What is Negotiation?

Word Cloud "Negotiation"

What is Negotiation?

Negotiation is a dialogue between two or more people or parties intended to reach a mutually beneficial outcome, resolve points of difference, to gain advantage for an individual or collective, or to craft outcomes to satisfy various interests.

Negotiation occurs in business, non-profit organizations, and government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers.

 In any disagreement, individuals understandably aim to achieve the best possible outcome for their position (or perhaps an organization they represent). However, the principles of fairness, seeking mutual benefit and maintaining a relationship are the keys to a successful outcome.

 

Why Negotiate?

It is inevitable that, from time-to-time, conflict and disagreement will arise as the differing needs, wants, aims and beliefs of people are brought together.  Without negotiation, such conflicts may lead to argument and resentment resulting in one or all of the parties feeling dissatisfied. The point of negotiation is to try to reach agreements without causing future barriers to communications.

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Preparing for a Successful Negotiation

Depending on the scale of the disagreement, some preparation may be appropriate for conducting a successful negotiation.

 For small disagreements, excessive preparation can be counter-productive because it takes time that is better used elsewhere. It can also be seen as manipulative because, just as it strengthens your position, it can weaken the other person’s.

However, if you need to resolve a major disagreement, then make sure you prepare thoroughly. Using our free worksheet, think through the following points before you start negotiating:

Goals: what do you want to get out of the negotiation? What do you think the other person wants?

Trades: What do you and the other person have that you can trade? What do you each have that the other wants? What are you each comfortable giving away?

Alternatives: if you don’t reach agreement with the other person, what alternatives do you have? Are these good or bad? How much does it matter if you do not reach agreement? Does failure to reach an agreement cut you out of future opportunities? And what alternatives might the other person have?

Relationships: what is the history of the relationship? Could or should this history impact the negotiation? Will there be any hidden issues that may influence the negotiation? How will you handle these?

Expected outcomes: what outcome will people be expecting from this negotiation? What has the outcome been in the past, and what precedents have been set?

The consequences: what are the consequences for you of winning or losing this negotiation? What are the consequences for the other person?

Power: who has what power in the relationship? Who controls resources? Who stands to lose the most if agreement isn’t reached? What power does the other person have to deliver what you hope for?

Possible solutions: based on all of the considerations, what possible compromises might there be?

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Top Ten Effective Negotiation Skills

  1. Problem Analysis

Effective negotiators must have the skills to analyze a problem to determine the interests of each party in the negotiation. A detailed problem analysis identifies the issue, the interested parties and the outcome goals. For example, in an employer and employee contract negotiation, the problem or area where the parties disagree may be in salary or benefits. Identifying the issues for both sides can help to find a compromise for all parties.

  1. Preparation

Before entering a bargaining meeting, the skilled negotiator prepares for the meeting. Preparation includes determining goals, areas for trade and alternatives to the stated goals. In addition, negotiators study the history of the relationship between the two parties and past negotiations to find areas of agreement and common goals. Past precedents and outcomes can set the tone for current negotiations.

  1. Active Listening

Negotiators have the skills to listen actively to the other party during the debate. Active listening involves the ability to read body language as well as verbal communication. It is important to listen to the other party to find areas for compromise during the meeting. Instead of spending the bulk of the time in negotiation expounding the virtues of his viewpoint, the skilled negotiator will spend more time listening to the other party. 

  1. Emotional Control

It is vital that a negotiator have the ability to keep his emotions in check during the negotiation. While a negotiation on contentious issues can be frustrating, allowing emotions to take control during the meeting can lead to unfavorable results. For example, a manager frustrated with the lack of progress during a salary negotiation may concede more than is acceptable to the organization in an attempt to end the frustration. On the other hand, employees negotiating a pay raise may become too emotionally involved to accept a compromise with management and take an all or nothing approach, which breaks down the communication between the two parties.

  1. Verbal Communication

Negotiators must have the ability to communicate clearly and effectively to the other side during the negotiation. Misunderstandings can occur if the negotiator does not state his case clearly. During a bargaining meeting, an effective negotiator must have the skills to state his desired outcome as well as his reasoning.

