Negotiations Part II – Do you have a successful strategy?

how to succeed with negotiations

Not sure what works best? In this short video Stanford professor Margaret Neale answers questions about how to craft a winning negotiation strategy:

It’s common to wonder if it’s best to make the first offer or not. According to Margaret Neale that depends from negotiation to negotiation. Regardless of that many people believe that the person who starts is lost.

If you make the first offer, you get the benefit of anchoring your counterpart because they need to respond. But when you receive the first offer you get the benefit of the information it gives you. Consequently what’s important is what benefits you most in the negotiation you are facing at the moment.

Where is the benefit?

Should you aim for setting the anchor or getting the information? The answer to that mainly depends on how prepared you are. And how prepared your counterpart is. Being prepared and having, to the best of your ability, made an estimate on what your counterpart hopes to gain will make it easier for you to decide which of the strategies is likely to be best for you.

Do you negotiate the easy issues first?

Negotiating is trading proposals back and forth. Frequently your counterpart will want to go issue by issue i.e. solve the easy issues first. Professor Neale however is of the opinion that doing so leaves you with the difficult issues and nothing left to trade.  Another aspect is that your easy issues may not be your counterparts easy issues. If that’s the case, you have lost the opportunity of using those issues to give them concessions and it could hence work against you.

Negotiating the package

Professor Neale is of the opinion that it’s optimal to negotiate at a package level. Your counterpart will start by trying to break it apart and go issue by issue which you should resist. Instead it is better to, from the package point of view, negotiate in the sense of “if I get a concession here I will give you a concession there”. That way you can avoid the battle it becomes  when everybody is keeping score by negotiating issue by issue. It’s much easier to develop a win-win scenario if you negotiate on a package level.

When to walk away

At what stage should you walk away from a deal and when should you keep on negotiating? Again, this depends on how prepared you are. What are your alternatives? What will happen if you don’t get an agreement? What difference will it make if you make an agreement or walk away i.e. what’s your bottom line? What’s an optimistic assessment of what you could achieve by making a deal? If you know the answer to those questions you will know what to do.

What strategy do you normally use when negotiating? Do you negotiate issue by issue? Or do you agree with Margaret Neale that it’s best to negotiate on a package level? Do you prefer to make the first offer or not? How prepared are you when you negotiate?  Or do you mainly improvise? What would make you walk away from a negotiation? What are your experiences of negotiating? Do you normally get what you want? 

Video: Stanford Graduate School of Business – Photo: US Department of State

58 thoughts on “Negotiations Part II – Do you have a successful strategy?

  1. Excellent video. It's important to know your bottom line — what's the deal-breaker for you. It could be price, timing, your work environment. It's different for each negotiation. When I sold my apartment in NY I knew my bottom line — it was a combination of price and timing. Once I knew that I had an accepted offer within a week.

  2. Depending on the situation I may select of the issue by issue or package level negotiation.
    When it comes to making the first offer when negotiating I prefer to go for it.

    1. After living and working in Riyadh I'm aware that in that country they are such skilled negotiators it doesn't matter what I do. When there it's better to avoid negotiations..

  3. Such a helpful article. I particularly love the video clip you used to reinforce your message. Working on a package deal first is the right way to go! I will absolutely refer back to your post when I negotiate. Thank you.

  4. The arguments for and against each part of a negotiation is fascinating. I can see why negotiators, and those trained in it, are a valuable part of a team and a strategy. There are so many factors that go into it. The skills to do it are impressive.

  5. Margaret makes excellent points. I don't think I have ever negotiated piece by piece and learned, to go from the package level. But behind the negotiations, I am thinking about my least acceptable offer. I love her term, "yoking" language – maybe that is because I use that kind of talk! Thanks.

  6. It's important to go into a negotiation fully prepared with an endgame in mind and which areas you're willing to compromise and which you're not. Hopefully you can continue to keep the momentum going the easier to harder with all feeling they've won.

