How to negotiate effectively

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. Ideal Limit HIM Bargaining area 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 HIM No deal 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 HIM 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 AREA OF NO DEAL Like Intend 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