Book notes: The Secrets of Power Negotiating by Roger Dawson

The Secrets of Power Negotiating by Roger Dawson

Synopsis:

“Negotiation is a skill that can bring you vast success in all aspects of your life. When you’re a skilled negotiator, you can get the best possible price on everything you purchase or sell, and you can deal with salespeople or clients.

We’re all negotiating all the time in all kinds of everyday situations: parents negotiating with their children; employees negotiating with each other, with subordinates, with bosses; customers negotiating with salespeople or service providers. And with The Secrets of Power Negotiating, you’ll always have the upper hand in every negotiating situation in which you find yourself.

For example, the program gives you specific ways to:

• Get the best possible price when you buy or sell a house, a car, a business, real estate, or any negotiable item.
• Get a raise or promotion.
• Keep employees happy without giving in to unreasonable demands.
• Get a new and better deal with your landlord or mortgage loan officer.
• Stop being stonewalled by store clerks, petty bureaucrats, service and repair people, and others.
• Get more cooperation from your corporate peers and subordinates.
• Get bigger loans and better terms from your banker.
• Uncover valuable “hidden information.”
• Be more confident in virtually any interpersonal situation.
• Plus many other situations you run into in your daily life.” -Audible

Opening thoughts:

I’m a huge believer in the benefits of learning negotiation principles. In the company I currently work at, I worked in the negotiations department for almost a year when I first started and developed a ton of great skill sets I still use today. Understanding influence, social dynamics, and the principles on how to work with others is extremely invaluable, which is why I decided to add this to my reading list this month.

Key notes:

• You can get anything you want if you realize these 5 things
  1. You are negotiating all the time. If you know how to do it right and structure a negotiation so that they get what they want and you get what you want, you’ll be more successful and have less stress and friction
  2. Anything you’ll ever want in life is presently owned or controlled by someone else. It makes sense to spend a little time learning how to get it and in such a way that we are not dominating people, but turning people onto us because we know how to get them what they want
     • The answer to good business is not in the mechanics, but in handling people
  3. Understanding there are some predictable responses to the maneuvers that take place in a negotiating situation
  4. There are three critical factors to every negotiation
  5. People are different. We have to adjust to the fact that we have a specific personality style, and so do the people with whom we will be negotiating with
• Win-win negotiating: negotiators should sit down and honestly work out their problems together and arrive at a situation where both of them can win in the negotiation
• There are always more than one issue in a negotiation, not simply price
• Rule #1: There are always many elements that are important in negotiations. The art of win-win negotiation is to piece together those elements like a jigsaw puzzle so that both people can win
  • Never narrow down the negotiations to just one issue
• Rule #2: People don’t want the same thing. We have an overriding tendency to assume other people want what we want
  • It’s not a question of one person being right and the other wrong. Both can be right, just seeing things from a different perspective
  • Example: One person’s palm faced towards another. Both give different descriptions of the hand. Both are correct, they just have different perspectives
• Rule #3: We will never be a win-win negotiator if we think what we want is what they want
• The opposite of love isn’t hate, it is indifference
  • You’re always better off with a strong objection than being met with indifference
• Good negotiating becomes not just a matter of getting what you want but also a matter of concern about the other person getting what they want
• Don’t confuse negotiating with price flexibility
• To a good negotiator, “no” is simply an opening negotiating position

3 Stages of Negotiation

• Stage 1: Establish criteria, find out exactly what the other side wants to do
  • First, ask them exactly what they want or expect us to do
  • Second, we create our criteria in their minds. Tell them exactly what we are prepared to do to ascertain how far we might be apart in the negotiations
• Stage 2: Get information, find out all you can about the other side
  • Don’t jump to conclusions, ask for information
• Stage 3: Reach for compromise

5 Characteristics of a Good Negotiator

1. They learn to mentally compensate for thinking you have the weaker hand than the other person
2. The desire to acquire the skills of negotiating
3. The understanding of how these different principles work, and how the gambits effect the negotiation
4. A willingness to practice
5. The desire to create win-win solutions
   • You haven’t completed a good negotiation if the other person resents what you accomplished. They must feel good about what was done

