The art of winning
The UK economy could be in much better shape if we all honed our negotiating skills, says Clive Rich. Here are his tips to improve yours
The economy would be stronger if British businesses were better at negotiating. That's according to leading negotiator Clive Rich, who says honing your bargaining skills will help your business thrive. He has helped to broker deals for large organisations including Sony, Apple, Napster and the BBC.
His advice will be valuable for SMEs in 2012. A report from invoice and asset-based lender Venture Finance says one in 10 SMEs want to acquire a business competitor, with a quarter of those planning acquisitions in the next six months. But a third say they have no idea how to engage in an acquisition or merger and nearly two-thirds think they need external advice. Deals often break down because of a lack of negotiation skills.
Rich says: "UK businesses have a lot of challenges and you hear many solutions being talked about, including lowering interest rates, freeing up bank lending, encouraging exports and giving better tax incentives, but better negotiation is never mentioned as a route to growth or saving costs. If everybody improved their negotiation skills by 10 per cent, what a difference it would make to the economy."
He says SMEs in particular could do with paying more attention. "They are not normally very good at preparing; they often don't have much time or a lot of people in the office. Smaller businesses also often feel small, so when they negotiate they think, 'we are small, we need the money so we don't want to make too much of a fuss', but you always have a shot."
If preparing for a negotiation seems counter-intuitive to entrepreneurs, who often act on instinct, Rich has this message: "Instinct can be good but it is not always a reliable guide during negotiations. Market traders are good at that, but if you put them in a room to negotiate an arms deal they may find that they can't do that shooting from the hip."
The skills you need
Rich says that top of any negotiator's list of priorities should be attitude. "Effective negotiators bring the right state of mind to the table – this means you should be confident and relaxed, you must believe you can get what you need, but you should also be prepared to listen to what the other side wants," he explains. "If you come to the table with the wrong attitude it goes downhill from there."
Consider what you want, what the other party is likely to need, how well you know them, whether you'll need experts by your side and importantly establish your bottom line, Rich advises. "All of that has to be dealt with upfront rather than when you are in the heat of the haggle; once you're there it is very difficult to think."
Determine the right atmosphere for talks, he adds. "You have to set the climate that you want; you could have a warm and open climate, or a cool, objective and data-driven climate, which is often used in industrial relations. Few people think about this, but if you want a collaborative atmosphere a big rectangular table is probably not the right setting."
Most people are happy to explore the content and issues – what they want in terms of delivery and the product – but many negotiations are settled by emotional payment. "There may be all sorts of emotions flying around and often they are not spoken about but they are actually what drive the negotiations so the sooner you elicit these the better placed you are to work with those to get what you need back," says Rich. "Find out what they need by questioning, observing and listening properly – a lot of people are very poor at listening."
He says it is vital to be able to read people and their mood. "You must match your behaviour to the person you are dealing with. Some people are born optimists while others run their lives according to catastrophe theory. Likewise, don't give a lot of detail to a big-picture man – it won't interest him."
A successful negotiation process, says Rich, results in both sides ending up with what they want. "Until recently people would focus on getting what they wanted, but we now live in a very connected world and negotiation is much more about collaboration and consensus," he explains.
Only after solid preparation should you get into the bidding and bargaining. Rich observes that few people follow this process to the letter; often they will skip a step but may have to go back to cover it.
"Negotiation is both a science and an art because there is a toolkit – the science bit – but how you assemble it is an art. People often just jump in and say what they want," he says.
He cites negotiations between the government and unions over pensions as an example of skipping steps. "The government has started the negotiations at the end rather than at the beginning. They have just said 'here's the Hutton report and this is what there is'. Ultimately, they will have to go back to the climate-setting in order to sort it out."
Britain is not the only nation that could do with improving the art. "This is a global phenomenon," says Rich, "so if we get better at it we may have real advantage over others. Preparing for a negotiation requires thinking in advance and people are not used to thinking of time and investment. But the rewards far outweigh the investment you make."
Clive Rich's top deal-making tips
Become a successful negotiator
There are six key skills to acquire – learn to remain calm under pressure , think on your feet, be articulate, show flexibility,
be prepared to adjust your behaviour and always have integrity.
Ask for what you want
Children are the world's most effective negotiators when it comes to bidding because they ask for what they want. People often think, 'I want 500, but if I ask for that he'll go mad, so I'll ask for 300 and see how it goes'. If you want 500, ask for 500 and if your bottom line is 200, you have 300 to play with.
Marshal bargaining power
Even if you are a small organisation you may have some expertise that the other party doesn't possess. You may have marketing power or the ability to access a network that a bigger player can't enter.
Take a break
People often sit in talks for hours without a break and you won't be at your best after six hours of negotiation. A break is fantastically helpful and it gives you time to think, refresh and consider your options.
