How to Negotiate a Real Estate Commission
Negotiating a real estate commission is an important aspect of getting a property leased or sold. You are hiring someone to do something for you. Accordingly, you want to have a broker that is motivated to focus on your need to sell or lease the property. You do not want to look back and realize that you grounded the broker too hard when negotiating the commission. You negotiate a real estate commission based on the type of transaction, the type of property, and the size of the transaction. It can also vary according to geographic area, the economic climate, and how busy the real estate market is.
Here's how to negotiate a real estate commission in seven steps.
Determine the proper usage of the property
When negotiating a real estate commission the first step is to determine what type of real estate is involved. If already developed, is it residential, industrial, office, restaurant or retail? If it is raw land then consider how it is currently zoned and perhaps complete a highest and best use analysis. Even if the property is currently used for a specific use you may find that there is a higher and better use for the property.
What is your preferred type of transaction?
There are many real estate transaction types to consider when negotiating a real estate commission. A property can be sold or leased. The seller can provide financing or require all cash. It can be leased as a vacant lot or developed and leased to an end user. Each transaction has different levels of complexity and challenge. Before a commission is structured the viable types of transactions should be identified so the commission agreement reflects the transaction.
Determine the value of the transaction
Is it a $5,000,000 property sale, a 10 year lease at $120,000 per year net rent, or a one-year residential lease? The monetary size of the transaction has direct bearing on how you will negotiate the real estate commission schedule. The larger the transaction, typically the smaller the percentage of the sales price or value of the lease should be. At If you are trying to achieve an above market sales price, aggressive rental rate, or need to attract a unique type of tenant, you should factor in the time it should take to make the transaction happen and the probability of success. Consider the risk involved for the listing broker. You are asking the broker to invest his time, efforts, and experience without any guarantee of being paid. The more difficult the deal, the higher the percentage of the deal not happening the way you want, the higher the commission that the broker will want, and should be paid.
Determine what the "industry standard"
Even for simple transactions like selling a home the standard commission could easily range from 4% to `10%? The local range can be determined by calling a few residential brokers and asking them the question. You should not have to reveal your name or identify the property to get this information. Make sure you acquaint yourself with any commission formulae that may be customary. For example, it is typical that a long term commercial lease provide for a commission based on x% of the rental income for the first five years then y% for the next five and so on.
Evaluate the degree of difficulty in making the transaction happen
If you are trying to achieve an above market sales price, aggressive rental rate, or need to attract a unique type of tenant, you should factor in the time it should take to make the transaction happen and the probability of success. Consider the risk involved for the listing broker. You are asking the broker to invest his time, efforts, and experience without any guarantee of being paid. The more difficult the deal, the higher the percentage of the deal not happening the way you want, the higher the commission that the broker will want, and should be paid.
Shop around for the right broker
Contact a number of brokers that specialize in selling this type of property, and interview them. Tell them you are considering an Exclusive Listing Agreement. Ask each broker for a Marketing Proposal based on marketing your property. If you feel the transaction is especially challenging tell the broker you are "open" to paying more commission, but only if is justified. Ask the broker to assign a marketing value to the property.
See what each broker comes back with. You are looking for several things.
Make sure you are comfortable.
When you are finished with your review of the marketing proposals from the brokers and have selected the plan and broker you want to use, evaluate the total commission. Discuss this issue openly with the broker. You are hiring someone to do something for you. Accordingly, you want to have a broker that is completely motivated to focus on your need to sell or lease the property. You do not want to look back and realize that you grounded the broker too hard when negotiating the commission.
If the total commission is fair and reasonable to both you and the broker, you should be ready to write it up.
Negotiating - A Contact Sport
In our lives we have two basic choices, to take control or follow.
Negotiating is a contact sport. To be effective you must be able to persuade others to listen to your arguments, consider the arguments, and decide that they want to help you in some way achieve your goals.
They do not need to decide that you are right. They do need to want to help you or allow you to proceed toward your goal. In fact, they will try almost anything to win including making personal attacks.
