Football season started recently, which has really made me happy! Oh how I’ve missed my football.

If you have been following football, you have probably heard of a guy named Michael Crabtree.  For those of you who have not been following his situation, he is a rookie wide receiver who was the 10th player drafted in the first round of this year’s draft.  Apparently, he is a diva and thinks very highly of himself.  As he considers himself a much better player than many of the first round picks, he wants a higher salary than those players.  He was drafted by teh 49ers and has been holding out and refusing to play until his contract is settled.  He was offered $20 million with $16 million guaranteed for a five year contract.  Crabtree, through his agent, has threatened to hold out for the season and re-enter the next draft.

I am interested to see how this will play out.  First of all, I think Crabtree is a little “crabby” (hehe I know, I’m corny) and also needs to get over himself.  He has a great offer with a $20 million contract and he should consider taking it.  I’ve written about negotations before and completely fail to see Crabtree’s leverage/power in this negotiation.  Sure, he is a good player and was a first round pick, but it seems like his ego is going to hold him back.  It appears like the 49ers could offer him more money, but not as much as the other first round picks and this offer doesn’t seem like it is going to fly with him.

If I were him, I’d ask for more, but if the organization came back and said now, I’d take the offer or at least try to make a contingent offer.  For example, add another piece of compensation for my performance (ie. if I score ___ touchdowns or have ___ receiving yards, I get ___ dollars in bonus).  Right now, he is a rookie with no proven experience.  He hasn’t even played one down in the NFL, which is on a whole different level than college football.  Furthermore, by holding out for this long, it shows his attitude and his inability to cooperate with the team.  This makes him less attractive as a player.  There are also plenty of talented receivers who will enter the draft next year.  If he were to wait and re-enter the draft, it is likely that he would be selected later and probably take a pay cut.  Plus, the 49ers don’t need him.  It appears like their offense is going to be more focused on running the ball.  All in all, Crabtree should suck it up and take the contract.  His alternatives really don’t look so great.

In previous posts, I discussed ways to negotiate, who holds the power in negotiations, and how to prepare for negotiations. In this post, I will delve into a couple hardball tactics that are commonly used in negotiations. Hardball tactics are strategies that can shift a negotiation in your favor given that the other party does not catch on.
The bogey tactic is a strategy that you employ when you are attempting to trade preferences on certain issues in integrative negotiations. In this strategy, when you find out one of the preferences of the other party, you give the impression that it is a much larger concession for you than it really is. You then attempt to trade this issue for another larger concession from the other party.
For example, in a hypothetical situation, you are interviewing for a job and hope to start in June, and while negotiating with the employer, you discover that they really need you to start in June. You could use this as an opportunity to use a bogey tactic, and give the employer the impression that you really wanted to take some time off after you graduate from college in May and try to trade the inconvenience to you for more vacation days. Obviously, this does not work all the time, so use caution with attempting to utilize hardball tactics.
Another tactic is the exploding offer. An exploding offer is an offer that has an extreme time limit. This strategy is used to take time away from the other player to explore other offers. If you take the previous situation of a job opportunity from the employer’s perspective, they could offer you a job, but tell you that the offer is only valid for one day. This way, you cannot interview with other companies and if you accept, you will not have had the chance to explore all your alternatives.
These negotiation tactics are a bit risky, but when executed correctly and in the right situation, they can significantly improve your outcome.

In a previous post I started discussed who holds the power in a negotiation. This time, we will talk about preparing for a negotiation.

Preparation is the key to success in negotiations. This is the most important part and you will not be as successful as you can be without preparing. If you go into a negotiation without preparing fully and understanding the facts, you will most definitely get rocked.

You need be aware of what your next best alternatives are and to establish a reservation point. A reservation point is the number at which you are indifferent to whether or not you do the deal. In other words, this is the lowest you will go. You also need to establish a goal that is above your reservation point that you are going to shoot for. If you achieve your goal, you have succeeded. If you do not but are above your reservation point, you have still done well for yourself. However, never accept a deal below your reservation point; instead, just walk away from the deal. Sometimes the best possible outcome can be “no deal.”

It is also extremely important to run through different scenarios. A good negotiator will be prepared for almost any situation. Say this to yourself, “if they say this, I will…” A way to throw the other party off is to change the parameters of the deal or mix things up. You need to be prepared if the other party attempts to use this tactic.

I’ll go into an example of a street vendor. Street vendors are very familiar with the numbers associated with their products. They make a living off this. As a result, when you try to negotiate with them, they will attempt to mix things up, often saying things like, “if you buy this, I will throw in this.” They will bundle and package deals to change your perception of the deal.
Another example is car salesmen. They often will try to negotiate the price and the financing of the car at the same time. While giving you a reduction in price, they will offer you a financing package that is actually not as beneficial. If you are not familiar with the numbers, they will succeed and you will not get the best result.

Prior to any negotiation, do your homework and run the numbers. Think of every possible scenario and how you will react to them. Next time, we will go through a couple hardball tactics.

