Afford Anything - How to Get a Bigger Paycheck

Episode Date: August 17, 2024

#532: We’re diving deep into the art of negotiation, especially when it comes to asking for a raise. The episode is broken down into three main parts, each designed to give you practical tools and insights that you can apply right away. First up, setting the stage. Before you even think about negotiating, it’s crucial to understand the difference between “interests” and “positions.” You’ll learn why knowing the underlying reasons behind what both you and the other party want is key to finding a win-win solution. We’ll also talk about how to prepare yourself, including knowing your BATNA (Best Alternative to a Negotiated Agreement), your aspiration point, and your reservation point. Plus, you’ll get tips on how to build rapport and strategically frame your requests to set the tone for a successful negotiation. Next, we move into taking action. Here’s where you get the practical strategies you can use during the negotiation itself. We’ll cover techniques like anchoring—where you set the initial offer to guide the conversation—and how to make strategic concessions. You’ll also learn about the power of silence, managing your emotions, and making sure that any concessions you make are balanced by getting something in return. Finally, we tackle more complex situations. Sometimes, negotiations aren’t straightforward. Maybe you’re dealing with a difficult negotiator who’s being aggressive, uncooperative, or even deceitful. In this part, we’ll discuss how to handle these tricky scenarios while still aiming for a win-win outcome. Throughout the episode, you’ll get a clear, actionable framework that you can use to negotiate effectively, whether it’s for a raise, closing a business deal, or even in your personal life. The focus is on preparation, understanding what both sides truly want, and using smart strategies to reach an agreement that works for everyone. ____ Timestamps Note: Timestamps will vary on individual devices based on dynamic advertising run times 1:15 - Introduces negotiation, focusing on asking for a raise 3:45 - Explains interests vs. positions in negotiation 6:10 - Prepares by knowing your BATNA, aspiration, and reservation points 9:30 - Builds rapport and trust before negotiating 12:20 - Frames arguments to align with other party’s interests 15:05 - Introduces anchoring to set the tone 18:40 - Makes concessions while ensuring reciprocity 22:10 - Uses silence strategically in negotiations 25:55 - Manages emotions, avoids triggers in tense talks 29:40 - Creates value by expanding negotiation scope 33:25 - Prioritizes and bundles issues in multi-issue negotiations 37:15 - Deals with difficult negotiators like aggressors and stonewallers 41:00 - Recognizes closing signals to finalize a deal 44:45 - Documents agreements to avoid post-settlement disputes 47:30 - Reflects on each negotiation to improve For more information, visit the show notes at https://affordanything.com/episode532 Learn more about your ad choices. Visit podcastchoices.com/adchoices

We all know inflation has gone up and not all of us feel as though our salaries have gone up with it. How do you ask your boss for more? We're going to talk about that. We're going to deep dive in today's bonus episode. Welcome to the Afford Anything podcast, the show that understands you can afford anything, but not everything. Every choice that you make carries a tradeoff. And that applies not just to your money but to your time, your focus, your energy, your attention to any limited resource you need to manage. This is a show all about optimizing your limited resources. and we cover five core topics. Financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double eye fire.

Today's episode is focused on that second eye, increasing your income by virtue of securing a higher salary, closing a business deal, by virtue of mastering the art of negotiations. So today, we're going to start by laying the groundwork, exploring the key principles that underpin successful negotiations. We're going to discuss the difference between interests and positions. We're going to discuss preparation. We're going to talk about how to build rapport. And we'll look at the power of framing how you present information. So all of that is going to be the first part of the episode and all of that is around setting the stage. Then the second part of today's episode will be focused on taking action. We will discuss practical, actionable

strategies that you can use when you're getting a raise in a boardroom on a sales call or convincing your spouse to join the financial independence movement. So the second part of today's show is all about taking action. And then finally, the third part of today's episode, we'll deal with more complex situations like how to handle multiple issues or how to deal with counter parties who are aggressive or uncooperative, with counterparties who stonewall or deceive. So we'll cover that ground in part three of today's episode. Let's get started. Part one.

Setting the stage. Many people think of negotiation as a battle, like a back and forth struggle. But the reality is that successfully negotiating involves creating an outcome where both sides feel like they've gained something valuable. Both sides feel as though they've won. And in order to do that, there are a few foundational elements that you'll need to understand. The first is interests versus positions. A position is what you say you want.

So it's the demand or the specific outcome that you're asking for in a negotiation. For example, if you're asking for a raise, your position might be, I would like a $10,000 increase in my salary. An interest is the underlying reason why you want what you're asking for. So it's the motivation, the need, or the concern that's driving your position. In the salary example, your interest might be that you've taken on added responsibilities at work or that inflation has gone up and you're facing higher living costs. When you focus on positions, you're likely to get stuck in a deadlock because a strong positional stance can turn into a my way or the highway scenario where both sides are rigid and unwilling to compromise. But when you dig deeper into interests, you open the door to creative solutions that can satisfy both parts. For example, imagine that you and your neighbor are arguing over a tree.