• Even if you don’t use these tactics yourself, you need to know about them because they’re being used against you all the time
• Nibbling: you can get a little bit more even after everything has been agreed to
  • When people make a decision, they tend to feel good about it afterwards and want to spend more because of their new confidence
  • People want to reinforce the decision that they just made
  • Don’t necessarily ask for everything upfront
    • Wait for the moment of agreement in negotiations and then go back and nibble for a little bit extra
  • The counterattack is the make the other person feel cheap
  • If you add the additional perk in the initial request, they can use it against you for a trade-off
    • It’s more effective to use it as a nibble on the back end
• Hot Potato: when somebody wants to give you their problem
  • Response: test it for validity right away
  • Always agree with people in whatever they say to you initially
  • Some issues like price may not be the deal-buster that it appeared to be
• Higher Authority: Always have a higher authority that you must check with before you can change your proposal or make a decision
  • Works best when it’s a vague entity, such as a board of directors or a committee
  • A great way to put pressure on someone without confrontation
  • Counterattack: remove the option to resort to higher authority before the confrontation
    • “If this proposal meets all of your needs, is there any reason why you wouldn’t give me a decision?”
    • Appeal to their ego to make a decision, and get their firm commitment they will give a positive proposal to the committee, and go to the qualified subject to close
• Set Aside: establish some momentum after putting aside the big issue. Come to an agreement on some small things and the big thing will be easier to overcome
• 3rd Party Close: use a 3rd party whom seems reasonably neutral, aka the arbitrator route
• Good Guy, Bad Guy: one rough character and one nice character
  • Small concessions will lead to big ones, be vigilant in identifying them
  • Counterattack: 1) identify 2) go over their heads to supervisor 3) tell them you will attribute whatever bad cop says to both people
• Never jump at the first offer
  • Still go through negotiation process so that the other person feels like they won
• Feel, Felt, Found Formula:
  • Don’t argue with whatever response people give. Arguing always forces people to defend their position, while agreeing defuses the competitive spirit
  • Agree then gradually turn around with “I understand how you feel. I felt/know people who felt the same way. This is what I found…”
• When negotiating, understand that dumb is smart and smart is dumb
  • You’re better off not acting too sophisticated when dealing with people as it breeds competition. If you act a little dumb with people, they will want to help you
  • There are ways to communicate that you are not a competitive threat to people in negotiating
• Declining Value of Services: the value of services always appear to diminish rapidly after those services have been performed
  • Anytime you make a concession, ask for a reciprocal trade off right away. The favor you did someone now loses value very very quickly
  • Negotiate the fee for services upfront, not after the work is performed
• Learn to develop walk-away power
• Always negotiate in your own territory
• Always ask for more than you expect to get so that you can set up a climate where the other person can win in the negotiations
• Flinching: always visually react anytime a proposal is made to you
  • When a proposal is made, someone is always watching for your reaction
• Trade-off Principle: anytime you’re asked for a concession, automatically ask for something in return
  • Never ever give anything away, always make a big deal out of it
  • This also stops the grinding process so they won’t come back for more
• Vice Technique: a way of squeezing people with a simple expression
  • After their proposal, smile and say, “I’m sorry, you’ll have to do better than that”
  • Counter: “How much better do I have to do?”
• Power of the printed word: people believe what they see in writing, but won’t believe when they just hear about it
  • Every chance you get, put it in writing
• Principle of the Withdrawn Offer: when making concessions, make one big enough to seal the deal. If you need to make more, make them smaller and smaller
  • Withdrawing an offer to bring the negotiations to a conclusion
• When done negotiating, never gloat. You should always congratulate them afterwards
• Always be the one to write the contract
  • Send someone a completed proposal with the assumption that they’ll accept it exactly as it is written
• Good negotiators understand “funny money” which is breaking down money into ridiculous terms or units
  • “Only going to be $0.35/ day extra” on 30 year contract = over $7,000.00
  • Learn to think in real money terms
• Red Herring (refinement of Decoy Technique): decoy that will subsequently be used to trade off for a real issue
• The Puppy Dog close: getting the other person emotionally involved in the decision to draw in the negotiations to a satisfactory conclusion
• Reluctant Buyer Principle: if you approach a seller with enthusiasm, you’re not going to get a very good buy
  • Always play the role of a reluctant buyer
• Want-it-all philosophy: in initial negotiations, always ask for far more than you would expect to get to leave room for the other person to win
  • As a buyer, go in very very low, but imply flexibility in the offer
• Split the Difference: never offer to split the difference yourself, but always encourage the other person to
  • People become more flexible in the relationship to the time they’ve invested in the negotiations
  • Keep stressing the time spent on the issue and small amount of money apart on the issue
    • Sooner or later, the other person will suggest splitting the difference
• The movement of the numbers and the goal concessions are the only thing that matters and affects the outcome of the game
  • Tennis players are trained to concentrate on the ball, not the other person
  • Good negotiators concentrate on the issues, not the personalities

