Power Pack 4 - Negotiation

In this Power Pack you will discover:

  • Why clients want to negotiate?
  • What makes a good negotiator?
  • Top 3 negotiation tips
  • Your own negotiation style

Developing your negotiation skills can rapidly increase your success, and your profits!

For many recruiters the fear of loss of a client or deal can incorrectly make them think that a fee reduction will secure the buisness.

This is unnecessary strategy and many negotiations are entered into by recruitment consultants that could have been avoided.

Negotiation can create feelings of tension and this is perfectly natural if the end result is import to you.

ExtraUnfortunately, focusing on the end result too much can cause you to lose sight of our commercial objectives: To generate good levels of profit for the business.

EXTRA:

This guide also contains our 'Negotiation Styles Questionnaire' - what is your negotiation style? Are you a bully or a doormat?

Download a print friendly version of the full guide or read the Negotiation Power Pack below

Download print-friendly PDF of the full guide

Negotiation Power Pack

[Click on each of the headings below to expand and read more on that section]

Negotiation

Negotiation is a subject that creates different reactions and opinions from recruitment professionals. It seems that there are those who enjoy the sport of negotiating with their clients and contractors and there are others for whom it is the worst part of their job.

Negotiation can create feelings of tension and this is perfectly natural if the end result is important to you. Unfortunately, focusing on the end result too much can cause us to lose sight of our commercial objectives: To generate good levels of profit for the business!

Understanding Why Clients Want to Negotiate

Before we can get to grips with how to effectively negotiate, it is worth spending a moment stepping into the shoes of a client and seeing the world through their eyes. Psychology tells us that empathy with our client will give us a much more informed understanding of their actions and behaviours.

Imagine being a client who is recruiting a new team member.

When you are talking to a consultant in a recruitment agency, why would you feel it reasonable to negotiate a reduced fee?

Experience
Clients may have negotiated rates down in the past with other agencies (and potentially colleagues within your business).

Expected and Acceptable
Recruitment fees are one of those services that are open for negotiation as it is normal and therefore abnormal to not negotiate.

Recruitment Consultants invite It
Lack of confidence can lead to recruiters asking a client questions such as “How does that sound to you?” or “How does that compare to other quotes?” after stating their fee.

How fees are described indicates flexibility
“Our standard fees are…” or alternatively “Our terms of business state…” Stating we have “standard fees” indicates that there may be other types.

High Price Ticket
Recruitment fees can, for some managers, be seen as high ticket price and full of margin rather than cost. For some recruiters they can also feel high!

Competitive
Clients believe there to a large number of suppliers and use price as differentiator. Clearly our value propositions will separate us from the crowd.

Lack of understanding of what we do
Without a thorough understanding of the work we do it is difficult for a client to perceive value

The Prelude to Negotiation

Negotiation is a major area where we are constantly asked to help consultants improve. Negotiating fees. The vast majority of the fees (perm) and charge rates (contract and temporary) are negotiable by consultants. Clients know this from experience and reputation. Many consultants say that they worry that if they don’t give some form of discount they will lose the business. This is definitely not true all the time. A skilled consultant should be able to sort the negotiators from the “don’t ask don’t get brigade” yet few do so properly.

What makes a good negotiator?

There are skills and tricks that can make someone a better negotiator though they are not as essential as the following.

It helps to think of negotiation as a cocktail:

  • 3 Parts Self Belief
  • 2 Parts Empathy
  • 2 Parts Listening
  • 1 Part Flexibility
  • 1 Part Focus
  • Splash of Preparation
  • A Twist of Bravery

Serve cool with plenty of credibility

As you can see, although a bit of fun, negotiation is all about soft skills and mind set. Believe in your product, your self and your prices and you will find it easier and fun.

