The Negotiation Process
The Negotiation Process
Everything comes to him who hustles while he waits.
– Thomas Edison
Introduction
In the previous lesson, we discussed the necessity of developing your bargaining stance before entering into negotiations. These are the other components of preparation that we will look at in this lesson, for example, determining the time and location, establishing common ground, and constructing an overall framework for the negotiation process.
Even at this early level, it is critical to have a set of guiding principles established. In the event that you allow them to be compromised, you will have already placed yourself in a situation where you can be considered prey for hostile negotiators. Building the foundation for discussions may seem like a formality, but it is the initial stage of the process and, as such, is as much a part of the overall preparations.
In this module we will also explore how to determine the time and location, establishing common ground, and constructing an overall framework for the negotiation process. Negotiations are most comfortable when they take place on the ground where the parties are most comfortable. The majority of people have a specific time of day when they are at their most alert and clear-headed. There are a variety of environmental elements that can impede with negotiations, including:
- Noisy environment
- Frequent interruptions
- Overcrowding conditions
- A lack of privacy
As long as you are doing the negotiation at your own location, you will have complete control over the situation. If you are negotiating at the other party’s location, you should request that the other party fix these conditions to the greatest extent possible before the negotiations begin. Every sporting event takes place at a venue, with one of the parties involved serving as the “home team” in the majority of instances. Whenever the parties are evenly matched in terms of talent and preparedness, the home team will almost always come out on top in the great majority of circumstances. This is because they are in familiar settings, when factors such as the weather and background noise work to their benefit. After arriving in strange territory, the away team must adjust to their new circumstances during the first half of the game. It is common practice to undertake political negotiations following a conflict (or in an attempt to avert one) at a neutral location where both parties are equally unfamiliar with the surroundings, ensuring that neither has an advantage and allowing the negotiations to be fair and equitable on both sides. In business, it is rare to have the opportunity to hold discussions in a neutral setting, and there is almost always a “home side” involved in the negotiations. The length of time spent negotiating is also crucial. Human beings are always at the mercy of their “biorhythms,” which lead the body and the mind to work differently at different times of the day, and which are always changing. As you are probably aware, some people are more comfortable in the morning than others, and some people are more comfortable the longer the day lasts. Ideally, if you want to give yourself a competitive advantage in talks, you should ensure that the negotiations take place either at your home or at a time of day that is convenient for you, or that they take place at both. Sometimes there may be disagreement over the location of a negotiation – and this will frequently be the location where the first negotiations and concessions will be made.
The Establishing a Common Ground
Occasionally, the parties to a negotiation will begin by discussing the issue on which they are the most diametrically opposed. They may appear to be working very hard, yet they are not doing so in a productive manner at all. Beginning with what the parties agree on and then moving on to a topic on which they are close to agreement is typically more productive than starting with what they disagree on.
Then they can tackle progressively more difficult problems until they reach the one on which they are the most diametrically opposed. This methodical approach sets a positive tone for the rest of the negotiation process. It also assists the two parties in developing a pattern of approaching situations from the perspective of common interests. Negotiations require a lot of movement to be successful. It is likely that the conclusion of the meeting will be less desirable for both sides if it is repeatedly stalled by disagreements over the most insignificant of topics because the goodwill required moving negotiations forward would be extremely sparse on the ground in this situation. Therefore, creating an agenda that is heavily weighted in favour of positive topics at the outset is the most effective strategy for both parties. After all is said and done, concessions will have to be made, but if both parties are in a positive frame of mind, it creates a pleasant environment in which to negotiate.
Developing a framework for negotiation
Both sides in a negotiation bring their own frame of reference based on their own experiences, values, and objectives to the negotiation table. A common framework must be agreed upon by both parties in order for a negotiation to progress. They must come to an agreement on the subjects that will be addressed. The manner in which these issues are stated can sometimes have an impact on the outcome of the discussion. It is the desire of each party to frame the issues in a way that advances its objectives.
It is possible to observe how involved negotiations might become as a result of this. “Talks about talks” is a word that is sometimes used to characterize the beginning stages of negotiations, and it is an interesting phrase since it reveals just how much is up for argument in the normal negotiation. Before beginning talks, it is critical to have an agreement on which subjects are negotiable and which issues are not negotiable at all. Those problems that are non-negotiable are removed from the negotiating table, and the parties make every effort to move forward with the matters that they can bargain on. Also decided is what sort of language will be used in the program for negotiations – making it clear to both parties what issues are off limits and why they are off limits is essential. Negotiations can become exceedingly disorderly and lack direction if they are not conducted inside a framework. Keeping in mind that trying to negotiate a settlement between two parties who are at odds requires a great deal of patience and acceptance on both sides that there will be some “medicine” to take – you don’t want to take it, but you have no choice – and that it is critical to make the pill as sweet as possible is beneficial. Setting a positive framework for discussions is all about making the pill a little more appealing.
