How to create good outcomes when negotiating | Hacker News Reader

How to create good outcomes when negotiating

aaronkharris.com

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I wrote an article on negotiation when I was a trial attorney that is applicable to most situations.

"Ten Rules of Negotiation"

https://onedrive.live.com/redir?resid=641BD45A41B1BD6C!645&a...

This is excellent. You should put it on a blog.

Yes, this is very very good.

I would enjoy clarification on the difference between ridiculous and comical numbers, as for me these words are largely synonymns. I'm referring to the section that says: "If you are somehow forced to give the first number, make it ridiculous, but not comical. For instance, double your number, but do not ask for a gazillion dollars or some completely off the wall number that will show you are not serious. Welcome an outrageous reaction to your ridiculous number, then smile and shrug. The first offer may be zero, the advertised price, or an “Anchor” number."

If someone makes a starting bid of "zero", for example, that would be both ridiculous/comical. (As why would the 'seller' even show up to hear bids of zero.) So more examples here or another way of putting the same thing would be helpful. (A doubled price doesn't strike me as "ridiculous" so much as uninformed or unreasonable.)

I realize author says that we shouldn't give a number at all.

I suspect this is good in a certain cultural environment - say, in US. Otherwise those advices could be interpreted as strange. And when background is taken into account, it becomes more similar to a protocol.

It's always easier to negotiate downward than it is upward. I always throw out ridiculous hourly rates that always get cut in half or more, but it's still more than I would make regularly.

I would enjoy clarification on the difference between ridiculous and comical numbers

I'd say your chosen quotes do it nicely:

"double your number, but do not ask for a gazillion dollars"

If I want to sell my house for 125k, I'd say 250k, but not a million. With current market, it's ridiculous to think I can sell it for more than 200. Saying 250 can annoy the buyer. But if I say a million the buyer will laugh.

As why would the 'seller' even show up to hear bids of zero

There are circumstances where the price is actually zero, just under other name.

Seconded. I'd love to be able to share this with friends/colleagues.

Joshua, this is extremely good. Thank you for sharing it.

I have not seen such a short and powerful distillation before, though I knew most of the tactics in passing. You give an excellent formula.

I would be interested in your take on other aspects of posture during a negotiation. If you are interested in the subject, perhaps we could email? I didn't find a way to reach you.

Thanks for the positive feedback. My email address is jheard at msn.com

I liked the recommendation not to 'split the difference', I hadn't thought about it the way you described. Thanks!

I have a slightly different view of offering to split the difference. If doing so is a number still within my range, then I do as a final offer. But it is final. If they say no, I walk away.

Thanks!

Being just a worker bee, I rarely get involved in serious negotiations, but have learned to deal with people for whom everything is a negotiation. The rules of "never make the first offer" and "shut up" have both served me well. Negotiators instinctively exploit the awkwardness of silence.

The one snag I see in this is 'Gather your Chips'. In the modern consumer-corporate environment the customer has only one chip: money. The corp holds all the other chips ( quality of service, timely delivery, terms of contract ).

More often than not the customer won't be in any position to negotiate other than declining to take the service. For a big corp that's no real loss.

It is not a snag but a reflection of the balance of power. Think about it from the big corp's perspective; because they have nearly all the bargaining chips, the negotiation is trivially solved by offering Hobson's choice.

In a negotiation those chips can belong to both sides.

A client/customer can outline what they require in terms of service / time / quality and what they can be flexible on. Those are still chips.

Easily readable html version here: https://dl.dropboxusercontent.com/u/156243/negotiation.html

Huge thanks for Joshua for the write up!

Excellent tips..my only nit pick is with not using ranges..If you are forced to make the first offer, a range can help figure out what the other party is thinking..if I offer $30-$50 for example, and he jumps on the $50, I'll just repeat the offer at something like $35

The problem with this is you have offered $50 and he has accepted. So if you then say $35, you have reversed yourself, which violates the fourth rule (you can never go backwards on your position). This is viewed as bad faith by the other side and can break the negotiation.

One issue in negotiating that I never quite know how to resolve is the tension between two somewhat opposing pieces if advice: never be the first to give a number and use anchoring to establish a price.

