’s the video link of the transcript below: https://www.youtube.com/watch?v=tRJ1JSfrTrI

{Transcript}

People are negotiating. We always want a good result—we want a fair result. Everybody wants a good result when they’re negotiating, and that’s quite understandable. So how can we enhance our chances of getting a good result?

Before we go down that path, I want to talk about what a good result actually is. What is a good deal in a negotiation? There are a number of characteristics of a typically good deal. One is that it’s going to meet your interests—or as many of your interests as possible. It’s rather pointless going into a negotiation or walking away from one without having any of your interests met. That would not be a good deal—certainly a path you don’t want to go down.

Another good characteristic of a good deal is that it’s doable, that it’s workable, and that it will stand the test of time. We don’t want to walk away from a negotiation and, five minutes later, scratch our heads and say, “I’m not sure this is actually workable in my organization.” That type of question is one you want to address before you get to the settlement stage.

Another characteristic is that both parties feel there was a degree of openness in communication—that there was trust and respectfulness. These play an important part. After all, you are trying to build or at least maintain a relationship. In a good deal, both parties should leave the table feeling that the relationship is intact—and that they wouldn’t mind negotiating with this person again in the future.

Another key characteristic is that the deal is better than your BATNA—your Best Alternative to a Negotiated Agreement. I can guarantee that in any negotiation you enter, there will be alternatives you can pursue if it doesn’t work out. What I can’t guarantee is that those alternatives will be good for you. They may not be workable. They may not meet your interests. It’s up to you—as the negotiator—to prepare for that negotiation by identifying and selecting which alternatives are in fact good for you. The best one is your BATNA.

So at the end of the negotiation, you can measure the tentative agreement against your BATNA. If your BATNA is better, you take your BATNA. In a good deal, the negotiated agreement will certainly be better than your BATNA.

So what makes a good deal? Interests are met, the relationship is maintained, no one feels they’ve lost, and the result is better than your BATNA—because remember, if it’s not, you won’t take the negotiated deal.

Going back to the question: how can we enhance our chances of getting a good deal? In answering that, I return to the elements of something called Principled Negotiation. Principled negotiation is a style of negotiation that originated at Harvard University. It’s intended to be a powerful form of negotiating—powerful in the sense of getting your interests met, not powerful in the sense of destroying the other party.

The first element I want to talk about is interests. We are there to get our interests met. Some people go into negotiations with demands or positions. What we want to do is figure out what needs are underlying those positions. We want to discover people’s interests, ensure they understand what our interests are, and—critically—we must understand their interests too.

People often ask, “I’m negotiating to get my interests met, so is it really important to understand the interests of the other party?” And any principled negotiator would say: yes, absolutely. It’s imperative that you understand the interests of the other party. Why? Because when you’re starting to create options, you’re doing so to meet interests. And if you don’t know what their interests are, you won’t get very far in the negotiation.

Understanding interests is extremely important. Also, think about this—it’s a good way to build rapport, relationships, and trust. People appreciate it when you show interest in what matters to them. If you ignore their interests, that’s reflected in how they’ll likely respond to you. It’s important that you listen to what’s important to them—their needs—and that you reflect that attentiveness in your body language and tone. After all, maintaining a relationship is a key trait of a good deal.

So, how do you address interests? How do you get them met? That brings us to the second element of principled negotiation: creating options. In my mind, it’s one of the most exciting parts of a negotiation.

How can you create options? You can brainstorm—invite people to open up, to throw out ideas. It doesn’t matter if the idea is crazy or brilliant. It doesn’t matter if it’s one you personally like. The point is to get ideas out there. You’re not evaluating these ideas yet. You can’t accept them—they’re not offers, they’re options. One of the best ways to enhance a deal is by being creative—creative in forming options. That’s why brainstorming is such an effective tool.

Eventually, of course, you’ll need to evaluate the options. You get as many as you can—but at some point, you’ll need to assess them. That brings us to the third element: legitimacy. Legitimacy is how we put value behind those options. We look at objective criteria or standards. What gives an option value? We measure it through legitimacy—by using criteria that both parties can accept as objective.

Legitimacy is also important for persuasion. Remember, any negotiation is an attempt to change someone’s mind. And to do that, we need to know where their mind is. We need to listen, ask questions, engage, and observe their body language.

Now, here’s another tip: at the end of the negotiation, when you think you’ve got an initial deal—don’t stop. Go back and see if you can negotiate and build on your deal. Can you get more? Can you be more creative? Can you enhance the deal using different options? This is a concept called Pareto Optimality—maximizing what you get out of the negotiation. Make sure you revisit your interests to see if they’ve actually been addressed. Go back and look at whether the scope of the deal can be broadened through additional options.

Once you’ve done that—once you’ve refined and expanded the deal—hopefully you’ll have a good deal. Or at least, a deal that’s better than your BATNA.