Project management is all around us. We see it all the time, but it doesn’t necessarily register as project management. One of the most common elements of project management…. Or just plain old management… is negotiation. Very few of us have been formally trained in how to negotiate. We pick up some tips here and there, we learn from a mentor, but it always seems that some people are great negotiators and some…. are not. Yet, negotiation is a learn-able skill. If you doubt it, take a look at a popular reality show, “Pawn Stars.” The show is about three generations of a family run pawn shop in Las Vegas make their living buying and selling antiques and oddities. Each generation learned the trade on the job, and the latest generation is… well… still learning the trade and making mistakes. Each episode has two or three negotiations and (most of the time) a sale. This is the prefect series to see how negotiations work in the real world. Let’s dive in!
When you need to negotiate it’s because two or more parties on your team have a different opinion on whether something is worth doing (what it costs, the timing, priority of other projects, changing assumptions), and if it is worth doing just how high a priority it is (something lowered the project value, something raised the project value, something has made the project irrelevant, etc.). Essentially, the conflict that needs to be negotiated arises from a difference in perceived value. How did this difference arise and how do the parties resolve it? Let’s walk through how conflict arises and the stages of negotiation in a typical episode…
- Discovery: At the beginning of every episode, someone comes into the shop with… something. It could be treasure or it could be trash but almost always the owner isn’t quite sure what they have. Before there can be conflict, each side must first establish their position. If the owner found this in granny’s attic, they want to believe that this is a family treasure… even when evidence to the contrary builds up. We The same happens with project work. Some team members have flexible points of view or are simply not invested in any given view. Other team members are experts with well-defined points of view, have powerfully vested interests in the project outcome or have had intense experiences that define their view-point. You don’t yet know if there will be a conflict, but depending on the viewpoint, you begin to see hints of where the conflicts will arise.
- Information: When someone wants to pawn old coins or a car or a guitar, they know the history, the current market value and who they can sell the item to. Why? Because they deal with these items over and over again. PMO’s also have core project types that repeat and types that are “one-offs.” Projects that are rarely (or never before) seen are much more difficult to estimate and plan. And much more likely to lead to different opinions, and conflict. Just as on Pawn Stars, the skilled negotiator is quick to say, “I need to call in an expert.”
- Confirmation: When the expert arrives, the opinion may be that the item is worth a lot more or a lot less than expected. How everyone responds to this is always interesting. The seller hears the high-end value and tends to ignore “details” such as the cost of restoration, fees for certifying authenticity, and perhaps action fees. Buyers hear the low-end value, and they are thinking about how their sticker price will be negotiated down, how “hot” markets boom and bust, the cost of holding on to an item for months or years, or even “Sure, the collection is worth $10,000 but I would have to sell it as 500 individual lots, and that’s a lot of labor cost.” . Both sides now have the same information, but as they filter this information through their individual viewpoints they may be farther apart than when they started.
- Conflict: The first three steps were pre-conflict, that define the terms of the true conflict. On Pawn Stars, the conflict may be minor difference in estimating (I think this is worth $5,000 and you want $6,000), or fundamentally different viewpoints (I heard, “it’s a great piece of art,” you heard, “in a rapidly falling market”). Outside factors also influence negotiations (Granny TOLD me that it was real!). While every episode of Pawn Stars has a conflict, the show only provides a small window into all the deals that come into the pawn store. According to their own statistics, only 17% of potential sales are completed, leaving 83% of the conflicts unresolved.
- The Gap: Each side has taken their position. Is either side willing to move? Both sides need to talk out their positions, and explain why they’re taking that position. When the gap between positions is fairly wide, you will always see the Pawn Stars stop to acknowledge the other side’s position, even (ESPECIALLY!) when the other side is basing their position on points that are irrelevant to you. When you don’t do this, you can offend the other party and never come to an agreement. Watch for signs that the other party is powerfully influenced by outside factors. The same is true with project management. A team member, even a project sponsor, may have agreed to a project earlier on but is now having “buyers regret” for not thinking through all the implications.
- Small Wins: When the negotiation gap is too big, or you cannot directly address the conflict, you can instead offer small wins elsewhere. If an owner wants $1,000 but the price is too high, maybe they will accept $1,000 in-store credit or a direct trade (did they want the money to buy something?). By approaching the conflict indirectly you may be able to reach an agreement.
- Bottom Line: At some point negotiations have to end, and you need to make a final offer. Long before you make that offer, you need to know your bottom line. On Pawn Stars their motto is, “Every deal has got to make the shop money.” For your PMO you may have a different motto, but you’ve got to know your own bottom line and you can’t negotiate below it. If the negotiation undercuts the value or the usability of the project, it may not be a deal that you can make. There may be times that the best deal you can make is to walk away.
- The Big Picture: In addition to negotiating individual deals with owners, the Pawn Stars also need to negotiate deals with professional authenticators, mechanics, painters, cleaning services, and restoration professionals. The quality, cost and degree of innovation on today’s project is often based on a relationship that has been built up over many years. Your PMO probably has a lot more repeat customers than the Pawn Stars. You can’t make a lot of losing deals and hope to remain in business, but you also need to think about more than winning the negotiations on every project; you also need to think in terms of winning every relationship. When you work with the same individuals over and over again, relationships can be more important the individual projects. It can be very difficult to balance current projects against the long-term relationship, but both are always in play.
We live in the age of Reality Shows. They are everywhere, and they don’t necessarily showcase the best of human nature. But there are a few shows that can teach us valuable lessons about human nature, what motivates us and our thinking process. If you regularly need to negotiate deals and agreements, you can learn a lot by watching a few episodes of Pawn Stars. Every PM and PMO Director needs to negotiate, and not every negotiation will be successful. If you keep your losses low and remember to value the overall relationships with key project sponsors and team members, you too can be a PMO Star! At least that’s my Niccolls worth for today!