The art (and finesse) of the deal

a woman
Marci Malzahn

Editor’s note: Consultant Marci Malzahn defines negotiation as “having a conversation with the goal of arriving at a win-win conclusion and having no regrets.” Here, other industry experts add their voices and experience to hers.

 

Talk a bit about what negotiation means to you.

Kris St. Martin, vice president, CBIZ Insurance Services, Inc., Minneapolis: Negotiation is a way for people to settle differences. To me, it is important to reach an agreement without it becoming an argument or dispute. There are many things I negotiate every day that range from the most mundane to items of high emotion and importance.

Regina Barr, president, Red Ladder, Inc., Inver Grove Heights, Minn.: A good negotiation is an interaction between two parties in which each may give something up in order to get something they want in return — while preserving the relationship. That’s what I call a win-win negotiation. 

Greg LaFrance, vice president, development, HTG Architects, Minneapolis: Negotiation is something to embrace and a challenge to appreciate. If you break it down, it’s really just a conversation with a goal to get to a mutually beneficial agreement or understanding.

Barry Sorensen, vice president, business banker, Highland Bank, Maple Grove, Minn.: Negotiation is a dialogue between parties for the purpose of determining a mutually agreeable contract. Terms of negotiation are driven by current pains, perceived future pains, and the current and future benefits of the parties involved.

Michael Berman, founder and CEO, Ncontracts, Brentwood, Tenn.: Negotiating is maximizing the attainment of high priority goals and objectives. It combines research and self-reflection with the confidence to speak up for your best interests.

a man
Paul Means

Paul Means, CEO, RiverWood Bank, Baxter, Minn.: Negotiating is a daily activity with all facets of life. Realistically, we have ongoing negotiations with employees, customers, family and friends on a daily basis. A negotiation entails sharing of ideas and thoughts with the goal of having a positive outcome for all parties. 

 

Talk about some of the challenges one can face when negotiating.

St. Martin: Some of my most difficult negotiations were from my time in banking with loan work out and collection activities. It was important to achieve the best outcome for the bank while not allowing the client to categorize me and my bank as “bad.” Once we are in the “bad” category, it becomes easier for clients to negotiate in bad faith. Try to come to an agreement that both sides see as legitimate and fair.

LaFrance: It can be like a first dance — maybe a bit awkward to start but then you find a rhythm between you and the other participant. In the end, both people brought something to the party, they left something on the dance floor and both walked away with a fulfilling experience. That’s a mutually beneficial negotiation.

It is amazing how many people avoid or cringe at the word “negotiation.” I often hear “I don’t like it,” or, “I am so bad at it.” Think about it. What is so hard about asking direct or poignant questions of the other party to seek an understanding? Negotiation is about getting to know where the other party is at before you begin to negotiate, walking in their shoes, having a certain empathy to their situation. Asking questions and really listening for the “why are they at this negotiation table?” Are the participants coming from a position of strength, or out of desperation or scarcity?

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Greg LaFrance

Regina BarrBarr: Sometimes people get so caught up in meeting their own needs that they wind up damaging an important relationship that can have longer-term and possibly negative implications in the future. Relationships are important to me and I work very hard to preserve them. You never know when or where you will need that relationship in the future.

LaFrance: I can tell you also what negotiation is not. It is not an adversarial event. It is not something to be afraid of and it is not an “I won; you lost” event, especially if you are in business or in an industry where you have repeat business. 

 

What are some of the top items you’ve negotiated?

Sorensen: Early in my career, I negotiated for training and educational opportunities. I needed to develop greater industry knowledge and skills to rise to the title and salary I desired. This required sacrifice to do my current job while studying and training for my desired future position.

Typically, salary and total compensation, which includes benefits, is a high priority. Depending on familial situations and life position, flexibility tends to become an important item.

Barr: In my work I have found that most leaders focus on the monetary portion of a negotiation including salary and bonus as well as the perks that go along with a specific title like club membership fees or a company car. These items are important but not nearly as important as the conditions that set you up for success. This includes having the right resources to do your job including support staff, budget and flexibility. However, perhaps the most important component of a negotiation but typically overlooked are the introductions to key players and assistance in building relationships that you might not otherwise have access to. Most successful executives have or had a strong sponsor in their corner at one time or another. Make sure you have one too.

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Michael Berman

Berman: It’s not about what leaders negotiate for. It’s what they don’t negotiate for. Many leaders are disadvantaged because they rarely negotiate a major deal and are going up against an HR department or vendor that negotiates almost daily. Those partners have developed standard contracts that lean strongly in their favor and know how to present a deal so it looks better than it is. 