Whoever holds the power in a negotiation has the opportunity to get the most out of it, especially in a distributive negotiation. If you are in a negotiation where each party has conflicting preferences on certain issues, the person with the power will win. For example, if I am negotiating a job offer and the most important issue for me is to get the highest salary while the most important issue to the employer is to give the lowest salary, the person with the more power is going to win and the other person will give in. Now the question is who holds the power?

In every negotiation, the person who holds the most power is the person who has the better next best alternative. In the previous example, the person with more power depends on the job market conditions and the other person’s alternatives. If I am negotiating the job offer and I also have another job offer with another company, my negotiating power has increased. Why? Because I have something to fall back on, and my next best alternative is to go work for someone else. In today’s job market environment, the employer probably has the power since their next best alternative is to hire the next guy that comes along as so many qualified people are unemployed.

Here is another example. Have you ever gone up to a street vendor and tried to buy something and haggled with them to get a lower price? And then, when they said “no”, you said “ok”, and started to walk to away. At this point, they wanted to be your best friend and shouted out a much lower price and if you kept walking sometimes they would go even lower. Why do they do this? Because you have the power in the negotiation! You have the better alternative! Your next best alternative is to walk to the next street vendor and get the same product from them. Their next best alternative is to wait for the next customer to come along and hope they are willing to buy their product. Of course, this tactic doesn’t work well if you are trying to do this in a high tourist area where the vendor’s next best alternative is to wait for the next tourist who is dumb enough to pay full price.

Another way to get power is through information. A key to getting the best result in a negotiation is to get the most information from the other party without giving up your alternatives. Your goal should be to find out what the other party’s next best alternative is, so you can exploit that. Take another example where I am renting an apartment from a landlord. If I am able to find out that nobody else has been interested in that apartment and the landlord’s next best alternative is a vacant apartment with no income, I can exploit that to get a lower price. On the flip side, the landlord would not want to let me know that he has no other potential tenants and instead, try to find out if I have other apartments I am interested in. If I did not, then he could exploit that because he knows that I do not have any other alternatives.

Remember, your next best alternative is your source of power. Don’t give it away unless you are showing the other party that you hold the power in the negotiation.

Coming up in this series will be a post about preparing for a negotiation.

In an earlier post I mentioned that I would share some of the techniques I use in successful negotiations. Here is my attempt.

A negotiation is a process that takes place between two or more parties to reach an agreement on a specific matter.
The goal of negotiating is to get the best result for you. There are two ways to achieve the best result: distributive negotiations and integrative negotiations. However, only one of these techniques will get the best result for everyone involved in the negotiations.
Think of distributive and integrative negotiations like this:
Distributive – You have a blueberry pie and you are splitting it between you and your friend. You each negotiate about how many slices of the pie each of you will get. Essentially, if you get more, your friend get’s less and vice versa.
Integrative – You have a blueberry pie and you are splitting it between you and your friend only you bake a bigger pie so you both can have as much as you want. Basically, you both thought outside of the box and maximized the value for both of you and everyone is happy. This is the best type of negotiation and the way you want to approach all negotiations.
Now that we know what integrative negotiations are, we can get into how to use them. The key to integrative negotiations is trading our preferences and thinking of other issues that will influence the outcome of the negotiation. In every negotiation, each party has their own priorities and preferences. Let’s use an example.

Suppose you are looking to rent an apartment from a landlord and you are trying to get a lower price. He prefers that you move in at the beginning of June as opposed to July and you have no preference on that issue. This is worth something to you! You could trade his preference for you moving in June for a discount on the monthly rent (which is your preference).

Of course, how could you have possibly have known this if you did not talk to the landlord and ask? The key to successful negotiations is to get as much information as possible from the other party. The more information you get, the more you can trade with them (and also the more power you have; more on this in a later post).

Perhaps you find out from the landlord that he has been getting really into tennis lately. It turns out that you are a really good tennis player. You could offer to give him tennis lessons once a month to lower the monthly price. This costs you nothing and the landlord has something to gain as well.

There are so many issues that can be packaged into a negotiation. You would never know about all these issues if you did not talk to the other party and look for these. Just a casual conversation could increase the value of the negotiation for both parties. Here is another example:

I once heard of story where one guy was negotiating his compensation and benefits for his job. He was an avid paraglider. Apparently, paragliding is best when the winds are coming from the right direction and are strong enough. So, his negotiation with the company was that whenever the wind was coming from the east and above a certain number of miles per hour, he would get the day off to go paragliding.

Clearly he had a lot to offer the company for them to accept that. Maybe he traded a lower salary for that benefit. That is a more extreme example of different issues that you can negotiate, but hopefully you get the idea.
This leads into how to prepare for the negotiation. You always want to go into a negotiation knowing what your preferences are and what is more important to you. It helps to make a list of things that you want in the order of your preferences. Your goal during the course of the negotiation is to find out the preferences of the other party and to match those up with the issues that you don’t care as much about and make those smaller concessions in order to get your preferences.
There will be more to come on preparing for a negotiation in a later post. Did this post help you? Do you have anything to add? If so, please comment below.