5 ways to nail a financial negotiation
Having to negotiate for what you want can feel like getting a root canal. You'd rather not do it, but sometimes it's necessary.
That's especially the case when it comes to money.
Whether you're negotiating for a higher salary, trying to settle on a price for something you're buying, or just trying to convince your spouse to save (or spend) more, there are some bottom-line principles that will help ensure your success in any negotiation.
1. Understand the other person's position
You're less likely to get what you want if you don't consider in advance what the other party's motivations and constraints are.
"People only say yes if they see an interest for themselves," said Gaetan Pellerin, a negotiation consultant and author of "Mindful NEGOtiation: Becoming More Aware in the Moment, Conquering Your Ego and Getting Everyone What They Really Want."
If you don't know their real interests, you're less likely to make a proposal that's acceptable to them.
"If I prepare with me and only me in mind, I will have a hard time being successful. I need to spend time focusing on the other party. What could be a win or a pain point or a concern for them?" Pellerin said.
Say you want to save more for your retirement but your spouse is all about living large today. You're not going to get far asking them to curb their spending just by making the logical case for why it's important to save for the future. You will improve your chances if your proposal accounts for your spouse's equally reasonable view that you shouldn't always put off what you want today because tomorrow is not guaranteed.
You also might ask yourself what's really behind your drive to save more. "Is it a value your parents gave you? Or is it your value as an adult?" Pellerin said.
2. Keep your emotions in check
Negotiating is emotionally triggering because it's usually about more than just money. It can be about self-worth, a need for respect, or a need for greater security or independence.
That's why it's helpful to prepare ahead of time for potentially tough moments so that you don't become reactive and sabotage your chances for success.
"Rarely does a negotiation go as planned," Pellerin said. So consider how best to respond in "what-if" scenarios.
What would your knee-jerk emotional response be if the other person gets upset or obstinate or condescending? What if they yell or cut you off? You might feel angry, powerless, or belittled. Rather than display those feelings, consider how to respond in less emotional, more measured ways.
The point is to prepare when you're thinking rationally and not just wing it in the heat of the moment.
"When we're facing a high stress conversation, we have an adrenal response to it -- all rational thought leaves your brain," said Fotini Iconomopoulos, author of "Say Less, Get More," who teaches negotiations at York University in Toronto.
3. Talk less, listen more
People tend to talk too much and listen too little during a negotiation.
"Those who get the most are skilled and listen carefully," Iconomopoulos said.
Her recommendation: Observe what's going on during the conversation, exude a quiet confidence and take a few meditative breaths before responding, particularly when you're thrown a curveball. She calls it the "power of the pause." Your goal is to think before you speak and carefully consider the words you use.
4. Don't walk away if you get a 'no'
If the other party rejects your proposal, get more information. "A 'no' isn't the end of a negotiation," Iconomopoulos said.
It's the moment to ask follow-up questions. "If you ask the right questions, you may get what you want [eventually]," Iconomopoulos said.
Say your boss says he can't give you the raise you'd like. If you ask why, he may say because you're already paid at the top of the salary band for your role.
So you might ask, "What steps can I take to get above the current salary band? Can we meet again in six months to discuss a promotion?" Pellerin suggested.
If your boss can't offer guidance on how you can get to the next level within a specific time frame or is evasive in his answers, that is a red flag -- maybe the company is in financial trouble or maybe he just takes a dim view of your prospects.
In all cases, you walk away with important information that helps you decide your next move. It may be to take on key projects that lead to a promotion. Or it may be time to look for a new job if there is nowhere else for you to go in your current one.
5. Be assertive about what you want, but stay flexible
Sticking with salary negotiations as an example, if a boss or a prospective employer can't meet your number for base pay, inquire about other ways the company might put more money in your pocket.
For example is a bigger bonus an option? Tuition reimbursement? Extra paid time off?
"Get creative to create value elsewhere," Pellerin said.
