How to negotiate effectively
HOW TO NEGOTIATE EFFECTIVELY
1. What is negotiation
Negotiation is an essential
part of the every-day business life. It can take place at any time and in any
place. Negotiation is a kind of meeting, but contrary to the latter it may be
held in some unexpected and uncomfortable place such as the street or on the
stairs.
There are several definitions
of negotiation. It is said to be “the process for resolving conflict between
two or more parties whereby both or all modify their demands to achieve a
mutually acceptable compromise”. Thus, it is “the process of changing both
parties’ views of their ideal outcome into an attainable outcome”.
The need of negotiation
arises when we are not fully in control of events. Negotiations take place to
handle mutual differences or conflict of:
·
interests (wages, hours, work
conditions, prices: seller vs buyer)
·
rights (different
interpretations of an agreement)
The aim of a negotiation is
to come to an agreement which is acceptable to both sides, and to preserve the
overall relationships. While specific issues are to be negotiated, common
interest are yet still to be maintained. Negotiations do not mean “war”. Negotiators
can still be friends and partners.
2. The negotiation
continuum
·
Overlap
The situations of negotiation
can be shown diagrammatically in terms of ideals and limits.
Ideal Limit
HIM
Bargaining area
Limit Ideal YOU
The limit may be the limit of
negotiator’s authority, such as a minimum (e.g. price) acceptable. If there is
overlap it is possible to settle. The final position within the bargaining
area, where settlement takes place, depends on the negotiators’ relative
strength and skill.
·
No overlap
The aim of the negotiator is
to achieve a result, i.e. to find a solution, within the bargaining area.
However, it is possible that both parties set limits which do not provide
overlap. In this case the negotiators have to move their limits, otherwise the
negotiation will be broken down.
Ideal
Limit
HIM No deal
YOU
Limit Ideal
·
Too much overlap
The opposite case
is also possible. When one is careless and settles for less than he could. In
this case the limit of the opposite side should be found and the ideal should
be revised.
Ideal Limit
HIM
YOU
Limit Ideal Revised Ideal
3. The approach
There are four
main stages of negotiation:
·
Preparing objectives,
information, strategy
·
Propose and bargain
·
Close and agree
While preparing to
the negotiation it is important not only to prepare supporting arguments but
also to define objectives. Objectives should be realistic and attainable and
have certain priorities. It is also necessary to investigate the opponent’s
plans and priorities, which can be rather difficult.
The objectives
should be classified basically as follows:
Like Ideal
but least important
Intend Achievable,
a range of possibilities
Must The
real limit
Ideal
Limit
AREA OF NO DEAL
Like
Intend
Must
The general
strategy for negotiation is to have a negotiating team of three people, who
will also be involved in the preparation.
·
Leader The
person who will do the talking and conduct the negotiations
·
Summariser The
person who will ask questions and summarise for control
·
Observer The
person not involved in the actual negotiations, whose role is
to watch, listen and record
80 % of the
negotiating time is spent arguing. If it equals 100 % the negotiation will
break down. There are two kinds of arguing:
·
Reasonable and
constructive Debates, discussions
·
Unreasonable and
destructive Emotional quarrels
The opponent may
try to divert you by escaping into destructive behaviour. In this case, your
behaviour should be not to interrupt, but to listen and control your feelings.
Even if the battle is won, the war can be lost.
A negotiator
should be constructive in arguments and try to get information by asking open
questions or even leading questions. One thing should be tackled at a time and
the opponent should be made justify his case item by item.
It is important to
be non-committal and to state only ideals at first. Later, the information
about the negotiator’s position can be given, and later alternative proposals
can be made. Sometimes it is necessary to challenge the opponent, so that he
demonstrates his strengths.
Negotiation means
movement. It may be that both parties move on one issue. It may be that each
moves on different issue. The motive forces are twofold:
·
Sanctions The
penalty of not agreeing
·
Incentives The
benefits of agreeing.
In both cases, the
parties seek to protect their self-interests. They will show willingness to
move by sending signals.
To signal is not
to show weakness. But if both parties wait for the other to signal, the result
will be deadlock.
The opponent’s
signals will show his willingness to move. So one should listen, recognise his
signals and interpret them, looking for the qualified words which are evidence
of willingness to move.
Another very
important point of negotiations is proposing and bargaining. Proposals should
be realistic in order not to cause argument and deadlock. The language of the
proposal signals one’s firmness. Weak language such as “we hope…, we like…, we
prefer…” should be avoided. Instead, a phrase “we propose…” is appropriate.
The final step in
a negotiation is closing and agreeing. There are two aspects to it:
·
When to close
·
How to close
The first is the
most difficult moment to recognise. There is a balance between:
·
Closing too early More
concessions from the opponent could have been
squeezed
·
Closing too late The
opponents squeezed excessive concessions.
The aim of closing is to get
the opposition to stop bargaining and to make an agreement. The final thing to
do is to write down the agreement and agree what is written down. It is
necessary to do this before leaving the negotiating table.
4. Characteristics of an
effective negotiator
What
characteristics should one have to be an effective negotiator. The first and
the most important characteristics, from the standpoint of many executives and
managers of large corporations, is preparation and planning skills.
The other very
important characteristics are:
·
Knowledge of subject
matter being negotiated
·
Ability to think
clearly and rapidly under pressure and uncertainty
·
Ability to express
thoughts verbally
·
Listening skills
·
Judgement and general
intelligence
·
Integrity
·
Ability to persuade
others
·
Patience
·
Decisiveness
5. Conclusion
In spite of the existence of
negotiating theories, it is frequently difficult to apply theoretical and
conceptual knowledge in a practical situation. In order to be a good negotiator,
one should have negotiation skills as well as a theoretical knowledge. But
without a practical experience it is hard to negotiate effectively.
Interpersonal
skills are very important in the negotiation, but what can help a negotiating
party while thinking what to do is not an elaborated theory, but rather is it a
simple analysis and intuition.
Bibliography
1.
Raiffa, Howard. 1982.
The art and science of negotiation. Harvard University Press. Pages 119-133.
2.
Murcott, Owen. 1991. IBS
Management Training. Hanzehogeschool. Groningen.