Before you start bargaining your way through the current recession, you need to decide which of your expenses might be negotiable.
Your office or residential rent? I have friends who have successfully negotiated reductions mid-lease on the strength of their desirability as tenants and good relationships with their landlord.
Over dinner with friends last night, I learned that a local shopping mall recently agreed to renovate the commercial space of one of its major department store tenants in exchange for the store's promise to renew its lease at the end of this year on existing terms.
When I asked my twitter network what recurring expenses they'd like to reduce this year, I got answers on everything from diapers (@mglickman) to flat Westlaw fees (@dtoddsmith). And though she rejected their offer, attorney Jeena R. Belil provided an excellent example of an integrative negotiation tactic - offer more value for the same price -- here, the Yellow pages offering to provide her with a half-page ad at the quarter-page price (@jeenaesq).
So, make a list of expenses that make your monthly "nut" difficult to crack during a down economy. Even if you believe these expenses to be non-negotiable, give it a try. You've got nothing whatsoever to lose by asking.
And once you enter negotiations, here are five rules from the Harvard Negotiation Project to speed you on your way to a more economical year.
1. Don’t Bargain Over Positions
Most of us begin negotiation by identifying a position and arguing for it, such as: “I want to retain the CEO title.” But such positional bargaining can limit your ability to arrive at a “wise agreement” that benefits both parties — the proverbial middle ground and the whole purpose of negotiation. Instead of thinking of a “position,” identify the goal. You want remuneration for the sweat you put into your company. You want, for example, status (to remain CEO). But a specific position is binary — you either get it or you don’t. A goal can be attained in many ways, giving you many more options for arriving at a solution.
2. Separate the People From the Problem
Most negotiation is emotional. You want something, after all. And emotion clouds our objectivity. But you can limit the emotional content of your negotiation by thinking of the person you’re talking to as your partner and the problem you’re trying to solve as an object. Take, for example, the question of how much a company’s equity is worth. In this case, you’re not negotiating against the investor over a position, you’re engaged with that person to arrive at the right answer to the question. Some will urge you to make your negotiation opponent a partner, but this can lead to Stockholm Syndrome. Instead just think of engaging the other person, using their input to arrive at the right answer. Maintain your independence.
3. Focus on Interests
We all have interests. The pursuit to fulfill our interests leads up to adopt positions. But bargaining for stated positions, such as titles, will not necessarily produce a wise agreement that takes care of the interests that led you to adopt the positions in the first place. Think instead: I want to remain engaged in the business. There are many ways to achieve goals without having specific positions.
4. Invent Options for Mutual Gain
This is the creative part. You must examine each other’s interests to come up with options in which both parties gain. Your investors have an interest in a pro-CEO who can sell into large corporations (you’ve never done that). You need funding, but also want to remain engaged. Both parties can draft a list of options for your new role that satisfy everyone’s needs: COO, president, chief innovation officer, etc. Negotiate from this list.
5. Insist on Using Objective Criteria
We all have personal standards. CEO conveys more status than chairman, etc. The key is to let go of personal standards in favor of objective ones upon which both parties can agree. (Think of the Kelley Blue Book, a set of agreed-upon standards for those looking to buy or sell a car). But here you have to do some real homework and investigate the objective standards that apply to your negotiation ahead of time. Some to consider: market value; legal or business precedent; scientific judgments (patents); efficiency; and reciprocity.
Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all types of business torts and contract disputes. During her two years of full-time neutral practice, she has co-mediated both mandatory and voluntary settlement conferences with Los Angeles Superior Court Judges Alexander Williams, III and Victoria Chaney. As a result of her work with Judge Chaney in the Complex Court at Central Civil West, Ms. Pynchon has gained significant experience mediating construction defect litigation. Ms. Pynchon received her J.D., Order of the Coif, from the U.C. Davis School of Law.
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