  7. Preparation is the name of game for this subject. I have no experience with this, but I am quite sure that preparation is key.

  8. Interesting article. I negotiate at work on a daily basis and find having an alternative when declining an offer always helps. I am however careful not to over commit myself as it lacks loyalty and integrity.

  9. I have not done any business negotiations but have often negotiated for better rates for my blog articles. I usually do this by telling them about the benefits from linking to my blog and often agree to meet half way. When negotiating with anyone, I like to think that both parties have gained something.

  10. I find that if you have an overall goal that you want to meet, whether it’s the purchase of an item, a long-term contract, or a salary target, you better have a # you are willing to walk away at. Much like gambling. When you lose too much no amount of future gain will make up the loss. Always negotiate the package and when you are VERY close to an agreement you can sweeten the deal with a line item concession. To hash it out on a line-by-line basis, that way lies madness. Love Margaret’s strategy advice.

  11. Great post, great insight. The package conversation is in my experience by far, the most successful way to approach negotiations. Unless you know your counterpart inside and out, it’s the only way to determine the difference between low hanging fruit and the challenging issues. As a lobbyist and as a senior executive inside of a unionized organization I have been taken by surprise by the the things that were sticking points. More often than not, what “we” thought was a given, was not a given to “them”. The package approach meant we could seem magnanimous, when we were giving away relatively little.

  12. I would argue about the concept of not negotiating the easy parts first. Negotiations are a form of communications and by beginning on easier aspects, you are establishing common bond to build on. I do believe you do need to keep a couple of these common areas so you can have something to go back to later. If the negotiations start to falter, you can have these to reestablish that communications.
    One of the most important parts of this blog is the concept of walking away. Too many people take negotiations personally, and they think if they walk away they lost.

    1. In that case, according to the professor you can only negotiate a few easy issues in the beginning, William. If not you take the risk of not having anything left to give away. What she says about negotiating on a package level is, in my experience, usually the best way.

  13. I also go into a negotiation fully prepared with an idea in mind of which areas I am willing to compromise on, and which I'm not. Always try to settle the easier points first. If you try to negotiate the harder areas first a) you'll oftentimes get stuck there and make no movement forward at all on any other issue and b) being able to come to terms on some smaller issues helps build rapport through the give and take. Hopefully you can continue to keep the momentum going from there and negotiate through the harder issues as well.

  14. Hello Catarina
    I think walking away depends much on the situation of person. If someone is joining the job for the first time and do not have experience but has skills so he/she will try to convince by telling about skills but on the other hand may be in a way can not walk away in many cases as they need to start at some point. I personally believe once you have experience then at least you have that in hand and can negotiate on the basis and where you have worked before. I walked away many times, as for me, I do not need only good salary but also the benefits that are there with the job and if someone will say me about raise in salary and try to remove benefits , then for sure I am not going for that job. I feel that comfort comes first. Its not every time that we go for a job and we have alternative, sometimes we have to negotiate and keep in mind that we can not lose it. Its all about give and take I think.
    Now a days I am thinking to quit the job and help my daughter for few school years and I am also planning to go for second baby. If I quit the job and go for these things then for sure I will go for part time teaching job as it suits me in many ways and if situation do not suit me then I will start my tuition center. I think I have alternatives with me, I will see how things turn out for me.
    This post really made me to think more, what I am thinking from a year. I am opening this from last three days and reading it and watching video. I am thinking to come up with some decision that will be in best interest for me and my family. I can just try and take best decision and leave rest to God… See what He plans for me.

  15. I have always found the less you give away in unsolicited chatter the better off you will be. Let the other party talk; you will get to the nitty gritty eventually and all too often, in my experience, the chatterer shows too many cards too early.

  16. I don’t negotiate. I have my prices and they are firm. I might give an alternative of a less expensive service or product. I know negotiating is very important for people who deal in larger packages. Interesting alternatives.

