Stages & Strategies of Negotiation
Stages & Strategies of Negotiation
If you don’t know where you are going, you will probably end up somewhere else.
– Lawrence J. Peter
Introduction
As discussed in the previous lesson, negotiation is a means of resolving disagreements between individuals. Essentially, it is a method by which a compromise or agreement is established while avoiding conflict and controversy.
Individuals understandably want to attain the best possible outcome for their stance when they are in disagreement (or perhaps an organization they represent). The ideals of justice, seeking mutual gain, and sustaining a relationship, on the other, are critical to achieving a good result.
Numerous contexts, such as international affairs, the legal system and governance, as well as industrial disputes and domestic relationships are characterized by the usage of specific forms of negotiation. General negotiation skills, on the contrary, can be learnt and employed in a wide range of situations and activities. Having effective negotiation skills can be quite beneficial in settling any disagreements that may emerge between you and others.
Like any challenging task, negotiation requires preparation. Before you begin a negotiation, you need to define what you hope to get out of it, what you will settle for, and what you consider unacceptable. You also need to prepare yourself personally. You can do so by following certain strategies that can be achieved in the multiple stages of negotiation. The key to personal preparation is to approach the negotiation with self-confidence and a positive attitude.
Without this preparation, you will end up giving more than you get from negotiations. It may be unavoidable that you will have to give up more than you would ordinarily be willing to, but finding the balance between acceptable concessions and getting the best deal for yourself relies on you being ready to go into negotiations with the strongest bargaining position you can.
Identifying your Worst and Best Alternative to a Negotiated Agreement is important
In the majority of negotiations, the parties’ assumptions about what they believe to be the alternatives to a negotiated agreement have an impact on the outcome. Because they believe they can do just as well without bargaining, the parties frequently have high expectations of what these alternatives are. As a result, they are loath to make sacrifices. If you do not have a clear understanding of your WATNA (Worst Alternative to a Negotiated Agreement) and BATNA (Best Alternative to a Negotiated Agreement), you will negotiate poorly because you will be under the impression that you will suffer if you do not reach an agreement on something.
During a negotiation, it is common for the sides to have to determine the likelihood of a given conclusion. If your WATNA is something that you would find difficult to accept, but the possibility of it occurring is low, you may not feel obligated to make significant concessions during talks. In this case, it is critical to be realistic. Negotiations would not be necessary if you could achieve the ideal circumstance, sometimes known as the “blue sky” scenario. Your WATNA is critical in allowing you to remain focused on the talks and maintain a sense of purpose. Anyone who is rational will consider what is commonly referred to as the “worst case scenario” before commencing on any project or undertaking any action. What happens if something goes wrong? How are we going to cope with that? In negotiations, how you feel about the WATNA will determine how flexible you will need to be (and therefore will be) in your approach. The BATNA is almost as important as the WATNA in terms of importance. It’s likely that if you look at your condition in the absence of a negotiated agreement and find it almost unfathomable, you’ll be compelled to initiate negotiations in the aim of obtaining a satisfactory resolution. The term “satisfying” is critical in this context. Is the WATNA more than satisfactory in terms of quality? Is the BATNA a worse option? In most cases, people only participate into discussions because they believe they are required to do so. They reach this conclusion after conducting a thorough analysis of their WATNA and BATNA.
Brief check
Negotiated agreements are frequently established after examining the best and worst options, referred to as BATNA and WATNA, respectively.
Identifying Your Walk Away Price
Keeping your WAP (Walk Away Price) to yourself is critical in any negotiation, particularly if it is much less than your initial offer. Unless the other party is aware that you will be willing to accept a far lower offer than you are now making, you will be bargaining from a position of strength. As soon as the other party learns, or has a rough sense of, what your WAP is, it ceases to be your WAP and just becomes your price. A WAP in your mind, and making certain that those negotiators on your side of the bargain (and only those negotiators) are aware of it, lets you to assume the strongest possible bargaining stance during negotiations. The opposing side will attempt to talk you down from your stated price, so you must maintain your resolve at all times.
