The Intelligent Negotiator

Praise for
The Intelligent Negotiator

“Charles Craver is that welcome rarity—a leading academic who possesses a sure grasp of the practicalities of everyday negotiating. And unlike many of his peers, Craver is not embarrassed about making a good deal for his side of the table.”

—James C. Freund, author of
Smart Negotiating

“An excellent guide to obtaining your negotiating goals. For those wanting to achieve better results at the bargaining table, this is an invaluable resource.”

—Andrew M. Kramer, partner,
Jones Day Reavis & Pogue

“I rely often on the powerful insights of Professor Craver. He fully appreciates the subtleties of the process of negotiation. I hope my adversaries don’t read this book.”

—Lon Babby, attorney for professional athletes

“Charles Craver goes beyond the traditional approaches to bargaining. Read this book and you will dramatically enhance your negotiating skills.”

—Ambassador John W. McDonald, chairman,
Institute for Multi-Track Diplomacy

“Charles Craver imparted invaluable lessons in the art of negotiation in the course I took from him thirty years ago.
The Intelligent Negotiator
is a must-read for anyone looking to maximize his success in competitive business. It brims with compelling strategies for achieving superior results.”

—Leigh Steinberg, sports attorney and CEO,
Assante Sports Management

C
ONTENTS

Acknowledgments

Introduction

PART I:
The Essentials

  1   
Negotiating Styles

  2   
Preparing to Negotiate

PART II:
At the Table

  3   
Building Rapport and Setting the Tone

  4   
Stage One: The Information Exchange

  5   
Stage Two: The Distributive Stage

PART III:
The Execution

  6   
Negotiating Techniques

  7   
Stage Three: The Closing Stage

  8   
Stage Four: The Cooperative Stage

PART IV:
Frequently Encountered Negotiating Situations

  9   
Situation 1: Negotiating Employment Opportunities

10   
Situation 2: Buying Cars and Houses

11   
Situation 3: Negotiating with Repair Shops

Preparing to Negotiate: A Preparation Form

Notes

About the Author

A
CKNOWLEDGMENTS

I
t is impossible to prepare a book on negotiating without relying upon the theories and concepts articulated by experts from diverse fields of study, including communication, psychology, sociology, law, and business. Those scholars have enhanced my understanding of the negotiation process. I also thank the hundreds of students who have taken my Legal Negotiating course and the thousands of lawyers and businesspeople who have participated in my Effective Legal Negotiation and Settlement programs, providing me with new insights and interesting bargaining stories.

I am especially indebted to Beth Lieberman, who took my original manuscript and patiently and professionally turned it into a finished work. Her extraordinary editorial assistance significantly enhanced the final product. Thanks to Ruth Younger for her extraordinary copyediting talents. My project editor, Michelle McCormack, further enhanced the final work. I must also thank David Richardson of Prima Publishing for giving me the opportunity to bring my ideas and teachings to a broader readership, and for his deft guidance throughout the publishing process.
My sincere gratitude goes to my agents, Janet Rosen and Sheree Bykofsky, who had confidence in the book I sought to produce.

I must finally thank Katey, my loving spouse and negotiating partner for the past thirty-five years. She, more than anyone, has taught me more about the mutual benefits to be achieved through effective negotiating.

I
NTRODUCTION

I
ntelligent Negotiators are prepared, confident, and supremely effective. They know what to expect of each unfolding stage of a bargaining encounter. They have defined their own goals and determined how they can best attain them; they have also discerned the goals of their counterparts. Intelligent Negotiators’ vast knowledge of bargaining techniques allows them to create powerful negotiating strategies that advance their side’s interests and at the same time enhance the final outcome for everyone involved.

The goals of the Intelligent Negotiator are often work-related. Who’s going to cover the client meeting in Omaha? Should we charge our usual 10 percent commission on the contract for a particular client, or reduce it to 7 or 8 percent to ensure future client loyalty? What quality guarantees should we get from the raw material supplier we’re thinking of using? Should I insist on being given the executive title of the person I’m replacing, or wait until I’ve demonstrated my capabilities in the new position?

At other times, the subject of negotiation is personal or professional. How can I land the perfect job that just became
available? How can I get the starting salary I feel I deserve? How can I get the salary increase I think is appropriate? Can I get my superior to change negative comments in my last performance evaluation? How can I interact more effectively with my coworkers and subordinates?

Still other issues relate to family and quality of life. Where will our family go for summer vacation? Can we get better terms on the second mortgage we are taking out to pay for our child’s college education? How can we minimize the cost of car or appliance repairs? Negotiating is the key to finding the best solution in each of the above situations.

