Market Collapse: How To Use Your Negotiation Skills To Safeguard Your Security

One can sense an air of uncertainty in the world financial markets wherever you go - for the first time - regardless of geographical location.

Warren Buffet said that it is only when the tide goes out that you can see who is wearing no swimsuit. In other words, it is easy to be successful when the markets are booming; it is only when tough financial times arrive that we can clearly discern quality & commitment.

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

Use 'Loss Framing'

We are more motivated by avoiding loss than by achieving the very same gain. Kahneman & Tversky's Prospect Theory work describes how people will become risk seeking in an attempt to avoid a loss whilst they are more likely to be risk averse when pursuing benefits. In the way that we negotiate, we can make the other side aware of the unique items that they stand to lose if they don't move in our direction and otherwise acquire if they do.

Create Alternatives

In times of difficulty it is vital to look at other options so as to support our negotiation position. The ability to create options is important in the context of negotiation and the strength of alternatives to concluding a deal is the key driver of our negotiation power.

We normally wait until we recognise that we are not going to be able to do a transaction before we begin to think about alternatives. We risk entering into unfavourable transaction and if we have not investigated all the alternatives. Similarly, thinking about the options available to the other side in the negotiation will give you a clear view of their relative position of strength in the negotiation. If they have good options available then they will be more aggressive and if they don't, they will tend to be more accommodating.

Use Reciprocation

Reciprocation is one of the key principles of powerful persuasion skills, because we are prone to return to others the sort of behaviour that they exhibit towards us. In times of difficulty it is key that we perform in the interests of the other side if we would like them to act in ours. Use this principle to your benefit by acting first and using the rule of reciprocation. Be careful and ensure that you record the obligation with the other side.

Move from price to value

It is important to take the focus off price and concentrate on the Total Cost of Ownership. For all services, products and solutions 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 haggle and it is only once we start to study the entire lifecycle of the service, product or solution that we buy or sell, that we begin to uncover options for negotiation. Before you even mention price in negotiation, evaluate your counterparty's long term strategic fit, expertise, switching costs should they wish to change a business partner, financial steadiness and potential risks or negative consequences that may occur when your counterparty doesn't reach an agreement with you.

Don't forget 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 dedicate enough time to preparing for your negotiations.

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