I'll Show You Mine If You Show Me Yours: The Fine Art of Negotiation

The Fine Art of Negotiation

When the St. Louis Rams were negotiating the naming rights for their stadium, they hired a consultant to help seal the deal. Financial services firm Edward Jones, which eventually purchased the rights, did the same—and both consultants set out to get the most for their respective clients.

That's precisely why the hired guns failed to settle on terms, says Bob Wallace, executive vice president and general counsel for the Rams organization. Both consultants saw the negotiation as an adversarial process. But a deal like this won't work if both parties are thinking only of their own needs.

"If I’m settling a lawsuit, and both sides will go their separate ways afterwards, then I want to get the most money that I can,” says Wallace. Such a deal is very different from one in which the people involved will continue to work together. “That’s when we need to have a win-win situation,” Wallace says, “where both people feel like they got what they needed.”

Once the two companies brought in their own team members, they quickly forged a deal to name the stadium. Now, the Rams play all their home games at Edward Jones Dome in downtown St. Louis.

Wallace, a member of Webster University’s School of Business & Technology Advisory Board who has settled everything from player contracts to sponsorship deals, says the first lesson in negotiating is to understand what everyone involved wants out of the deal. And to do that, you have to do your research.

Know Your Stuff
As the group manager for the strategic sources department at Sprint's world headquarters in Overland Park, Kan., Leonard Jones is the point person for negotiating some very big contracts between the telecom giant and its equipment suppliers. When Jones sits down to make a deal, he’s already done his homework. He knows what his company needs, and he knows what he's willing to spend.

Even more important, Jones knows exactly what the people on the other side of the table have to offer. If he’s ready to put his name on agreements worth millions of dollars, he has to be willing to tell his boss that Sprint is getting its money’s worth.

"What I say to everybody is that 80 percent of your time should go into knowing your suppliers, their products and their services," says this ‘79 Webster graduate.

That means he needs to understand how a potential supplier's machine works and how it will function within the Sprint network. He needs to know what other companies have paid for comparable systems, what types of warranties and service contracts were part of those deals, and whether the products are living up to their hype.

"You have to know what you need and what the equipment does," says the veteran deal-maker. "If you know these two things, rest assured that you can make a good deal."

Jones’ advice goes to the heart of the delicate art of negotiation. While he uses these skills to get the best prices, warranties and service contracts for high-tech communications gear, his suggestions are just as applicable when working out any other type of agreement—whether it's settling on delivery terms or negotiating the terms of a job offer.

Gary Renz, an assistant professor of management who teaches a class on negotiation techniques at Webster, says there are two basic ways of brokering a deal. In a competitive situation, the players are each interested only in getting the best deal for themselves. These discussions are often characterized by the relatively small amount of information each side shares about what it needs or what it can offer. One side will make an offer; the other side will counter. Eventually, they may find common ground. "With experienced negotiators, these tactics seldom work, and the outcome is decided by the relative power of the parties," explains Renz.

The other option is to follow the collaborative model, where both sides are more interested in striking a deal that works for everyone—the “win-win” situation. Renz says that during these negotiations, the players tend to be much more eager to share information because it will eventually help them both find a solution.

Is That Your Final Offer?
A critical element in any deal is leverage. As Wallace points out, it's important to know whether you have something the other side desperately wants, and vice versa. He recommends going into any negotiation knowing your walk-away number—the price at which a deal no longer makes sense no matter how much you want it.

That's especially important to keep in mind during an employment negotiation. Remember, the product is you, and the employer has almost all the leverage. It's important to know your own walk-away price. That could be measured in terms of your last salary, or in terms of what people with comparable experience are making.

Does the firm you're applying to have a reputation for offering low salaries but making up for it with better-than-average bonuses? That could be good in the long term, but only if you know not to balk at a lean initial salary package. “Remember that the company is most likely looking at salary market data that it knows and trusts,” says Geraldine Auger, vice president of human resources at Schick-Wilkinson Sword. “Plus, they may have internal constraints as to how high they can go.”

Be creative, adds Nancy Murnin, senior vice president and general manager at Lee Hecht Harrison, a top talent recruiting firm. “If the company can’t budge on salary, think about other things: a one-time dislocation fee above and beyond moving expenses, career counseling for your spouse, a laptop computer for working at home or cell phone service.”

Murnin also counsels people to ask about an exit package when they’re negotiating the terms of a new position. “It may sound odd, but it’s the reality of today’s world,” she says. “Negotiate how much severance you would get if something doesn’t work out. Consider asking for outplacement assistance.”

No matter what you ask for, don’t nickel-and-dime the person you’re negotiating with, advises Murnin: “Put it all on the table at the same time.” Especially if you’re taking a position in sales or marketing, the employer is watching the way you make deals. “They are looking at how you handle it; they don’t want to hire someone who comes off as a bull in a china shop,” she notes.

Wallace offers another important deal-making tip: "Don't believe you can bluff the other side without the conviction that you can live with it." If you are pushing for a slightly higher salary, don’t tell the recruiter to “take it or leave it” unless you really are willing to leave it.

And never, ever negotiate over e-mail. “It’s much easier to misinterpret e-mail or read an attitude in it which doesn’t really exist,” Auger says. “Always negotiate live, either on the phone or in person.”

With enough negotiation reconnaissance work, sitting down for the final back-and-forth should be much easier. As long as you understand what you need and what the other side has to offer, the terms should fall into place. "If you don't," warns Jones, "you definitely won't get the best deal."

BACK TO TOP