Avoiding negotiation might feel safer, but it could be costing you more than you think. Linda Babcock explains why shifting the conversation from conflict to collaboration can create wins in real life.

If you’re interested in learning more, please visit: www.thenoclub.com

Linda Babcock is not affiliated with Hartford Funds.

Hi I’m John.

And I’m Julie.

We’re the hosts of the Hartford Fund’s Human-Centric Investing Podcast.

Every other week we’re talking with inspiring thought leaders to hear their best ideas for how you can transform your relationships with your clients.

Let’s go!

Linda, welcome to the Human Centric Investing podcast. We’re so excited to be here with you today.

I’m really happy to be here thanks.

So Linda, we’re gonna talk of the podcast today about one thing that I know I can’t stand, the topic of negotiating, like the thought of buying a car, asking for a raise, like I’m an avoider to be sure. And so I can wait because I’m waiting for you to instruct me on all the things I need to know to get my mindset right around this topic. But not only, I hope we can talk today both about mindset, but also about technique. So I guess with that as an intro, how should we be thinking about negotiation and maybe how are many people thinking about it the wrong way?

Yeah, well, you know, you raised what are kind of stereotypical negotiations, like buying a car. Everybody, when you think about negotiation, you think, oh my God, I have to buy a car, it’s such a terrible experience. And it is a terrible experienced buying a part because it’s a very atypical actual negotiation, even though that’s the first one people think of because it, you’re negotiating a one-time purchase with someone you don’t know all about price. It’s a super competitive situation and that can make people feel very uncomfortable. And car dealerships seem to have a real knack for dragging it out and making you feel uncomfortable. But the way to think about it is that negotiation is so much bigger. It’s the things that you do every single day and or maybe that you don’t do every single day that you ought to. It’s discussing something with a colleague. It’s...Talking about where you’re gonna go to dinner with your partner. It’s working something out on a team about who’s gonna do what. Those are all negotiations. And to really frame those as the opportunity to advance your interests, obviously, but also to help the other side reach a good outcome as well. And when you think about negotiation as that way, hopefully you feel a little better about it, right? That it’s a more cooperative endeavor. And something that doesn’t have to be full of a lot of stress.

I’m thinking of a financial professional maybe working with a client who is looking either to buy something or maybe they’re having trouble with a family member, you know, trying to figure out who will host a holiday or where the family is going to go on the family vacation that’s supposed to be filled with joy, but all of a sudden becomes incredibly stressful. How, how could the financial professional help their clients? Maybe go through this process a little bit more smoothly, and we can pick either example, depending on what you wanna walk people through, but I just think that that would probably be something where that’s additional value that could be added to that relationship.

Well, negotiation is a great way to manage conflicts because unresolved conflict is stressful, it harms our professional and personal relationships. And so using negotiation to actually dissolve the conflict and create agreements that all sides are happy with is a way that you can really increase value for your clients because it can reduce stress, it can improve financial resources, all of those kinds of things. And so, Fortunately, though, negotiation is not rocket science. A few easy steps to follow, though. And you can negotiate just about anything. So maybe we should walk through some of those steps.

That would be great.

Okay, we can pick an example about where the family’s gonna go on vacation. I’m sure you’ve all had this discussion and your families, I certainly do too. The first step is really to think about what you want. Not like I want to go to Puerto Rico, but what is it about that place that would be useful for me? I can go to the beach, we could have good food. And so to be thinking about what are the things that would make me happy on a vacation. Now that’s important to do. Because the option I say I want, say Puerto Rico, may not be good for someone in my family, and yet we could find another option that would still satisfy my interests, the things that are really important to me, going to the beach, having good restaurants. Okay, so to really think carefully about what are the things that motivate me and what I want. That’s really the first step. The second step is to gather some information. And this can be, the case if you’re by your car, obviously you gather information. But if you are planning a vacation, what are exploring options? What are some of the things that would satisfy my interests? Talking to people in your family, what of the things that really motivate and interest them? So gathering that information. You have to have that because that’s a key building block of any negotiation is having information. The third thing would be to assess what I call negotiation parameters. And any good negotiation book you pick up is going to have. A list of these terms, like your alternative to a negotiated agreement, what your goal is, and so to really think carefully about the things you want and need in order to have a successful negotiation. The fourth step is to establish a cooperative mindset. So go into the negotiation, not this is going to be a battle and a war and I’m going to fight and win, but we’re going to have a discussion about this. How can we all make a good choice that’ll work for us as a family. And so thinking about how am I going to encourage that dialog, right, that cooperative dialog. And so you don’t want to do something like say, well, here’s where I want to go. That’s very competitive. It’s setting out your position and set open it to have a discussion. What are people wanting to do? What kind of timing works for people? And so to have that cooperative mindset and communicate, this is a discussion not about. And then the last step is to really plan a strategy. So it’s really important to start off a negotiation on a positive foot. And so what I like to tell people is to develop an opening script, okay? And think about it as a movie script, your role. Here’s what I’m going to say in this first scene of this dialog. And you don’t have to deliver it exactly as you’ve written it, but be very thoughtful about. What are the things I’m trying to communicate? I’m tying to communicate openness, dialog, willingness to figure out a solution that works well for everybody and have that script really open up this discussion in a way that’s really positive. And I know I ran through those very fast, but literally those five steps can be used to negotiate the purchase of a car. Or to create a peace agreement between two countries having conflict. They’re all kind of the same in terms of the steps you need to follow to have an effective negotiation.

