Barry Elms

If you make a collection call with compromise high on your agenda, chances are that you will compromise far too soon and end up conceding far too much. Negotiation is a process that leads to agreement; compromise is simply a tool that can be used to smooth the way. When you enter a negotiation, keep these five negotiation positions clearly in mind: Logic, power, and emotion are the primary positions; trade and compromise are the secondary ones.

Primary Positions: Make Your Stand Here

• Logic: State the merits of your case, emphasizing the sound reasons why you should be paid.
• Power: Make the other party aware of your ability to invoke penalties or rewards.
• Emotion: Introduce the human element. Goodwill and personal feelings affect the outcome of the deal.

Secondary Positions: If Necessary, Fall Back Here

• Trade: When you bargain with the other party, sometimes you will need to offer them something in return for meeting your requirements.
• Compromise: Sometimes, one or the other, or both of you, must sacrifice something in order to come together. Example: Splitting the difference.

Exploit the Primary Position
Those who gain the most in negotiations spend most of their time arguing from a primary position, leaving it up to the other party to adopt a secondary position of trade or compromise. Quickly offering trades and compromises as soon as his position is questioned is the mark of the unskilled negotiator. As soon as the customer asks for more time to pay less, the unskilled and overanxious negotiator offers a trade or a compromise.

Let's listen in while a credit manager makes a collection call and skillfully uses the primary positions to negotiate a best result.

Credit Manager: Hi, John. I'm calling to ask you about that past due invoice for $25,000. Did you get our letters about it? (Logic)

Customer: Yes, I got the letters, but we're having some cash flow problems.

Credit Manager: I understand that, but we must come to an agreement now. I'm sure that you want to preserve the good relationship that we've developed over the years. (Emotion)

Customer: Well, I don't think I'll be able to pay you much now.

Credit Manager: Based on your cash flow, what can you do now? (Logic)

Customer: How about $5,000 in two weeks and the balance in six weeks? (Compromise)

Credit Manager: No. That's not acceptable. You're already 45 days behind on this. We'll need $5,000 today and the entire balance within 30 days. After all, I'm sure that you'll be needing our product soon. (Power)

Customer: Well, how about if I pay the entire balance in 40 days. (Compromise)

Credit Manager: We could live with that, but we can't wait that long for full payment. We need at least weekly payments. Let's do $7,000 today and $3,000 a week for the next six weeks. Can you mail the first check today? (Compromise)

Customer: OK, I think we can do that.

Credit Manager: I'm counting on it. I'll fax you an agreement so that we can memorialize our agreement. I understand your difficulties, and I want to work with you just as we've done for all of these years. (Emotion)

Here, the credit manager used each position to move the customer closer to his requirements. Remember, most customers also can negotiate from primary positions. The customer could clearly state, "Look, this is all I can pay now. Case closed."

But, the case isn't closed: He's simply negotiating by assuming the power position. Now, it's your move. You can accept his offer or revisit one or more of your previous primary positions, based on your analysis of his position.

• Logic: Show him that his argument is unreasonable or without merit.
• Power: Detail for him the consequences he will face if he refuses to reconsider.
• Emotion: Explain how he is being unfair, or argue that he should reconsider for the sake of the relationship. If necessary, you can assume a secondary position.
• Trade: Offer him something if he reconsiders.
• Compromise: Split the difference.

If you practice this process of negotiation, you will always achieve the best possible outcome. That's a big improvement over leaving yet another negotiation wondering what happened.

Barry J. Elms is President of Strategic Negotiations International, Newburyport, Massachusetts. Telephone 617-899-7746. snideals@aol.com