Always remember that negotiation entails the following skills: Listening Ability to identify the interests of parties, Persuasion Diplomacy, Establishing and preserving working relationships.
Brief check
Every time you negotiate, you have to make choices that affect whether you achieve a successful outcome for your business. To get the best outcomes, you need to understand the steps involved in the negotiation process.
The Negotiation Process
Nearly everyone in groups and organizations engages in some form of negotiation process at some point during their interactions. Negotiation is a form of back and forth communication intended to reach an agreement while leaving the other party intact and positive in the process.
It is easier to negotiate when the two sides have some common interests and some that are diametrically opposed. There are generally three types of negotiations – (a) Soft: The participants are all close friends. The goal is to come to an agreement. (b) Hard: Participants are adversaries, which makes it difficult. The goal is to achieve victory. (c) Principled: Negotiating on the basis of principles or on the merits is referred to as principled negotiation. Characteristics of Principled negotiations are –
– Create a variety of options from which to choose; make a decision later.
– Prevent yourself from making snap decisions.
– Avoid looking for a single answer to every question.
– Avoid making the assumption that the pie is fixed.
– It’s important not to think that “solving their problem IS their problem.”
Let’s look at the five stages of negotiation process.
Preparation:
- Know your interests and why you value them.
- Understand the issue at hand.
- Understand the “needs” versus the “wants.”
- Understand the advantages and disadvantages of your position and yourself.
- Self-awareness
- Personality characteristics
- Emotional intelligence
- Identify your key commitments
- Consider the situation from the other party’s perspective—why are they negotiating?
- Identify the interests of the other side. Identify their needs (security, autonomy, recognition).
- Be aware of the unpleasant consequences for both parties if your idea/proposal is not accepted.
- If you succeed, who else might be affected, harmed, or advanced?
Opening Position:
- Outline Your Opening Position
- Decide whether this will be High Ball or Low Ball
- Ensure that this position is realistic in light of the facts available to both sides
- Allow for movement within whatever opening position you adopt
- Confirm all agreements reached and positions offered
- Make a list of all of the alternatives that could meet your requirements.
- Be innovative and expand the pie
- Recognize who is supportive and who is not or less supportive
- Is this individual in a position of authority to make the decision?
- Does bluffing have any negative consequences?
- Is there a time limit associated with the negotiation process?
- Bring a list of your main points as well as a set of questions with you.
- You’ll learn more if you don’t interrupt.
- Restate “as I hear it…” as objectively as you can.
- Keep an open mind to new information.
Bargaining
- Question for Information
- Challenge other side for justifications of their position
- Examine and Test their commitment
- Present Your Key Commitments
- Explore Key Commitments
- Summarize Arguments and Seek Acceptance
- Look for Signals of Possible Movement
- Imagine how it would feel to achieve your goal
- Role play your opening with a trusted colleague and rehearse the problematic areas
- Be the devil’s advocate
- Plan ways to break it/Buy time
- “I need to think over what you just said so can I have a couple of minutes?”
- Identify and Highlight Common Ground
- With a well-thought-out BATNA, you will have more power (leverage)
- Make a decision on: What can you comfortably walk away from?
- Is it a ruse? Allowing desperation to be detected in your nonverbal communication is not a good idea.
Movement
- Be Prepared to Concede
- Begin with those of Low Priority and seek High Priority Items
- Never Concede on more than possible by your brief
- Use your Concessions Wisely
- Don’t just give these away expect and receive something in return
- Use Conditional Argument
- All movement should be realistic and contained within your brief
- It should be always towards the other side’s position and not away from it
- Be prepared for larger movements at first as it can build trust within the negotiation
- Continue with smaller movements
- Concentrate on your personal interests, not people, and certainly not gains
- Make decisions based on objective criteria, and ensure that the other party does the same.
- Redirect personal attacks onto the issue at hand.
- Actively and reflectively listen.
- Pay attention to what is not said
- Learn from what the other side says
- Remain open to new information
- Synthesize the information you hear and incorporate it into your own argument
Closing
- Emphasize the benefits to both parties
- Carefully introduce the consequences of not reaching agreement to both parties and losing what has been agreed so far
- Timing is Essential
- Take Care when making a Final Offer. Be sure that it is consistent with your brief.
- A Small Traded Offer is often better. A small move by them in return for an extra movement by you.
- Ensure that all agreements are understood and accepted before finalization
- This should be well documented and signed at the close of the negotiations
- These should be then forwarded to both parties post negotiations
- If you are unable to reach an agreement, be prepared to walk away.