So Linda, when I go into a negotiation, should I be mindful of the fact that everything I want probably isn’t going to happen? Is that how we get away from the I win, you lose type of mentality? What should my mindset be entering that first step?

Yeah, I think the first thing is to really think about it is negotiation is not necessarily a win-lose situation. There are a few situations that are that way, like buying a car, okay? The higher the price, the better for the dealer, the worse for me, there is no win-win, okay. But think about the family vacation example. There are clearly some outcomes that would be terrible for everybody, right? And other outcomes that would better for all parties than some other outcome. And so Just because I’m doing a little better, doesn’t mean someone else necessarily does worse. And so if you’re open to that possibility, it can get you thinking about negotiation in a really different way.

It’s interesting, Linda, as you went through those five steps, how much preparation is involved? I think that’s surprising to me. I could see the car example because maybe we’re researching, you know, numbers and how many cars are out there at other dealerships and, you know some of those facts and figures, but even from more of the human centric examples, it just, it was interesting to me how much research preparation thought goes into not only why do I want that and maybe you know putting some details down but then also maybe how will my other family members potentially react that’s just that’s such an interesting concept to me um the amount of research that goes into it is that surprising to people typically when they learn more about this?

I think it is because people think about what determines how I do in negotiation is what happens in the room, you know, the family dinner table or wherever it is. And really how well you do in a negotiation is determined by everything you do before you even open your mouth. It’s all the thinking and planning and practice that you do ahead of time. To really make sure that your interests are well-served and that the negotiation is a productive and positive one, right, because if you’re negotiating, say, at a family vacation, at the end of the negotiation, you’re spending the rest of your life with these people. Right, it is not something that you want to have this negotiation affect badly these ongoing relationships. And so it is important to have some thought and care into how I prepare. And I do think most people are surprised at. What needs to be done. Now, it doesn’t mean it takes a long time, but it does mean some steps and go through and doing some thinking. And the great thing about negotiation is you get a lot better at it the more that you do it. And so these steps become very natural, just part of the process, and they tend to not be so cognitively taxing the more you negotiate.

Linda, you mentioned some of the tools or the terminology of negotiating and the one you mentioned was a best alternative to a negotiated agreement. Can you, for those of us that aren’t well-steeped in negotiation skills, can you talk to our audience about what that is and why it’s so important in the negotiation process?

Absolutely, we call it our BATNA, the best alternative to a negotiated agreement. Think about it as your plan B. And your BATNA is what you can do on your own without the agreement of the other side. And it’s the major source, one major source of your bargaining power in a negotiation. Because if you don’t need an agreement, you can walk away, the better the agreement will be in order for you to accept it. Okay, and so think carefully, what would I do on my own? Without the agreement of the other side. What can I do? And so, in an example, if you’re buying a car, it would be deciding to keep your old car. If that is a perfectly good option, then I’m not gonna feel pressured into getting a car right now. Or maybe I won’t have a car. I’ll take Uber or Lyft. The better that is, the more, again, I won’t be pressured into buying a car. If you think about it in terms of the family vacation, Maybe the BATNA is not so good here. It’s that we don’t go anywhere if we don’t agree what we’re gonna do. And so everyone then has the incentive to come to the table because everybody wants a deal. But that’s clearly one of the most important things you can do. And it gives you a lot of confidence going into the negotiation because you know that you are not going to accept anything that’s worse than your BATNAS. It has to be better or else you’ll go with your BATNA. So it can give you that confidence. To really push through in a negotiation.

