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The top 4 biggest business negotiation myths

by Michael Rom , October 31 2018

Octet spoke with seasoned negotiations expert Simon Kelland to get his insights on how businesses can get the best deal. In the process, we discovered that for something we all partake in everyday, many of us have a lot of false ideas when it comes to negotiations.

So, we decided to set the record straight, by putting forward the four biggest myths about business negotiations.

Myth 1: Negotiators must be tough

The idea that a good deal-maker is about being hard-nosed has become outdated and oftentimes ineffective. According to Kelland, “One of the biggest misconceptions is that you have to be tough and hard to do good negotiations, where the research shows that the opposite is true. Be firm on the issue, soft on the people.”

If both parties are coming at a negotiation without considering the potential needs of the other side, they’re essentially entering a war of attrition. The result is going to be a defeat for both parties, rather than something that’s mutually beneficial.

Myth 2: Withhold information to be in control

Unlike poker, playing with your cards close to your chest is a strategy that can actually land you in a bit of trouble at the negotiation table.

Kelland warns, “There’s this idea that if I hold onto my information and leak it out, bit by bit, somehow that’s going to give me more power. But what happens is that trust evaporates, and it takes way too long to get a deal going.”

Withholding information immediately seeds doubt that the whole truth will not see the light of day, or that there may be some underlying motives which could damage the negotiation. Not a good way to start a productive exchange – or a healthy business relationship for that matter.

Myth 3: Seniority equates to a good negotiator

Kelland believes the optimal number of people in a negotiating team is three. This provides room for a lead negotiator (the most skilled and informed), a summariser (the scribe and timekeeper) and an observer (someone in a senior role).

It might come as counter-intuitive that the most senior participant shouldn’t take the lead role, however, this is for good reason. Whilst it’s helpful to have someone high-up present to make sure the process runs smoothly, there can be major disadvantages to having them steer the conversation.

All too often, such a participant will attempt to take charge of the situation where such an approach isn’t suitable – thus coming across as dominating. This may create a tense atmosphere that’s not conducive to fruitful outcomes, alienate the other party or cause them to adopt an aggressive stance in response.

“Some of the most skilled negotiators are actually relatively junior,” adds Kelland. This is not only due to their less authoritative position, but also because they tend to be across more information that could be useful to the negotiation at hand.

Myth 4: There’s a home ground advantage

Meeting face to face is the best way to do negotiations. However, where the exchange takes place is a smaller issue. Kelland reports that, whilst football teams might gain an edge from playing on their own turf, when businesses meet to negotiate, home ground advantage makes negligible difference. Whether you’re meeting at your office, theirs or on neutral ground, the location has little effect.

That being said, the environment, both physically and atmospherically, in which a negotiation takes place plays an integral role in the process and outcomes. Whatever the setting, it should be comfortable for all parties, and the priority should always be fostering an energy of openness, cordiality and respect.

There you have it – four of the most common negotiation myths, busted and put to rest. Perhaps the biggest takeaway from this journey, as guided by Simon Kelland, is that maintaining honesty and civility is always the best code of conduct. Whilst a lot might have changed over the years in business, to use Kelland’s words, “Good manners never go out of fashion.”

To bring further power to your negotiations, Octet offers supply chain finance solutions that can give your business an edge.

Read more in Powering Business Issue 1: The Power of Negotiation.


Blog

Michael Rom

Michael has extensive experience in business finance from seed-stage through to enterprise businesses.

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