Critical negotiation element: Power

Power = the ability to influence other people

1. Legitimate power: anybody who has a title (if you have it, use it)
   • Having a secretary or someone to screen calls demonstrates power and authority
2. Reward power: someone who is perceived to be able to reward you
3. Coercive power: someone who is perceived to be able to punish you
   • When you realize it is a numbers game, it removes perception of reward or punishment and people become more self-confident in what they’re doing
4. Referent power: anybody who has a consistent set of values, such as a religious leader
   • When you’re consistent, people will follow you
   • People perceive this in negotiations. They admire and respect consistency
     • Play it straight with people, reputations travel very quickly
5. Charismatic power: hardest to analyze and explain, tremendous personalities of people like celebrities and entertainers, they get a tremendous amount of respect and following
6. Expertise power: when you project to people that you have a little more expertise than they do in a particular area. Attorneys and doctors play this up
7. Situation power: people who normally have very little power will take advantage of situational power, like a secretary or front desk worker having a bad day
8. Information power: sharing information forms a bond, withholding information tends to intimidate
   • The more you share information with the organization, the more committed your employees will be to the company goals
   • Large organizations believe that a level of secrecy at the top will give them control over the workers
9. Rate yourself in these elements as others perceive you and do what you can to scale up

• 4 Critical Elements: legitimate power (title), reward power, referent power and charismatic power
• Information affects negotiation. Almost always the side that has the most information can do better in the negotiation
  • Important to start off learning as much as you can about the other side
  • Learn the art of probing and asking open ended questions
  • Techniques: repeat the question, ask about their feelings on the situation, invite some open response, ask for restatement
  • Find out information from other companies or people further down the corporate structure about the person in question
  • The setting and location where you ask for information will be a factor

3 Steps in the Negotiating Process:

1. Establish criteria, open and hidden agendas
2. Gather information
3. Reach for goal compromises that will achieve momentum to reach a settlement

• Critical element of time: The person with the most time pressure usually does worse in the negotiations
  • People under time pressure are more flexible
• Pareto’s principle / 80 – 20 rule: 80% of concessions happen in the last 20% of the negotiations
• Tie up all the details upfront

Personality Styles

• You’ve got to adapt what you are doing to the personality styles of the different people you deal with in relation to you personality style
• Personality styles:
  • Pragmatic:
    • Makes decisions on logic/organized, businesslike, dislikes wasting time, more assertive
    • Approach: don’t waste time with small talk or overload with info. Overenthusiastic presentation will come across as phony. Expect fast decision based on facts
  • Extroverted:
    • Makes decisions on emotion, loves participating with people, fast decisions, more assertive
    • Approach: paint an enthusiastic picture of benefits. Get him excited and talk about his interests. Tell a story about triumph and disasters. Expect fast decision based on level of excitement about the project
  • Analytical:
    • Makes decisions on logic/organized, unemotional/less warm approach to people, into detail, slow decision makers, less assertive
    • Approach: be accurate and prepared to give many details. Build rapport by talking about his interests
  • Amiable:
    • Makes decisions on emotion, slow decisions, less assertive, more warmth/emotion
    • Approach: go slowly and wait until he trusts you. Demonstrate you really care about people. Don’t offend or high pressure. They will need time to think things through and until they feel comfortable
• Sometimes people will think their supervisor is the same personality type when in reality, the supervisor has adopted the style of the employee to deal with them
• The problem with sales training is they tell you to be enthusiastic
  • While this may work for Extroverts and Amiables because of the high emotions, the Pragmatics and Analyticals will be turned off
• Sales also tells you to dominate the conversation and respond to questions with questions. This will work with Analyticals and Amiables, but not for the assertive Extroverts or Pragmatics
  • Similar idea for buying on emotion, which is only true for Amiables and Extroverts

