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Real-life expertise: How to negotiate

Negotiation happens to everyone. Follow these steps and it'll be less painful, more profitable and easier on everyone involved.

REAL-LIFE EXPERTISE: NEGOTIATION By Jeff Angus

Negotiation is an inevitable practice in all channels. Sadly, most people care too little about it -- they don't choreograph the dance, they respond only to the moment, usually too rigidly or too emotionally. Some of the remainder care too much about the craft of negotiation, as though academic methods they learned are part of a religious crusade. Either excess can make doing business expensive, and worse, can crash a project or an entire business relationship. Good practitioners of the science-art combo know how to dance the dance and arrive at a win-win conclusion that makes projects what I call "3P": pleasant, productive and profitable. One such champ is Joe Palian, a manager at Brulant Inc., an online solutions specialist consulting firm. Palian uses his background in project management to work through the details that will determine how well a project meets the 3Ps, and his roadmap to structuring a negotiation is built on project management principles, too. Apply these five tips from Palian:

  1. Make sure you know your own bottom line and what your final offer can be before you start a negotiation.

  2. Recognize there are separate elements (Palian, with his project management background, calls them constraints) around which you can build a negotiation. In consulting engagements, these are scope, calendar time, money and expertise.

  3. Always nail down scope first. Once you fix and thoroughly document the scope, the interplay among the other three becomes much easier to calculate -- each move on one changes the constraints for another. Negotiations for projects that don't nail down scope are longer and less effective. Palian has found that many clients, especially C-level folk, go straight to money as the anchoring element. This buries the client's business requirements down low on the list of considerations and leads to longer, less effective negotiations. If money ends up being the constraint, Brulant works to break the project into pieces to fulfill the business need in phases.

  4. Clarify procedures and rates for change orders early on. Change orders don't just lead to longer, more expensive projects, but they are also the moments that unbalance scheduling and resource allocation, and frequently lead to friction in the relationship.

  5. Price can vary based on other, subtle factors. With a consultant, determining billable hours over a number of months increases the chance of keeping people un-billable, so longer-term agreements might earn a price break.

Palian thinks it's critical to know your negotiation partner's business model and factors so you can work to win-win. Hardware and software vendors have very different elements that increase or decrase their willingness to yield profit up front. Being open about your elements, and asking vendors outright what their elements are, can lead to a quicker win-win point.

Jeff Angus is an active management consultant who does presentations and workshops on management. He is also the author of Management by Baseball: The Official Rules for Winning Management in Any Field, published by Harper Collins and available here.

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