Key items to consider are termination clauses. The start of a new relationship is exciting, and so most people are not thinking about how it could end. Make sure any contract addresses termination. This is especially true in vendor contracts. Suppliers are notoriously vague on the cost of termination. Some say it’s 80, 90 or 100 percent of the remaining contract. But that doesn’t include conversion, de-conversion or integration fees which are often left to the prevailing rate. Negotiate these fees into the contract. Also, negotiate terms, scope, performance metrics and economic incentives or consequences and have solid penalties or incentives in place if it reaches or fails to reach specific goals.

LaFrance: I see community bank leaders today have a challenging role and much of it is the battle for labor. It appears no industry is immune to this very tight labor market. When we talk with our clients about what they want out of their new or remodeled spaces, right at the top is: “Help me recruit and retain employees.”

We certainly see more of our new workforce asking or negotiating some flexibility. We are finding creative ways to avoid rush hour congestion, maybe establishing home office workdays and other soft or feel-good benefits.

With the young talent coming out of college and so strapped with student loan debt, they are asking for continuing education benefits to be paid by the employer in exchange for a long-term employment agreement.

 

Give up-and-coming leaders advice on negotiating successfully. 

a man
Barry Sorenson

Sorensen: Go into a negotiation with a plan. What are you seeking? What are negotiable items and what are non-negotiable items? If you have a significant other, ask them what your negotiable and non-negotiable items should be. Don’t assume you know. 

Start by discussing non-negotiable items. If either party cannot work with the other party’s non-negotiables, stop and move on. There is no reason to waste each other’s time.

Means: The most important aspect of a negotiation is preparation. Taking the appropriate amount of time to prepare for a negotiation typically provides for a win-win outcome. Preparing for a negotiation not only includes knowing all you need to know about your side of an issue, but also attempting to fully understand the perspective of others with whom you are negotiating to develop a sense for what a favorable outcome for the other side might be. Showing a willingness to compromise for a favorable outcome also allows for a win-win solution; it demonstrates an effective leadership skill that transfers to the next negotiation you have with those parties.

Berman: Whomever you are negotiating with will try to make their offer sound appealing with bells and whistles, which may not be your priority. Having a clear list of objectives prevents you from getting distracted by offers that won’t give you a good return on your investment. Remember, it’s not a bargain if you didn’t want it in the first place.

LaFrance: Good negotiations start with setting expectations. Are you going into the relationship for the long term or is this a one-time transaction? Be transparent, open and honest. If there are issues that need to be addressed, let the other party know. If you are handcuffed by budgets, let the other party know. If there is a personality issue or an ego issue, bring that out in the open; don’t let it fester. Talk through the challenges. Don’t email.

Never walk away from the table without exploring compromising solutions. Get to know who you are negotiating with and have fun with it.

If you have providers who have value or expertise, recognize that you may have to pay a little more. Good negotiations are not just about the dollars, there are other benefits that have value and can be negotiated. Embrace your valued partners, reward them with partnerships for the long term and they will work harder for you and return more dividends.

St. Martin: Try to minimize emotion in the conversation. As much as possible, rely on data and try to stay on the high road. Greed in negotiations will burn bridges.

a woman
Vicki Turnquist
a man
Kris St. Martin

Vicki Turnquist, director, Citizens Independent Bank, St. Louis Park, Minn., and executive coach and consultant, The Bailey Group: Recognize that a negotiation is not a competition.

Barr: Know what the other party wants and try to deliver on that. So often we get caught up in our own needs we forget the other party has needs too. Your willingness to acknowledge and support those needs says a lot about your willingness to collaborate and solve problems, and the nature of the relationship you will have going forward.

Also, you need to know when to walk away. A successful negotiation is one in which both parties walk away with something that is important to them. If not, then it’s a win-lose negotiation and that can set you up for difficulties in the future. You don’t want to win the battle but lose the war.

 

How do you hone your negotiation skills?

Berman: Research, research, research. I’m very comfortable asking for what I want, but I get the best results when I’m the most informed. I’ll talk to others about their experiences, inquire about industry benchmarking, and do everything I can to find out what pricing and terms others have negotiated. It’s all about due diligence. Being prepared increases the possibility of a win for both sides, which means a successful negotiation.

Sorensen: Take any sales training offered. Seek out mentors with more skills and experience than yourself and ask them for help. 

a woman
Regina Barr

Barr: I always spend time outlining how I will open a negotiation. That helps to take the emotion out of it so you can simply focus on the facts. Early on in my career I also did some role playing. My father-in-law was an executive with 3M and could be quite intimidating so I would ask him to sit down with me to practice. Now, I focus on mental preparation. 

One way to do this is to anticipate the other party’s objections and then write out your responses to them. Then I play them out in my mind. And finally, I always try to be gracious and thank the other party for taking my needs into consideration even if I don’t get everything I need or want. Remember, how you close out one negotiation lays the groundwork for the next one.

St. Martin: I try to understand the position of the person I am negotiating with, and to be empathetic.

Turnquist: Be aware of body language and ask good questions.

LaFrance: I watch Shark Tank.