To handle the conflict common t negotiations consider the following approach.
This is simple leadership. Managers must motivate employees to do their jobs allowing the manager to succeed. Teachers must motivate students to study and produce homework and learn. Parents must convince their children not to play in the street, do drugs or otherwise step in harm's way recklessly.
Whenever two or more people come in contact there will be some level of conflict. It may be as simple as passing on a narrow mountain path next to a sheer canyon wall or as complex as working out a peace accord between vying nations.
Resolving the disparate interests is a matter of establishing a commonality of interests. Leaders are adept at forging such realignment of individual interests. Individuals do the same when resolving conflict. They persuade others to consider alternatives in the hopes of reaching a mutually agreeable solution.
Managing from the Bottom Line
A Ruby-Throated Hummingbird must consume twice it’s body weight in food each day. This is not a goal or objective. It is the bottom line!
Mediators and negotiators by definition have different bottom lines. While both are seeking to reach an agreement, that is the sole and absolute goal of the mediator. He has no vested interest in the terms of such an agreement.
Knowing your bottom line is perhaps the most important aspect of being a good negotiator. The bottom line, the minimum that you will accept, is the point that you must decide whether to continue to try to hold things together or simply walk away from the opportunity.
In most cases, this is the point where you become willing to bluff. Bluffing is a last resort tactic that should be reserved until all you have at risk is failure itself.
Share your bottom line with your co-negotiators. If you are uncomfortable doing this, you should consider replacing the person causing the concern. A team is only as strong as its weakest link. Your concern about being totally transparent with everyone on your team tells you something about the team or your management style.
Do not confuse your goal with your bottom line. They are vastly different. Your goals are what you want to achieve while your bottom line is what you need to achieve.
Having Alternatives Improves Negotiating Results
When you come to a fork in the road you have two chances to make the right choice. Pick carefully.
Negotiating is very much like a trek through a jungle. You know where you are going but will encounter any number of obstacles that need to be negotiated to get back to your camp. Being proficient with your tools and having planned the journey will increase the odds of your making it through the jungle.
A negotiator does not have a compass, map or guide to assist him. But he does have similar tools and the opportunity to plan. Those who come to excel in the field invest in their trade craft and properly prepare before each encounter.
Planning for a negotiation requires proper knowledge and preparation. Facts are the basis of the map to the negotiation. Your ultimate goal is the compass heading you need to check and recheck as you proceed. Your co-negotiators and experts are your field team. Setting the plan is an essential step in the pre-negotiation process. Establishing a common goal for the team allows everyone to set their internal compasses and pursue the same objective.
Planning provides a chance to anticipate objections and prepare counter strategies. It is far better to be prepared than forced to react. Preparing and planning gives a negotiator alternative strategies and tactics to use in pursuit of his or her goal. Negotiations are conflict based. They are not intended to be easy. Being armed with alternatives improves one's chances of prevailing.
Corporate Team Building in Negotiations
There are times when having a negotiating team is appropriate.
In corporate environments this is often the norm. You have the executive responsible for solving or managing the situation, the corporate counsel who may be involved or may enlist out-house counsel to litigate the matter, the staff insurance or risk manager, and the insurance carrier's representative. This core team may then add professionals or experts depending on the complexity of the matter. There may also be other corporate representatives involved.
In effect all corporate negotiations are team negotiations no matter who arrives at the settlement conference.
Like any other aspect of negotiations, teams need to be properly managed.
If you are heading up a corporate team, you are responsible for that team no matter to whom the individuals report. You are responsible for its preparation, research, and the role each member will play. This is especially important if there are 'professionals' on your team. Too often clients delegate the preparation and research aspects of a settlement conference to their legal staff. This would be fine if the issues were legal details. But when it comes to other issues and overall strategy, the responsibility should be vested solely with the lead negotiator.
You need to build your team based on the needs of the occasion and not the desires of political factions within the company. Representation at each meeting is not a requirement for each member of the team, especially if that individual proves disruptive to the settlement process. In establishing the team, make sure everyone knows their role, is prepared, and most importantly, that you have set the goals and objectives for the team.
