Contract negotiations are a necessary part of any business agreement. Collaborating together to put together an offer that clarifies every term of your arrangement is key to having a positive professional relationship going forward, minimizing any risks of conflict or misunderstanding. However, negotiations are often perceived with hesitation and concern. This is because they are often perceived as a contest where one party wins and the other party loses. In truth, the purpose of contract negotiation is to ensure that you are being compensated fairly for the value you provide, and it’s an incredibly useful tool to help you achieve your career goals.
Of course, the reasons for people’s fear of negotiation aren’t completely unfounded. Many find themselves making unfortunate mistakes in the process that end up costing them instead of providing any sort of benefit. For that reason, it’s crucial to familiarize yourself with the following steps to contract negotiation.
1. Determine What’s at Stake and Prioritize Your Goals
When entering a negotiation, you need to already have a clear idea of what you need to get out of the interaction, and why. As humans, we inevitably respond to social clues, often without even noticing, and showing up to the table with no vision and no drive invites the other party to take control. Additionally, it will help you determine which concessions you are willing to make, and which terms are not up for debate. If you find yourself tempted to settle at any point, your priorities can be a helpful reminder to stand up for yourself and your needs.
2. Know Who’s At the Table
As stated by NOLO, “The party with more information usually has more leverage.” There’s a reason why “Knowledge is power” is a statement that has been quoted a myriad of times throughout history. Researching the organization or individuals you’re meeting will go a long way towards helping your negotiation run smoothly.
When you arm yourself with information on the other party’s goals and interests, you can better prepare for any arguments they might throw your way. Additionally, you’ll have a better idea of what they are realistically able to offer you, allowing you to ensure that your proposals are feasible.
3. Break the Negotiation Down Into Parts
The fastest way for a negotiation to stop cold is when too much is on the line at once. Ramping up to ultimatums and all-or-nothing offers gives you very little room for debate and makes it unlikely that you’ll find an agreeable compromise. When faced with such a scenario, the key is to break it down into smaller, more manageable parts.
4. Keep It Professional
When conflict arises, unregulated tempers can very quickly escalate the situation. It doesn’t take much for people’s frustrations to emerge in the form of personal insults or attacks. The important thing is to avoid taking such interactions to heart. Responding in equal measure will simply make matters worse. Instead, put your efforts into diffusing the situation and getting at the root of the issue.
If you’re having difficulty with this, take some time to step away from the table. The worst you can do is press on when you’re already flustered, making you more likely to make a hasty decision you’ll later regret. Remember that this isn’t a battle; it’s an alliance, so it’s important to behave accordingly.
Additionally, even when things are running smoothly and conflict is not an issue, focusing on facts and data and putting aside your own personal thoughts on the matter can go a long way towards getting you what you want. Arguments based on research instead of opinions are much more convincing, harder to refute, and will ultimately do a better job of supporting your case.
5. Don’t Get Discouraged By the First Offer You Get
Remember, this is a negotiation. If you get an offer you don’t like, you don’t have to accept it. The first offer you receive is nothing more than a starting point, and if it’s substantially different than what you were looking for, put your energy into understanding why. Is the other party subject to more limitations than you’d initially assumed? Did they perhaps misunderstand your request? Or maybe they just need more data before they’re willing to make a greater commitment. As Entrepreneur.com points out, “If you don’t understand something, ask for clarification. If you don’t agree, ask to discuss the point.” Asking these questions is far more productive than calling the whole thing off just because you didn’t get what you wanted on the first try.
6. Adjust Your Strategy to the Situation
There are many different approaches you can take when negotiating a contract. You could point out that your requests are in line with current standards and are not unusual or excessive in any way. You could prepare certain concessions you’re willing to make to allow the other party to feel like they’re getting the better end of the deal. You could focus solely on showing how this agreement will be beneficial to the other party in terms of long term profits. You could even refer to other influences outside of the negotiation to make yourself seem more reasonable than the alternatives.
Each of those examples can be extremely successful in the right context, but they can also backfire extraordinarily if applied to the wrong situation. Make sure you’re asking the right questions to ascertain what the other party values most, and adjust your strategy accordingly.
When the Negotiation is Over, It’s Not Really Over
Just because you’ve successfully navigated your present contract to your satisfaction doesn’t mean you can throw caution to the wind. Business relationships generally will require multiple negotiations over the years, meaning that in all likelihood, you’ll someday find yourself seated back at the negotiation once more. By adhering to the above tactics, you’ll leave a good impression and give yourself a future advantage. As Medium states on their site, “Keep them happy and develop them as a partner who will not only be happy with you but will tell others too.”
That being said, not all negotiations will be face to face. While the core principles of doing research, acting professional, and being open to making changes to your proposal and strategies as needed, negotiating a contract remotely can have its own unique challenges. That’s why Shapiro Negotiations Institute put together a guide on how to ensure you retain control of your contract when engaging in remote negotiations.