Any experienced negotiator knows to do their homework before a negotiation.
Obviously, homework takes time and costs, money and the smaller the deal; the less homework can be justified. But within the limits of time and budget, the good negotiator does as much homework as possible.
The Good Negotiator’s Homework Checklist
Subject matter. The good negotiator will be thoroughly knowledgeable about the subject of negotiation. If they are not an expert on the topic, they must quickly learn as much as they can on the matter
The negotiator’s organization. The fully prepared negotiator searches his whole organization for carrots and sticks. The more carrots and sticks, the more leverage. Go on a leverage hunt. Who else in the organization has something the other side might want? Purchasing, credit, sales, and other departments should be polled to insure that no potential trade offs are being overlooked or wasted. Any handy requirements to fulfill, adjustments to make, or disputes to resolve can become trading ammunition.
The counterpart’s organization. What’s their history, financial situation, political situation, culture, and reputation? What are their short-and long-term goals What does their organization chart look like? Who reports to whom? What’s their deadline? Are there potential cross-cultural negotiating issues?
The individual counterpart. What’s the counterpart like? What is his reputation? What is his position? What are his interests and possible secondary interests? What concessions-obvious and obscure-might appeal to him? Is he known to use specific negotiating techniques (such as starting high, limited authority, good guy-bad guy)? Does he tell the truth? Does he keep his word? Has he written anything that might reveal some information? What personal interests might he have that could be used as small-talk material? Is he from a different culture and/or country?
Setting an envelope*. More than anything else, homework is about Envelope-setting. It’s by far the most important homework task. Everything learned while doing homework will ultimately be reflected in the envelopes. If there are multiple issues, envelopes must be set for each issue and given a relative value. If the negotiator takes the time to determine his envelope with care, he’s almost surely going to do most of the important things right. He’ll start high. He’ll trade concessions. He’ll make each concession smaller than the one before. He’ll nibble (go for some small concession from the counterpart) at the end. He’ll know when to dead lock.
Authority issues. The homework period is the time to get authority issues straightened out with the boss and organization. Detailed approvals at this stage will help avoid misunderstandings later. Beware of overly broad grants of authority. Get the higher-ups to agree to stay out of the bargaining. Prepare them for patient negotiations with long stretches devoid of apparent progress.
Team preparation. If a team will be negotiating, the good negotiator ensures that he has minimized the team’s size. He has briefed everybody on the overall game plan. He has assigned roles. Most importantly, he will discuss agreed upon communication rules with the team. There will be a single spokesperson, there will be no note passing or whispering, and team members can call a caucus whenever they wish.
Nibbles. What are some worthwhile things to nibble for? What nibbles might the other side seek? If they did, what should be asked for in return? Having a list of candidate nibbles in advance will significantly improve the overall quality of nibbling, especially when the negotiator is tired at the end of a session.
Creative concessions. The good negotiator identifies in advance any concessions that, while not particularly costly, might be especially appealing to his counterpart. Or something that is appealing to his counterpart’s boss, or other higher-up. Can the relationship between the sides be expanded so as to provide more potential trade-offs?
There’s No Subsitute For Proper Preparations Before a Negotiation
The side with the most information usually has the upper hand in negotiations, no matter how brilliant the negotiators might be. There is simply no substitute for doing homework to prepare for a business negotiation.