One of you wants to cut down the tree, the other one wants to keep the tree. And we'll say the tree is right at the border of your property line. So the positions are clear. One neighbor demands that the tree is removed. The other neighbor demands that the tree stays in place. But when you and your neighbor explore your interests moving beyond positions, you find that the neighbor who wants the tree cut down is worried about the tree roots damaging their property, whereas the neighbor who wants the tree to stay appreciates the shade and the privacy that it provides. And so with this understanding,

you can arrive at a solution that addresses both concerns, like trimming the roots or planting a new tree in a different spot. So let's go back to asking for a raise. Perhaps your position is that you'd like an extra $10,000, your interests, your really, you're really. You're really. that your motivation is that your cost of living has gone up because of inflation. The employer's position is no, and the employer's motivation behind that is that their expenses have also gone up. Now, if you know this and you know that they're having a particularly tight ear, demonstrating and quantifying precisely how you've been able to cut costs, and having that data assembled on a spreadsheet when you go in for this conversation,

That can be a really powerful tool. We'll talk in more depth about the presentation that you give at the time that you ask for a raise, but for the moment, what we're establishing definitionally is the distinction between interests and positions. So that's point number one. Point number two. Before you go in for this conversation, there are three things that you'll want to know. Your batna, your aspiration point, and your reservation point. Let's talk about all three.

So your batna is your best alternative to a negotiated agreement. it's your fallback plan. It's the course of action that you're going to take if the negotiation does not result in an agreement. And knowing your batna gives you the power to walk away if the deal on the table isn't good enough. For example, let's say that you are negotiating a job offer. If you have another job offer lined up, that's your batna. Because if the current offer doesn't meet your expectations, you can confidently walk away knowing that you have another option. If you don't have a strong back, you're not. You don't have a strong back. You're not. You can't have a strong back. You're not. You can. You can't, you don't have a strong back then you might feel pressured to accept a less favorable deal. Let's go back to the example of you currently already have a job and you're asking your employer for a $10,000 raise. If your employer says no, or if they say we can only give you a raise of $2,000 instead of $10,000, okay, what is your bat anna? Are you going to start looking for other positions at other companies?

Can you get an offer from another? company, bring it back to your current employer, and ask them to match it. Would you want to jump ship? Would you want to go work elsewhere? These answers are going to vary depending on what industry you work in, what geography you're in, the size of the company that you work for, etc. These are going to be very individual, but having a very clear sense of this is part of determining the batna ahead of time. And that's part of the preparation. Two other points that you're going to want to know before you go into the negotiation are your aspiration point and your reservation point. So your aspiration point is your ideal outcome. This is the best case scenario

that you're hoping to achieve, the goal that you're aiming for in the negotiation. Maybe your aspiration point is a $15,000 raise. That's your best case scenario. And your reservation point, which is the minimum outcome that you're willing to accept before walking away, your bottom line, maybe your reservation point is a $5,000 raise. And if you get anything below that amount, you're prepared to start looking for other jobs and you're prepared to actually walk away. Those are examples. Obviously, your mileage will vary and your personal aspiration point and reservation point will

differ from those precise numbers. but having those two points clearly defined in your mind helps you navigate the negotiation without losing sight of your goals. So your aspiration point gives you something to aim for while your reservation point protects you from accepting a deal that's not in your best interest. And then your batna tells you what your next best alternative is. So know those three things before you go into the conversation. All right, that's point number two.

Point number three. Research the other party. You want a clear understanding of the other party's background, interest, and motivations. What pressures are they facing? What are their likely objections and what are they likely objectives? So again, if you're asking your boss for a raise, you know, what are the objectives and the objections, the pressures that the company is facing? Maybe the goal is to expand into new markets, but that conflicts with a direct. pressure, a direct and immediate pressure that your supervisor is facing to cut costs,

which is coming from above. So your supervisor is trying to simultaneously find the budget to be able to expand into new markets while also cutting back on travel costs or CRM costs. Understanding their situation allows you to tailor your proposal in a way that aligns with their interests. It also allows you to better prepare your counter arguments because you'll be able to anticipate that they're going to push back on certain terms. So you will have data or examples ready to support your position. And on the subject of preparing your counter arguments, you're going to be going into this with strategy. So you might start with a strong anchor, right, anchor that initial price point to your aspiration point, then make strategic concessions,

concessions that you had already pre-planned and ask for strategic nibbles, right? So you go in anchoring to your aspiration point of a $15,000 raise. You make certain strategic concessions along the way. Like you concede on a given side issue about the number of days per week that you are in person in the office. But then you also, as you make those strategic concessions, nibble back, by asking for more vacation days, or by asking for a better parking spot. Now let's move to the next element of setting the stage. Building rapport and building trust.