These are not in conflict -- the anchoring effect (apparently) does not rely on the numbers being relevant to the discussion. So, prior to the salary discussion, begin a brief digression into astronomy. Then, with large numbers firmly lodged in their mind, make them establish the price.

Not sure it's as profound to others as it was for me, but my biggest lesson in negotiation was the idea of negotiating in bulk. If, say, there are 20 points to work through, the idea is to know before the negotiation starts which of them you're going to insist on, which you're willing to barter for, and which you're ok to lose (i.e. barter with).

As opposed to fighting through each of the 20 items one by one...

You're right about knowing where you stand on each item going into the negotiation. It's important to point out, however, that savvy corporate negotiators will insist on stepping through one item at a time, taking a strong position on most and offering up only a token gesture or two in order to disguise their true interests, build leverage and the appearance of good faith.

I don't think he means "tell the other party where your priorities lie". I think he means "don't negotiate and finalize each point one at a time" because if you do that, then you can't give on something you don't care about in order to get more of something you do care about. I remember getting that exact same insight from a previous HN thread.

These seem helpful, particularly in multi-round negotiations (which is pretty much anything in silicon valley, but actually isn't a great model for a lot of transactions in the wider world, unfortunately), but for me, the single most important key to getting good outcomes from negotiations is pretty simple:

BATNA. i.e. know what your best alternative to a negotiated agreement is before starting negotiations, and be able to walk away. As long as I have that, it's easy to be dispassionate and rational (and thus polite, honest, thorough, good at documentation, etc.)

> "... and be able to walk away."

I've always found this to be the trickiest, both in terms of defining it (in advance of a negotiation) and being willing to stick to it (during the discussion). Sometimes understanding that the BATNA is just the time saved can be helpful.

NB It's related to other advice that 'deals exist in order to fall through'.

> Do not leave anything to ambiguity - Turns out this is one of the hardest things to do, especially in "friendly" negotiations with investors you know or friends you might be hiring. Don't assume that something you think is implied is agreed upon. Every point that you negotiate should be made explicitly.

This wouldve saved me a lot. I just did an internship that was supposed to be paid, or at least thats what i understood out of my talk with the person in charge of accepting me for it.

Turns out when i asked for my money i got something along the lines of "well i said we'd see if i wanted to pay you or not"

Edit: and there was no contract or anything written so i guess im pretty much screwed.

    Edit: and there was no contract or anything written so i guess im pretty much screwed.

Depends on your jurisdiction. Depending on how long you worked and how vindictive you feel, perhaps talk to a union rep or a lawyer. Even if you didn't explicitly agree to a particular pay, it may be assumed legally that you get some sort of pay for the job you performed.

Assuming you're in the US, there are very strict federal laws about what an unpaid intern is allowed to do (from [1]):

1. Interns cannot displace regular employees.

2. Interns are not guaranteed a job at the end of the internship.

3. The employer and the intern(s) understand that the interns are not entitled to wages during the internship period.

4. Interns must receive training from the company, even if it somewhat impedes on the work of the organization.

5. Interns must get hands-on experience with equipment and processes used in the industry.

6. Interns' training must primarily benefit them, not the company.

If you were under the impression you'd be paid, they're already in violation of the law (#3). Most likely your internship violated a few other provisions as well; an unpaid internship basically has to be "science camp" to be legal, little productive work can be produced except by accident.

[1] http://www.dol.gov/whd/regs/compliance/whdfs71.htm

Edit: And, please do pursue legal action if you have the time and energy to do so, or refer the case to someone who does. Illegal unpaid internships are exploitative and industries reliant on them end up locking out everyone who can't afford to work for free (anyone but the children of the wealthy).

These laws are all well and good, but in practice:

1. Completely ignored everywhere because it cuts costs to have an intern

2. Obeyed because it protects corporate profits

3. Obeyed because it protects corporate profits

4. Obeyed because that's the only way to extract work/profit from the intern

5. Obeyed because that's the only way to extract work/profit from the intern

6. Completely flagrantly and aggressively ignored 100% of the time, always, everywhere

So I guess the laws are strict, but not ever enforced. The intern-ization of corporate US is a pretty well documented situation which has been used to slash costs at the entry level, thus creating a new "entry level" which requires internship experience and pays effectively what a non-free intern used to make.