-If a contract or agreement is required, a note or memo should be written.
-If I don’t hear back by x, I’ll assume the situation is still the same.
Brief check
While many negotiations are straightforward, some will be among the hardest challenges you face. Your success will depend on planning and preparation. Always approach negotiations with a clear set of strategies, messages and tactics that can guide you from planning to closing.
For those who are new to the negotiation process, there may be a number of questions that arise. Some of the most frequently asked questions are as follows:
What is the length of time the negotiation process takes?
The length of time the negotiation process takes – depends on the circumstances. It is difficult to put a definitive timeline on the negotiation process because it is difficult to do so in any conflict. During the research stage, for example, the amount of time required can vary depending on the circumstances. If you are simply attempting to persuade your partner to take a vacation, for example, you are already familiar with them and can anticipate their counterarguments. As an example, if you are negotiating with someone with whom you do not have a strong personal relationship, your research should be significantly more extensive.
The length of the negotiation process can be determined by the characteristics of the individuals involved as well as the circumstances. If you have two parties who are willing to make concessions, the process can be completed in a relatively short period of time. If, on the other hand, you are dealing with strong opposition from a tenacious competitor, it may be necessary to make a significant time investment before you see any results.
Is success guaranteed if you plan ahead of time?
Preparation may not ensure negotiation success, but it certainly does not hurt your chances of achieving your objectives. If you look back over your life, it is likely that you have not emerged victorious in every conflict, and it is important to remember that there are no guarantees in this world. Whatever your level of preparation, there is always the possibility that a mutually beneficial solution will not be achievable. Rather than viewing these instances as a setback, it is critical to consider them as opportunities to learn and build relationships with the opposition in the future, rather than simply as setbacks.
Is it necessary to complete these steps in the specified order?
To keep it simple, yes, it is critical to follow these steps in order to ensure that you are fully prepared for a pending negotiation before beginning. If you attempt to enter formal negotiations without first gaining a thorough understanding of the situation, the opposing viewpoint, and the opposition’s objectives, you will be much more likely to fail. And to make matters worse, the other side may pick up on your lack of preparation, which can only have negative consequences. If you don’t put in the effort to earn trust and build a relationship, you may find yourself up against more opposition and less likely to reach a mutually beneficial solution.
Where can I put these abilities to use?
The wonderful thing about negotiation skills is that they can be applied to any situation where there is a potential for conflict, whether in your personal life or in your place of employment. Takeaway number one from these steps is the importance of developing your ability to effectively communicate your point of view while remaining open enough to truly listen to the other person’s point of view on a given issue. As a result, you and your negotiation partner will be able to talk through your thoughts, feelings, and expectations in the hopes of reaching an agreement. As you progress through the process, the ultimate goal is to reach an agreement on terms that both parties can agree on and respect. This point of view can be beneficial in both minor disagreements and major conflict situations.
Can you put your faith in the negotiation process?
Negotiation is an art form in and of itself. As a result, even though most of us have been involved in some form of negotiation for the majority of our lives, mastering it can take some time. However, once you grasp the fundamentals of negotiation, the process becomes more and more natural with each passing encounter.
The truth is that learning about the negotiation process is beneficial for everyone involved. We all experience conflict at some point in our lives, and knowing how to deal with it can make all the difference when it comes to reaching a mutually beneficial resolution of the situation. The five stages of negotiation are intended to assist both new and experienced negotiators in honing their skills in order to maximize their chances of succeeding in their negotiations. You must complete each step, and although there is no set period of time in which you must master these tools, you will not improve unless you put in the necessary time and effort.
Practical Application
A new customer was bidding one of the largest buyouts ever offered by a toy manufacturer. Two months after the start of work scoping details, a “handshake” agreement was reached, and the customer stated they would have “Purchase Order Ready” by the end of the month.
In the following week, the customer contacted the manufacturer and informed them that “I spoke with our CFO, and they informed me that we do not have the budget and that you will need to do better at the offer.”
The manufacturer wished to maintain their excellent relationship with their new customer, but they had already put together their best offer in order to win the large contract in the first place. This company’s goal was to keep their client satisfied while also protecting their profit margin.
The manufacturers, on the other hand, began negotiations by first scripting a list of questions to ask (as part of the planning process). After that, they brainstormed ways to reduce the quote while still maintaining margins for the company. After some haggling and the presentation of several options, the manufacturer’s potential new customer chose Option B, allowing the Client to maintain their profit margin. Win-Win!
As soon as sellers stop being afraid of their customer and/or losing the order and instead begin to have courage and confidence in their own value and ability, they will be able to stop giving away margin and begin negotiating over costs rather than prices. A customer’s budget constraint does not necessarily imply that the supplier is experiencing margin constraints.