  1. Collaboration and Teamwork

Negotiation is not necessarily a one side against another arrangement. Effective negotiators must have the skills to work together as a team and foster a collaborative atmosphere during negotiations. Those involved in a negotiation on both sides of the issue must work together to reach an agreeable solution.

  1. Problem Solving

Individuals with negotiation skills have the ability to seek a variety of solutions to problems. Instead of focusing on his ultimate goal for the negotiation, the individual with skills can focus on solving the problem, which may be a breakdown in communication, to benefit both sides of the issue.

  1. Decision Making Ability

Leaders with negotiation skills have the ability to act decisively during a negotiation. It may be necessary during a bargaining arrangement to agree to a compromise quickly to end a stalemate.

  1. Interpersonal Skills

Effective negotiators have the interpersonal skills to maintain a good working relationship with those involved in the negotiation. Negotiators with patience and the ability to persuade others without using manipulation can maintain a positive atmosphere during a difficult negotiation.

  1. Ethics and Reliability

Ethical standards and reliability in an effective negotiator promote a trusting environment for negotiations. Both sides in a negotiation must trust that the other party will follow through on promises and agreements. A negotiator must have the skills to execute on his promises after bargaining ends.

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Ed Brodow’s Ten Tips for Successful Negotiating

 1. Don’t be afraid to ask for what you want. Successful negotiators are assertive and challenge everything – they know that everything is negotiable. I call this negotiation consciousness. Negotiation consciousness is what makes the difference between negotiators and everybody else on the planet.

 Being assertive means asking for what you want and refusing to take NO for an answer. Practice expressing your feelings without anxiety or anger. Let people know what you want in a non-threatening way. Practice ‘I’ statements. For example, instead of saying, “You shouldn’t do that,” try substituting, “I don’t feel comfortable when you do that.”

Note that there is a difference between being assertive and being aggressive. You are assertive when you take care of your own interests while maintaining respect for the interests of others. When you see to your own interests with a lack of regard for other people’s interests, you are aggressive. Being assertive is part of negotiation consciousness.

 “Challenge” means not taking things at face value. It means thinking for you. You must be able to make up your own mind; as opposed to believing everything you are told. On a practical level, this means you have the right to question the asking price of that new car. It also means you have an obligation to question everything you read in the newspaper or hear on CNN. You cannot negotiate unless you are willing to challenge the validity of the opposing position.

  1. Shut up and listen. I am amazed by all the people I meet who can’t stop talking. Negotiators are detectives. They ask probing questions and then shut up. The other negotiator will tell you everything you need to know – all you have to do is listen.

 Many conflicts can be resolved easily if we learn how to listen. The catch is that listening is the forgotten art. We are so busy making sure that people hear what we have to say that we forget to listen.

You can become an effective listener by allowing the other person to do most of the talking. Follow the 70/30 Rule – listen 70 percent of the time, and talk only 30 percent of the time. Encourage the other negotiator to talk by asking lots of open-ended questions – questions that can’t be answered with a simple “yes” or “no.”

 

  1. Do your homework. This is what detectives do. Gather as much pertinent information prior to your negotiation. What are their needs? What pressures do they feel? What options do they have? Doing your homework is vital to successful negotiation. You can’t make accurate decisions without understanding the other side’s situation. The more information you have about the people with whom you are negotiating, the stronger you will be. People who consistently leave money on the table probably fail to do their homework.

 

  1. Always be willing to walk away. I call this Brodow’s Law. In other words, never negotiate without options. If you depend too much on the positive outcome of a negotiation, you lose your ability to say NO. When you say to yourself, “I will walk if I can’t conclude a deal that is satisfactory,” the other side can tell that you mean business. Your resolve will force them to make concessions. Clients often ask me, “Ed, if you could give me one piece of advice about negotiating, what would it be?” My answer, without hesitation, is: “Always be willing to walk away.” Please note that I am not advising you to walk away, but if you don’t even consider the option of walking away, you may be inclined to cave in to the other side’s demands simply to make a deal. If you are not desperate – if you recognize that you have other options – the other negotiator will sense your inner strength.