Personality styles in negotiations

• Pragmatics: street fighters, care about willing, not necessarily win-win. They will fight hard because they expect you to fight hard
  • Goal: victory, play to win
• Extroverts: turn into Den Mother because they get so excited that they lose perspective
  • Goal: influence other people. They enjoy changing people’s minds
• Amiables: turn into pacifists, not needing to win but to make sure everyone is happy
  • Goal: agreement, the ultimate solution is to get everybody to be happy
• Analyticals: may be too rigid in negotiations
  • Goal: have order in the negotiations. To get it all sorted out so that it runs on an organized and well-run basis

• Win-win negotiator’s goal: a wise outcome for all parties involved
  • Learns how to be soft on the people, hard on the problem
  • Learns how to create options where nobody loses
    • Works to get people off of their positions so that they can concentrate on interests
• Body language: a tremendous amount of communication is nonverbal
  • Never negotiate over the phone if possible, always try and meet face-to-face
  • There is a lot of information you can gather about the situation when in-person
  • People believe what they see much more readily than what they hear
  • Changes in body language are vital, not just the body language itself
    • Smoking and unbuttoning jacket to signify being relaxed
    • Changes in eye blinking frequency can signify high tension or lying
    • Head tilt = paying attention, head upright = zoning out
    • Tug ear = wants to hear more
    • Scratching head = embarrassed or uncomfortable about what’s going on
    • Steepling (fingers touch, especially tips, without heels of hand) = indication of supreme confidence
      • Difficult to do when nervous
    • Man brings hands to chest = openness and sincerity
    • Woman brings hands to chest = shock or protectiveness
    • Touching bridge of nose (particularly with closed eyes) = concentrating on what’s going on
    • Hand touching back of neck or finger in collar = annoyance
    • Throwing glasses on table = frustrated or upset
  • Proxemics = how close you should get to someone
    • <1.5 ft = intimate zone (do not intrude w/o permission)
    • 1.5 – 4ft = personal zone
    • 4 – 7ft = social zone
    • 7ft+ = public zone
    • Many variables to this such as national background, where people from crowded cities like UK, Japan, or densely populated areas are more comfortable in crowded environments
  • Height considerations: Taller person should give shorter person more room as to not be dominating or turning slightly profile to lessen effect
• 4th ingredient of a great negotiator: willingness to practice until they become 2nd nature
  1. Understand gambits
  2. Understand personality types
  3. Understand body language
  4. Willingness to practice
• Understand and be careful of hidden meanings. Listen very carefully to the words people use
  • If something sounds strange, write it down word for word and analyze it later
  • Very often people say the exact opposite of what they mean
  • Throwaway expressions: “As you are aware,” “Before I forget,” “By the Way…” usually precede monumental announcements
  • Legitimizers: “Frankly,” “Honestly,” “To tell you the truth…” are used to legitimize something not fully true
  • Justifiers: lay the foundation for failure, fall short of a firm commitment
    • “I’ll try my best,” “I’ll see what I can do…”
  • Eraser words: “But” or “However” erases what has happened preceding that statement
  • Deception phrases: means the exact opposite, “I’m no student of the law but…”
  • Preparer statements: “I don’t mean to be personal but…”
• Most of us have a particular orientation to one of our senses such as sight, sound or feeling
  • You can discover by the language someone uses
• The answer to negotiations isn’t domination or overpowering, but to achieve a win for them also and help give them what they want
  • Object: not to beat opponent but to creatively reach an agreement in which each negotiator can feel he is a winner
  • No matter the object of negotiation, both sides can and should win
  • Good negotiations are completed when both parties walk away feeling they’ve accomplished something important
  • 2nd benchmark: the feeling that each cared about the others’ objectives
  • 3rd benchmark: belief that each side was fair in the way negotiations were conducted
  • 4th benchmark: each negotiator will leave feeling like they would enjoy working together again in the future
  • 5th benchmark: a belief that each party is determined to keep the commitments made in the contract
• Everything you need and want is controlled by someone else
  • Use these skills to help deal with people more effectively, and ethically reach an agreement fair for everyone, a win-win solution

Negotiating for a Car:

• In America, our culture is not accustomed to negotiating prices on anything except real estate and automobiles
• Going in, be the opposite of what the sales person wants you to be
  • You must be informed, not emotionally attached, and not under time pressure
• You can pay for a service to find out how much a dealer pays for a car
• Call leasing companies, they’ll locate the car at a dealer and get you the best price
  • Call 2 -3 leasing companies and ask for lowest price on particular model to get a good idea of what’s possible
  • You can also ask what the dealers’ cost is and they’ll tell you
• Used car: call loan officer from a bank and they’ll give a quote from Kelley Blue Book
  • Retail prices “high bluebook” and wholesale prices “low bluebook”
  • A dealer tries to not pay more than low bluebook and tries to sell at high bluebook
    • Your objective is to buy as close to low bluebook as you can
• Objective: buy anywhere from dealer cost up to 5% below actual dealer cost
  • Not cheating dealer because car fleet buyers can buy for several % points below dealer costs because the net cost to the dealer after factory incentives is considerably below actual invoice cost from the factory
• Be emotionally uninvolved in the purchase
  • Do any test driving on a separate day
  • Let the car salesman know you’re buying for someone else (family member or company)
    • The decision on the make and options have already been made, you’re just looking for lowest possible price
• Don’t be under time pressure, or if you are, don’t let dealer know
• If salesman tries to get you to make a commitment, ask him to commit as well in regards to being able to make final purchasing/selling decision
  • Counter to the Higher Authority gambit
• Disarm the Good Guy, Bad Guy gambit by calling it out when you see it
• Beware of “funny money” and find out TOTAL price at the end
• Gambits against dealer:
  • Reluctant buyer: pretend you don’t like the car and turn to leave, but throw in last question about how low they would go for selling the car
  • Bracketing is positioning your objective in between the two opening negotiation positions
    • Most negotiators have “split the difference” mentality, which makes this effective
• Four-squaring: every car buyer has 4 concerns, but one is primary
  • Price, trade-in for old car, amount of down payment, monthly payment
  • Be detached from other squares as net price is your main concern

Negotiating a Pay Increase

• You can’t do anything that will make you money faster than being a good negotiator
  • Proves true when you calculate concessions divided by how much time it took for you to get them
• Negotiating with a boss is intimidating for several reasons:
  1. Greater title power
  2. Reward power over you
  3. Coercive power (fear of them getting mad or not being loyal)
  4. Information power
• Never negotiate with someone who can only say no
• Your power in the negotiation is your relationships to the alternatives that each side has
• The most important pressure point is which side is prepared to walk away from the negotiation if they can’t get what they want
• Gambits:
  • Anticipate and preclude objections that may come up
    • 2 biggest objections: company isn’t doing well enough to afford your raise, and your performance isn’t good enough to justify a raise
  • Have the courage to ask for more than you expect to get in the negotiations
    • When you put pressure on the other side, you also create an environment where the other side can get a win
  • Concentrate on the issues:
    • The only thing that matters is the movement of goal concessions across the negotiating table over the course of the negotiations
  • Hot potato: don’t let them give you their problems like not budgeting for your deserved raise
    • Counter: test for validity immediately, ask who can exceed the budget
  • Good guy, bad guy: always best if you can have someone else negotiate your raise in your place
    • They can be more forceful than you and use higher authority with you
  • Nibble: once you reach concessions or agreements, perfect time to ask for a bit extra. “Oh by the way…”
• Review personality styles, your own, how you come across, and your boss’s style
• Remember: you always think that you have a weaker hand than you normally do
  • There’s always pressure on both sides

Closing thoughts:

This is one of the books that I think everyone should read. It definitely made its way into my top 10. I think sales/influence/negotiation is something people should always learn because even if they don’t use the tactics themselves, they are being used on them all the time. Every time we see an advertisement, sales copy, or deal with people, we’re dealing with the same principles of influence. Dealing with people is such a universal skill no matter what line of business you work in. Lastly, this book can literally save you hundreds if not thousands of dollars down the line with practice, especially the ending sections on negotiating for a car or a pay increase.

Nutshell:

Solid negotiation principles and strategies to become a win-win negotiator.

Similar books:

• Never Split the Difference by Chris Voss
• The Like Switch by Jack Schaefer
• Influence by Robert Cialdini
• The Soulful Art of Persuasion by Jason Harris
• Give and Take by Adam Grant

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Rating:

4/5

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