If you are not used to working with the members of your corporate team, take steps to establish your role as team manager.
Corporate Team Building Tactics:
- Welcome them to the planning session and indicate your appreciation of what they can lend to the team.
- Source the pecking order of the individual team members and see if there are potentially conflicting internal goals and objectives to be resolved.
- Discuss with each new member of the team their role, qualifications, and specific areas of expertise.
- Ferret out areas where the other team members appear to not agree fully with you. Monitor closely the non-verbal reactions to the discussions to note any unvoiced discord. You want your team to be focused and mutually supportive.
- Collectively establish the goal of the team and the negotiating parameters.
- Prior to each formal negotiating or settlement session meet with the team doing the negotiating and establish the goals and objectives of the day's discussions.
- Decide prior to meeting with the other side if you want to reveal your leadership role during the meeting or let someone else lead the dialogue. There are times when it is beneficial to use a straw man while you observe the interaction of the other team.
Negotiating teams are no different than other teams. They need good leadership. They need direction. And they need to be managed so they function efficiently and constructively.
Business Management Skills in Negotiations
In any dispute those involved make up a small group and are subject to traditional group dynamics. Groups need to be lead or managed. Filling this role is what makes mediators effective at resolving disputes.
Similarly, negotiators who take the initiative to become informal group leaders are most likely to have the best track record of achieving their goals.
Negotiations essentially are dysfunctional small groups. All small groups need to be lead to achieve their goals. Group leaders establish objectives and set a course to obtain the desired results. Negotiators should look at the various people at the table, from both sides, as a small but dysfunctional group in need of leadership.
The challenge is to motivate the group as a whole to focus on mutually beneficial goals.
Mediators, trained to manage such small groups, have the benefit of being assigned the role of leader. Negotiators must acquire the role through application of management skills to capture the respect and attention of their opponents. Demonstrating expertise, professionalism and passion are common traits of strong business leaders. These traits also serve the negotiator well when establishing a position of group authority.
A manager and a mediator have their positions established by others. Negotiators have to earn theirs without directly confronting the other person. Collaborative managerial styles are excellent means of subtly establishing a role of leadership. Such styles include:
- Establish a Common Goal: By giving each person a vested interest in the outcome of the negotiations you establish a common cause that should underscore the reasons behind each collective decision the parties make. Identifying a common goal is the first step towards establishing an informal, small group which can be lead.
- Parity of Power: By recognizing the power bases of the parties, you can dissolve misconceptions about who has the most power and create an environment where both parties need each other to resolve the situation.
- Persuasion: Mediators are masters of group persuasion. They must get warring parties to set aside their differences and reach an accord. Most people are used to being told what is right to do. A mediator is unable to make the decision for the group. He does not function as a judge or jury. He must encourage each of the parties to set aside their animosity and strive to work out a solution. He may have to persuade a recalcitrant party to let go of their emotional baggage and focus just on the settlement terms. He can do this by re-stating the other person's position or proposal in a more favorable light. He may remind the disgruntled party of the time and expense of pursuing the matter in court and point out that settling during mediation might cost less in the long run. What the mediator needs to do is get the party to soften an absolute rejection so some dialogue can start.
Making others want to do things they don't initially want to do is what successful mediators and negotiators do. Hitting the other person over the head with facts and demands is a good approach if you have power and authority on your side. If not, you must resort to the basics: inform, educate, and enlist.
Inform - By informing the other person of salient facts, tangible information and logical arguments, you are providing reasons for the person to reconsider their position without losing face.
Entice - By creating alternative and/or innovative incentives for the other person to reconsider their position, you are expanding the negotiating arena to include other commodities that may make an otherwise untenable accord viable.
Enlist - By seeking the other person's help in solving the dilemma, you are cashing in emotional concessions in return for advancing your cause.
All three approaches are basic management tactics designed to get the other person to do what you need him to do. They work as well in the negotiating arena as they do in the business environment. Essentially they are non-threatening management styles designed to motivate another person to action.
