Negotiations happen all the time in the business world, and it’s important to know how to do it both properly and effectively. Being charismatic only get’s you so far. One of the biggest mistakes I see people make, younger people in particular, is when entering a negotiation they either don’t have a plan-B at all or they do not implement it properly.
For those who don’t know, when talking about negotiations, a plan-B is the lowest offer you are willing to accept before walking away from the table. Negotiations can take many different forms and they aren’t always formal, but without exception, it is absolutely critical you have a plan-B. When you really think about it, it becomes pretty evident why that’s the case.
Say hypothetically I currently make $60,000 a year but the median salary for my position in my city is $70,000, so I decide that I am going to ask for a raise. I schedule a meeting with my manager, go into the meeting, ask for the raise, and the manager flat out says no. It happens all the time. So what do I do? That’s why it’s so important to have a plan-B, because if I don’t have one there isn’t anything I can do. If I enter a negotiation and don’t have the option to say no and walk away, then I have no power in the conversation. With out the leverage of being able to turn down the offer it isn’t even a negotiation, I’m just asking for something. Alternatively, when I have a plan-B the conversation has the potential to go very differently because now suddenly I have a point in which I am willing to walk away.
However, with the added power in the conversation comes added risk. Take the same hypothetical situation and my plan-B is that I will quit. If I tell my manager, after he says no, that if I don’t receive the raise I will be forced to leave the company. I have to legitimately be prepared to leave. A plan-B isn’t a strong-arm tactic, which is how it can often be treated. A plan-B is solely a pre-defined course of action I will take if the minimum offer I am willing to accept is not met. This is where proper implementation becomes important, and why preparation is a negotiators best friend.
Keeping along the same lines, say I prepare for my meeting several months in advance. I apply to a a few jobs and end up getting an offer for $72,000 and decide I really like my company and would settle for an $7,000 raise instead of $10,000. Now when I go into the meeting, propose what I want, and my manager says no, I can approach it as someone who has legitimate negotiating power. I then explain that I received an offer from company X for $72,000 but since I value my position here would be willing to so settle for $67,000. The manager may still say no, but the ball is now in his court and I am comfortable because I already established that if those terms aren’t met I am willing to take the other position.
This is why I need an explicit, well defined plan-B. Without it I have no power and the negotiation can’t even take place. I am setting myself up for failure or to be taken advantage of. But with it, I not only am able to approach the situation more comfortably, making me more likely to get what I want, but I garner respect while I do so. Negotiation is all about mutual benefit and respecting the other party, and by preparing and clearly defining my goals and bottom line I show that. If I go in competent and prepared, with solid plan-B, no matter the outcome I will be successful.