Before any negotiation, you should ask yourself what you want to achieve: more turnover, more profit, more return on investment, or a higher salary. Achieving all your objectives would be the optimal outcome – in a difficult negotiation this will be near impossible. The opposite party will use counter moves, put you under pressure und show you limits to what is possible. That leads us to a much more important question: what is your minimum position and when will you break off negotiations? And what are your criteria to evaluate a break off in negotiations? In the worst case, fear will take over: the fear to lose your supplier, your client or the deal. The opposite side will try their best to influence your perception of the situation – this is why a clear objective is so fundamentally important for any negotiation.
Defining the objective for a negotiation is not always straightforward because there are numerous potential outcomes. Often, these are mutually exclusive. There are a few general tips though: your objective must be positive and future-oriented. Negative objectives and a focus on the past should be avoided at all cost.
Examples of positive, future-oriented objectives:
• 3% increase in turnover with client A by the end of this year.
• Outsourcing 40% of production of supplier A to low cost countries within the next three years.
• Increasing net profit by 5% within the next 2 years.
Examples of negative, backwards objectives:
• Avoid decrease in turnover
• Avoid escalation
• Things need to stay the way they are
It is important not to communicate your objectives to the other side before negotiations kick off. Defining your objectives is part of your preparation, not the other side’s preparation.
More often than not, you cannot achieve all objectives at the same time. Some might even be mutually exclusive. That is why we work with a target range rather than precise targets.
Avoid formulating a precise goal – this will limit you in negotiations later on. Formulate a maximum goal (your optimal outcome – 10) and a minimum goal (acceptable outcome, 1) that has to be reached in order to make a deal. If that cannot be reached, break off negotiations.
Important: if you lead a negotiating team, the minimum/maximum objectives for the negotiation have to be agreed in writing
It is also important to define intermediate targets.
Example: in the bull’s eye, you could put «I only stay in this job if I get a 10% salary increase”. Your minimum target (ring number 1) could be «I want a 2% salary increase or else I resign». An intermediate target could be “I want a 5% salary increase, be it in the form of a higher salary, a company car or other financial benefits such as insurance”.
Intermediate targets are important as they move your focus away from the maximum target an give you room to manoeuvre. You must be absolutely certain about your minimum target: in this example, you would have to resign if they only offer you a 2% salary increase. Otherwise, your minimum objective would be “I stay even if they offer nothing”:
Use SMART criteria for defining your objectives:
Be as specific as possible about what you want to achieve.
Your objectives have to be measurable. What exactly needs to be realised so this objective counts as achieved?
Be brutally honest with yourself – are you ready to live with the consequences of this negotiation? What will your team, your boss or your family say? Only start negotiating if you can live with the consequences.
Judging if your objective is realistic is one of the most difficult questions. Most people look back to make a judgement – what has worked in the past, what have others done in the past? We recommend looking ahead instead: how is the market developing, how will salaries develop over the next five years?
Objectives and milestones should always be linked to a deadline. A detailed readmap or timeline will show what needs to be achieved by when.
When you have determined your objectives, put them into a timeline. You will sttruggle to achieve everything at once so a stepwise approach linked to a timeline will allow you to proced in an organized way.