Being able to capture a leadership role within a negotiating small group environment is a management challenge. If you can achieve it, you will be in an excellent position to also broker a settlement or construct a viable accord.
Interpersonal Communication Skills
A negotiator needs to be skilled at two things. Delivering and receiving messages. Unlike a postal carrier, he must make sure his message is heard and understood. Unlike a court recorder, he must understand as well as hear.
Learning to listen pro-actively and observing while you speak is just the beginning. Negotiating is an art form. Communicating is nothing less. Mastering the ability to reinforce what you are saying with your actions and demeanor allows you to more effectively communicate your point.
Actors practice or rehearse their lines in front of mirrors to get their entire persona to deliver the "feeling" as well as the line. Attorneys preparing opening and closing arguments do the same thing. Why, then, should not other professionals take the same care to insure they are optimizing the impact of what they are going to say? In fact, most mediation and negotiation professionals do go through various types of rehearsals and dry-runs before important meetings.
Prepare, review, and practice for the meeting so that you have mastered the subject matter and know what your objectives are before you sit down to do battle. If you are not adequately prepared you may find that the discussion is being controlled by the other person and that it is being channeled where they want you to go rather than toward your goal.
Knowing the material and being prepared is the first step to good communications. Taking responsibility for delivering the content is the second. Most people will not be convinced through a verbal presentation. Likely they will be spending more time preparing their response than listening to you. That is why you need to shoulder the responsibility of making them actually hear and understand what you are saying as part of your role as an effective communicator and negotiator.
When speaking, you are responsible for making sure what you are saying is being understood. Verify this by:
- Asking follow-up questions to make sure you were understood.
- Repeating salient points two or three times.
- Seeking input on your comments.
- Repeating key points one more time for effect!
- Observing the non-verbal reactions to what you say. *
* By observing you are trying to see if they are thinking of something else, if they are planning what next to say, or if they are just asleep!
Conversely, as an effective negotiator you have to train yourself to be a good listener. We all have bad habits. Many of them apply to how we listen. Our minds can handle much more activity than mere listening. Because of this, we are apt to be subconsciously trying to frame a response to the last point made, figure the odds on the baseball game this evening, concocting a strategy to get a raise at work and worrying about last night's fight at home; all the while also listening to the other person making a point. With all this concurrent activity, actually hearing what is being said is at best difficult. Hearing the subtle nuances within the context of the remarks is next to impossible.
When listening, you are responsible for making sure what you are understanding what is being said. Verify this by:
- Observing the non-verbal signals of the speaker.
- Asking follow-up questions to make sure you understood what was said.
- Repeating back the salient points for affirmation.
- Seeking clarification on complex points.
- Make sure you are not thinking about something else!
- Make doubly sure you are not thinking about what you are going to say next!
Don't sell short the need to improve your communication skills. They can always be improved. The discipline of leaving one's baggage at the door is the most touted and least observed. After all, it is your baggage, you can handle it! But like alcohol and drugs, personal baggage in a negotiation can take your edge or focus away.
People Skills and Negotiations
Managing any group of people or even another person requires well-honed people skills. Managing the people involved in a negotiation requires exceptional ability to influence and motivate others.
As all human interaction is a form of conflict resolution, enhancing your people skills is a sure way to improve your ability to negotiate successfully.
To manage people you have to first understand them. Negotiators are people and people are individuals. To reach them through a debate of the issues it is best to present your case in terms they understand and with which they are comfortable. The time spent informally talking before a negotiating session serves the purpose of providing insights into how you might phrase your arguments. Researching the other person before the meeting may also provide information on his or her background, professional and scholastic. Talking to associates who know the person is another way to develop a dialogue strategy.
Develop a style that allows you to be assertive and not aggressive in your communication with the other person. The "3-Rs" to accomplish this are: Rehearse, Repeat, and Request feedback. To lead an informal group you must assert yourself. Being assertive does not also mean being demanding, rude and egotistical. Being assertive is a management style to enable you to control the actions of the group. In a negotiating setting, this needs to be very subtle. The 3-Rs approach is an effective way of taking control without grasping it from the other person.