If they are willing to pay less, you may be willing to agree to a lower price in exchange for compromises on your part. The opposing party will next have to examine what is acceptable to them in terms of a compromise. Rather of pushing too hard and risking missing out on a deal that would be favourable to them, they will identify specific areas in which they are willing to make compromises on their own. But if they are aware that you have set a WAP that would save them money, they will simply refuse to accept anything less than that price. They have no reason to make any concessions to you at this time. In many respects, bargaining is about keeping as much information about yourself as you possibly can until you are no longer able to maintain your current position. Once you have established your WAP, it is critical that you adhere to it. If you are not prepared to walk away if your walk away price is not fulfilled, then setting a walk away price has no relevance at all. In a negotiation, you should give the impression to your counterparts that you are prepared to walk away at any time. After all, they will not be content with a price that is satisfactory to them; instead, they will want to extract a little more value from the transaction for themselves, putting you through your paces to determine what you are willing to give up. A warning against setting your WAP too low is that the other party will not take you seriously if you appear to be a pushover throughout the negotiation process. They will attempt to put you through your paces at every opportunity.
How to Identify Your Zone of Possible Agreement?
Both parties should be pleased with the outcome of the bargain for the used car they are purchasing. Despite the fact that both sides had hoped for a better bargain, both received a better price than their WAP. This negotiation highlights how important it is to keep your WAP to yourself if you want to get the best bargain possible during a negotiation. In this circumstance, your price range is between the price that you would ideally, realistically obtain and the WAP that you have established. The perfect world would be one in which you could demand a million dollars and expect to receive it. Negotiating in a realistic reality necessitates being realistic in your expectations. Consider what the acknowledged market value for the product or service that you are selling is in order to arrive at your desired realistic price. In order to find the best realistic price, you must first account for your specific negotiation position (such as whether you are approaching it from a position of need, for example). Then think about a price at which it would no longer be worthwhile to negotiate a deal with the other party. Your co-negotiator will have followed a similar procedure. What he expects to pay and what you expect to receive are both just optimistic expectations. Ideally, you will end up with a price that is closer to their WAP than yours within the ZOPA (Zone of Possible Agreement), which is the area in which the ultimate price will be located. If you give the other party a hint as to where your WAP is located, they will be less likely to come to an agreement that is significantly better than that.
Brief check
A zone of possible agreement, also known as a bargaining range, is a space where two or more negotiating parties can find common ground. This is the range where most negotiating sides will compromise and reach an agreement.
Personal Preparation
Remembering that there is nothing to be afraid of before a negotiation will help to reduce some of the stress you may be feeling before the negotiation begins. For as long as you are aware of your own position, there is no chance that you will "lose" the negotiation process. You should always be the following during and before a negotiation:
Politeness never diminishes the importance of your point of view.
Firm - Dispels any perceptions of inadequacy.
Calm - Allows for more effective persuasion and compromise.
Don't take things personally when they happen.
It is important to understand your stance before commencing discussions so that you are clear on your "red lines." Accept the following: Things that you are not prepared to consider that might make your situation worse than it already is Many people are pushed into a deal that is unpleasant to them because they have failed to prepare for the negotiation in this manner before the negotiation begins.
If you enter talks with only a vague sense of what you want, that vagueness will eventually become vulnerability in your bargaining stance. The most crucial thing to remember about your negotiating position is that you should be the only one who understands what you're talking about.
Many people equate the process of negotiating to that of playing poker. When playing poker, you should constantly be mindful of keeping the nature of your hand a secret from other players. They will squeeze you to the point of breaking point if they are aware of your situation and are convinced that you lack the necessary motivation to fight back.
Negotiators who are aware that their "opponent" has a weak or compromised position will instantly recognize that they are dealing with someone who is acting out of desperation when they enter a negotiation with him or her. "He has determined that he is willing to accept for that," they will believe, since "he needs this deal." And I'll approach the negotiation from the perspective of "Does he need it enough to give me a little bit more leverage?"
Stages of the Negotiation Process
It may be beneficial to take an organized strategy to negotiation in order to reach a preferred outcome. For example, in a workplace setting, it may be necessary to schedule a meeting in which all parties involved can come together to discuss the matter.