This is particularly important if the person whom you are asking for a raise is not a direct supervisor whom you frequently work with. Maybe they're a person at the company that you don't interact with often. And more broadly, these elements of building rapport, which I'm about to describe, I've also applied to any other negotiation. Like, for example, if you are making a direct deal with a home seller outside of the use of agents, if you're buying a property that's off the MLS and you need to negotiate with the home buyer or seller directly, right? This is where all of this comes in and it becomes applicable not just to getting a raise, but to all of these very high stakes, high ticket elements of your life.

Because negotiation is not just about the exchange of our. offers and counteroffers, it's about the relationship between the parties. And that's true even when you are speaking to a party, a counterpart that you've never met before. So let's talk about how to build that rapport, which is also part of setting the stage, right? So there are the common practices of starting with small talk, finding common ground, shared experiences. But there's also the rapport that comes from establishing and signaling credit. And that credibility comes in a few ways. Partially it comes from being upfront about your goals, your constraints, and your limitations.

Right. That honesty is really the cornerstone of credibility and transparency builds trust. So being unfiltered about the limitations you're working with and the vision that you're trying to achieve goes a long way. preparation is also key to establishing credibility. When you come to the table well prepared with facts, with data, you're demonstrating that you are taking the other party's time seriously. And that, more so than small talk, more so than chit-chat about the weather,

that preparation with facts and data and a commitment to honoring their time, that's what establishes true rapport, not simply surface. level, how's the weather? How are the local sports teams? There's also follow-through. So if this is a multi-day negotiation where you discuss something, this often happens with getting a raise, you have an initial conversation, and then one or both sides say, you know, that they need to talk to their higher-ups or they need to take a look at their budget and can we circle back, and then you circle back again one week later. When it comes to these big-ticket, These are often multi-day, multi-week negotiations.

And oftentimes during that, you may agree to do something small, whether it's providing additional information or consulting with a colleague or revisiting a proposal. That follow-through reinforces your credibility and your reliability. And then the other element of it is communicating clearly, which comes from not using jargon and not using technical language. And this is particularly important if you have a role within your company that is highly technical and you are speaking to somebody who is not a direct supervisor and maybe has only a cursory understanding of what it is that you specifically do, right?

Perhaps you're speaking to somebody whose expertise in the company is more at the budgetary level or at the executive level, but they do not know the intricacies of what you do. drowning them in jargon or drowning them in technical language, which is a tactic that some people employ in order to make themselves seem indispensable, it actually just muddies the communication and it harms the rapport and the trust that you're trying to build with the counterparty. So clear, jargon-free communication in which you present your points in a straightforward and understandable way, that sets the stage for a healthy long-term discussion. It sets the stage for preventing misunderstandings and making sure that you both are on the same page. And now this brings us to

the next topic. The power of framing. Framing is closely related to clear communication. Framing refers to the way that you structure and present your arguments, proposals, or requests. So it's about choosing the right words, emphasizing certain points, and aligning your message with the other party's values and interests. And the way that you frame a proposal can have a huge influence on how it's perceived and whether or not it's accepted. Here's a simple example. Let's say that you are negotiating a project deadline with a client. Now, you could frame your proposal by saying, we need more time to complete the project, but that would be a mistake because that focuses on your need.

Alternatively, you could frame it by saying, hey, by extending the deadline, we ensure that the project meets the highest quality standards. And that focuses on the client's interest in receiving a high quality product. So the second framing, which emphasizes the benefit to the client, is more likely to resonate with the client. All right. That's a very simple example. You see that every day in the course of business.

But framing matters because it shapes how the other party perceives the negotiation. And the right framing can make your proposal more appealing. It can align it with the other party's goals and interests. And it can increase the likelihood of getting to that yes, getting to that agreement. Right. So let's go back to the example of asking your boss for a raise. Now, you could frame your request by saying, look, I need a $10,000 raise because my living expenses have increased. my property taxes, my car insurance, my grocery store bill, my air conditioning bill,

heck, even the amount that I paid on Netflix every month, it's all gone up. If you frame your request like that, while this is totally true, it focuses entirely on your personal needs. It's all about you. And so that framing may not be as compelling to your boss, but, But alternately, you could frame your request by saying, hey, let's talk about some of the ways that I've cut costs or increased revenue for this company. Let's talk about the increased responsibilities that I've taken on.