The process of preparing children for life is a complicated mix of coaching, demanding, directing, disciplining, dreaming, educating, encouraging, entrusting, informing, loving, mediating, negotiating, nurturing, philosophizing, training and trusting. Unlike most management situations, it is unique in that neither party has the option to quit without devastating consequences. There are some well-known parenting situations that can help managers understand and improve their management behavior.
Parents, like all people, react when challenged. This reaction is not the best of management styles, even for parents. Among other common mistakes, parents are apt to resist allowing their child to grow and assume additional responsibility as fast as the child would like. Parents tend to thwart blatant independence at a young age by saying "No!". Unfortunately "no" creates frustration rather than redirecting activity. In a negotiation "no" has a similar impact on the atmosphere between the negotiators. It can be frustrating to the point of distraction. If your intention is not to stop the dialogue in its tracks, be judicious using the word.
Parents also tend to concede too soon and then spend the night worrying if it was the right decision, often with good reason. Negotiators who preempt the other person by negotiating against their own proposal often wish they had just been patient. Cognitive dissonance is often referred to as buyers remorse. After a negotiation you do not want the other side thinking they gave away too much. You want to make sure you have reinforced their decisions as being well made and in their best interest. By building up their egos you are cementing the deal so it will stand the test of time.
Managing others is a design on your part to influence how they will act or respond. Before getting them to act, you have to first impact how they think. Few people can be persuaded to change how they think through a verbal debate. Bring data sheets, diagrams, experts, and other tangible support for your arguments to help educate, inform and influence the other person. Remember also that attitude and setting can influence the other person's mood. Take the initiative to make the initial few moments of any meeting positive and upbeat. Make it a personal challenge to get the other person to smile at least once before sitting down to start the formal dialogue.
To create change in another person, you need to make them uncomfortable and then lead them toward a comfortable resolution. One technique used is to change the topic abruptly to throw the other person off balance. This is especially useful when the discussion is heading into 'troubled waters' for you. Use any transitional thread to shift away from the sensitive area. Most people do not want to be rude and openly object. And example of how this might be done is to interject an observation about how difficult it is to work with city planners when an aspect of the lease negotiations is going against you. There are few people involved in developing commercial properties who won't readily vent about past problems with planners or planning commissions. Use the diversion as a chance to mentally regroup and find a way around problems the other discussion presented.
Basic Management Skills in Negotiations
Any situation involving two or more people is a management opportunity. Those who take the initiative will typically prevail whether it is a physical confrontation or simply deciding which movie to see. Negotiations are only slightly more complicated management opportunities. Unlike a fight where blows are thrown, the combatants must feign civility and control. Initiative and leadership, however, are the most reliable tactics to be used to prevail.
Those involved in a dispute make up a small group and are subject to traditional group dynamics. Groups intrinsically need to be managed. This is what makes mediators effective in settling disputes. They are adept at taking control and managing the mediation process. Negotiators can benefit from learning mediating techniques. Parents, too, benefit from approaching family disputes as a group dynamic situation in which each family member has a role and voice. Using the mediation technique of inclusion to integrate everyone's needs into the solution can provide a mutually agreeable group decision.
How does one take control of an informal group?
By exerting influence and demonstrating leadership traits. In a negotiation, there are some ways to take the initiative:
- Initiate the call to arrange for the meeting.
- Host the meeting where you will have the ability to perform administrative tasks through your staff for the group.
- Prepare and present (or have on the table) an agenda for the meeting.
- Acting as the host, introduce everyone to each other and make sure they have coffee, water or anything else they may need.
- Position your pad and pen at the head of the table before the others arrive.
- Before someone else suggests it, call the meeting to order.
These seem like small things but they demonstrate your confidence, your can-do attitude, and your control of the environment. All that is left is for you to control the discussion. That is not as easy. But you will have made a good start.