 

  1. Don’t be in a hurry. Being patient is very difficult for Americans. We want to get it over with. Anyone who has negotiated in Asia, South America, or the Middle East will tell you that people in those cultures look at time differently than we do in North America and Europe. They know that if you rush, you are more likely to make mistakes and leave money on the table. Whoever is more flexible about time has the advantage. Your patience can be devastating to the other negotiator if they are in a hurry because they start to believe that you are not under pressure to conclude the deal. So what do they do? They offer concessions as a means of providing you with an incentive to say YES.

 

  1. Aim high and expect the best outcome. Successful negotiators are optimists. If you expect more, you’ll get more. A proven strategy for achieving higher results is opening with an extreme position. Sellers should ask for more than they expect to receive, and buyers should offer less than they are prepared to pay. People who aim higher do better. Your optimism will become a self-fulfilling prophecy. Conversely, if you have low expectations, you will probably wind up with a less satisfying outcome.

 

  1. Focus on the other side’s pressure, not yours. We have a tendency to focus on our own pressure, on the reasons why we need to make a deal. It’s the old story about the grass being greener in the other person’s backyard. If you fall into this trap, you are working against yourself. The other side will appear more powerful. When you focus on your own limitations, you miss the big picture. Instead, successful negotiators ask, “What is the pressure on the other side in this negotiation?” You will feel more powerful when you recognize the reasons for the other side to give in. Your negotiation power derives in part from the pressures on the other person. Even if they appear nonchalant, they inevitably have worries and concerns. It’s your job to be a detective and root these out. If you discover that they are under pressure, which they surely are, look for ways to exploit that pressure in order to achieve a better result for yourself.

 

  1. Show the other person how their needs will be met. Successful negotiators always look at the situation from the other side’s perspective. Everyone looks at the world differently, so you are way ahead of the game if you can figure out their perception of the deal. Instead of trying to win the negotiation, seek to understand the other negotiator and show them ways to feel satisfied. My philosophy of negotiation includes the firm belief that one hand washes the other. If you help the other side to feel satisfied, they will be more inclined to help you satisfy your needs. That does not mean you should give in to all their positions. Satisfaction means that their basic interests have been fulfilled, not that their demands have been met. Don’t confuse basic interests with positions/demands: Their position/demand is what they say they want; their basic interest is what they really need to get.

 

  1. Don’t give anything away without getting something in return. Unilateral concessions are self-defeating. Whenever you give something away, get something in return. Always tie a string: “I’ll do this if you do that.” Otherwise you are inviting the other negotiator to ask you for additional concessions. When you give something away without requiring them to reciprocate, they will feel entitled to your concession, and won’t be satisfied until you give up even more. But if they have to earn your concession, they will derive a greater sense of satisfaction than if they got it for nothing.

 

  1. Don’t take the issues or the other person’s behavior personally. All too often negotiations fail because one or both of the parties get sidetracked by personal issues unrelated to the deal at hand. Successful negotiators focus on solving the problem, which is: How can we conclude an agreement that respects the needs of both parties? Obsessing over the other negotiator’s personality, or over issues that are not directly pertinent to making a deal, can sabotage a negotiation. If someone is rude or difficult to deal with, try to understand their behavior and don’t take it personally.                                                                         {B1A1225E-C9AC-4D94-B859-72FEB57E11DC}Img100