With this mindset in place sorting out who really wants to negotiate is easy. Follow these 5 steps:

The Prelude to Negotiation

  • Step One If asked for a discount say “NO”
  • Step Two Demonstrate your price = value
  • Step Three Say “NO” again, nicely (“that Mr Customer is why the price is X”)
  • Step Four If they persist: Ask them why they think you should rather than telling them again why you shouldn’t. Take the opportunity to ask questions and gather information to be able to answer the questions in step 5.
  • Step Five Decision time. Do I need to negotiate? Do I want to negotiate? What do I need to do to secure this business? Then either negotiate OR walk away

Many a needless negotiation has taken place because too often a rash sales person has gone from step 1 to step 5 missing out 2, 3 and 4. There are even those who have missed numbers 1, 2, 3 and 4 and begun at 5!

The Prelude to Negotiation - A Worked Example

Client:
“Another recruitment business we work with have agreed to work at 12% on this role..”

Recruiter (at step 1 “NO”)
“I understand that there may be others in the market who would reduce their fees. However, we take great pride in the quality of our service which is why we charge 25%”

Recruiter (at step 2 “Justify”)
“Let me explain how we work to demonstrate the level of value we believe we provide to our clients…..”

Recruiter (at step 3 “NO again”)
“That is why we believe that 25% is a fair fee to levy on a contingent basis”

Client:
“I understand all of that but I still have another agency willing to charge less..”

Recruiter (at step 4 “Client Justification”)
“What level of business do you give to the other company?”
“How long have they had the vacancy?”
“If you are happy with what they are delivering, what has led to you also giving the vacancy to us?”
“What will you do if they don’t come up with the right candidates at that price?”
“Rather than asking me why I won’t work at 12%, what reason could the other agency have for agreeing to it?”

If we now decide to negotiate it does not mean that we have to be at 12% and it does not mean we need to move from 25% (as per our earlier example). There may be other things more important to the client other than price. A good negotiator understands their product and service and all of the associated elements that can also be used.

Top 3 Negotiation Tips

1. Know your walk away point

Knowing your walk away point means to genuinely know what your walk away point is. Although the business will have a floor limit as the minimum fee this should not be considered your walk away point! For some roles your walk away point is likely to be higher due to the difficulty in finding those skills in the market. Without a walk away point you can end up giving away too much and only recognise it in hind sight.

2. Focus on mutual benefit rather than seeing it as a confrontation

Some recruiters approach their negotiations as if it is either combative or confrontational. Working in partnership with your client is more comfortable for all and ensures both parties are happy.

Establish a common goal for you and the client. For a recruiter this is relatively easy to frame with the client as both parties should be focused on finding the right candidate. There will be multiple suppliers out there who could agree to 15% and never fill the job, as they cannot find the right person. Finding the right candidate has to be the shared goal of both parties.

A good question to ask the client is:
“What is more important to you, finding the right candidate or the level of fee you pay?”

3. Know your trading variables

Trading variables (sometimes referred to as bargaining chips) are commodities that we identify we can offer a buyer or request from a buyer during a negotiation. Money is an obvious trading variable and is often the most commonly traded – this does not necessarily mean it is the most attractive.

What do you offer that would be high value to a client but of little cost to you (financial or time)?

What could a client give you which is of little cost to them (financial or time) that would be high value to you?

10 Techniques to Keep Control

1. Use silence

Saying nothing can be as powerful as saying something, provided it is used at the right time and in the right way. Most people are quickly embarrassed by silence. It usually requires a conscious effort to maintain one, but can be very useful.

A silence can imply certainty on your part (and prompt uncertainty in the other person). Thus, having made a clear suggestion - ‘So what do you think?’ - wait. (Do not allow the pause to push you into diluting what you have just said.)

2. Summarise

Frequently Negotiations can be complex. They involve juggling a number of variables. It is easy to lose the thread, so never be afraid to summarise. For example, summarise where you have got so far or recap where you left one aspect of the discussion.

Linking this to using ‘suppose’ or ‘if’ keeps the conversation organised and allows you to explore possibilities without committing yourself. (‘Right, we have agreed that we need to resolve cost, delivery and timing, now if ...... then ....’)

3. Take notes

Keep track of complex negotiations throughout their course. While the formality of certain meetings is inappropriate for note-taking, you must keep track. Remember, information is power. Never leave yourself groping (‘What did we say about so and so?’)