Managing implies taking responsibility for the actions of others. A negotiation leader or a mediator delegates responsibilities not only to his co-negotiators, if any, but to the other side. This delegation of assignments serves not only to get the job done but also to give everyone a vested interest in the outcome. A mediator advances the process by directing and delegating the participants in a mediation. This process serves to make both parties valuable to the process, more equal in their respective statures, and, ultimately, more likely to be able to come to reach an agreement.
In a negotiation, group participation can have a similar impact. By getting both sides involved in working together, the resulting 'attitude' should be more supportive of reaching a mutually viable accord.
Two ways to get two people openly at odds to work together include:
Start with simple tasks that are unrelated to the primary issue.
1. Suggest the other person come with you to the coffee room to help get the coffee, cream and sugar.
2. Suggest methods of sharing information. "If I can explain to you how I have valued the property will you demonstrate to me your cost basis?" This is a tactic to get the parties involved in valuing a piece of real estate by working together. It calls upon each to be an expert in their own right. It also allows you to gather essential information.
Disorganized groups without leadership quickly collapse into chaos. Chaos rewards the stronger of the parties; it does not yield a negotiated settlement. Chaotic situations offer opportunities for someone to intervene and bring some order to the situation. Effective negotiators seek to control the environment and manage the process. It is better to be deciding what is going to happen next than to be told what to do.
Don't relinquish your role to another unless doing so tactically serves your ends. There are times to defer to another person to advance your cause.
Is an Enemy Required in a Negotiation?
In the September 17, 2005 edition of the Epoch Times there is an article about Sino-U.S. relations, the Storm Clouds That Cancelled the Sino-U.S. Summit Were Not from Katrina, by He Qinglian. In that article he explains the need for an adversarial relationship between the U.S. and China. "China's ever-growing military power requires that China have an "enemy" so that the military can greatly enhance its political status and increase its budget."
The Chinese government appears to need to make an enemy of the U.S. to keep control of its population. In normal life we tend to make our opponents our enemies. This is usually not the case. They just want something different than we do. Like the opportunity to make a profit or to win a point. An enemy is out to do you physical or fiscal harm. In most business negotiations that is not the intent of the parties. Divorce settlements may be different. The parties want to do damage!
It is not always productive to view your opponent as an enemy. One makes enemies and friends through their actions. Both your enemies and friends will talk behind your back. Realize just as you seek background information on others before a meeting, they will likely do the same. If the feedback they get about you is too adverse, you may never be able to have an open, productive dialogue.
Dangers of being viewed as an Enemy:
-You may be prejudged.
-You may lose opportunities if viewed as an enemy or staunch adversary.
-You may have to overcome fear and hostility from a perfect stranger.
-It will take twice the effort to convert that enemy to be a friendly associate.
He Qinglian goes on to say, "A short while ago, General Zhu Chenghu announced the intention of using nuclear weapons against the U.S. The explanation offered by the Chinese government, that Zhu's speech only expressed his own personal opinions and does not represent the Chinese military, is not convincing. Looking at the changes in the relationship between the two countries, whether a state of military neutrality will last depends on whether or not the Chinese civil system is strong enough to manage the military."
Beware of letting your prejudice block your ability to negotiate. Yes, you have to watch your enemies to see the strike coming before it hits; forewarned is forearmed. Don't let an impression of your enemy hinder communications. Through a dialogue you may find he is not the enemy but a potential ally.
Federal Emergency Management Agency Director Michael Brown was recalled to Washington to oversee national hurricane Katrina relief efforts. His replacement is Coast Guard Vice Adm. Thad W. Allen, who was overseeing New Orleans relief and rescue efforts.
Team negotiations are often essential in today's business environment. They function like any other team and become dynamic entities in their own rights. By expanding a group, additional talents and perspectives are added. Additional members also increase communications and focus challenges. This can be beneficial to the process, or detrimental.
Like any other aspect of negotiations or management, teams need to be well managed.
