Category: Negotiation Course

The Dodgers and agent Scott Boras seem to be at an impasse.

They are negotiating Manny Ramirez’ 2009 major league baseball contract.

The team has offered a two-year deal, while Manny’s agent asserts it will take four or more to tango.

Dodgers General Manager Ned Colletti is trying to avoid what is called, “negotiating against oneself.” If you’re the only or top bidder for something, the traditional negotiating playbook says:

(1) Wait for a counteroffer before sweetening your original offer.

(2) If you receive silence in return instead of a counteroffer, the other party will blink. If he has received no better offer than yours from a third party, he’ll have to deal with you, sooner or later, and accept yours.

(3) If you succumb to your impatience, or buckle under the pressure brought on by the approach of a deadline, such as the slated start of spring training, and you offer a better deal before receiving a counteroffer, you’ll make concessions for nothing.

In that case, you are bidding against yourself, and throwing away money.

Boras has heard all of this, and yet he’s acting as if he’s oblivious to the merit of Colletti’s position.

What Boras is tacitly threatening is this:

If the Dodgers do not sweeten the deal on their own, Ramirez will play for the first team that does improve on that offer, or for the highest bidder.

In other words, the Dodgers will have had one bite at the apple, and they may be denied a second chance to improve their offer, later.

But is that completely rational?

Not really, but who said negotiation is ever 100% reasonable, or predictable?

Western culture: the main reason why most of aren’t keen to negotiate on a deal. Yet for small businesses in particular, the ability to understand the processes involved in a negotiation can mean the difference between profit and loss.

Knowledge is power and it can take as little as one day to grasp the fundamentals of successful negotiation. Once learned, you’ll be surprised at just how often these skills come in handy, at work of course, but in your everyday life too.

Let’s look at a few figures first. A successful 1 million business might make ten percent profit. There are plenty of organisations with that kind of revenue making no more than two or three percent pre-tax profit. Imagine then a tough year like 2008, when costs rose dramatically and major customers refused to accept price increases of any kind.

By honing your negotiating skills, it’s quite realistic to expect improvements in your deals, depending on which commercial area you’re in, three or even five percent more might be feasible. The biggest challenge is to first accept that there’s a set of highly effective rules for negotiating and that professional buyers in particular know exactly how to use them.

Perception is reality. It is usually within your control to manipulate the environment of a deal and that one advantage can make a huge difference to the shape of a deal. Suppose you are buying a car and having looked around it, you’ve decided it’s exactly what you want. The sticker price on the car is 3,950 ‘or nearest offer’. So what does ‘or nearest offer’ tell you? It means the vendor doesn’t expect to get 3,950 at all. And what do you think he might be aiming to get?

So now you’re thinking he’d be happy with 3,700 and you haven’t done a thing yet.

When going into a negotiation, you must be aware of what kind of self-talk is happening in your mind. Chances are if you are like most average negotiators, you are experiencing some version of the Assumption-Compromise-Assumption thought process.

First, the chain of events is set of by fear or doubt in your position in the negotiation. You think that there is either something wrong with what you’re offering, or there is a fear of your negotiating opponent.

What happens in your head is something like this: “I wonder if they are going to think my consulting service is too expensive? Maybe I should drop my price a bit. Maybe they are going to think I’m crazy for asking so much.”

The first assumption is that the person you are going to negotiate with will think that your price is too high. So, you start to compromise by lowering your price. You justify that with another assumption that they would certainly think you’re crazy for asking such a high price.

You’ve just successfully negotiated against yourself before even meeting the prospect. Why did this happen?

The main culprits are a lack of confidence in what you are offering and a lack of a proper negotiating system.

First, go back to step one and really consider what it is that you are offering. Whether it’s a product or a service, analyze its value and be sure that you are comfortable representing this product or service.

The car ride to the prospects office is not the time to think about this. You should have confidence in your offering long before setting up an appointment to negotiate with someone. If you haven’t done so yet, go back and be sure to do this or you will be stuck in the Assumption-Compromise-Assumption trap forever.

Now that you have 100% certainty that you are offering something of value, it’s time to turn on the self-talk monitors.