Money is often the primary reason we negotiate. We either want to pay less or make more. But unfortunately most of us aren't as skilled in the art of negotiation as we should be. For salaried physicians, good negotiation can result in better pay, a saner call schedule and increased job satisfaction. Even if you aren't a confident negotiator, the ability to identify another party's negotiation techniques can often provide you the insight you need to succeed. With that in mind, here are a few important negotiation gambits to try — and to avoid when they are tried on you.
The scene: You're negotiating a salary for a new position. During initial talks, you're told that the salary range is $130,000 to $160,000. With your experience, you feel that you're worth $160,000. You're offered $150,000, but you hold fast to $160,000. Later that week, your potential employer leaves a message on your answering machine saying that he's terribly sorry but the offer of $150,000 was based on an example used in a different state and that local corporate standards would place you at $140,000. You return his call and say that you won't sign for $140,000 but that you'll reconsider the $150,000 offer.
The analysis: Your potential employer offered you a salary of $150,000 but you refused it. Instead of increasing the offer, the employer withdrew it and offered $140,000. Doing so artificially increased the value of the $150,000 offer. That's because you're now comparing it to $140,000 instead of $160,000. If you decide to accept the position for $150,000, you may feel as if you've just “won” an extra $10,000 instead of settling for less than you initially asked for. That's exactly the response the other party is betting on when using the “offer-withdrawn” technique.
The counter: Recognizing this negotiation gambit is the key to disarming it. Understand that your potential employer has signaled a willingness to pay $150,000 but that he's also close to his walk-away point. Don't react emotionally. Remember: he's using a negotiation technique. Your value as a human is not being impugned. Use your own negotiation technique by countering with, “I assume you'll honor your previous offer.” Then you may want to re-assert that the market and your experience support $160,000 and force the other party to come back with a legitimate counter offer. Or you can counter with $155,000 or the implied $150,000 if you're comfortable with it, but be prepared for heavy-handed interactions of the “like-it-or-leave-it” variety with this employer in the future.
Uses: On the flip side, the offer-withdrawn gambit can also work for you. Perhaps you're negotiating an employment contract and want an additional week of vacation. Previously, you had suggested that you might be willing to cover urgent care for six days per year. If your potential employer won't concede the extra week of vacation, you can counter by saying, “When I suggested that I might be willing to cover the urgent care, I assumed that I'd receive additional vacation. Since urgent care will take six days per year away from my family, I'm afraid that without the additional vacation days, I won't be able to take on the added work. It was my mistake making that assumption. I'm sorry.”
The scene: You're at a car dealership and have offered $20,000 for a new car, but the salesman won't budge from $24,000. You make a small concession ($20,500), causing the salesman to get a pained look on his face. He tells you he wants to help and is willing to talk with his manager on your behalf. He leaves, comes back, shakes his head and says he isn't allowed to let the car go for any less than $24,000. You're tired of negotiating. You want the car so you offer $22,000 and voilà! The car is yours.
The analysis: Fatigue, frustration and a “no” from the salesman's manager resulted in you giving $2,500 in concessions without receiving anything in return. The salesman successfully used a variation of the “good-cop, bad-cop” negotiation technique. He, the good cop, made an appeal to a higher authority, the sales manager, the bad cop. From the start you were at a disadvantage because you were trying to negotiate with someone who apparently can receive, but not give, concessions.
The counter: How can you strengthen your position? You can try calling them on it. For example, you could say, “You're not going to use the ‘appeal-to-a-higher-authority’ technique on me are you?” Second, you could ask, “Are you able to negotiate items and sign a contract with me? If not, I'd like to talk with someone who can.” Third, you could walk away if you're stuck at a price that is more than your walk-away price (the amount above which you are not willing to go). Also, in these situations remember that the salesman is trying to wear you down. Hang in there and don't give up out of fatigue. And finally, always remember to get a concession for a concession.
Uses: The “appeal-to-a-higher-authority” technique is effective if you need a little time and distance from the negotiation, or if you need a little muscle. If you're negotiating an employment contract, you might tell your potential employer, “I'll have my contract lawyer look this over.”
The scene: Back at the car dealership, the salesperson tries another negotiation technique. He tells you, “I can't sell you this car for less than $24,000. I paid $24,000 for it.” The analysis: The salesperson is trying to get you to accept his position as your own. You wouldn't sell something for less than you paid for it, right? It wouldn't be fair, right?
The counter: The real issue here is how much the car is worth to you, not the salesperson. You can counter by saying, “I'm sorry you paid too much for the car. I'm willing to spend $22,000,” and go from there.
Uses: When negotiating, let the other party know your reasons behind the amount of your offer. Say, for example, you're negotiating a salary. “I made $110,000 at my last position. This position calls for more responsibility and longer hours, and the local cost of living is 15 percent higher. Anything less than $130,000 would be a step backward for me.” But be careful not to let them know your walk-away point, and don't mention any amount less than what you're willing to accept.
Caveat: This negotiation technique will work against you if you come across sounding as if you are trapped by a past, bad decision. In general, use this approach only when you are selling something or when you are very close to your walk-away point and can't give much more. Finally, be prepared to walk away.
The scene: The salesperson says, “We're only $1,000 apart, let's split the difference.” The analysis: What you're really being offered is a $500 concession for a $500 concession.
The counter: If the salesperson offers to split the difference between her $22,000 and your $21,000, they have just conceded $500. Counter by saying, “Now we're only $500 apart. I could come up to $21,200.” But don't offer to split the difference on the remaining amount.
Uses: Don't make the mistake of saying, “Look, let's get this over with. Let's just split the difference.” Recall the earlier offer-withdrawn gambit: The potential employer offered you $140,000, but you wanted $160,000. If you say you'll split the difference, you've just agreed to take $150,000. What will you do if he or she counters by saying no? You can't go back up to $160,000. You've given up a big concession, gotten nothing in return and broken the rule of decelerating counter offers. [For more information on decelerating counter offers and the basics of negotiation, see “You Can't Always Get What You Want … But Sometimes You Can,” FPM, November/December 1999, page 24.]
The scene: The salesperson tells you that the daily cost of the supplemental insurance policy he's trying to sell you will amount to less than the price of a cup of coffee. Or perhaps you've heard something like this: “Your annual tax-deductible donation will amount to just 26 cents a day.” Now doesn't this sound a lot better than someone asking you for a donation of $95 (26 cents multiplied by 365 days equals $95). By presenting the cost in numbers that sound small, you may buy things that you wouldn't normally buy if you figured out the total cost. Here's another variation of the same technique: “How much do you want to spend each month? We can just adjust the length of the loan to give you the monthly payments you want.”
The analysis: This technique makes the payments and cost sound reasonable, but results in jacking up the total cost of what you're purchasing.
The counter: Don't tell them how much you're willing to spend. Once you do, they have you by the nose. Instead, respond by saying, “Let's stick to talking about the total cost of the car.” That way, you don't reveal your playing cards.
Uses: You can also use this technique to convince others. Perhaps you want to buy a piece of equipment that costs $15,000, and your employer balks at the price. You could say, “I know it seems like a lot of money but if you expense that over three years, it amounts to less than $20 per business day. I can make that up with one lab run per day on this new piece of equipment.”
As you may imagine, there are many negotiation gambits in use today. Those presented here are among the most common. It's my hope that this behind-the-scenes look at negotiation strategies will help you gain confidence, get better results and even have a little fun the next time you're in a situation that requires negotiation.