How I Learned To Stop Worrying And Love Negotiating

Tweet

'I never planned to go into business, much less to own and operate one. In fact, I studied Shakespeare. I taught Shakespeare at the Chinese University of Hong Kong and taught Faulkner in Bombay. But through a variety of odd circumstances, I dropped Macbeth to go first into real estate, then into the rag trade. I found that one was as dramatic as the other -- Shakespeare, real estate, retail.

That surprised me. I had never understood from the outside how exciting business can be -- the strategizing, the risk taking, the untidy surprises, the successes. And to my mind, there is no place where all of these things come into play as fully as when I sit down at the negotiating table, be it with my banker, my vendors, or one of my landors. The fun of negotiating is that it's alive.

The art of negotiation has not come naturally to me. It's taken a while to realize that the process improves with patience -- by no means my long suit. And the truth is, I started out backwards. I prepared for each round by focusing on my goals and alternatives first, and then on the people I was negotiating with. My reasoning went something like this: who has ever won the Olympics without knowing where the finish line is? Who has ever won a chess tournament without assessing alternative moves and outcomes?

But this strategy doesn't always work, as I found out 10 or 12 years ago, during my first job as a buyer for a large department store. I'd been there only a short time when my boss laid out my assignment: "Marjory, the department is overstocked, and the markdowns are way too high. One of the major problems is such-and-such a vendor. On this New York City trip, go tell him the inventory levels are too high, the goods aren't performing, we need to send back 25% of our inventory, and we need $8,000 to help cover our markdowns."

No sooner had I shaken hands with the vendor in his Manhattan showroom than I told him precisely that. It was my first experience with the boom-zero effect. He was insulted and angry. Who was I, brand-new in this area, to say his products weren't good? And who was I to make demands of him? Ignoring his needs, not to mention his feelings, I scored a fat zero.

Still, I couldn't go back to Minneapolis empty-handed, and over the next three or four weeks we arrived at a compromise. But it was clear to me that I had reached an acceptable solution by the sheer force of the store's buying power and by my will and determination. By guts, not skill. By force, not finesse. I had won financial concessions but not a strong relationship. And I'm in a business where ongoing relations with vendors is key.

More important than the financial results, I brought out of that experience the awareness that one ignores the feelings of the other side at one's own risk. Determination and goal setting are good complements to people skills, but not good substitutes.

Some people think of negotiating as a game, which is certainly the way I first looked at it, with my Olympics-and-chess mind-set. And the analogy has a lot of appeal. The idea is that each party is out to pursue his or her own interest and to win, which makes each wary of the other. It's assumed that it takes certain skills to play well ans succeed, and that, above all, a sportsmanlike attitude is appropriate.

Now while all these points are true, I believe that negotiating is not a game. It's a business relationship in action. And nothing can kill a negotiation more quickly and more completely than a me-against-you attitude. While the "gotcha" approach may work in a single transaction, it is hardly likely to produce a successful, ongoing business relationship. Over time, both partners have to win. Otherwise, the loser will drop out.

Certainly all of us have negotiated with folks who, emotionally, just don't have all their ducks in a row. At the extreme are those with the Agent 007 complex: they believe the world is full of guile, jeopardy, and illusion, but that they will prevail because they are ready and able to go for the kill. They believe any overtures and any efforts at mutual problem solving are a game of deceit, that they can't win unless you lose.

It's with just such people that being a chief executive officer really comes in handy. As often as possible, I choose to deal with these would-be negotiators by dealing them out. Who's in a better position than a CEO to select which resources to use and which not to use? Surely there's another bank, another accounting firm, another vendor, another site. Why negotiate at all with 007s? Better to walk.

Maybe you've had the experience, as I have, of one of these dropping uninvited into your business life. Meet "Alfred," the new president of your number-one vendor. Agent 007. You can't ignore him without jeopardizing your business. Here I just keep it smooth, take the grief, and start developing new vendors so I can scale this one down, down, down.

Aside from the 007s of the world, I've found that most businesspeople respond favorably to looking for mutually beneficial solutions. There's a catch, though. "Mutually beneficial" means not only that they have to benefit from the deal, but also that they have to perceive that they are benefiting. The perception factor is so strong that sometimes I've had to put in much more effort than seems necessary to get the other side to see the benefits. Here's an example.

 1 | 2  NEXT