Holly Schroth Leads Winning Session on Negotiation Strategies

Professor Holly Schroth, award-winning Senior Lecturer at the Haas School of Business, University of California, Berkeley, led an entertaining and interactive workshop about negotiation skills to a sold-out crowd in April in our third Professional Development program in 2014.

Holly emphasized that successful negotiations aren't about "win or lose" but rather are about problem solving. Holly highlighted the following "sins of negotiation," all of which are related to poor preparation:

1.  Settling for too little

2.  Leaving money on the table (because you don't know enough about what you are negotiating for)

3.  Walking away from the table when there is a good offer

4.  Settling for terms that are worse than your alternative (this can set precedence for future deals)

When negotiating, Holly suggested striving to make the pie bigger (creating value) rather than fighting for a bigger piece of a fixed value pie. This approach is not easy and requires ample preparation. Holly gave practical tips on how to prepare for negotiations. She suggested looking for ways to create value. For example, find out what is important to the other person besides the dollar amount. Avoid the desire to go through and agree to each feature line-by-line. Instead, Holly suggested presenting all the features as a package, including the price, because people will be more flexible. Furthermore, have up to three packages to offer, and use the packages to get information from the other party as to what she values. You may be surprised!

Holly asked who should make the opening offer, and many said the other party. Holly counseled it should be you because: 1) your offer creates an anchor upon which all other offers will be judged (there is an 80% correlation between the opening and closing offer); 2) it gives away power; 3) it makes the other party work to justify their number. But remember always make your first offer a package, not just a price.

Finally, once you are in the negotiation process avoid changing your offer without having a reason. If you must make a change, ask for something back in return for your concession. Once the negotiation is final you can go back and find more value if you can. Alternatively, if your offer was rejected, try to find out why because you may find there still is room to reach a deal.

In the last 20 minutes of the program we broke into groups to do our own simulated negotiation, similar to what Holly does in the college and graduate classes she teaches. Based on the scores of our final negotiated packages we were able to compare how all the groups did with our newfound knowledge. Trying to apply what we had learned showed that the art of negotiation requires plenty of practice!

We were fortunate that Holly was willing to share her insights for an evening and we had a lot of fun. The next time we have to negotiate Holly's teachings will be useful to arrive at a win-win solution.