N
EGOTIATING
O
UR
W
AY
T
HROUGH
L
IFE

Although most of us rarely stop to think about it, we negotiate our way through life. Every day we negotiate with family, friends, members of our communities, business associates, salespeople, and complete strangers. Still, many of us are uncomfortable with the idea of bargaining. We dread the psychological battle of wills, the exploitive rituals, and the deception it normally entails. We tell ourselves that bargaining is not a normal part of life, even believing that most things in life are not negotiable. We go to stores, examine the price tags on desired commodities, and decide whether to purchase those items at the stated prices. We rarely seek more beneficial terms, fearing we will embarrass ourselves by even asking. If we only realized how many salespeople in even staid retail establishments are willing to negotiate lower prices or other customer-beneficial terms when asked, we could benefit dramatically.

Businesspeople often fail to appreciate the degree to which they must negotiate with superiors, subordinates,
and others in the employment setting. They cavalierly arrange employment relationships, supplier contracts, and customer deals without recognizing the bargaining aspects—and potential enhanced rewards—of these critical encounters.

Some less-proficient negotiators excuse their lack of interest in the bargaining process by maintaining that objective market-driven forces determine the price or value of most commercial—and many non-commercial—items. They think they have no control over “externally regulated” factors. This assumption completely ignores the personal—and necessarily subjective—factors that affect bargaining encounters. A prospective car or home buyer who wants a particular car model or a specific house that is in demand is likely to pay a premium. On the other hand, someone who is willing to purchase a different car or house can offer a lower bid that may result in saving literally thousands of dollars. People with new job offers who ask for higher starting salaries get paid substantially more than those who merely accept the initial offers. Even department store shoppers who negotiate prices may save 10 to 20 percent over shoppers who pay the stated prices for the items they purchase. Buyers who politely ask sales clerks “Is this the best price you can give me?” may receive last week’s sales price or be offered a discount if they purchase two of the items they are considering.

Skilled negotiators realize that various factors—beyond basic seller cost—play a significant role in bargaining encounters. These diverse factors determine the
settlement range
(see
figure 1
). As each side prepares for a negotiation, its participants consider the relevant objective considerations: the monetary cost of specific items, the opportunity costs associated with the trading of one
employment situation for another, or the value of anything else we may be thinking of exchanging for other benefits. The other side makes similar calculations with respect to the relevant items from its perspective. Each party determines the most it will pay or the least it will accept to enter into the exchange being contemplated. The overlap between the parties’ respective bottom lines (represented by the shaded area in
figure 1
) defines the settlement range. Every point within that range is acceptable to both of the negotiating parties.

Figure 1. Settlement Range.

Once the participants begin their bargaining interaction and move toward the settlement range, the objective considerations become less significant, and subjective factors begin to influence party behavior. How much does each side want the deal? How risk-averse or risk-taking is each participant? What occurs
within the settlement range
is a psychological battle of wills. If one side can convince the other that the other must move in its direction, the other party will do so. Different individuals agree to very different terms with respect to seemingly identical transactions because of the various subjective factors influencing the interactions.

Several years ago in my work as a negotiations consultant, I became involved in a personal-injury negotiation. The plaintiff had been injured, and his attorney wrote a letter to the insurance company demanding $100,000. After that figure was rejected, the plaintiff decided to retain the attorney with whom I work. We developed a strong negotiating position and settled the $100,000 case for
more than $500,000!
Our efforts greatly benefited the plaintiff, and was costly to an insurance firm that should have recognized the reasonableness of the original $100,000 demand and settled the case quickly.

Individuals who appreciate the basic factors that influence all interpersonal transactions obtain more satisfactory results than those who do not. They know how to prepare for these exchanges, they understand the crucial verbal and nonverbal communication skills involved, and they appreciate the different negotiating games being played. They know when to take a hard position and when to adopt a more conciliatory approach.

Becoming an Intelligent Negotiator allows you to create situations of opportunity for yourself and your negotiating counterparts. The people across the table possess the capacity to improve our situation, which is why we are talking with them. Both parties believe that a successful transaction will enhance their present circumstances. If superiors and subordinates can agree on work assignments and performance expectations, their relationships will flourish. If buyers and sellers of goods and services can establish trusting relationships, both sides will benefit. If these people are unable to agree upon their many interdependent issues, their relationships will suffer.

One of my recent bargaining encounters demonstrates the benefits to be derived from negotiating opportunities. I arrived at a hotel in Atlanta at which I had a
guaranteed reservation. The clerk indicated that he had no room because of an unusual number of holdovers who had not departed as scheduled. He offered to relocate me to another hotel, but I asked if he had anything available. He said he had half a suite containing a single bed. I said this would be acceptable, but suggested that the $175 price for the room I had reserved would be excessive for the accommodations he was providing. I was then silent and awaited a response from him. I expected a reasonable price reduction and was surprised when he offered me the smaller room on a complimentary basis. I was glad I had not made the first offer, because I would have suggested something in the $100 to $120 range!

T
HE
R
ITUALISTIC
N
ATURE OF
N
EGOTIATING