The process of negotiation includes the following stages:
1. Preparation is the first step
Before any negotiations can begin, a decision must be made on when and where a meeting will be held to discuss the topic, as well as who will be there. Setting a time limit for the disagreement might also be beneficial in preventing it from deteriorating further.
The purpose of this stage is to ensure you are aware of all of the important facts of the case in order to define your own viewpoint. In the employment example above, this would entail learning the ‘rules’ of your organization, who is eligible for assistance, when assistance is not deemed suitable, and the reasons for such denials of assistance. It is possible that your organization has policies to which you can refer in order to prepare for the discussion.
Prepare before discussing the dispute in order to avoid further friction and unnecessary time wasting during the meeting.
2. Participation in a discussion
Individuals or members of each side present their respective cases, i.e., their interpretation of the circumstance, during this stage of the process.
Questioning, listening, and clarifying are all important qualities to have throughout this time.
It can be beneficial to take notes throughout the discussion stage in order to keep track of all of the points that have been raised in case further clarification is required. Listening is incredibly important when there is a disagreement because it is easy to make the error of expressing too much and listening too little when there is a disagreement. It is essential that both sides have an equal opportunity to convey their arguments.
3. Defining Objectives
It is necessary to clarify the objectives, interests, and points of view of both sides of the argument as a result of the conversation.
It is beneficial to arrange these considerations in descending order of importance. It is frequently possible to identify or build some common ground as a result of this clarification process. Clarification is a critical component of the negotiating process; without it, misconceptions are more likely to arise, which can lead to problems and obstacles in the pursuit of a favourable solution for all parties.
4. Strive for a Win-Win Result in Your Negotiations
This stage focuses on achieving a ‘win-win’ solution, in which both parties believe they have achieved something beneficial as a result of the negotiation process and both parties believe their points of view have been taken into account.
In most cases, a win-win situation is the optimum outcome. Although this may not always be attainable, it should always be the ultimate aim, which can be achieved through negotiation.
At this point, it is necessary to explore different tactics and concessions that have been proposed. Compromising is frequently a favourable choice that can often result in higher benefits for all parties involved when compared to sticking to one’s initial beliefs.
5. Reaching an agreement
Once both sides’ points of view and interests have been considered, it is possible to reach a mutually beneficial agreement.
For a satisfactory solution to be found, it is critical that everyone concerned maintains an open mind about the situation. Any agreement must be crystal clear in order for both parties to understand exactly what has been agreed upon.
6. Putting a Plan of Action into Practice
Following the agreement, a plan of action must be put in place to see the decision through to completion.
Brief check
Most of us imagine negotiators walking away from a table in disappointment when we think of failed business discussions. But that's only one example of a sour negotiation. Failed business discussions also include those that are later regretted by the participants and those that fall apart during implementation.
Practical Application
Clarencewas the owner of a small cosmetic retail shop in a shopping centre. She had arranged a meeting with the management of the shopping centre to renegotiate the original terms of rental agreement established five years ago.However, the business was not doing well at all and she was unable to pay the amount as agreed in the contract.
Clarence knew that the better she prepared for the meeting in advance, the better her chances would be to win the negotiation. As part of her preparation, she had to bear in mind “what-if” scenarios as well as find win-win agreements by searching for common ground, which is generally beneficial for both. When she met the management for a meeting, Clarence was well prepared. She had already done some market research about the fallen office rents in the recent months. As a result she had a good idea of the WAP (Walking away Price) that the shopping centre management would be content with.
The meeting eventually went fairly well and in favour of Clarence though there were differences among parties’ views on similar issues. For instance, one variable such as the rent was more important for one side (i.e., the management) and not so much for the other (i.e., Clarence) and vice-versa. Clarence found it interesting to realize that those differences were potentially the source of joint gains, because concessions can be made selectively on issues that mainly benefit others but do not cost the other party so much to concede. That is why eventually the shopping centre management agreed to reduce the rent than to loose a client. In times when there was dim chance for the shopping centre to give out their shops on rent, they decided to sacrifice a bit.
