Negotiations

I was invited to guest lecture at Sawyer Business School in Suffolk University last week.  I taught a class in negotiations.  I was informed by the instructor of the class that there were several students who thought that they would be bored, so I punched up the program a bit.  In just short of three hours, we covered all of the primary negoitation techniques, did some role playing to test our skills and then looked at the psychological factors that went into the process.  It was eye opening for the students and for me.  You see, I tested a theory.

I believed that the mindset of the people in the negotiations far outweighed the actual reality of the situation.  So to test this theory, I set up the following scenario.  There were three students in each group.  Each student received a different color piece of paper that spelled out their personal scenario and goals.

One student was the business owner who was receiving offers from two other companies to buy his/her business.  That student's goal was to get the best deal for the company while maintaining their objective of taking care of their loyal employees and safeguarding the hard work s/he had done. 

The second student got a pink piece of paper saying that they were a lower level employee who was hoping to move up.  They had screwed up their last deal and they needed to impress their boss or they would never hope to get the promotion they desperately wanted.  They COULD NOT afford to screw up again.  They had 5 million dollars that they could spend and they were under orders to get the company no matter what.  They also would get a bonus if they could get the company for less than $3.5 million.

The third student received their instructions on a yellow sheet of paper and was informed that they were a professional negotiator who was brought in to make this deal happen.  They were confident in their ability to get the deal done and knew that the company they worked for was behind them 100%.  They had $4.5 million dollars they could ultimately spend and got a bonus of $100K if they could bring in the deal under $3 million.  They were also informed that they knew there was more than one way to skin a cat.

So what do you think happened?  If you look at the scenarios, it seems clear that pink should be able to outbid yellow in every instance - they simply have more buying power.  But what actually happened is that yellow won the negotiations in 5 out of 8 groups.  Why?  Yellow was more aggressive and offered shares of stock in the company to be retained by the existing owner (something that was neither approved of nor forbidden).  They also maneuvered on the emotional issues that the business owner had.  Pinks gave up too quickly. 

Did I pick only the bad negotiators to give the pink papers to?  No.  In fact, I purposely chose the people who had won the prior negotiations from the earlier role play to be the pinks in this one.  It was the psychology that had been set up.  They allowed their minds to psych them out. 

How are you at negotations?  Do you go in knowing that you are good at them?  Or do you allow yourself to be psyched out by the competition?  Perhaps next time you might try pretending that you are the best negotiator ever known.  You too might be the yellow that outbids the pink through nothing more than a force of will and a little ingenuity.

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Kelle Sparta is the author of The Consultative Real Estate Agent - Building Relationships that Create Loyal Clients, Get More Referrals, and Increase Your Sales, as well as being a speaker and trainer specializing in the real estate industry. Kelle is the founder of Sparta Success Systems, a real estate training company that provides tools, products, and training to empower agents and brokers to create lives and businesses they can love. For more information, visit her website at http://www.spartasuccess.com/. © 2008, Kelle Sparta.