If you are heading a negotiating team, you need to manage the people on your team. Even if they are "professionals" you are responsible for their preparation, research, and the role they will play. This is especially important if they are "professionals". Too often clients delegate the preparation and research aspects of a settlement conference to their legal staff. This would be fine if the issues were going to be resolved by simply applying legal principles. When it comes to other issues and overall strategy, the responsibility is ultimately vested solely with the lead negotiator. You need to insure that everyone on your team knows their role, is prepared, and most importantly, that you have set the global strategy for the session and the parameters for settlement.
If you find you have a weak team member, replace that person quickly. If they have been engaged in the fray, do so in a fashion that does not impair the progress you have made. Negotiations is little more than small group management.
In the case of Michael Brown, he had to be removed because he had become a liability. Michael Chertoff tried to smooth over the impact of his removal by saying it was part of a larger need: "The effort to respond and recover from hurricane Katrina is moving forward. We are preparing to move from the immediate emergency response phase to the next phase of operations," Chertoff said during a press conference. "Importantly, we must have seamless interaction with military forces as we move forward with our critical work in New Orleans and the surrounding parishes. At the same time, we are still in hurricane season and need to be prepared to deal effectively with the possibility of future hurricanes and other disasters."
Katrina has thrown America a major curve. After weathering the storm everyone exhaled. Then, the following day, the levies gave way and havoc erupted. The ensuing crisis has focused the attention of the world on America's ability to handle the situation.
Having good crisis management skills is an essential characteristic of an effective negotiator. No matter how well-prepared, how you have planned, or how ready you are for a negotiation, the unknown can always through a curve into the process. How the unexpected is handled often determines the outcome of a negotiation.
Managing a crisis requires:
• Understanding your own strengths and capabilities.
• Knowing where the high ground is and how to get there.
• Being able to gain the confidence of others and lead them to safety.
• Having the strength to weather the store and make the trek.
• Caring enough to make the effort to prevail.
• Taking action and following through to complete the task.
In negotiations when your final overtures are thwarted or an agreement made is broken at the last minute presents a crisis situation. Times like these require regrouping, on-the-fly assessment of options, and concise decision-making. Only good preparation and a strong knowledge base will prepare you to step into the breach and save the day. Whether you do it is up to you. It takes confidence, conviction and a passion to prevail.
Michael Chertoff, the Homeland Security and FEMA, Governor Kathleen Babineaux Blanco, Army Lt. Gen. Russel Honore, New Orleans Mayor Ray Nagin and everyone else involved on the ground and in the chain of command have had to cope with correcting a problem that emerged from what initially was thought to have been a near miss. How they handle the situation on a go-forward basis is far more important that understanding how it happened. That will come later. In a crisis you look forward, make a plan, and attack the plan. You can look back later. What is essential is that the victims are attended to, the areas impacted are stabilized, and rebuilding is not only started but completed.
Trust is Necessary When Negotiating
In episode eight of Showtime's popular series Huff, Izzy lectures Beth on trusting too much. "You know, trust is a device we use to put people on pedestals. The higher we put them, the harder they fall". "And your point is?" Beth asks. "The next time you catch yourself trusting somebody, look at that scar!" Izzy has been deeply hurt by her husband leaving her for another woman. Beth had naively let Huff's patient into their home trusting her when she said she would not hurt anyone.
Conflict resolution, alternate dispute resolution, negotiations, mediation, settlement discussion, debt restructuring, salary and performance reviews, literally any form of productive human interaction requires a basis of trust from which accords can be reached. Humans are inclined to want to trust each other. The need to trust one another is necessary to function in society.
Honesty or integrity is an essential personal characteristic for any negotiator regardless of the situation. If you have a good reputation others will listen with confidence. If not, you will have to sell each point hard and even then may still be doubted.
Make sure you mean what you say and that you are able to back it up with your actions or those of your company. Never intentionally give your word then go back on it. Sometimes situations change and you are forced to back out of an agreement. Never do so lightly. Explain the change that occurred. Clearly demonstrate your frustration at having to change your mind to the other person. Apologize profusely and empathize with the other person's angst. Try to find a way to make it up. You do not want others to think this is typical behavior for you.