On negotiation in general, ff you have a partner or group to practice with, or as a regular small team exercise, I highly recommend Harvard's materials from their Program on Negotiation.

The material is inexpensive and can be previewed / downloaded, in full, for free (the instructor pack).

Dedicate more time to the de-briefing than the exercise, as that is where the learnings are.

http://www.pon.harvard.edu/store/

Hi, can you share the link? Couldn't find it on the sitemap, and search results don't show the Instructor Pack.

Thanks

Click through to one of the topics/exercises that you find interesting. An exercise can be added to your basket/cart (registration is necessary at this point, but no fee is involved for registering).

"Begin with the end in mind"

-- Stephen Covey (Habit 2, The 7 Habits of Highly Effective People)

Above rule has helped me a lot throughout my personal and professional life.

One of the best salary negotiation articles I've read: https://news.ycombinator.com/item?id=3501366

I liked that post and also this video: https://www.youtube.com/watch?v=km2Hd_xgo9Q

This list seems to read like: "be honest, clear, and thorough". While this makes you a straight shooter, I don't see how you'll get anything better than what's fair using these tactics (and if fair is the end goal then I've been over estimating the challenge of negotiation).

There's a saying that goes something like "a successful negotiation is one where both parties feel like they're getting the better deal". I think you are correct. You typically don't have to negotiate much for a fair deal.

If you're negotiating terms for a relationship that's intended to be more than a one-off transaction, it's in both parties' interest that the outcome be fair.

In the modern business world, truly one-off transactions are very, very rare.

Not sure if I'm reading this right, but you have been thinking of negotiating as ensuring you beat the other party and your outcome is unfair in your favor? There is something not good enough about being a straight shooter who's honest, clear, and thorough? Are you trolling or being serious?

If you are evaluating negotiation as a stand alone skill I think you have to judge by how far in your favor the result is. It's entirely possible that your bigger picture strategy leads you to intentionally leave "meat on the bone", but doing so doesn't mean you've become a great negotiator.

It looks like I misread the intention of the article: the title says "How to create good outcomes when negotiating", but I somehow misinterpreted that to read something like "How to be a better negotiator". It's probably the fault of the first paragraph:

When I watch my nieces and nephew negotiating with my siblings, I'm consistently amazed at how good they are. ... they win more frequently than they lose.

The web filter here at work has that blocked as a gambling site.

Good points, but wish the author pointed to the enormous, readable lit. (Few people I know have read things like "Getting to Yes.".)

People often are ideologically blind to fundamental antagonisms in various relationships. (For example, market interactions is a big one.) I've had entirely good deals with people who've tried to (if you'll excuse my language) fuck me over, by silently changing little things in PDF contracts, benefiting on the X% of people not paranoid enough to run diffs.

Some argue, "How can you make a good deal with someone who just tried screwing you over?" Frankly, most deals are that way. Landlords try to; you buy products from companies who routinely lie to you (and even try to make you feel miserable about yourself); etc. And if you're a bit privileged, you may be lucky enough to be able to hit back hard at some of these people.

I hear you, but most of the literature that I've seen is about specific tactics for getting the most favorable outcome. That's an important next step, but a lot of founders I meet don't even have the foundation.

I don't believe in dirty tricks like you describe, but it's my solemn belief that you're not negotiating unless your goal is to "fuck the other person over," or aim for an unreasonably good deal. Whether you get it or not is an entirely different matter, but that should be the starting point. You'll never get a great deal unless you try for it, or the guy you're negotiating with is an idiot (for which there is there is also a simple strategy).

I don't know why you think landlords try to fuck people over. I've been on both sides of that negotiation and it's almost entirely market driven. You must live in NYC, or maybe moved to SF in the last couple of years, and have encountered landlords who know they have you over a barrel.

Many negotiations aren't zero sum (just about price). The skilled negotiator is able to trade things that they are less concerned about for things that they are more concerned about. Even in a landlord negotiation there might be conditions around the original condition of the property or the timing of the transaction that are ancillary to the linear price dimension and may give room for both sides to win.

Sometimes the way to go is "don't" : http://www.insidehighered.com/news/2014/03/13/lost-faculty-j...

I'm guessing tenure-track positions in the Philosophy faculty are very much a buyer's market. The candidate didn't seem to appreciate this.

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