Which makes sense to me versus going into negotiations saying, man, if we don’t get this done, I don’t know what I’m going to do, right? Then I’m panicked. But if I can be confident that I can handle it, right, and I’m confident that even if it doesn’t work, I’ve got something else I can do, I think that has to be empowering to many.

Absolutely right, it can make you feel like you’re not pressured to do a deal. That feeling of this is going to be a disaster if I don’t is very hard. And so, you know, thinking carefully about what your BATNA is and also taking steps to improve it. What can I do that can make me more confident going into that negotiation that I can actually have a better BATNA than I thought I had.

Or otherwise describe, put myself in a better position when I come back to this.

How do you defuse someone that’s becoming emotional? So say you’ve prepared yourself, you have your research, you have you’re Batna, all of your facts and figures and you’re having an even-keeled, calm, rational conversation. You’re trying to, right? We’re trying too. And say the person on the other side is taking it as either a personal attack or because they maybe don’t have their research and facts and figure. It’s escalating and you can feel it. Are there ways that you can try to draw actual information out of them during the conversation as you feel it, maybe starting the emotions starting to rise?

Yeah, it’s a great question because, of course, we’re not negotiating with robots. We’re negotiating with people who have inconvenient things like emotions, and it can be a very difficult situation, especially because emotions are contagious. Now this can be for positive emotions as well as for negative emotions, so if someone starts to get defensive or upset, it can actually cause that reaction in me also, and then the conflict can really escalate. And so you won’t be surprised at this, but it goes back to being prepared and thinking ahead of time, you know, what are the ways in which, okay, I know the person I’m negotiating. What are the way in which this could go off the rails? How could they take this the wrong way? Okay, if they do that, what could I say to turn it around? And so, you can’t anticipate every single thing that’s gonna happen in negotiation, but sometimes you can suspect about how. How things might go badly. And you can actively think about ways to deescalate that conflict so that you’re not scrambling in the minutes, trying to control your own emotions, trying to manage the other side, you sort of have an idea. You know, you could think about something like, I can see that this is really upset you, that it was not my intention. I really value our friendship and relationship. Please don’t. If you were upset by this, I’m really sorry. You know, just the things that you can have prepared, not so that it sounds sterile, but so that you work to deescalate that conflict. Because the last thing you want is that these things kind of escalate and then get out of control and then you can’t focus on the negotiation. You’re just, you’re focused on a fight then and it’s kind of too late. The preparation can really help you to be ready anticipating that.

Are there questions that you could ask as you go through that, like, why is that, why is Hawaii so important to you or how does Hawaii make you feel or what are the key aspects of Hawaii that make you so excited about that being the destination? I mean, is that helpful if you’re trying to sort of peel back the layers and maybe at least get them to express the why behind maybe their resistance?

Absolutely, because it’s possible they haven’t done as much preparation as you have. They have a reflexive thing about, oh, I want to go to Hawaii. Maybe not with a clear understanding there could be options that could be just as good as that for them. And so asking about that, absolutely, one of your best negotiation strategies you have in your toolkit is to ask a good question, like, can you help me understand why this is a great option? Can you help me understand why the option I mentioned doesn’t work? I really like to hear what your concerns are about this. I want to find a way to alleviate those concerns. And so getting them to think then more creatively, analytically, less emotionally, can really help the negotiation get back on track.

Linda, one of the parts of preparation you talked about was the opening statement. And I think sometimes we can do all our research, we’ve got our BATNA and we’re feeling really good. Do you have any suggestions on crafting an opening statement? Like, how would I think about constructing it if I’ve done all my homework? And what am I trying to do with that opening statement

you’re trying to do a couple of things. First of all, you want to establish what it is you want talk about, okay? So you have to start with something like, hey, I want to chat about our holiday plans. Topic, introduce the topic. Set a positive tone. I think there are lots of options we consider and I’m anxious to hear about everybody’s thoughts about this, right? That communicates not, I’m gonna lay down the law here and we’re gonna do it my way. But I wanna hear from everybody. I wanna talk about this and we’ll resolve it together. And so that’s setting that right mindset, okay. And then you might lay out an option saying, you know. I was thinking about going to Puerto Rico, but, because it has some things that I like, but I’d like to hear what people think about that and also discuss some other options as well. Again, you’ve laid out an option, but you’ve suggested that you’re open to it. And then, you know, make sure that you close communicating something about it being a dialog. Who wants to start first and chat about the things that they’re hoping to achieve on a vacation? Those are kind of the loose components for that type of negotiation.