Let me demonstrate the value that I've added to the team. And due to all of that, I believe a raise is warranted. And of course, that's going to be backed with a lot of data with a solid, solid presentation. You know, you're going to be armed with some very key specifics. but that framing, which focuses on the value that you bring to your company, makes it far more likely that your employer is going to see your raise as justified because your employer is thinking about their bat anna. And so the stronger that you frame your value,

the more expensive their batna becomes. We can talk for hours about how to really arm yourself with facts and data that demonstrate your value. and that's outside of the scope of this particular podcast episode. But keeping this at the broad 30,000 foot view level, here are a few techniques for framing your proposal. So first, focus on the benefits, frame your proposal in terms of the benefits that it's going to offer to the other party,

highlight how it's going to help them achieve their goals, solve their problems, how it's going to create value for them. In addition, frame your proposal in a way that aligns with the values and belief of the other party. So, for example, if you work for a company that deeply values innovation, then you might frame your proposal as an innovative solution to a challenge that they're facing. Now, in some cases, creating a sense of urgency can also be an effective framing method.

So if there is a limited window of opportunity, or if there is a time-sensitive issue at hand, emphasizing the urgency can encourage the other party to take action. be careful not to overuse this because this can backfire if the other party feels pressured. So this is going to be a very case-by-case specific tactic. But emphasizing urgency when it's appropriate can be an incredibly powerful tool. Finally, when there are multiple issues at stake, framing certain terms as more flexible, while framing other terms as non-negotiable, allows you to prioritize the issues that matter most to you, while giving the other party the impression that you're willing to compromise on other points.

So, for example, in a multi-issue negotiation, you may be talking not just about your salary increase. You'd like a $15,000 salary increase. You'd also like to work from home three days a week instead of just one day a week. You'd also like a better parking spot for when you do come to the office. you would also like a credit to cover your cell phone bill, and you'd like five extra days of vacation per year. Framing certain things as flexible and others as non-negotiable or essential, gives the other party a sense of agency while also conveying what matters most to you.

So in all of those ways, the framing of the initial proposal sets the stage for the conversation ahead. And that's why so much of the work of a successful negotiation, particularly when you're either accepting a job offer or asking for a raise, so much of the work happens before you even begin the discussion because that preparation ahead of time, that setting the stage ahead of time sets the tone for how everything will follow. So far, we have talked about setting the stage. We've talked about interests versus positions, and we've talked about your batina, your aspiration point, and your reservation point. We've talked about building rapport and trust, and we've talked about the power of framing. We're going to take a short break, and when we come back, we're going to dive into specific strategies and techniques, like anchoring, leveraging concessions, using silence, strategically, managing emotions, and the principle of reciprocity. All of that is coming up in just a moment.

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you are actually in the heat of the moment in the midst of a negotiation. So we're going to start number one with anchoring. Now, many of you already know what this is. Anchoring sets the tone for the negotiation by setting the initial offer or the initial proposal. And that serves as the reference point or the benchmark for all subsequent discussion. So the notion behind anchoring is a psychological phenomenon known as the anchoring effect in which when people are presented with an initial piece of information, such as a price or a number, they tend to heavily rely on that when making decisions. You see this often when people have really erroneous, cognitively biased ways of thinking about real estate, though this is how I most often see it, is people will

anchor to a price point that a particular home in a given neighborhood used to be selling for three years ago or five years ago. And they'll say, I don't want to pay so much more than the home is worth because only three years ago or only five years ago, the home used to be worth X. It's a prime example of anchoring. Once people have in their mind the 2017 value of a home and that 2017 value is locked in mentally, cognitively, then people will often have a hard time adjusting to the price in 2020 or the price in 2022. And so they'll say, oh, it's overpriced because they've anchored to the 2017 price. And then they're surprised when the calendar turns to 2024. And they're like, why is it still going up? Well, because it wasn't overpriced. It was simply that you hadn't updated your

mental model. So that's an example of anchoring. And a way that you can use this in a negotiation, let's say that you are selling a car, selling a used car. If you ask for $25,000, that number becomes the anchor. And every subsequent counteroffer revolves around the anchor of $25,000. Now, of course, there's market research. There's the Kelly Blue Book value. Right? You can't pull the number 25,000 out of thin air. But even then, I mean, Kelly Blue Book value, what is that? It's a list of anchors. It's a list of price anchors based on comparable sales data. So how do you respond when the other party sets the anchor? If the other party sets the anchor first, what do you do? Well, there are two tactics. One is called re-anchoring and the other is de-anchoring. Re-anchoring involves countering

with your own incredibly strong anchor. So if the seller starts with a high price, you counter with a very low anchor that reflects your aspiration point. And by virtue of setting an anchor that is so far away from the seller's anchor, it makes a statement. Now, this is a risky move because if you set too much of a low ball,

then the seller might not want to engage. Again, you see this in real estate a lot. But when done right, in the right situation with the right tact and finesse, re-anchoring can completely reset the frame of the conversation. There's another tactic as well, and it's called de-anchoring. And that involves challenging the validity of the other party's anchors. So, for example, let's go back to that car sales example. Let's say that you're the buyer, the seller anchors by asking for $25,000. for their car, but you looked up the Kelly Blue Book value or you found other similar cars

