Market Collapse: Using Your Negotiation Skills To Negotiate For Security

One can sense an air of insecurity in the world financial markets wherever you go - for the first time - regardless of where you find yourself in the world.

Warren Buffet said that it is only when the tide goes out that one can see who is wearing no swimsuit. In other words, it is easy to be prosperous when the economy is thriving; it is only when tough financial times arrive that we can easily discern quality & commitment.

How can you use your negotiation skills, negotiation training or purchasing training to avoid losses in the current economic climate?

Use 'Loss Framing'

We are more interested by evading loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking when trying to avoid a loss whilst they are more likely to be risk averse when seeking benefits. In the way that we negotiate, we can make our counterparties aware of the unique items that they stand to lose if they don't agree to our requests and otherwise gain if they do.

Create Alternatives

In times of difficulty it is vital to create alternatives so as to support our negotiation position. Creating options are important in the context of negotiation and the power of alternatives to securing a transaction is the key driver of our negotiation power.

We normally wait until we know that we are not going to be able to do a transaction before we start thinking about alternatives. We risk entering into a less than ideal transaction and if we have not studied all the options. Similarly, thinking about the options available to the other side in the negotiation will give you a clear understanding of their relative position of strength in the negotiation. If they have good alternatives available then they will be more aggressive and if they don't, they will tend to be more agreeable.

Use Reciprocation

Reciprocation is one of the key principles of powerful influencing skills, because we are most likely to return to others the sort of behaviour that they exhibit towards us. In times of economic uncertainty it is key that we act in the interests of the other side if we would like them to perform in ours. You can use this principle to your advantage by acting first and using the rule of reciprocation. One note of caution and ensure that you register the obligation with your counterparty.

Move from price to value

It is important to take the focus off price and home in on the Total Cost of Ownership. For any service, product or solution that we buy or sell, there is always a trade off between value & price. If we only focus on the price, the best that we will do is to barter and it is only once we start to investigate the entire lifecycle of the service, product or solution that we trade, that we begin to discover opportunities for negotiation. Before you even mention price in negotiation, examine your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial stability and potential risks or negative consequences that may happen when your counterparty doesn't manage to reach agreement with you.

Remember that the magic in negotiation is found in the quality of your planning. In times of economic uncertainty it is more important than ever to commit enough time to planning your negotiations.

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Market Collapse: Using Your Negotiation Skills To Negotiate For Security

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