‘GETTING MORE’ by STUART DIAMOND; 12 principles for effective negotiation

  1. Goals Are Paramount. …In a negotiation, you should not pursue relationships, interests, win-win, or anything else just because you think it’s an effective tool. Anything you do in a negotiation should explicitly bring you closer to your goals for that particular negotiation…                                                                                                                           
  2. It’s About Them. …You can’t persuade people of anything unless you know the pictures in their heads: their perceptions, sensibilities, needs, how they make commitments, whether they are trustworthy…                                                                                               
  3. Make Emotional Payments. …You need to tap into the other person’s emotional psyche with empathy, apologies if necessary, by valuing them or offering them other things that get them to think more clearly…                                                                                                   
  4. Every Situation Is Different. …Blanket rules on how to negotiate with the Japanese or Muslims, or that state you should never make the first offer, are simply wrong…                                 
  5. Incremental Is Best. …Take small steps, whether you are trying for raises or treaties. Lead people from the pictures in their heads to your goals, from the familiar to the unfamiliar, a step at a time…                                                                                                                        
  6. Trade Things You Value Unequally. …Then trade off items that one party values but the other party doesn’t…                                                                                                                         
  7. Find Their Standards. …Name their bad behavior when they are not consistent with their policies…                                                                                                                                        
  8. Be Transparent and Constructive, Not Manipulative.                                                               
  9. Always Communicate, State the Obvious, and Frame the Vision. …Most failed negotiations are caused by bad communication or none at all. Don’t walk away from a negotiation unless all parties agree to take a break—or unless you want to end the negotiation…                                                                                                                                              
  10. Find the Real Problem and Make It an Opportunity. …Few people find or fix the real, underlying problem in negotiations. Ask, “What is really preventing me from meeting my goals?”…                                                                                                                                          
  11. Embrace Differences. …Great negotiators love differences….                                                                             
  12. Prepare—Make a List and Practice with It. …If you don’t have a list, you aren’t prepared. If you aren’t prepared, you won’t do as well…                                                                          

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BEST PRACTICES: NEGOTIATING – WHAT’S THE POINT OF THE DEAL, REALLY?

When business is tough, deal negotiators are often under tremendous pressure to deliver the goods. Yet it is precisely during such times that focusing on the quality of deals can be most critical. This means going beyond the deal, negotiating as if implementation matters.

Negotiating as if implementation matters is quite different from just “doing deals” for the sake of reaching agreements. It means doing some things that go against common wisdom. These things include the six steps below.

  1. Recognize that the real purpose of the negotiation is not to sign a deal, but to accomplish something

Often this means working backwards from what it is you are hoping to accomplish, to determine what it is you really need your counterpart to help you do. Understanding what you and they need to do differently after the deal is signed will help inform how you should negotiate.

  1. Make sure that stakeholders (yours and theirs) are aligned so that implementation can proceed smoothly

Typically, this requires consulting more, rather than less, broadly speaking. When implementation matters, you need to involve more stakeholders, on your side and theirs, than might be strictly necessary to reach agreement. Leaving the implementers out of the negotiation makes it more likely that they will be unwilling or unable to live up to commitments made on their behalf.

  1. Recognize that the way you deal with each other during the negotiation will impact how you work together during implementation

Whether we like it or not, the negotiation is the first, best example we have of what it is like to work together. We can use that opportunity to create a useful history of collaboration and problem solving, or we can waste it by posturing, withholding information, springing surprises, coercing, and damaging trust.

  1. Confront the hard issues instead of repressing or minimizing them to get the deal signed

It is easy to bury your head in the sand and avoid raising difficult topics during the negotiation. After all, you don’t want to give offense, and besides, those problems “might not happen.” But ignoring risk doesn’t make it less risky. Addressing it jointly, however, gives us more opportunities to prevent potential problems or to mitigate their impact.

  1. Make sure your counterparts understand what they are agreeing to, and can actually deliver, rather than treating any ambiguity or potential difficulty in performing as “their problem”

Some negotiators measure success by the number of commitments they can extract from their counterparts. But commitments they can’t deliver on are hardly worth the paper they are written on. Relying on enforcing penalties in the contract later doesn’t get you a successful event when you need it.

 

  1. Pay attention to the transition from the negotiating table to execution

The deal is not done when it’s signed. Use what you learned at the table to propel you and your team right to successful execution. A fast lap in a relay race is useless if you drop the baton instead of handing it off smoothly. If there needs to be hand-off to others who have to take what was negotiated and act on it, don’t leave it to chance. Make sure the hand-off happens, that both sides are involved, and that it covers not only the words but the intent of the agreement.

Doing these things is hard. It runs counter to a lot of incentives that have been built into the jobs of some negotiators. It flies in the face of many things our culture teaches us about deal making. It requires some different skills, and it may cost you some deals that you might have closed if you had disregarded this advice. But if you have something worth negotiating, and if implementation matters, then doing deals any other way is just plain irresponsible and foolish.

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