Any successful business owner or manager of a big or small company, whether buying, selling or discussing employees’ wages, or getting a loan from the bank, must get the best possible deals without creating any form of conflict.
A good negotiation must be collaborative, constructive and satisfying both parties involved in the negotiation. If one party wins at the expense of the other expense, this will jeopardise future relations.
However, there will, almost certainly, be occasions when you will find yourself in competitive negotiations. Negotiation skills can be learned and improved through use.
Important Principles in Negotiation
Negotiation may be looked upon as the process of finding the point of balance between your own objectives and the objectives of the other party.
Negotiation can be ‘competitive’ or ‘collaborative’. In competitive negotiations, the negotiator want to ‘win’ even if this result in the other party ‘loosing’. It can end in confrontation. In collaborative negotiations the aim is to reach an agreement which satisfies both parties, i.e., to maximise mutual advantage.
There is no one right way to negotiate. Each person will develop a style which suits them. Your skill will develop with experience but you can try to pick up the basics from books, training videos and short training seminars. To negotiates successfully, it is necessary to learn how to;
- Understand the importance of preparation
- Understand how to develop objectives for negotiation,
- Understand the strategies, tactics and signal which may be used,
- Assess realistically the chances of a successful outcome.
In any successful negotiation, you are concerned with three key elements which are
- Owner’s objective.
- Other person’s objectives.
- Basis for the negotiation.
Five Essential Stages in Negotiating Process
Carefully outline your objectives. They must be specific, achievable and measurable. In other words,you must have a clear picture of what you want from the other party, be realistic and be able to assess how well you have done. Write them down.
Objective should also be put in order of priority, one way to do this is to classify them as ‘must achieve’, ‘intend to achieve’ and like to achieve. For example, you bought a printer for your office. It breaks down after two weeks and you have to contact the supplier. What are your objectives?
- Must achieve: the use of a printer that works.
- Intend to achieve: get the printer repaired.
- Like to achieve: get a replacement printer.
Make research; gather as much information as possible about the subject to be negotiated. The person with the most information usually does better in negotiation.
This is the process of exploring each part’s needs stating with tentative opening offers. This need to be realistic otherwise there will be a little scope for a satisfactory conclusion.
If both parties are co-operative, progress can be made. If one side is competitive, problem may arise. Analyze the other party’s reaction to what you say.
Use opening statement covering the main issue. Allow the discussion to develop mutually. Establish a relationship with the other person. Ask questions to find out more about their needs and keep things moving.
In this stage, you are giving and receiving proposals and suggestions. Remember to trade things, not to concede to them. Look for opportunity to trade things which are cheap for you to give but valuable to the other party, in return for things which are valuable to you.
After discussing each other’s requirements and exchanging information, the bargaining can start. Generally speaking, you receive more if you start off asking for more, or you will concede less if you start off offering less. If conflict arises at this point, indicate that your opening position is not necessarily what you will finally accept.
Agreement is reached when both parties find an acceptable point somewhere between the starting position.
At this stage you summarise what has been discussed and agreed. Do not start bargaining again. Offer a summary of what has been agreed, this will give a chance to confirm any decision. As soon as possible, send a letter documenting the agreement. Having the agreement in writing is better than a handshake on a deal.
The letter should contain the following points
- The terms of the agreement,
- The names of those involved,
- The price mentioned, discounts, etc.,
- Individual responsibility,
- Time schedules and any deadlines agreed.
Useful tips during negotiation process.
- Be assertive.
- Be patient.
- Be open minded
- Listen carefully.
- Be self-discipline.
- Plan carefully and fully.
- Be creative
- Be flexible
- Be persuasive.
- Be decisive.
- Show confidence.
- Show consideration.