So you're sitting in your office and you know you have an upcoming negotiation. You're a little nervous and a little excited. If you enjoy confrontation, you're getting pumped up about the hunt and kill. If you're someone who avoids conflict, you might be feeling tense, wanting to get the darned thing over with, hoping that you come out of it well. But regardless of your nature, if you approach the negotiation as a way to strategically partner with the "other side," your focus will be on having both sides come out happy. How do you do that?

No matter which side of the negotiation table you're on, no matter what you're negotiating - whether it's trying to buy a house, get a raise, or find an audiovisual vendor for your next meeting - all negotiations share the same fundamental principles. You can apply these core concepts to change the rules of the game so that both sides work together toward a common "win," doing better than they could elsewhere.

First, you need a plan … but what does a negotiation plan look like? What should be included? What data do you need? There are two fundamental concepts that you can use to guide you. Once you have these firmly under your belt, you'll see that negotiations don't have to be as complicated or as combative as you might have thought.

Principle 1: The BATNA
Ask yourself a simple question: If this negotiation falls through and for some reason we don't reach agreement, what happens? You might be saying to yourself that you won't let that happen, that the deal can't fall through because you really need for it to go off, that you have to meet your numbers, or a host of other reasons why the negotiation has to work. While this may or may not be true, on the off chance that the negotiation fails, you're going to be left with something. The other side will also be left with something. What does that "something" look like?

Objective Questions
We call this the BATNA or Best Alternative To a Negotiated Agreement. So if the deal falls through, we'll be facing something, an alternative to reaching an agreement with the person across the negotiation table. If you're on the sales side of the table, you'll either have to sell to someone else or do nothing and maintain the status quo. If you have to sell to someone else, what is the market demand for your product or service, and how many deals will you have to make to equal what you could have gotten here? In other words, if you lose this deal which is potentially worth $100K, how easy will it be for you to make up that $100K elsewhere? Will you get another deal with a similar value or have to get two at $50K? How long will it take?

If you're on the procurement side of the table, you'll either have to buy from someone else, do nothing, build or service it yourself, or find a reasonable substitute. If you have to buy from someone else, are there switching costs? How long will it take to build a new relationship? What is the cycle of your procurement process? How fiscally stable is the other seller? What is their service record? As you can see, there are many questions you have to ask yourself. It might not be that easy to get a better deal elsewhere. If you do nothing, what does that mean? How will you be able to service your customers? What else would you do with the money you've budgeted?

The point here is that no matter which side of the table you find yourself sitting on, you have to objectively assess the situation. This isn't an analysis of how you wish the situation to be, but a diagnosis of what it actually is.

Hard Costs Versus Soft Costs
In thinking about any of these issues, from acquiring another supplier to finding a substitute (if available), we have to analyze the hard and soft costs and gains for the short and long haul. Hard costs and gains are those we can easily and quantifiably measure numerically, such as dollars or time. Soft costs and gains are those that are a bit "fuzzier," such as relational issues, hassles, or morale. We also have to remember to think about these things for both the organizations and for the specific individuals involved in the deals. If I'm selling to you, for example, I'm not only worried about my company making a profit but also about the commission that I'll be making - and keeping my boss happy.

The BATNAs allow you to know where the line is, where it's better for you to walk away from the deal because you can do better elsewhere and how far you can push the other side before they walk away. They also let you know who has more power. It's simple: whoever has the worse BATNA has less power. If I'm selling services that are in great demand, I won't have to work too hard to get another buyer. If I'm buying services that are in great demand, and there are few adequate sellers in the market, I'll be hard pressed to get these services elsewhere. In this situation, the seller has more power because their situation isn't as bad if the deal falls through. We need to analyze the BATNAs objectively, however, in order to recognize where we truly stand. And most importantly, if we have more power than the other side, we must tactfully and cautiously inform the other side, if push comes to shove, in order to preserve the relationship.

Principle 2: The RINT Analysis
Once we've analyzed the BATNAs on both sides of the table, we have to ask ourselves another question: If we make this deal happen, what will that look like? We call this the RINT or Ranked Items on the Negotiation Table analysis. Not only do we need to know the items that we'll be negotiating and their order of importance, but the limits for each item (the upper and lower ends), how important they are, and why they're important. This list is, in essence, the goal sheet for both sides. You want items A through J for example, and it's your goal to get them. The other side wants items Q through Z and they believe that it's their goal to fulfill their list. The problem arises, however, that more often than not, there's overlap on the lists and both sides are looking for the same items, but with different limits attached to them. Price is often on the list for both sides. Obviously the buyer wants a lower price and the seller wants a higher price. How do we reconcile this? The only way for the seller to achieve this is to get more money from the buyer and the only way for the buyer to get a lower price is to pay less money to the seller!