And I think, Linda, often what we hear, like I know from clients that Julie and I have presented in front of and sometimes even the clients asking on behalf of their daughters or their sons saying, okay, let’s say I’m asking for a raise, for a job position. Does that negotiation differ or does it not differ in process, it’s just a matter of kind of how we construct things.

Yeah, the topic is different, obviously, but the basic components are the same, right? It’s a long-term relationship. There are several issues involved. It’s not just what your salary is gonna be, but your title, your responsibilities, how this is all going to work, what training you might get. You’ll have to, again, you’ll do some research by thinking about what the possibilities are for these. You’ll wanna have a dialog about it. It’s not. I’m gonna go and I’m going to demand a raise or I’m go to quit, right? It’s like, I’d like to talk about me advancing with this organization. It’s about that dialog. And again, it’s about an opening script. So the same building blocks, just in a different context and being really thoughtful about the fact that, again, this is an important long-term relationship. I want to use negotiation to... Not deteriorate, but maybe even improve my relationship with the other side, and that’s possible. And maybe that’ll make you feel a little bit better, John, about negotiating, you think? Yeah, for sure. Opportunity for me.

No, that’s the mindset we talked about, which, yeah, for sure, I agree.

Linda, is there ever a point where if the conversation is just going in circles, things aren’t being established, right? We’re not coming closer together. Maybe emotions are starting to run high. It’s just not a productive use of time. Is it okay at any point to say, let’s pause this for now. Let’s sleep on it. Maybe we could all come back with our list of what those key aspects of our vacation destination are and sort of share those or, you know, do some of our homework and come back together. Is that ever an okay interim resolution to just hit the pause button?

It’s always okay. Yeah, absolutely, and sometimes it’s appropriate to take a longer pause than others. For a negotiation that’s maybe relatively quick, but it’s going off the rails, you could even do something very short, like say, hey, I could really use a cup of coffee. Can you wanna take a quick break, and I’ll get you one too, and we can come back to this? Oh, wow, this discussion has given me a lot to think about. I need to go and wrap my head around this and can we regroup next week after we’ve had a chance to think? Totally okay and a really good thing to do if the conflict is escalating or perhaps the other side has thrown something at you that you weren’t prepared for, you haven’t thought about it and you wanna give it some time. And so that’s always a good idea. Make sure that you though leave. Negotiation not in a negative place and say you know I appreciate that we’ve had this conversation I’m looking forward to regrouping next week.

Well, Linda, this entire podcast episode, I’ve been working on researching some ideas and I’ve crafted an opening statement if you’re ready for it. Awesome. Linda, it has been a lovely time that we’ve spent together and I have learned so much, but I’d like to talk to you about kind of taking our conversation a different direction. Julie and I like to ask our guests what we call a lightning round of questions, just top of the mind questions to kind of have our audience get to know you a little bit better. Would that be something you’d be willing to discuss with us?

That sounds great. I think it’ll be fun. Let’s do it.

This is easy. I’m ready. I’ve got a new license for my negotiating life.

That was a great script, John. That was great. Yeah. I’m Ready.

Well, with that, I’ll ask Julie to ask our first question.

What’s your favorite season of the year and why?

Summer, because it’s hot. I love hot weather.

Are you a night owl or are you a morning person?

Neither. I’m a sleeper. I am really good in the middle of the day.

Good, good.

What’s your favorite quote or mantra in life?

Um, what is my favorite quota mantra? I guess you only live once would be how I’m thinking about things lately.

And my last question, in this age of digitization, do you use a paper to-do list or a digital to- do list or no to-do list at all?

Oh, it’s so embarrassing, a paper to-do list. I even have a paper calendar. My colleagues just laugh at me. But yeah, I’m old school.

I love that. What’s one thing people would be surprised to learn about you?

I guess that I’m actually an introvert. Most people think I’m kind of an extrovert, but I would say definitely an introvert.

Thank you so much, Linda, for joining us today to share your insights and expertise on negotiation. And for our audience, if you’re interested in learning more, please feel free to visit Linda’s website at thenoclub.com. You can also check out her other books called Women Don’t Ask and Ask For It. Again, Linda thank you so for all that you shared with us today.

Well this is great. Thanks for letting me to talk about my research.

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The views and opinions expressed herein are those of the guest, who is not affiliated with Hartford Funds.