We are all negotiators. Whether we’re buying a home or acquiring a company, we all face situations that require working with another party to set terms that we find advantageous. Doing so successfully means understanding our own objectives and anticipating the other party’s, finding solutions that make everyone better off, and analyzing the outcomes to assess whether we’ve actually walked away ahead. Chicago Booth’s George Wu explains some of the good and bad practices that can determine how a negotiation will go, and looks at some of the most common negotiation problems many of us face.
1. How to prepare for a negotiation
A successful negotiation starts with the proper preparation. George Wu says negotiators need to give themselves time to prepare, to understand what their objectives are and which are most important to them, and to anticipate what their negotiating counterparts hope to achieve. Also important, says Wu, is understanding the BATNA: the best alternative to a negotiated agreement, essential information for gauging whether or not a negotiated outcome is a positive one.
2. The recipe for a win-win negotiation
Success in a negotiation doesn't have to be one-sided: George Wu explains that because each party typically has multiple objectives and different priorities, it’s often possible for both sides to come out ahead. In fact, Wu says, both sides usually do, which can help bring your counterpart back to the table for future negotiations. However, it also means that negotiators have to rigorously assess the outcomes of their negotiations to understand if they really did as well as it initially appeared.
3. A recruiter’s not-so-secret weapon for salary negotiations
“So, what are you making now?” It’s a question that puts job applicants at such a disadvantage that it's illegal for recruiters and hiring managers to ask it in many parts of the US. George Wu says that to some extent, there’s no perfect solution for this problem: if your salary isn’t very high (a common motivator for seeking a new job in the first place), a skilled recruiter can often use it to her advantage when negotiating your pay for a new position. Wu suggests that applicants who face this question try to steer the conversation away from what they’ve been making and toward the value they will provide for their new company—a strategy that, in survey results, was the best of a limited set of options.
4. How to negotiate a home purchase
Even for seasoned negotiators, a home purchase can be a challenging experience. George Wu says that’s in part because it’s often loaded with emotion: the long and difficult process of finding a property that meets your criteria and your price range can make it difficult to walk away if the sale becomes problematic. Wu says that buyers should consider negotiations ongoing until the sale is complete, and should continue looking at other properties even while moving forward with their first choice, to make it easier—mentally and materially—to walk away if necessary.