Bring Value Into the Equation In order to resolve this seeming paradox, you have to learn to exchange items of different value. By adding more items into the mix, it actually becomes easier to be more creative in finding appropriate solutions that are acceptable to both sides. This is why you need to know what's most to least important for both sides as well as the limits of each item. If you're selling, you need to know how much you're willing to go down on price for example, but not just because the other side asks! Make sure that you exchange the lowered price for something else, like volume. I'd be willing to come down on price for my services, for example, if I reach a much larger agreement in which the buyer purchases more of my services for a longer period of time. You also need to know how important each item is so that you don't get stuck talking about unimportant issues or so that you can more easily reach agreement by exchanging items of differing value and importance. If the buyer has a cash flow problem and the seller isn't as concerned about payment terms (let's say payment terms is number three on the buyer's list and number eight on the seller's), the seller could probably get a higher price in exchange for more amenable payment provisions. It's easier for the seller to give this since it's not as high on their list, but of much more value to the buyer. Remember that just because something is third on the list doesn't mean that it's almost as important as the second item. The seller might fall on his or her sword for the first two items but items three through 10 might be up for grabs, for example.

Finally, we have to know why each item is on the list. What's the "Causal Drive" that's creating the desire to get that item in the first place? If we understand what is motivating each side to get a certain item, we might be able to provide a more creative way of getting it. If the buyer wants a lower price, for example, we might want to know why. It sounds rather silly, right? Buyers always want a lower price. But if you as the buyer were having a hard time with turnover and it was costing your association $150K in administrative fees yearly in order to maintain your customer alliances due to hiring, training, and related costs, the seller could actually raise their price by $50K if they took over these functions, right? It would be easy for the seller to provide this sort of add-on training as well as act as a single point of contact for you as the buyer since it's already their business to be experts in this arena. You would benefit because you'd actually be saving $100K even by paying more. In this scenario, if the seller didn't know why you were hammering the price issue, the seller wouldn't be able to come up with this creative solution. And this is where relationship-building comes into play.

Relationship-Building Through Negotiations
Once the BATNA and RINT analyses are accomplished, it becomes much easier to discuss needs with the other side. Just because you've done your analysis doesn't mean that you're done, however. There are items about which you are unsure. If you've exhausted all of your data sources, where do you get this information? Have a pre-negotiation meeting with the other side. Set up the meeting as mere information sharing. If you're buying or selling, you need a bit more information in order to ensure that both sides come out ahead and do better than they could do elsewhere. Don't do the deal during this meeting; simply ask questions and take notes. Share appropriate information. You don't want to tell the other side about your BATNA for example, but you might want to tell them your RINT because you'll be discussing it when you negotiate anyway. It will allow them to know how they can best make exchanges as well. Be wary of sharing your limits on each item, but you'll help build your relationship if you tell them the items on your list and their ranked importance.

Once you know why each item is important to the other side you'll be in a much better position to get the best deal possible. You can read between the lines and understand more about their BATNA. You can creatively come up with offers that will be better than both sides' BATNAs and exchange items that differ in worth based on your RINT analysis in order for both sides to truly win. Once you've come up with one, two, or even three offers that meet the criteria for both sides, set up another meeting in which you actually hammer out the details of the deal. Remember that there's no magic here. But by following these principles, you'll be well on your way to becoming a successful negotiator, building your relationships one deal at a time, and creating a legacy of trust and partnership.

BATNA at Work
Issue: the hotel is trying to sell you rooms at $200 (inclusive of taxes); you have a budget of $200, but do not want to spend that much as you forgot to budget gift bags for all your attendees. The only place you could recoup the money is with a lower room rate of $180. The hotel, unbeknownst to you, can lower the rate to $170. Your BATNA is $180. The hotel's WATNA (Worst Alternative to a Negotiated Agreement) is $170 - and they do not want to sell it for the lowest price. You start off with saying your group will bring in x-revenue and the sleeping rooms should be $160. The hotel will not go for this, but lowers its rate to $185. You know that the gift bags will be about $15 and are not sure if you should push for a further reduction. The BATNA serves as a trip wire; a good BATNA keeps you from jumping at the first offer. If you add the reason why you need to have them go lower, the hotel may have a solution. Perhaps the hotel has over-ordered gift bags and could give them to you if you accept a certain sleeping room rate or perhaps the hotel could bulk order them through a preferred vendor at a cheaper rate. The more you get the other side to work with you, the better partners you become in resolving the issues. - Dana Lynn Bernstein, CMP

° Samuel Tepper, Ph.D., is president and founder of Strategic Information Partners Corporation, a consulting firm specializing in strategic negotiating, decision-making, change management, and creative business solutions. Tepper is also a professor at Northwestern University, teaching bargaining and negotiating, and organizational communication. He can be reached at sam.tepper@strategicinfopartners.com.