Why good negotiation skills are key to successful contracting

To gain a competitive edge over others when bidding for a new contract role, it is often your non-technical skills that will determine your success. Here, Simon Bichara explains why the art of negotiation is so important.

Wanted. C# engineer. Must have ten years solid transaction processing experience. Oh… and great sales skills”

I’ve never seen that in a job description before. And I’m sure you haven’t either. Yet sales skills are part of the skillset that separates contractors from permanent employees; and successful contractors from also-rans.

Contracting industry more competitive than ever

Contractors today operate in a complex market. They sell their skills directly to end clients; via recruitment agents; through third-party consultancies; on a full- or part-time basis; by the day or by the outcome. Today, more than ever, contractors are aware that they are independent small businesses operating in what can be a difficult environment.

And like any small business, a contractor needs to separate what they sell (the product) from how they sell it (the business skills). Typically for a contractor, the “what” will be the years of experience in programming / project management / accounting / copywriting, etc.  And this is the part that most find easy. Contractors are typically highly skilled in their core competencies, and once into a role delivering to client expectations can be the easy part.

Why negotiation skills are important to contractors

But “how” can be more challenging. Unless you are a sales and marketing contractor, how do you gain the sales and marketing skills to go out and sell yourself? Unless you’re a procurement contractor, how do you gain the negotiating skills needed to secure the best deal?

Some of these skills you can, of course, buy in. Most contractors use an accountant to run their books – buying in accounting and tax skills. But arguably the two key areas of selling yourself and negotiating contracts require new skills that are core to a contractor’s role. And these skills need to be acquired.

In this article, I’m going to take a quick look at negotiation skills. There are a lot of resources on the web which will help you get better at this (you can find my own more detailed thoughts here), but you can summarise the advice pretty easily: the key to a great negotiation is preparation. Forget the Hollywood style trickery of “Wall Street” or “Suits” – good negotiations aren’t about how you behave in the meeting, they’re about the work you do in advance.

To be successful, you need to follow these three steps:

• Do your research.
• Figure out your BATNA.
• Go and talk nicely.

Research / Market Positioning

Doing your research means not only understanding what you want from the other party but what they want from you. What motivates them? What do they want that you can provide better, or more cheaply than they can get elsewhere? What’s likely to be a good deal for them? If you understand your partner before you start you’ll always get a better deal.

You also need to understand your market positioning properly. This can be almost fun when you’re out looking for roles in a rising market, and each time you check yourself vs your peers you’re able to award yourself a pay rise.

But it can equally tough when, for example, your client is asking you to take a rate cut because the market has turned and they feel they can acquire your skills more cheaply. It’s particularly important in this case to be unemotional – you are a product, and the price of the product can go both up and down with no reflection on your competence or skills. Either way, you need a dispassionate view of the truth of the market before you start.

Your BATNA

Figuring out your BATNA (best alternative to a negotiated agreement) means being certain what you’ll do if you can’t get to an agreement. This makes you much stronger. For example – if you’re negotiating on contract renewal and you’ve not considered what you’ll do if you don’t get it you’ll be uncertain and weak- and more likely to accept a poor offer. You don’t have to have an alternative offer in hand – even deciding to take some time off will make you psychologically stronger.

Finding the right tone

Talking nicely means not approaching negotiation in an aggressive or confrontational way. Whether or not you get to an agreement, you want your negotiation partner to want to work with you. That way when the situation comes up again (and it will, it’s a small world) they will look forward with pleasure, not dread it.