for sale in the area. And so you can challenge the validity of the other party's anchor by saying, look, here is data, here are other cars for sale, here is a market listing of value, here are things that I can present, here's information I can present that challenges is the very basis of the anchor that you've set. Now, for something like a car where there's an enormous amount of data, that's relatively easy to do. For something like a graphic designer giving you a quote for their services, that's a bit more challenging to do because prices are all over the map when it comes to professional

services and quality is all over the map. So the range is quite broad. But you can still, when armed with data and succinct but good comparisons and counterarguments, you can de-anchor even those more amorphous offers. Okay, moving on from anchoring, re-anchoring, and de-anchoring, let's talk about making concessions. Because once that anchor is set, the conversation could focus on the main issue, which often the main issue is the point that is anchored. But there are also a myriad of side issues. Again, if you're negotiating for a raise, the main issue may be salary, but the side issues are vacation, retirement.

And then ancillary perks like professional development, going to trainings, workshops, taking online classes that are on the company dime, or getting reimbursed for the cost of your morning commute. Some companies, for example, offer unlimited public transportation tickets. So in New York City, you might ask for an unlimited ride metro card. So at any rate, when it comes to those, particularly those ancillary side issues, this is where we want to talk about the art of making concessions, because how you handle this can significantly impact the outcome. And so there are both tactics and principles to keep in mind as a tactic you want to use gradual concessions often. So instead of making a large concession right away, start with smaller concessions and if necessary, increase in. them gradually. But that said that that's a tactic, the principle, the underlying principle that you want to be thinking about as you are making gradual concessions is the principle of reciprocity.

So anytime you make a concession, you want to ask for something in return, whether that is a concession on a different issue from the counterparty or an additional benefit that hasn't yet been discussed or even a commitment to move forward with the deal. Now, in addition to this, It's not enough to simply make a concession. You need to signal its value, which means clearly articulating why the concession is significant and what it means for the negotiation because the other party needs to understand the value of what you're giving up in order for the concession to make the largest impact. So, for example, let's say that you're a graphic designer and you are reducing the price of your services. You might say, I'm willing to reduce the price by 5%, but this will require us to scale back.

some of the features we initially discussed. And I believe that this adjustment reflects the amended value of the services while also addressing your budget concerns. So by framing your concessions in terms of value, you reinforce the importance of reciprocity, and you encourage the other party to make concessions of their own. What you don't want is to succumb to the pitfall of making unrecipricated concessions. So giving something up without getting something in return. And this is common if you're eager to reach an agreement or if you're feeling pressured by the other party. But unrecipricated concessions can weaken your position.

So you always want to link your concessions to specific requests. Again, back to the example of you are a graphic designer. You're pricing out your services. And if you're offering a discount, that 5% discount, you might say, I'm willing to offer this discount if we can finalize the agreement by the end of the week. So it creates a clear expectation of reciprocity, and it helps maintain balance. You also want to know when to stand firm. So you might say, for example, I've made several concessions to address your concerns, and I believe we've reached a fair agreement.

I'm not in a position to make further changes at this point. Standing firm at the right moment shows that you're confident in your position, and you're not willing to compromise beyond what's reasonable. Now within this conversation around concessions, one incredibly powerful tool that you'll want to use is the strategic use of silence. After you make a statement, after you either ask for something, anchor to something, or make a concession with the reciprocal request, go silent. Because silence creates a psychological pressure that can compel the other party to speak or to make a mistake. move. Make your statement or your offer and then stop talking. Give the other party time to process what you've said. For example, you're applying for jobs. You're in a job interview and the recruiter

or your future boss asks you what are you looking to make in this role. You throw out your salary request anchoring at your aspiration point so you say, I am looking to make between 125,000 to $135,000 in this role. And then instead of immediately justifying your ask, you go silent. This is an example of a time inside of a negotiation in which justifying the ask weakens it. Now, that said, how do you know which are the appropriate times to go silent? Well, here are three points during a negotiation when silence can be strategic. Number one is after making an offer. Anytime you make an offer or a key point, pause. Give the other party time to consider what you've just said. Number two, in response to a question. If the other party asks

you a question and you're not ready to answer, pause. Give yourself time to gather your thoughts and formulate a response. Don't rush to fill the air with filler words. And number three, when the other party pauses. If the other party fall silent, resist the urge to fill the gap. Instead, allow silence to fill the room and wait for them to speak. They might reveal more information, or they might make a concession just to break the silence. By the way, many people feel uncomfortable with silence, particularly in high-stakes negotiations. So the key to overcoming this discomfort is practice. In fact, the key to a lot of what I've been talking about in this episode, the key to doing this well is practice. And that's why in the course that we're building,

