Negotiation: Power in hands of both parties
By Hoang Nguyet Han _ S3183280
In any relationship, negotiation is to solve the problems or conflicts that make that relationship better. However, there is not anyone can negotiate and become a good negotiator, especially the people who are working as service providers like agencies in marketing and communications. I have a chance to study in Professional Communications and I can understand how marketing and communications agencies work on the negotiation to their clients. I found that it takes time to improve the negotiation skills and it’s really important to bring the WIN-WIN outcomes on the table of negotiation. I questioned if the other types of service providers are different from communications and what types of negotiation they have. Then it leads me to contact my friend, Mr. Blake Kirk who is working as a Senior Vice President of Beecher Carlson, Insurance and risk management brokerage. The company is based in Atlanta, Georgia, US, but Blake is working for San Francisco office.
With his 14 year experience in the insurance broker, I found Blake had a lot of things to share to me when I first contacted him and sent the topic about ‘Negotiation’. This also links to his real-world experience and his job, then he was so excited to discuss about it. Due to the fact that, he is not in Vietnam, I conducted the interview through Skype. Blake mentioned, “Insurance industry might be different from your major and industry; however, we also have the same purpose to maintain relationship and make clients happy.”
Why is negotiation important?
“If you can’t negotiate, you can’t do business”, Blake started the discussion. The nature of his job is the middle- man between the insurance buyers (the banks, health care organizations, corporations) and insurance sellers. He needs to keep both parties happy and he also has to play two different roles when he represents the insurance buyers to talk to the insurance companies to have a good price or represents the insurance companies work with the buyers. The fact is that the buyers are not always happy with that price. He states, “The key of successful negotiation is that everyone walks away feeling like they have the best deal and get the better price than the other.”
This reminded me to the lecture of Negotiation. There is not always pure ‘Win-Lose” or “Win-Win” propositions. Blake said “Although we called that “Win-Win” situation and try to reach that to make everyone happy, create the illusion of “Win-Win”. “Win-Win” implies as the even result and the feeling of each party is “Win-Lose” because the nature of human is to be the winner. Then the hard work of my business is to make them think that.
“The most important thing to make me success is to demonstrate the “Value” to both parties. I need to have the understanding of the clients’ business and the knowledge of insurance industry,” Blake emphasized.
When we want to have the deal in the negotiation, we need to know what we can bring to the table and that will make us succeed. I found that Blake is likely into the ‘Integrative bargaining’ type which is always to have a meeting with clients – willing participation, open discussion and the purpose of maintain the long-term relationship – relationship, try not to have a big fight or argument – Collaborative atmosphere.
He gave an example of negotiation between Health Care client and insurance company. They buy the insurance to protect their company against large health care clients and the insurance company always pays out a lot of money. “The principle of insurance is to guard against an unknown risk. It’s like when you buy the insurance for your house in case it’s burnt down. You cannot buy the insurance when it’s on fire. The key of insurance is also to spend the money to buy coverage may happen and you do not know when it will happen. The Health Care client always has claim and the insurance company has to write the policy and charge the premium above whatever the client‘s claim is. Each last year claim costs 600,000 USD, so the insurance company had to charge that amount of money plus more in case the client has more claims. The client can make money on the claims, but last two years they have just 10% of the total premium has been claimed. This year they do not want to pay more money while they don’t have any claim. I have to make the client understand they still have to pay for past since and all the money they claimed over the year. At the same time, I get to the insurance company to drop the number.”
Blake shares his strategies in this situation when the client and the insurance company try too hard in the negotiation, “I always have a back-up list of other insurance companies that I can also continue with the deal. I still focus on the one I’m working with, but if they do not perform for me, then I go to the back-up. However, if I just do that, I will upset the insurance company. The good thing to do is to make sure the insurance know beforehand that I am going to the back up, so they know what will happen if we cannot make the deal. I also give them every opportunity to have a fair deal. In every deal, I often have in mind a based price to deal with insurance company and know the price they might offer. I have one advice for you when you sit on the table of the negotiation, ‘don’t burn the bridge’ to any party that you cannot go back later.”
What skills are not in any book to teach us negotiation skill?
Blake gave 2 principles, “One is when you ask for the deal that you have in mind what you want, you just shut up, leave the silence after your offer and say no more and this is really difficult and awkward moment. Secondly, when they say YES, stop and you are done, thank you and goodbye. Most of people would be so excited after getting the YES of client and make the client rethink if they made the wrong decision. At that time, you might blow up your effort.”
After finished the discussion, I thought in order to get the experience and level of negotiation, I need so much time to practice and get stuck in tough situation. It’s true when everyone can negotiate, but not always be a good negotiator. Blake has such a great skill of negotiation and I’m glad to talk to him about this.
Proof of life through Skype
‘Negotiation’ 2012, course notes for COMM2384 Client Management, RMIT University, Vietnam, viewed 4 January 2013, Blackboard@RMIT.