If directed by superiors to reverse your word or go back on a contract, do not blame your boss or company. Even if that is the cause, it is your word that has been broken. Taking the heat personally demonstrates your sincerity and should save a good portion of your reputation. If such vacillation is habitual in your company, consider seeking another job where you can provide proper representation.
Izzy's bitter resentment demonstrates the damage caused by a breach of trust. For her, she has lost the ability to assume people are trustworthy. When this happens in a negotiation, the absence of trust will block any chance the parties have of opening up and solving the problem. In such a situation someone needs to suggest changing the negotiators or separating them. Often a mediator will put the parties into a permanent caucus setting and negotiate between the two parties, a process called shuttle diplomacy. This tactic diffuses the angst one or both of the parties has toward the other and may allow meaningful discussions to get started. You have to be willing to get burned from time to time, as Beth was, to effectively negotiate. It requires you to have faith in the other person.
In the last 2004 episode of ABC's popular series, Desperate Housewives, Edie goes to Susan's. She's scared to be alone after the news of Felicia's attack spreads throughout the neighborhood. She is so consumed by her fear she can't understand Susan's attempt to tell her Zach's holding a gun on her. Storming off in a huff, she is completely unaware of the situation.
Edie has demonstrated the need for effective, two-way communications in stressful situations. Observing other people while talking enables you to make sure they are awake, alert and actually hearing what you are saying. If you find them to be inattentive, as in the case of Edie, stop what you are doing and find a way to get their attention.
Whether you are negotiating, telling a joke or simply discussing a topic, you are partially responsible to make sure others are listening. You can verify you have their attention by:
-Observing the non-verbal reactions to what you say. Watch to see if they are reacting to what is being said or if they are thinking of something else. Frequently you will find that they are planning what to say next rather than listening.
- Pepper your comments with questions designed to draw the other person into the discussion.
- Pause and let the ensuing silence pique their interest.
- Ask their opinion of a point you just made to confirm that they heard you and understood what you said.
Taking responsibility for being heard and understood is part of being effective as a negotiator.
Edie's role in this episode also illustrates someone who is so involved in her own issues that she is not hearing what the other person is trying to say. As a negotiator, you have a real need to not only hear but fully understand the other person's comments. Make sure you aren't preoccupied with other matters before entering serious settlement discussions.
Collective Dreaming - How to Win in Negotiations
Empires are built on dreams. Olympic champions start by dreaming of winning their next match in middle school. In last season's closing episode of ABC's television series Lost, Locke shared the spirituality of why he has been placed on an island in the South Pacific that has healed his legs. Jack, his protagonist in the series, is limited to caring for the others and hoping to be rescued.
Locke is much more likely to sleep peaceably dreaming of something more than just surviving each night while Jack lies awake wondering what the next challenge will be that he will have to overcome.
According to Peter Drucker, successful companies such as Harley-Davidson and Starbucks work because they are selling a lifestyle or an image rather than simply a product. Successful companies offer more than a commodity. They create a collective dream-need through marketing that only their product or experience will satisfy.
No one enters a negotiation without an expectation of the outcome. Nor should they. Their expected outcome is their dream. To achieve that dream, they must find a way to make it the other person's "dream" as well.
Most focus on their individual needs and wants without caring about the other person's needs. To excel at negotiating, the strategy of collective dreaming is required. Collective dreaming is the process of getting everyone involved in the discussion and then having the group envision the same objective. That is, getting all concerned to want to achieve that objective albeit for differing reasons. Then they are more apt to work together to make it happen.
To do this a negotiator needs to look beyond his or her interests and conjure the ultimate outcome of the negotiation if successful for the group. Then, acting as an informal leader, he or she must present that dream to the entire group demonstrating how, if achieved, it benefits everyone.
It does not cost anything to consider another person's needs or perspective. In the coming season of Lost it will be interesting to see whether Locke or Jack prevail in creating a common goal for the survivors.