which is all about how to ask for a raise, it's about negotiations broadly with an emphasis on asking for a raise specifically. A cornerstone of that course is lots and lots of practice sessions. Because it's one thing to sit back and passively learn the techniques and the principles. it's another to get in the arena and train. And that training is enormously valuable. That training can get you an extra $10,000 or $20,000 in the amount of money that you get paid to do the same job that you're already doing. And that's $10,000 or $20,000 each year building on itself

and adjusting for inflation in perpetuity. right? That's the power of a few hours of practice can be some of the most lucrative hours that you ever spend. So we'll practice silence. We're also going to practice watching for your emotional triggers during a negotiation. Because negotiations often are situations that are likely to lead to comments, whether intentional or unintentional, from the counterparty, that could provoke a source. strong emotional response. For example, your expertise may be questioned, or the value of your contribution as a graphic designer, as an accountant, the value of your contribution to the company, that might come into question.

You're making a case saying, look at what I've done for the company. And it might be that your boss or your supervisor doesn't see it that way. And maybe they're not even trying to trigger you. maybe they just genuinely see it differently, and they're trying to engage at a very honest, intellectual level, but that still might be upsetting. And so one of the other elements where practice becomes incredibly important is learning how to recognize and then manage those emotional triggers. This, again, is where silence and pausing can have a huge impact, as well as deep breathing,

reframing negative thoughts, and focusing on the outcome. So emotional intelligence, EQ and emotional resilience, which is the ability to bounce back from setbacks, cultivating those has a massive role in successful negotiation. Now, another thing that we'll work on, because it requires some creative out-of-the-box thinking, is the concept of value creation. Because value creation is finding ways to expand the scope of the negotiation so that all parties can benefit, right? So value creation is about making the pie bigger rather than quibbling over how to split a limited pie, right? Instead of viewing negotiation as a zero-sum game where one party's gain is the other party's loss, value creation finds win-wins that satisfy both parties. So if you're negotiating a lease for an office space, instead of focusing solely on the rent, you might talk about for maintenance agreements or flexible lease terms or shared services, right? So by broadening the

scope, you can create more opportunities for both sides to find value. And so creating value, a couple of steps that you can do. One is by identifying additional interests, right? So if you're negotiating a job offer, negotiating for a performance-based bonus where your interests are aligned is one way to identify an additional interest and create additional value. If you're negotiating a contract, exploring options for future collaboration or for joint ventures is another way of doing that. Exploring tradeoffs, right? If you know that one party values time more than money and the other party values money more than time, great. You might agree to a faster timeline in exchange for a higher fee.

And then taking a collaborative approach, I mean, you can even ask the open. question of what would make this agreement more valuable to you because the counterparty might suggest something that you would never thought of. But that being said, the counterparty might not be practiced in that kind of out-of-the-box thinking. Well, it's good to ask those open-ended questions. It's also incumbent upon you with practice to think more innovatively. And then in addition to innovative negotiation, there's also this other concept. It's called integrative negotiation where the goal is to integrate the interests of both parties in order to make the outcome more mutually beneficial. So you've got distributive negotiation where the focus is on dividing a fixed amount of resources,

and then you've got integrative negotiation where both parties work together to identify shared goals. Again, the performance-based bonus being a prime example. Okay, so the next topic to cover, and we've sort of touched on this, is the concept of multi-issue negotiation. And we've really, we've been talking about this the whole time, but we haven't actually given this a name. There are certain negotiations that are single issue. If you are selling a used handbag or a used set of golf clubs, that's a single issue negotiation. But in many contexts and in the most important most high-stakes contexts, like business deals, contract negotiations, buying a house, playing a house, playing.

planning a wedding, accepting a job offer. These are multi-issue negotiations where each party has a broad range of interests that they're bringing to the table. And for the most complicated deals, you have multi-party multi-issue negotiations where you've got three or more parties negotiating on a broad range of issues. This sometimes happens with buying a house. This often happens with contracts, clients, mergers. It happens with a lot of business deals.

So let's talk about, let's talk directly about how to think through multi-issue negotiations. Because the first thing that you're going to want to do is prioritize your issues. Often there's going to be the main issue and then all of the ancillary issues, which we've talked about. But with regard to all of those ancillary issues, rank these in order of importance. try to get a sense with the counterparty how they would rank those issues or their issues in order of importance. Because by understanding your relative weightings, you know, how important is X and Y and Z to you and how important relatively are X and Y and Z to the counterparty, you can stay focused on what matters most. You can make sure that you don't make unnecessary

concessions on issues that are critical to you. And you can give on issues that don't really matter that much to you, but that matter quite a bit to the other party. Beyond that, another effective strategy is packaging or bundling issues together. So instead of negotiating each issue separately, you can group related issues into a package and negotiate all of those as a whole. So let's say you're negotiating a contract that includes several key items, including price, delivery timeline, and payment schedule, rather than negotiating each term separately, you might package these together.

