How to Negotiate Effectively

IBS-Plekhanov

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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.


How to Negotiate EffectivelyHow to Negotiate Effectively Ideal Limit

How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively HIM

Bargaining area

How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively

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

How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively

HIM No deal

How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively

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

How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively HIM


How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively YOU


Limit Ideal Revised Ideal


3. The approach


There are four main stages of negotiation:


Preparing objectives information strategy

Discussing (argue) and signalling willingness to move

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

How to Negotiate EffectivelyHow to Negotiate EffectivelyHow to Negotiate Effectively AREA OF NO DEAL

Like

How to Negotiate Effectively

How to Negotiate Effectively Intend

How to Negotiate EffectivelyHow to Negotiate Effectively 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


Raiffa Howard. 1982. The art and science of negotiation. Harvard University Press. Pages 119-133.


Murcott Owen. 1991. IBS Management Training. Hanzehogeschool. Groningen.

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How to Negotiate Effectively

Anton Skobelev 12 October 1996

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