Negotiating skills

All human interactions are characterised by some sort of negotiation between or

among people trying to give and take from one another. This process of exchange
is continual and often goes unnoticed. Negotiating is a process of bargaining to
reach a mutually acceptable agreement. It implies two communications between
parties to find solutions to problems result in an outcome acceptable to all. It is not
having your own way in all situations. Successful negotiations achieve win/win
situations: mutually acceptable outcomes.

Scope for agreement

In any negotiation, you quickly need to

discover the likelihood that you might be
able to reach a satisfactory agreement.
This may be thought of as an overlap of
objectives. For example, a seller may be
seeking to maximise the sale price, but
has a price below which they must not go.
Similarly, a buyer may want to minimise
the purchase price, but will have a
maximum above which they will not buy.

Steps in negotiation

In any successful negotiation you are

concerned with three key elements as
shown.

You need to know your own objectives. You

need to plan and prepare for your
negotiations. If you are negotiating, say, a
sale or a purchase in relation to your
business, then it is likely that you will
already have sufficient knowledge.
However, if you are negotiating a topic with which you are less familiar, say on
Negotiating skills

behalf of a trade association, then it is essential to research the topic thoroughly in

advance. As the negotiation progresses, you need to learn as much as you can
about the other party’s objectives.

Five steps to successful negotiation

You can use the mnemonic “Partners Don’t Pick Bad Arguments” to remember the
steps in the negotiating process, which are as follows:

Prepare

Always prepare thoroughly. There will still be times when you must think on your
feet and respond to the unexpected, but try to minimise the possibility. Decide your
objectives and, as you will be assertive rather than aggressive, decide your fall-
back position. Categorise them as follows:
ƒ must achieve;

Negotiating skills 1
 ƒ intend to achieve; and,
ƒ would like to achieve.
Negotiations often involve a compromise, so you need to decide what you are not
prepared to concede. Think of all the solutions which may be offered to you and
decide in advance which are acceptable.

Once your objectives are established, do enough research to be sure of your facts.
Gather and analyse the information that is available; undertake or commission
additional research if necessary. Then plan your strategy. What will your opening
offer be? What are you prepared to trade?

Try to assess the needs of the other person in the negotiation by listing the
information under must achieve, intend to achieve and would like to achieve. What
will they need to get out of the deal? Use any previous knowledge of the person or
organisation to work out what stance they are likely to take. Do not make
assumptions.

Discuss

You know what you hope to achieve - the discussion stage is where you establish
the other party’s objectives and requirements. Once you have both sides of the
story, you are in a position to move on.

Propose

Based on your knowledge, offer proposals and find out what the other person is
prepared to trade in return. At this stage, nothing is set in stone - you are
tentatively exploring possibilities.

This is the time to ensure that the information received is accurate. Both sides may
have given facts and arguments, to convince each other of their case. However,
statistics can be misused, facts may be wrong and emotional appeals might have
been made. It is always sensible to test the other’s statements.

When both parties have satisfactorily explored the issues, the requirements to be
mentioned in the bidding phase should be summarised.

Bargain

You are now moving to firmer ground and your bargaining and trading should take
you forward to agreement.

After discussing each other’s requirements and exchanging information, the

bargaining can start. It is important not to start bargaining too early - you may
miss important concession areas or information. Generally, you receive more if you
ask for more. If conflict arises at this point, indicate that your opening offer is not
necessarily what you will finally accept.

When your offer is made, state this clearly. If you use the word “about”, an
experienced negotiator can challenge on a variety of issues, and change your offer
dramatically.

When the offer has been made, the next step is to find out exactly what it includes.
Ask for clarification. You will have prepared a list of your requirements in the pre-
negotiation stage, so ensure that your needs have been met. The points to
remember when making an offer are:
ƒ Aim high - you can reduce your demands later.
ƒ Make a positive offer.
ƒ Ask for clarification of offers you receive.

2 Business Advocacy Fund

 The next stage is the most vital phase of the whole negotiating process. The offer
has been made, and the two parties have to ensure that this is mutually
acceptable. All the issues to be negotiated need to be identified. At this stage,
concessions may be introduced. Trade items that are of little value to you, but of
great importance to the other party, in exchange for items of great importance to
yourself.

If you are offered a concession, it can be dealt with in four ways:

ƒ Be grateful - and ask for more.
ƒ Trade with a smaller concession.
ƒ Accept it and continue talking.
ƒ If it was too small, act as though you had not heard it.
Do not trade all your concessions at once. If they are given too early, the other
party may expect more. Also, you should record all concessions, to ensure no
misunderstandings occur. No deals are binding until the contract has been agreed.

