HomePrivate WealthArticlesWhy Empathy Is Critical To Successful Deal Making

Why Empathy Is Critical To Successful Deal Making

Negotiation is an essential skill for entrepreneurs and corporate executives. From clients to suppliers and from governmental agencies to employees, your ability to effectively foster agreements is regularly critical to your company’s success. 

There are many ways to approach negotiations. Some negotiators are very aggressive, looking to gain leverage and pound the other side into dust. Some negotiators are deceptive, and there are many ways to be deceptive such as agreeing to a deal the other side finds incredibly attractive at the time, knowing the preferential terms will be ignored. If you are forced to negotiate with these parties at some future time, or your reputation as a negotiator will matter, these approaches are likely to be counterproductive. 

A scenario where all sides achieve what they truly need out of a deal and get some of what they want is usually optimal. This approach receives consistent solid results and has tremendous longer-term advantages. 

According to Frank Carone, chairman of Oaktree Solutions and co-author of Everyone Wins! How You Can Enhance and Optimize Business Relationships Just Like Ultra-Wealthy Entrepreneurs, “When I’m involved in negotiations on behalf of my clients, it’s fair to say, they always get the best deal possible, and it’s often a lot better than they thought possible. I can get those kinds of results because I’m also very concerned that the counter-party gets as good a deal as possible. I aim for everyone to leave the table feeling good about their results and how the process worked. This overall success is based in part on my being highly empathetic. I have to understand not only the various potential terms of the deal but the motivations and thinking of my clients and, just as importantly, the motivations and thought processes of the other side.”

Being empathetic underpins your ability to ascertain what the other side truly needs and wants from a deal. Empathy is both a frame of mind and a skill set. As a cognitive orientation, it’s about respect and a willingness to try to understand. As a skill set, empathy enables you to look behind the curtain and discern what matters most to your counterparty.

During negotiations, for example, probing is an effective way to get the other side to share more of their thoughts and feelings. It includes non-verbal prompts such as nodding and verbal encouragements such as saying “sure” and “I agree.” Also, clarifying questions such as, “Can you tell me more?” often gets the other side to share information. Summarizing is a review of positions and desires. It ensures everyone is on the same page and can be an excellent way to move the negotiations forward. 

“Keep in mind, never mistake empathy for sympathy. It’s also not agreement,” says Carone. “When you’re empathetic, you understand the other side very well. That doesn’t mean you agree with them. You use the insights you gain from being empathetic to help you craft a deal that must get you the outcomes you need and will help you simultaneously get the other side outcomes they need.”

Being empathetic is not—in and of itself—enough to repeatedly get the type of results expert negotiators like Carone delivers. But, it’s regularly a critical component. Being empathetic will help shape your approach to negotiations. It will enable you to improve your strategy during a negotiation and craft messaging to best resonate with the other side.

It’s essential to recognize that empathy as an orientation and skill set can be learned. If you’re already being empathic in your negotiations, then you can refine your thinking and abilities like the rest of us. If not, you might seriously want to consider the approach. It has the most promising short- and long-term results.

Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.


Most Popular