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8 tips to negotiating in a recession (Pt 2)

Mark Simpson
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Continuing our tips for negotiating in a recession, last week we shared two pieces of advice that talked about the importance, in any negotiation, of correctly valuing the cost of success and failure and having a structured approach of your negotiations.

Planning and preparation are key part of Scotwork’s teachings, providing resources for our participants to manage this process.

Another important element is evaluation of your business and its limits. Determining what you value, what you don’t, what can be traded and what can’t play an important part in developing your proposals and your counter-proposals.

And this planning and preparation will also help when you are up against an outright ‘No’.

Tip #3 of 8: Understand your Limits

We all understand the risks of bidding at an auction without a clearly defined “walk away point”; the temptation is to get carried away and pay more than you can afford.  The same jeopardy applies in negotiating when the limits are not clearly understood, or where they are set artificially low and so ignored.  “Speed Limit 5 mph”.

An even greater hazard exists where it is believed that a client is indispensable. Every time that client puts pressure on price, the supplier gives in. The relationship becomes abusive.  In these situations, it is vital to define the break point.  Even though you never expect to end up there, the mere act of defining it gives a confidence boost which communicates to the other party that you are not prepared to be a victim.

Many organisations in New Zealand, post lock down, are now wrestling with trying to balance the continued viability of their business with the reality of a reduced client base. Scotwork worked with a global PR customer a few years ago who had a single client that represented 80% of their turnover. They were so afraid of losing them that they always caved into the clients regular demands for lower fees.  We worked with them on imagining a world without that client; smaller but profitable.  From this base they set about renegotiating their fees to a realistic level.

Tip #4 of 8: Know your areas of flexibility

So much of the time people spend preparing for a negotiation is not spent doing that at all; they actually spend their time rehearsing 75 ways of saying “No”.  Behaviours are catching: “If you deny me what I need or want, I am likely to deny you what you want or need in return”.  Negotiation requires movement and flexibility, not entrenched positions from which to mount a defence.

In the preparation agenda we advocate, one of the key elements is ‘Possible Concessions’; planning in advance those areas in which you can afford to concede, the value of those concessions and what you would expect in return. This knowledge allows a greater level of confidence, which in turn feeds back to the other party that you are not defenceless.

The first thing you should plan during your negotiation preparation, is what to do when the other side says No! The questions "Under what circumstances would you do as we ask?" or "What could we do for you to turn that No into a Yes?" are great ones to try. You may need to ask them more than once, but it will help the other side think about being flexible rather than the opposite.

If you want to ensure you and your people have the skills needed to ensure your organisation thrives in the current environment then contact Scotwork. P: 04 2979069, E: info@scotwork.co.nz

(Adapted from an article by John McMillan)

Next week we will share 2 more tips for negotiating in uncertain times.

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