If you're a freelancer, maybe you just offer standardized packages of price, timeline payment and say, hey, we've got package A, B, and C in which the price varies depending on the timeline and depending on the payment schedule. With all this established, let's talk about the pitfalls of multi-issue negotiation. The first is overcomplication, because with so many issues on the table, it's easy to get lost in the details and lose sight of the big picture, and it's easy to start quibbling about the weeds. Now, there are some strategies to avoid this.

Packaging or bundling, which we just talked about, is one of the ways that people try to simplify a multi-issue negotiation. Another way to avoid this is through the practice of what's called log rolling, which is the practice of trading across issues. So if you and your counterparty both disclose how you prioritize the list of issues, then you can start to trade across them based on how each of you prioritize each issue. Packaging, bundling, log rolling, those are a few ways to deal with the threat of overcomplication, because overcomplication is one of the things that can threaten a multi-issue negotiation. Another threat that multi-issue negotiations face is inflexibility.

Multi-issue negotiations are ripe with opportunity for one party or the other to become too rigid on certain issues, and that can lead to deadlock. And then the third threat is imbalance. Because if one side feels as though they've given up too much, they might be less committed to upholding the agreement. And that, this conversation around inflexibility and imbalance and potential deadlock, leads to the next topic, which is how to deal with difficult negotiators. We're going to take a super quick ad break, and when we come back, we're going to talk about the four archetypes of difficult negotiators,

which, spoiler alert, the aggressor, the Stonewaller, the deceiver, and the egotist. We're going to talk about all of those and how to deal with those types of difficult and uncooperative negotiators. Stick around. There are four archetypes of difficult negotiators. There is the aggressor. This is the type of negotiator who is confrontational, who uses intimidation tactics,

and who often tries to dominate the conversation. Then there is the Stonewaller. This is the negotiator who is uncooperative and refuses to engage. So they may avoid answering questions. They may provide intentionally vague responses. Or they may simply refuse to negotiate at all. Stonewallers often become ghosters. And if you're trying to buy a used car, that's not a big deal because there are plenty of other cars out there that you can purchase.

But if you are facing off against a Stonewaller at your workplace where you're already employed, then you're going to need some training and strategies and practice in how to deal with this. So the Stonewaller is the second archetype. The third is the deceiver. The deceiver is the negotiator who is dishonest and who uses manipulation or false information in order to gain an advantage. So they might exaggerate their position. they might withhold important details, or they might make false promises that they have no intention of keeping. And then the fourth type of difficult negotiator is the egotist.

This negotiator is driven by their ego, and they want to win at all costs. So they may be inflexible. They are dismissive of your concerns, and they're focused solely on achieving their own goals. Ego in this context is the opposite of empathy. So four types of difficult negotiators, the aggressor, the Stonewaller, the deceiver, and the egotist. We could have an entire episode that dives into nothing but how to deal with these four types of negotiators. But speaking very broadly at the 30,000 foot view level, a few strategies for him. handling them include. Number one, not mirroring their behavior. Now, this goes against what we typically learn about communication. We often learn that mirroring the other party's behavior is a method

of establishing rapport. And you often see people, particularly people who are very high EQ, will often unconsciously do it, crossing their legs in the same way, folding their arms in the same way. slouching or sitting upright with the same slope, right, in the same posture. Oftentimes, this is actually unconscious behavior, but it gets our mirror neurons firing and it creates a sense of camaraderie and connection. This is, however, not what you want to do when you are dealing with an aggressor, a stonewaller, a deceiver, or an egotist. You do not want to mirror that behavior. because responding to aggression with aggression can often make the situation worse. So don't mirror, but do set boundaries.

And by the way, the word boundaries are often misused these days. People will misuse the term setting boundaries to refer to trying to exert control on somebody else. There was that famous, well, at least it was internet famous case of some celebrity telling his celebrity girlfriend that she couldn't wear two-piece swimwear because he was setting a boundary, right? And that was a misuse of the term boundaries because what he was really doing was exercising controlling behavior. And he was misusing the language of quote unquote boundary setting in order to convey that. Boundaries in reality reflect your own behavior, not your expectations of somebody else's

behavior. So they can act however they want to act, and you will act accordingly. And so knowing where that line is for yourself is another element of dealing with aggressive negotiators. Now, the third element of dealing with aggressive negotiators is active listening, because oftentimes people are aggressive when they feel as though they're not being heard. And so active listening can de-escalate a situation. The fourth tactic for dealing, dealing with an aggressive negotiator is to focus on interests rather than positions. Aggressive negotiators can often be fixated on positions. So by redirecting the conversation towards interests, you can open up the possibility of finding common ground. And again, I'm giving a very 30,000-foot-view