Not only will taking notes prevent you being caught out on something that you cannot remember, but making them or checking them can have another advantage. It gives you time to think: either as you say ‘Let me make a note of that’ (and obviously do so) or when you say ‘Let me check what we agreed about that’ - remember our values? Accountability mean you take ownership of tracking conversations. At every step of the way - LOG IT ON YOUR DATABASE. If it isn’t on the system, it didn’t happen.

The brain works a lot faster than the pen. It is sometimes surprising just how much thought you can bring to bear as you write down two or three (sometimes irrelevant) words on your pad.

4. Promote a good feeling

Negotiation tends to build up agreement progressively. As you proceed, make sure you emphasise that each stage is good, preferably for both parties but particularly for the other person.

Phrases like ‘That’s a good arrangement’, ‘This will work well’, ‘That’s fair’, ‘That’s a good suggestion, let’s do it that way’, help the agreement build.

5. Read between the lines

Remember, negotiation is essentially an adversarial process. Both parties want the best for themselves, and the only signs of approaching traps (or success) come via the other person. Particularly watch for danger phrases: those that often mean something other than what they seem, or mean the opposite of what they say. For example:

  • ‘You’re a reasonable fellow’ (Meaning ‘I am’)
  • ‘That’s much fairer to us both’ (Meaning ‘Especially to me’)
  • ‘It looks like we are almost there’ (Meaning ‘There is something else I want’)
  • ‘Now, we only need to clear up a couple of minor details’ (Minor? For whom?)
  • ‘That’s everything’ (Followed by ‘..... except for one most thing .....’)
  • ‘Subject to contract’ (Meaning ‘I will haggle on these terms’)

6. Maintain neutrality

Maintain neutrality as much, and for as long, as possible. Negotiation works best as a balancing exercise. If one party throws the whole basis of discussion up in the air - ‘It is not as good as the other deal I am considering’ - this can take things back to square one.

Keep the whole process focused on negotiating arrangements, rather than questioning whether there is a deal to be done. If it is necessary to go back to the offer itself, so be it; but that is persuasive communication. Negotiation must concentrate on terms and conditions.

7. Keep thinking

Keep thinking - and build in time to think. The power of silence has already been mentioned: use it to think ahead. Use note-taking in the same way.

Use any delaying tactic - working something out on a calculator or making a telephone call - but do not let your mouth get ahead of your brain.

Of course, if you can encourage the other person to do just that, so much the better.

8. Hold your fire

Try not to make an offer, certainly not a final offer, until everything that needs negotiating is out on the table.

This may need no more than a question like, ‘Yes, I am sure I can help there; now, is there anything else that you want to consider?’. If necessary, ask more questions and keep pursuing the point.

Never use “I need to talk to my manager” as it devalues your role in the negotiation.

9. Don’t get hung up on time

There is an old saying that there has not been a deadline in history that wasn’t negotiable.

Too often vendors (recruiters included) rush negotiations “to get it out of the way”. The buyer may also try to push you to make rash decisions. Take your time to evaluate your options and to present a considered and professional approach.

10. Remember: Constraints & variables are interchangeable

Almost anything the other side presents as fixed can be made into a variable. Fixed is as likely to mean not wanting to negotiate as not able to be negotiated.

Negotiation Styles Questionnaire

The purpose of this self-assessment is to help you examine your personal negotiating style.

Negotiation – a process by which two parties communicate with each other in order to reach an outcome on which they mutually agree.

Directions

  1. Answer all questions to the best of your ability. There are no right or wrong answers. Don’t try to think of the “correct” or most “desirable” response, but simply respond with your honest reactions.
  2. Respond by putting a check-mark or X in one column per question or statement.
  3. Proceed to the first section where you will find a number of questions that ask you to consider how likely or unlikely you are to behave in a certain way when you are negotiating.
  4. In the second section you are required to rate your level of agreement with a number of statements.
  5. Finally, you will find the scoring key and interpretation guide.

Download a print friendly version of the full guide which contains the Negotiation Styles Questionnaire

Download print-friendly PDF of the full guide containing the Negotiation Styles Questionnaire