When making concessions or offering counter-proposals, flexibility should be

maintained. This should reduce the possibility of a deadlock. If an agreement
cannot be reached on one issue, discuss all the other issues and then return to the
final point of disagreement, with the aim of finding a solution.

Agree

The final stage; an agreement satisfactory to both parties is arrived at and

documentation, if appropriate, drawn up to seal the agreement.

When agreement is in sight, the energy level of the negotiators may increase.
Other signs to watch for are verbal indications - “maybe” “perhaps”, and non-verbal
- papers may be placed in briefcases. It is time to summarise what has been
discussed and agreed. Do not start bargaining again.

It is vital to ensure that all points discussed have been clarified. An action plan may
be required, giving details of deadlines and allocating tasks.

Offer a summary of what has been agreed. This will give a chance to confirm or
correct any decisions. Ensure that all concessions have been agreed as part of the
total package. It is too easy to feel relieved at the final stage and overlook some
detail that could disrupt the whole negotiation.

If there is any disagreement, it may be necessary for negotiations to recommence

until a successful outcome is reached again. It is worth writing a minute of the
meeting or, failing that, following up with a letter documenting the agreement
made and, ideally, who will be responsible for what action together with a
timescale.

Rules of negotiation

There are no rules, but the following pointers may help:

ƒ be assertive;
ƒ respect the other party – they have objectives, too;
ƒ open with a realistic offer, be neither too greedy nor sell yourself too cheaply;
ƒ work out your objectives in advance – this makes it easier for you to
compromise if that becomes necessary;
ƒ always trade – don’t give anything for nothing;
ƒ if you need time to think, take it – ask for a short break and recap your notes.
Ensure that the outcome is mutually beneficial and that all parties leave with a
feeling of well-being; that way they’ll be happy to do business with you again.

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 Factors in negotiation

Let’s look at the sort of things that are likely to affect the negotiation process:
ƒ The nature of the relationship between the parties. If you value the relationship
you will generally use collaborative strategies; collaboration seems to
demonstrate concern for the other party.
ƒ Your, or the other negotiating party’s, skill in communicating. Much of this is
simply a matter of confidence, which is built up over time.
ƒ The amount of time available to the parties. Studies have shown that parties
who face tight deadlines when negotiating will tend to use competitive
strategies, although these are likely to be the most time-intensive where parties
are more or less equal in power.
ƒ Clarity of objectives impacts upon the negotiation process. If you have clear
goals you will be more likely to enjoy a focused discussion in which the
objectives can be used to define progress and as a measure of success.
ƒ You may need to consider the way in which openness affects the negotiation
process. Openness is a major factor in contributing to both communication
effectiveness and negotiation success. You might think that knowledge of the
other party’s positional strength would put them at a disadvantage. Research
seems to prove the opposite to be true. Knowledge of the other party’s relative
weakness seems to lead the negotiating party into responding collaboratively.
Such information needs to be honest and relevant.

Collaborative and competitive negotiation

Competitive negotiation is about one party achieving power over another party,
whereas collaborative negotiation is about both parties balancing the power
between them. They look for solutions that will create value for all the parties
involved in the negotiating process - to create a “win-win” situation.

Amongst the best known proponents of win-win negotiation strategies are two
Harvard professors, Roger Fisher and William Ury1, who have produced a model of
“principled bargaining” built around four strategies:
ƒ Separate the people from the problem – involves communicative strategies,
which accept the people as human beings and focus on the problem as a
separate issue.
ƒ Focus on interests, not positions – involves avoiding the opposing party’s
positional stance, but looking for the underlying interests; a communication
strategy, which looks at the underlying message.
ƒ Invest options for mutual gain – creating new opportunities based on the free
exchange of information about individual need.
ƒ Insist on objective criteria – creating or using external standards that are
untouched by the bargaining process.
Collaborative negotiation can be much less intense because of the parties’ attitude
to power within the negotiation. Where parties set out to balance power in a
relationship, this gives clear messages about the quality of the relationship and the
degree to which the parties wish it to continue.

Conclusion

Negotiation is a means of arriving at a solution to a problem (or problems) in a

manner which ideally results in an outcome which is of benefit to all parties; in
other words, a win/win situation. Everybody is happy, and as a result of your
different needs and objectives, it is possible for everyone to leave the table with
substantial gains and inconsequential losses.

1
Roger Fisher and William Ury, “Getting to ‘Yes’”; Hutchinson, 1990.

4 Business Advocacy Fund