    1. Beth, negotiating is not something we only do in business. We have done it privately since we were toddlers. And the same principles apply with family and friends, in shops, with real estate agents and so forth.

      1. Catarina, you are right of course. I was just thinking about business. We certainly have done it since early childhood – especially if we have siblings.

  17. I have to admit that on many occasions I have taken an issue by issue approach. That is tied into the issue of knowing when to walk away for me. I always want to look at the toughest issues first because I want to know that there is going to be the potential to reach agreement on those, otherwise I don't want to waste my time.

  18. There are some useful reminders here, Catarina. For my part, though, I don't have a standard strategy – it depends so much on circumstances. Preparation is certainly key, whatever the case, as otherwise you don't really have a good idea of what a successful outcome will be for you…

  19. Like Leora I have no experience with this, but I certainly appreciate those who do. Being prepared is always key in whatever you do.

  20. This is a timely video for me as I'm about to enter into a negotiation and the idea of negotiating a package and not getting bogged down in every little issue is good advice. You have to know your bottom line – your real bottom line. Many years ago I accepted a senior position with a major corporation at what I felt was an excellent compensation package. I later learned that another candidate had insisted on a higher salary. When he learned he had lost out on the position, he said, "I would have accepted that salary." He didn't know his real bottom line. Of course, I like to think I would have gotten the job anyway!
    My recent post Is Microsoft Starting a Trend in Customer Service?

  21. Interesting post. There are a lot of ways to approach and handle negotiations. I’m not sure whether negotiating the hard or easy points or negotiating as a package is best. I suspect it might depend a bit on who you are negotiating with. I know someone who, even if he got everything he was after, wouldn’t feel as if he’d “won” unless it was a little bit hard and he felt as if he’d made the other person give up something. What the post points out to me is the importance of being prepared and of knowing something about who you’re negotiating with, understanding what they really need or want.

  22. I used to be part of a union negotiating team, and definitely believe it's best to negotiate the easiest points first, so that you build a report with the opposing team, and boost your confidence in the process. Establishing some common ground is critical to any negotiative process.
    My recent post the need to rejuvenate

  23. I agree with Margaret. I think we have been told for so many years, not to speak first as you lose control is not the way to negotiate. As anything we all have different perceptions of what is an easy or hard problem. Knowing when to walk away is so important. Each side has a limit. I have found that walking away sparks more interest than beating a dead horse.

  24. I think doing your homework and knowing your bottom line are the important points. Recently we purchased a used car – going in we had done our homework on what kind of car and accessories we wanted and knew what we were prepared to pay. We also had a great little pickup in perfect condition with low mileage that we wanted to trade.The salesman practically drooled when he saw my little truck so that gave us the edge and we were able to negotiate a super deal.

  25. She is spot on. For me, as someone more introverted, and it usually gets me a most favorable end result. I have in mind, my bottom line of what to accept. Whether I go first or last with an offer tends to be relevant as long as I am quite clear on this. Recently my husband and I have been using this "package" level Neale refers to in trying to find the right realtor as we decide to sell our house or not. It's actually fun when you know what your own bottom line is because in a successful strategy to negotiate, you have to come close to it. Thanks Catarina.
    My recent post Increase Your Awareness To Blog More From Your Heart

  26. Interesting topic that I don't know a lot about (negotiations). Certainly makes sense what Margaret Neale is saying, especially about being prepared and looking at the package, as she calls it. I would be interested in learning more with specific examples.

    1. Leora, why don't you get in touch with Stanford University? They may have an online course now or in the future about it. Am personally doing such a course about contracts that Harvard is doing and it's really worth while.

  27. I agree with Margaret Neale in that preparation is the determining factor. Bur frankly, I've seen more success by waiting for my counter-part to make the first offer. I really do try and listen for THEIR most important issue which really helps to determine the package. Looking back, if you wait, they'll keep talking! In my mind, that's a leg up:) LOL The yoking concept was interesting. Negotiations Part II really hit the heart of the whole process! Good one!

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