What Is Considered a Negotiation?
Negotiation is a dialogue between at least two parties that is intended to result in a beneficial outcome on matters of mutual interest or conflict. The aim of all negotiations is to reach a desired outcome on the priorities while compromising on other aspects. In order to have a productive negotiation, be it a conversation with your boss, a team discussion of a project, or a business-related matter, you need to be equipped with certain tools in advance. Below we will break down steps to take before and during the negotiation as well as common tactics that work.
Two Most Common Types of Negotiation
According to the Harvard Law School Program on Negotiation, the two most common types of negotiations are the win-lose and lose-lose negotiations. The difference is based on the distribution of overall value – whether it’s fixed on not.
This type of negotiation involves both parties being interested in getting the most value out of limited resources. Because this process is similar to slicing up a pie, it is likely that one side will get a “bigger piece” than the other side. Examples of everyday distributive negotiations would be any sort of price-related bargain – things like bargaining at a local market or getting a better deal when buying a car. In order to win in this case, it is important to know your “walk away price” – the price above which the buyer is not ready to purchase the item. In contrast with the zero-sum game, there is another type of negotiation – the integrative negotiation.
Also known as “interest-based bargaining” or a “win-win”, this type of negotiation requires both parties to find satisfactory outcomes of the situation. Continuing with the pie analogy, parties enlarge the pie by creating more joint value. It is necessary to have a few points of mutual interest, as this “win-win” scenario will only work if both sides can compromise something in return for meeting their top goals.
A great example of using the same resources is a dispute between two little sisters over an orange. The two potential outcomes here are a compromise and a win-win solution. If the girls want to eat the orange, then they each get half. However, if one girl wants to eat the orange and the other one needs the zest for baking, then it’s a win-win case. Therefore, for a win-win case it is important to determine interests and see whether there is an overlap.
If the girls were to get into a discussion over an orange, they would benefit from knowing what skills are required for a successful negotiation.
Negotiations themselves require some level of preparation depending on your environment and situation. Here are the core skills that are subconsciously and intentionally used for negotiations.
Planning. To make a coherent argument, decide on your priorities and consider the long-term impact of your decisions. It is important to do the required homework and collect as much information about the opposing party as possible. Putting yourself in the shoes of your opponents will help you to see the benefits they are striving for and which points they can give on.
Strategizing. As they say, hope for the best, prepare for the worst. Many points in a discussion may lead to a different combination of win-wins and compromises than in your Plan A. Have a backup plan, and research additional factors that may affect the opposing team such as their sales target for the quarter.
Persuasion. Influencing people with the use of specific words and tactics can play mind tricks on them and make miracles happen. Some of the persuasion techniques include asking for an initial favour or a small commitment which will influence people to do more, using “because” structures to decline offers, and many more other techniques.
When it comes to actionable steps to take, here are a few ideas to consider beforehand.
What to Do Before a Negotiation
Identify the final goal and your BATNA. Consider two options: the minimum terms that will satisfy you as to the outcome of the negotiation and your BATNA. This acronym stands for the best alternative to a negotiated agreement. If for whatever reason you won’t settle for the minimum results, what is your best outside option? To put it simply, what price will get you the most value even if it is outside of the expected range?
Impose time restrictions. In order to ensure that negotiations will help the parties reach an agreement, set a timeline for decisions. If results aren’t attained in that period of time, both parties may take some time to reevaluate their BATNA given the information obtained and then return to it at a later stage.
Have a Mock Negotiation. Practice your arguments with a trusted colleague or by using apps like Bigrock. Both of these methods will help you to evaluate key settlement points, understand your negotiation styles and weaknesses, and become more assertive.
Beware the Anchoring Bias
When people are making a decision, they tend to rely on some piece of information as a baseline for other options. And very often this piece of information is what they learn first.
Whether it’s a number or a quality, it has the potential to change the final decision, anchoring and affecting the person. To make sure that this phenomenon doesn’t affect you, revisit your BATNA and goals throughout the negotiation. Here is an article on how anchoring bias can affect your salary, money matters, and life decisions.
Which Conflict Style Is Yours?
Kenneth W. Thomas has outlined the five conflict styles that people usually demonstrate when it comes to negotiations. These styles depend on two factors: the extent to which negotiators attempt to satisfy their needs (assertiveness) or the attempt to satisfy the other party’s concerns (cooperativeness). Here they are:
- Competing (assertive and uncooperative)
- Accommodating (unassertive and cooperative)
- Avoiding (unassertive and uncooperative)
- Collaborating (both assertive and cooperative)
- Compromising (moderately assertive and cooperative)
We all negotiate on a daily basis; and in order to practice these skills intentionally, consider enrolling in a free negotiation program on Coursera. The University of Michigan is offering a course on essential skills while Yale University has created a strategic playbook with principles for persuasive negotiations. The programs focus on helping you to prepare a negotiation strategy, learn key tactics, create a contract, and close the deal. Whether negotiations take place on a personal level or as a part of business operations, negotiating skills lead to success, career advancement, and rising pay.
Photos: Shutterstock / Photomontage: Martina Advaney
Check out the other articles in the series of Top Future Skills: