Is that your final offer?

Feb 1, 2004 12:00 PM, by M. Richard Vinocur

I am a huge fan of the Seinfeld series that appeared on NBC for nine years. Some of my favorite episodes center on the continuing saga of characters Jerry and George trying to pitch a TV show about nothing to NBC. After considerable negotiation, NBC offers $15,000 for the pilot. Expecting somewhere in the neighborhood of $50,000 or more, George declines the offer. But NBC takes the offer off the table, and Jerry chastises him for the bluff.

George later visits the president of NBC to renegotiate. When he's told that the network has bid on another pilot, he says, “We'll take $13,000.”

He finally closes the deal at $8,000.

In the past 25 years, I've written about virtually every topic that pertains to managing a printing company, but for some reason I've never mentioned how important negotiation skills are in running a successful organization. Consider that a manager negotiates constantly: with customers, employees, vendors and, possibly, a potential acquirer.

Benefits of negotiation

In many parts of the globe, negotiation is standard. In Egypt, street vendors never take no for an answer. They lower the price until the buyer says “yes.” Once, in Mexico, a friend and I came across a jewelry vendor who was working the tourists. The vendor had a locket on display for $200. As my friend pulled out his money, I stopped him. “You're paying too much,” I said. “Let's leave.” We walked away, and the vendor followed. My friend ended up paying $60.

Another example of the benefits of negotiation occurred during the economic boom of the late 1990s. A different friend of mine, who owned a small publishing company, got a surprise call from a publicly owned firm looking to grow by acquisition. My friend hadn't thought about selling but was intrigued. After a discussion with his accountant and his lawyer, he met with the acquiring company executives. Even though the initial offer was more than he expected his company to be worth, my friend added 10 percent to the bid. The acquirers agreed to the higher figure, and my friend netted an additional $500,000.

The art of poker playing

Evidently, negotiation is becoming more of an issue. A recent Wall Street Journal article, “Women Fall Behind When They Don't Hone Negotiation Skills,” noted: “Women often are less adroit at winning better salaries, assignments and jobs — either because they don't ask or because they cave in when they do.”

The article also suggested that not negotiating or bungling a single negotiation can be costly. For example, a 22-year-old woman who fails to boost her first job offer of $25,000 by $5,000 stands to lose more than $568,000 by age 60, according to Linda Babcock, a Carnegie-Mellon University economics professor.

I've always felt that negotiation skills were similar to the skills required for poker. You have to read your opponents, to stare them down and look for “tells,” movements that suggest an opponent's psychological and emotional mood. Just as a good poker player uses psychology, philosophy and general knowledge to make an informed decision, so, too, must a good negotiator.

Bartering is good for business

In a slightly different vein, I recently read an article that discussed how small businesses barter to augment cash flow. Perhaps a printer might examine the possibility of bartering for healthcare services, which are in high demand as small-business owners struggle with the rising price of health plans for their employees. Healthcare providers need promotional printing. It's an exchange that benefits both parties.

The article on bartering noted that hair stylists, even dentists, have traded services for other services for which they normally would have paid. An individual was quoted as observing, “There was a time when people thought barter meant your business was in bad shape. Now a lot of people are saying their business is doing good, but they say, ‘I can get 10 percent more business through bartering.’”

There is even a retail trade exchange in Connecticut, Barter Business Unlimited, which hosts an expo every year for its members to show off their services and merchandise for barter. You should know, however, that barter income is treated like cash, and trade exchanges are legally required to report each client's barter income to the Internal Revenue Service. That is probably the one organization that may frown upon a good negotiator.

M. Richard Vinocur is president of Footprint Communications. Contact him at mrvinocur@aol.com.