synopsis. It's easy to say, well, focus on interests, but how do you actually do that in the context of dealing with somebody who's stonewalling. And so there's an entire other episode that we could go into just on this subject matter alone. You know, uncooperative or aggressive negotiators are often reluctant to commit to a single option. So they're simultaneously fixated on positions, but also reluctant to commit to anything that would move the deal forward. They often like, in theory, the idea of answering,

open-ended questions, but also might respond to those open-ended questions with stonewalling or deception. And deceivers in particular will often rely on ambiguity in order to obscure the truth, or they will come back and nitpick at specific phrasing. I once had a very frustrating conversation with an attorney who started arguing with me about the definition of the word about. And so that is something that a person does when they are knowingly being deceptive, but trying to loophole their way out of it. So these difficult or uncooperative negotiators, they are a bundle of contradictions, sometimes appealing to their ego helps, sometimes highlighting mutual benefits helps.

But in the cases in which you're dealing with an uncooperative negotiator, you are facing someone who to some extent enjoy. is derailing the conversation, either with tangents or with personal attacks. And so a lot of practicing mock negotiations is engaging in the practice, in a controlled student environment, engaging in the practice and the roleplay of dealing with this so that when you encounter it in the real world, you're prepared because you can fall back on your training, and that preparation often is the thing that helps you avoid ultimate deadlock. We'll do another episode in the future on how to deal with aggressive and uncooperative negotiators, but that is an introduction to the topic. All right, let's move to recognizing closing signals

so that you can close the deal. First, know how to recognize the closing signals of a negotiation, because sometimes there are signals that the counterparty is ready to start wrapping things up, and if you miss those signals, you might end up giving more concessions than necessary. So there are verbal signals such as, that sounds fair, I think we're close, let's finalize the details, and then there are nonverbal signals, such as when the other party starts nodding an agreement, leaning forward, or increasing eye contact. And if the other party makes a final concession or agrees to one of your key terms, that's a very strong signal that they're ready to close. Now, before you finalize the deal, make sure that you summarize the agreement to make sure that both parties are on the same page.

That means reviewing key terms, conditions, and commitments. So, for example, you might say, all right, to summarize, we've agreed on a price of $10,000, a delivery timeline of six weeks, and payment terms of, of 50% up front and 50% upon completion. So first summarize it, then document it, do it ideally through a written contract or a memorandum of understanding, but at a minimum through an email confirmation. And the email confirmation should have an affirmative yes. So one party sends all of the details and the other party replies. It's not enough to simply receive it. The other party must reply.

So an email is the minimum, the absolute minimum, but depending on the complexity of the deal you might want to to take it further than that. Now, all of that said, it's common for last-minute concerns to arise during the closing phase. So additional requests, questions about the terms, doubts about the agreement, and making sure that both parties feel good about a given agreement requires addressing those last-minute concerns. So if at the last second the other party says, you know what, I know that we've agreed to a delivery timeline of six weeks, but I'm worried because it's incredibly important that we receive this project in six weeks. And if we don't get it by then, I'm going to be in trouble with my bosses, right? So one party might kind of bring that up as a last minute concern. And then you can put into place something like a penalty clause for delays, which would reassure. them while also keeping the base deal intact. Now, the reason it's essential to address last

minute concerns is because what you want to avoid is the post-settlement settlement. And this happens when one party tries to reopen the negotiation after the agreement has already been reached. And this can lead to a lot of frustration and mistrust. And oftentimes, parties will try to reopen the negotiation or they'll try to renegotiate if those last-minute concerns have not adequately been addressed. If the company rep says, man, why did we agree to a six-week delivery time schedule? Because six weeks is the absolute maximum. Their concern is that they've left no margin of error.

Now, that is an addressable concern, again, with something like a penalty clause for delays being added in. It's a very addressable concern. But without that type of creative and collaborative thinking, oftentimes after a deal is reached one party will try to blow it up or reopen it. And that, by the way, is another reason why documenting the agreement is so critical. Because once the base agreement is documented, then you can hold that base agreement intact while also supplementing it with, in this example, the penalty clause for delays. Because that doesn't change the base agreement. It simply supplements it with an addendum. And then finally, after every negotiation that you take part in,

again, whether it's for something really simple, like buying a used barbecue grill on Facebook marketplace, or whether it's for something more complex, like negotiating a job offer, take some time to reflect on the process and to write down what went well, what could have been improved, what lessons did you learn, and how will you continuously practice? That is an overview around the art and science of negotiation, which is a crucial piece of increasing your income, getting that raise, making more money, building your net worth, reaching financial independence.

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This is a bonus episode of the Afford Anything podcast. My name is Paula Pant, and I will meet you in the next episode.