Negotiation

Here is a brief summary of the sections in this topic. If you want to see the full topic, you can get a free trial here.

1. Understanding negotiations

Negotiation is one of three principal methods of dispute resolution (the other two being mediation and arbitration). A negotiation can be either an outcome-driven process, at one extreme, or a relationship-building exercise, at the other. Ideally, it should be both, as building satisfactory relationships with the other parties is in itself a desirable outcome. With this in mind, the ideal outcome is a win-win result.

You’ll know that you’ve achieved a successful negotiation when

  • You’ve identified the minimum outcomes that the other party or parties are prepared to accept (their bottom line)
  • You’ve adjusted your initial demands accordingly
  • You’ve obtained all your own desired outcomes or an acceptable level of these (your bottom line), while ensuring that the other parties remain committed to the negotiating relationship.

2. From win-win to lose-lose

You should always aim for a skilful win-win outcome wherever possible.

  • Win-win is beneficial to all parties, being based upon a shared belief that there’s a better way of doing things and a shared desire to find it.
  • Win-win or no deal is evident in attempted negotiations where none of the parties can find a mutually beneficial solution.
  • A win paradigm is a context in which one party wins without regard to the cost to, or the feelings of, other parties and is very common in the business world.
  • Win-lose is evident when one party uses its power, resources or authority in an attempt to win at the expense of the other parties.
  • Lose-win is characterised by appeasement, placation, abandonment or submission and is dependence at its most obvious.
  • A lose-lose paradigm is created if the parties involved are each playing a win-lose game.

3. You as a negotiator

You have considerable experience of negotiations, whether or not you’re conscious of this. You can improve your understanding and practice of negotiation if you enter into it more consciously.

  • The first step to self-knowledge about your skills is to ask yourself when you enjoy negotiations and when you do not, when you choose to negotiate and how well you prepare.
  • The next step is to analyse how skilled you are at conducting the various stages of a negotiation.

4. Do you have a preferred negotiation style?

When faced with the need to resolve disputes, we tend to behave in a mixture of aggressive, assertive, cooperative or submissive ways. According to the specific circumstances, each type of behaviour can be appropriate

  • Aggressive, if you are involved in a price war with business rivals
  • Assertive, if you are quietly sticking to your bottom line
  • Cooperative, if you and the other party have decided to pool your resources in a common venture
  • Submissive, if the specific issue is of little interest to you, but you want to maintain good relations with the other party
  • Assertive, if the other party is being either unnecessarily aggressive or passive to the extent that a good win-win outcome might be missed.

Men may tend to see the other party as ‘opponents’ to beat, while women may tend to see the other group as members of a ‘party’ with whom there is potential to collaborate for mutual benefit.

5. Deciding whether or not to negotiate

Before entering into negotiations, you need to ask why you are doing so, and whether there might be a better alternative to negotiation.

  • A useful starting point for this is to determine your BATNA – Best Alternative To a Negotiated Agreement.
  • Your initial BATNA is pre-determined – it’s one that you’ve identified before negotiations begin in earnest.
  • Your emergent BATNA is that which changes or becomes clearer during the negotiations as you begin to obtain more information about your own and the other party’s interests, resources, constituencies and influence.
  • Sometimes, our imagined options to negotiation are not as strong as we might initially think, so your EATNA is the Estimated Alternative To a Negotiated Agreement.
  • The worst thing that could happen is your WATNA – Worst Alternative To a Negotiated Agreement.

6. Preparing for negotiations (before)

Successful negotiation is 80 per cent preparation (the most important ingredient):

  • Do I need to negotiate?
  • What are my goals?
  • What could I trade?
  • What is my bottom line?
  • How would the other side answer the above questions?
  • What can we offer each other and what relationship do we want?

7. Conducting negotiations (during)

There are four recognisable stages for you to notice during successful negotiations. These are:

  1. Engaging – preliminaries, including establishing trust and agreeing the process and rules
  2. Suggesting – the opening gambits
  3. Bargaining – making a firm provisional offer
  4. Agreeing – agreeing outcomes, getting it in writing, setting the scene for next time and celebrating.

8. What if things go wrong?

With the best will in the world – and even if you set out to achieve a win-win outcome – things can go wrong in negotiations. So it helps to anticipate the most common sorts of problem you might encounter, and have some provisional ideas to hand about how you might address them.

  • Ground rules, such as Time Out, can prove extremely helpful when problems arise.
  • It may also be worth considering using a facilitator.

9. Preparing for the next negotiation (after)

After the formal closure of negotiations, you’ll naturally want to review, evaluate and reflect on the outcomes you’ve achieved, and decide upon any further action that’s required.

  • It’s quite usual to have doubts afterwards, but it’s generally better to take any learnings forward to the next negotiation rather than try to reopen that particular set of negotiations.
  • Always take time to review the negotiation and decide what worked, what didn’t and what you might do differently next time.

10. The ten commandments of negotiations

Although negotiation can often seem complex and daunting, you can ease your way through all its twists and turns if you follow these ten simple guidelines…

  1. Ask yourself, is this a potential or actual negotiation?
  2. Prepare
  3. Work out BATNA, EATNA and/or WATNA
  4. Never assume value
  5. Listen and observe
  6. Aim for win-win
  7. Call for time out, if necessary
  8. Write down the agreement
  9. Celebrate success appropriately
  10. Learn lessons

11. Glossary

Some 17 key negotiation terms are set out in alphabetical order.