The 10 Things I Learned About Negotiations During My Wharton MBA

The Top 10 things I learned about

Negotiations during my Wharton MBA

Who I am:

1. A 2nd year Wharton MBA student with average grades2. A soon-to-be rank and file employee at LinkedIn

Me

Who I am NOT:

1. An expert on negotiations2. Someone who has negotiated a lot of

big, famous deals

HOWEVER, I took negotiations class at Wharton and learned a lot.

NOW, I’m sharing what I learned with you so you can become a better negotiator without spending $200K on an MBA!

We all negotiate every day

Big things you negotiate:

1. Your salary2. Your house price

Small things you negotiate:

1. Projects at work2. Discounts at the store

Negotiating is tough but can be learned.

What makes a great negotiator? Discipline, Process, Relentlessness,

Consistency, Practice, & Routine.

NOT in-born talent.

The Top 10 Things I Learned About Negotiations during my Wharton MBA

1. Prepare rigorously.2. Build trust and rapport.3. Exchange information & listen.4. Identify things of unequal value & trade them.5. Grow the pie before dividing it.6. Claim the slice you deserve.7. Know thyself.8. Understand power and when to use it.9. Women don’t ask, but we should.10. Don’t be evil.

because the negotiation begins in the back office.

1) PREPARE rigorously

Preparation Checklist:

Research the people and situation. Know the history of the other party’s actions. Build relationships with the other side. Always have the meeting before the meeting.

Know your priorities & how much you value each. Build a decision tree with all possible issues,

offers, and counter-offers. Build a spreadsheet to model different scenarios.

Role play the debate. Write down word for word what you will say in

tough situations (“Scripting”). Draft, Devil’s Advocate, Deliver (3 D’s).

Know your BATNA - Best Alternative To A Negotiated Deal - and your goal.

Never reveal your BATNA or your goal. Your best advantage in a negotiation is getting

more good BATNAs.

2) Build Trust and Rapport

Deals happen because of peopleNOT spreadsheets

How to Build Trust with the Other Side

You’re more influential when others actually like you. Face-to-face meetings > Video Conferences > Phone > Email. Relationships are everything so preserve them by the way you behave. Aim for quick wins up front to create trust. Frame the negotiation as a team problem solving exercise.

3) Listen & Exchange Information

How to Listen & Exchange Information:

Find out what they want. Try to give it to them in exchange for what you want. Ask open-ended questions to get good information. Connect what you hear to what you know. Never assume! Follow up to test your understanding. Don’t be afraid to talk about what’s most important to you. If you are unclear, ask or involve an expert.

“I want the fruit!” “I want the peel!”

4) Identify things you value differently and trade them

Examples of differences you can trade:

The value / price you place on something How risky you each think something is Costs

5) Grow the pie before you cut it (so everyone goes home with a bigger slice)

The Pie = The benefit you both get by working together beyond what you both could’ve gotten by working alone.

How to expand the pie?

Foster trust to create an environment for creative solutions. Trade things of unequal value.

6) Claim the slice of pie you deserve

Claim it! Aim for the high side of

reasonable. Don’t be afraid to ask. However, unreasonable offers

can create ill-will. Know when not to ask or

when to stop. Leave room for yourself to

incrementally increase or decrease your proposal.

In multi-party negotiations, timing is key: Claim value early. Once an agreement is reached, it’s hard to change.

7) Know Thyself

My strengths: Teamwork, Networks, Coalitions, Exchange

My weaknesses: Logic, Might, Situational Awareness, Agency

Find examples of people who use power well and emulate them. Sometimes it’s better to be direct so the other person understands

what you’re saying.

My Keystone Habit to Work on: Might

8) Understand sources of power & know when to use it

In negotiations, power is how much value you bring to the other party relative to how much value they bring to you.

If you are unwise with power, people might not trust you, might resent you, and might rebel against you.

CAUTION: Social Psychology tells us that having power causes you to lose your inhibition.

There is power in coalitions.

Form coalitions. Anticipate coalitions.

Form coalitions based on interests, relationships, reciprocity, history, and reputation.

9) Women don’t ask, but we should!

Women negotiate less often than men because:

We have a negative view of negotiations. We think we don’t deserve more. We lack confidence. We are risk averse. We fear rejection, conflict, losing. We want to avoid the perception of aggression. We want to be liked.

Why women should negotiate: It signals our ability to represent the organization. To make deals better and create value for all parties. Sometimes you’ll hear “no” but often you’ll hear “yes.”

How women should negotiate: Have aggressive goals without exhibiting aggressive behavior. Balance empathy and assertiveness.

#10: Don’t be evil

Everyone has different values. Some negotiators will be more ethical than others. Take the high road by not being evil.

How to deal with people you don’t trust

Know your BATNA Research the other party Strategize internally The burden is on you to find out if things

aren’t as they seem

How not to be evil: Aim to be ethical no matter what. Preserve your reputation and your relationships. Keep your word.

Process fairness is also important: Did you involve the right people? How did the decision get made? Did you explain the reasons for the decision?

Epilogue: 10 Negotiation Mistakes To Avoid

1. Not preparing enough.2. Fixating on price. You’re negotiating a deal, not just dollars. Get all

issues out on the table.3. Trying only to find common ground. Differences are a source of value

creation when you find them and trade them.4. Negotiating one issue at a time. Always negotiate packages because

this increases trading opportunities.5. Answering every question. You don’t have to answer everything, but

know what you will say in response (Redirect & reframe).6. Anchoring yourself with a low offer.7. Always trying to do a deal. Be willing to walk away at your BATNA.8. Saying yes too quickly. You are more powerful before yes.9. Letting emotion take over. When things get heated, sleep on it.10. Not knowing when to stop asking. Aggressive behavior can backfire.

#NegotiationFail

Check out these resources:

1. Bargaining for Advantage by Richard Shell2. Getting More by Stuart Diamond3. Six Habits of Merely Effective Negotiators by James Sebenius

Can’t get enough about negotiations?

Now go forth and negotiate!