Business Negotiations

By Joe Linstroth / Illustration from iStock/Liana Monica Bodei

Negotiations are some of the more uncomfortable human interactions we can face in life. There is often a lot at stake. Confrontation may be required to get what you want. Your information may be incomplete, and the person with whom you’re negotiating could be unprincipled or have the upper-hand or both. Negotiations also are not limited to the financial or business spheres. Consider the haggling that happens in a marriage, or in parenting a child, or even in trying to plan a vacation with friends or family.

To help prepare students for business and life, Karl Egge Professor of Economics Joyce Minor ’88 employs self-evaluations and simulations in her course Business Negotiations to push students out of their comfort zones and into the real world, where both “saints” and “snakes” live.

Q: How does one set themselves up for success in a negotiation?

A: I have students do a self-evaluation to help them understand what their negotiating style is. You can simplistically categorize people into two kinds of negotiators: Are you a saint, or are you a snake? Someone who’s very Minnesota Nice, who’s very accommodating, perhaps uncomfortable with conflict—that’s a saint. Compare that to someone who has a very hard-nosed, tough negotiating style, where they’re more demanding than accommodating and perhaps even comfortable with deception—that’s a snake. If you understand your own negotiating style, as well as that of your counterpart, it may change how you think about the negotiation and how you prepare for it.

Q: What are some of the most challenging scenarios in negotiation?

A: A really difficult situation in negotiating is when you have the sense that your counterpart has better information than you do. If you’re in that position, you definitely don’t want to throw out the first offer. You want the other side to throw out the first offer because yours is probably based on incomplete information. I would also advise that you try to ping for information, meaning to test assumptions that you have and see if you can get the other side talking so that you can learn some of what they know.

Q: What mistakes can scuttle a negotiation?

A: We talk a lot in the course about the “ten dirty tricks” of negotiating (as described in the classic text Getting to Yes: Negotiating Agreement Without Giving In) and how to diffuse them. Being aware of and listening for those dirty tricks and being ready to handle them is very useful.

Q: Do you have a favorite “dirty trick” that you’ll admit to using sometimes?

A: Yes, but it’s not a particularly evil one! Let’s say you’re the person whose position already exists and someone’s trying to negotiate you out of that position. Stonewalling—which is basically refusing to engage because you’re in the position you want to be in—can be an effective tactic short-term. But usually your counterpart will recognize what you’re doing eventually, and if the relationship matters to you, you’ll have to come to the table and work something out.

Q: How do you teach students to respond to a “dirty trick”?

A: We talk about how you don’t want to respond in kind. Instead, call it out and let the person know that you see what they’re doing and then question them as to whether that’s really how they want to go about the negotiation. Calling something out like a personal attack and putting a name to it can help diffuse a dirty trick. If that doesn’t work, then we talk about “going to the balcony,” which means pausing the negotiation until cooler heads can prevail. As a last resort, you can go to your BATNA (Best Alternative to No Agreement), or your back-up plan, and walk away from the negotiation.

Q: You do negotiation simulations every week in class. Why is that?

A: Negotiating is one of those subjects that you have to actually do to learn, somewhat like parenting. You can read all the parenting books in the world, but if you have never actually parented a child, you don’t know how to do it. You learn by doing. So in the Business Negotiations course, every week, half the students get one side of a case or a scenario, and the other half get the other side and they negotiate against each other in pairs or in groups. Then we come back and debrief, and you’ll see the whole range of solutions. Someone may have sold the property for $30 million, for example, and someone else for $50 million. And we try to understand what dynamics occurred that allowed for such different outcomes.

Q: You had a long career on Wall Street before coming back to Mac. How do you incorporate that experience into your course?

A: I tell a lot of stories about all the mistakes I’ve made so they can learn from them! For example, when I got my job offer from Lehman Brothers and they told me what the salary range was, I said, “Great, I’d be comfortable at the lower end of that range.” And so they gave me the lower end of the range, which felt like a lot to me. But what I tell students is, “Don’t do that! Listen in your negotiations, ping for information, try to find out what something is worth to the other side. Don’t just be happy with the first number that’s thrown out.”

Joe Linstroth is director of media relations and public affairs.