Negotiations can be challenging to navigate in any business. Whether it’s real estate, M&As, or employment, negotiations help parties reach mutually beneficial terms.
However, the crux of successful negotiations hinges on the parties engaging in open communication while seeking to reach mutually beneficial terms.
Some negotiations are not negotiations at all, but simply a clarification of terms, while others are a series of discussions and presentations of new terms to the original offer, otherwise referred to as counteroffers.
Counteroffers are challenging to navigate during the negotiation process because of the delicate balancing act – you want to be firm, but not so inflexible that the other side perceives you as unyielding and unreasonable.
Demonstrating your interest in reaching an agreement while not coming across as overly eager to compromise requires tact and thoughtful communication skills.
Importantly, you must be mindful that the goal of engaging in a negotiation is to obtain a positive outcome for yourself, not to take advantage of the other party.
Counteroffers are a tool to aid two parties come to a mutual agreement. They are not a guarantee of terms or conditions, and they are not to be abused or used for manipulation.
In fact, if two parties are in the negotiation process and many counteroffers have gone back and forth, it is a clue that the parties failed to perform extensive due diligence to gain an understanding of the needs and interests of the other party prior to reaching their original terms of offer.
If the fundamental objective of one party has not been satisfied with the initial proposed terms, offering new terms via a counteroffer may be appropriate. However, to engage in a back and forth negotiation without carefully considered terms may prove to be an ineffective use of time and resources for all involved.
That’s why Katalyst Group takes consideration and care in pairing employers with high-performance potential team members. Our team makes sure to perform quality due diligence on the organizations and talented prospects they represent to ensure that any negotiations and counteroffers are minimal – if any are needed at all.
In the event that you find yourself in negotiations where you feel the need to make a counteroffer – here are the nine tips on what to avoid when negotiating and making counteroffers.
What to Avoid When Making a Counteroffer During Negotiations:
1. Making an Excessive Counteroffer
One of the most common negotiating mistakes is “shooting for the moon,” asking for terms that are clearly in excess of what the other party is willing or able to provide. This can backfire in two ways. First, it may cause the other side to become irritated, especially if they perceive your offer as being unreasonable or out of line. Second, it could lead the other party to terminate negotiations with the belief that there is no way to bridge the gap.
The best way to avoid this mistake is to do your homework before making a counteroffer. Know the needs and interests of what the other side is looking for and what they are likely to expect in return. This way, you can make an offer that is fair and reasonable.
Items to have clarity on before making a counteroffer include:
- What are the other party’s objectives?
- What are their bottom line requirements?
- What are you and they willing to compromise on?
- What is their likely reaction to your offer?
- If the terms of your counteroffer are not accepted are you prepared to accept the original terms?
2. Making an Emotional Counteroffer
When negotiating, it is important to remain calm and level-headed. This can be difficult even for the most experienced of negotiators. Allowing emotions to lead while negotiating may add to the difficulty of reaching an agreement.
Developing keen emotional intelligence skills, keeping your emotions in check, and focusing on making a rational, well-reasoned offer are key to negotiating.
3. Making an Ultimatum
An ultimatum or demand that is unreasonable or inflexible may inspire the other party to reject it outright and terminate the negotiation.
While it may be tempting to make an ultimatum in order to get what you want or to get closure on the negotiation, it rarely leads to the desired outcomes both parties seek. Why? Ultimatums are often perceived as confrontational and hostile, which may damage your relationship with the other party and make it more difficult to reach an agreement.
To overcome this problem, it is best to avoid making ultimatums altogether. If you feel that you must make a demand, frame it in a way that conveys the value the other party will receive in exchange for accepting your terms (and that the value exceeds the terms to which they are agreeing to).
4. Making an Impulsive Counteroffer
When you are under pressure, it can be tempting to make a snap decision on terms that are acceptable to you.
To avoid this mistake, clearly communicate your timeline for providing a response to the terms of the initial offer. There is no fault in asking for time to contemplate an offer; however, you need to set an expectation from the start regarding your timeline for providing a response and stick to it.
5. Making an Unreasonable Counteroffer
It is important to remember that the other party also has objectives in a negotiation, with specific goals and needs, and is likely to be just as committed to achieving them as you are.
Be reasonable when making a counteroffer, and take into account the objectives of both parties. Seek terms that are reasonable and justified – and remember that policies exist within companies that apply to their entire workforce which, often, cannot be changed to accommodate the request of a specific individual.
6. Making a Counteroffer Without Understanding the Market
Know your market value. There are several online resources that are available without a subscription that will provide insight into market trends and conditions along with national averages that will inform your decision making process. It is necessary to remember that not all positions, organizations, and markets are identical so use the information you are able to gather as points of reference with the understanding that these are not hard and fast guidelines.
If you make a counteroffer without understanding the market, you may find yourself negotiating for terms that are not aligned with current market conditions. It is essential to invest time performing research into market conditions, as well as speaking with a specialist in the market/industry that may provide you with detailed insight into what is/not reasonable.
7. Making a Counteroffer Without Having a Walk-away Point
In any negotiation, it is important to have a walk-away point—a point at which you are no longer willing to negotiate and you are prepared to walk away from the opportunity. This is important because it gives you clarity as you are navigating through the negotiation process.
8. Making a Counteroffer Without Considering the Consequences
Having a walk-away point is important, but it is also necessary to consider the consequences of walking away from an opportunity. Having clarity on what inspired you to pursue the opportunity is a good starting point. In most cases, you will be leaving something behind when leaving one role/organization to embrace another.
The question begs, what do you seek to get out of a new role/employer, and is the consequence of passing up that opportunity because specific terms are not being met in an offer greater than the perceived gap in the terms they have offered you? In some cases, the consequences of walking away may be too great, and you may need to reconsider your position.
9. Taking No Action
It is also possible to make the mistake of not contemplating a counteroffer at all. If the work has been done up-front and throughout the interview process the terms of the offer may not require any further negotiation. However, it is a healthy exercise to fully contemplate the terms of the offer and evaluate whether it makes sense to request enhanced terms in the event that there are any perceived gaps when seeking a mutually beneficial agreement.
The goal of negotiating is to reach an agreement that is beneficial for both sides. So, even if the other side has made a fair offer, there is still value in fully considering the terms of the offer before formally accepting the terms as offered.
Negotiations require an offer to be extended, and in response a request to modify terms of the original offer in some way. This back-and-forth exchange does not need to be difficult or cause for anxiety. However, be mindful so as to avoid making a mistake that could jeopardize the entire negotiation process.
If you find yourself uneasy navigating through this process, rest assured, you are not alone. Katalyst Group helps organizations and individuals navigate this tricky process so that all parties involved have clarity and maintain effective communications with one another, ultimately leading to their combined success in reaching mutually beneficial agreements.
Katalyst Group has played an integral role in helping top talent communicate and negotiate their values, needs, and desires to prospective employers.
If you are in need of expert advice before exploring other career opportunities, contact Katalyst Group today. Our team of dedicated professionals is ready to help you.