Negotiation Skills

Negotiation Skills Topic Outline

What Is Negotiation?The Nature of NegotiationThe Need for NegotiationSituations Not Requiring NegotiationFactors Affecting NegotiationPersuasive Skills and the Use of You-AttitudeStages in the Negotiation ProcessNegotiation StrategiesReaching an AgreementSummarizingDeadlocks

What Is Negotiation?

Negotiation is a process of bargaining in which two parties, each ofwhich has something that the other wants, try to reach an agreement onmutually accepted terms.

The Oxford Dictionary of Business English defines negotiation as: (a) a process of trying to reach an agreement through discussion, (b) a meeting where this discussion takes place.

The Winston Simplified Dictionary defines negotiation as, the discussion and bargaining that goes on between parties before a contract is settled or a deal is definitely agreed upon.

The Nature of NegotiationThe following points make the nature of negotiation quite clear:

1. Negotiation takes place between two parties. Both the parties are equally interested in finding a satisfactory result. 2. Negotiation leads to agreement through discussion, not instructions, orders, or power/influence/authority.

The Need for NegotiationSituations requiring negotiation

Negotiation can take place only when both concerned parties are willing tomeet and discuss the issue at hand.

Formal negotiationsThere is a prearranged meeting of the two parties. The agenda is already fixed, and both parties know what is going to be discussed. Generally, more than two persons are involved in the discussion. In formal negotiations, there is time to prepare and assign roles for each person in each party. A formal negotiation is simpler to handle than unannounced meetings. There is time to study the entire situation and find out the strengths and weaknesses of the other party.

The Need for Negotiation Contd..Informal negotiations

Informal negotiations are unannounced and casual meetings, such as when a staff member drops by a colleagues office and discusses a problem, which they attempt to resolve. It is unannounced. It involves just two persons. It appears casual (although the colleague who initiated the discussion might have planned this approach deliberately). It does not give one time to prepare for the discussion, so one cannot study the strengths or weaknesses of the other side. Its friendly and informal approach is meant to influence the outcome.

The Need for Negotiation Contd.. Situations not requiring negotiationThe following types of situations will not require negotiation: When one of the two parties/persons immediately accepts or agrees to what the other is suggesting. In such a situation, the desired result is already achieved.

When one of the two parties refuses even to consider or discuss the suggestion or proposal. For example, suppose a supplier or a dealer completely refuses to reduce the price or consider any suggestion of partial payments, there is no possibility for negotiation.

Factors Affecting NegotiationNegotiation is affected by the following factors:Persuasion includes a range of skills for convincing other people of the need to accept or agree to a course of action. It helps in resolving issues on which there is a difference of opinion but the solution should be in the interest of allThe location of a negotiation can influence the level of confidence of one party.

Persuasive skills and the you-attitude

Stages in the Negotiation ProcessAccording to Alan Fowler, the stages of an effective discussion are:These six stages can be grouped into three basic phases:

Exchanging initial views

Stages in the Negotiation Process Contd..Preparation phase

The negotiator has to be prepared for the following, before the negotiation: Assessing the relative strength of the two parties Setting negotiating objectives. At this stage, the negotiator should try to answer the following two questions: What are the real issues? Which parties should be involved?

Knowing the real issues at hand helps the negotiator feel confident and fully prepared about two things:

That he/she knows the subject matter well and is not likely to be surprised by the other party introducing unexpected facts or figures That he/she is clear about the desired goal of the discussion

Stages in the Negotiation Process Contd..Negotiation phase

Most effective negotiations follow a set sequence:The parties begin by defining the issues at hand. They ascertain the scope of the negotiation. Each side then puts forward what it is seeking. First, the party that is making a claim presents its case, and then the other party gives an initial responsethus, both the parties define their initial positions. After that comes a more open phase in which the initial positions are tested through argument. The parties then move to discussing a possible solution that could result in a resolution. Firm proposals in more specific terms are then discussed and modified before both parties accept them. Finally, an agreement is spelled out and a conclusion is reached.

Stages in the Negotiation Process Contd..Implementation phaseSome scholars do not consider the stages of preparation and implementation to be parts of negotiation. But they constitute two basic phases of the actual process of negotiation one before initiating the negotiation process and the other after concluding discussions.

The purpose of negotiation is to achieve a decision; the purpose of an agreement is to implement the agreed-upon decision/outcome. If due attention is not paid to the implementation of a negotiation, then the negotiation fails.

Stages in the Negotiation Process Contd..Three steps to prevent failure of implementation are:

In all formal negotiations, confirm in writing all that has been agreed upon.

As far as possible, mention an implementation programme in the agreement. This includes mentioning who is supposed to do what and by when. This matter, if left undefined, may become the subject of disagreement later.Ensure that every concerned person, not only those involved in the discussion, is told about the agreement, its implications, and the actions that are to follow.

Negotiation StrategiesInitial strategies

The negotiators must plan their strategies before any negotiation:A successful negotiation should plan the discussion according to the psychological needs of the other party and use appropriate strategies to maximize his or her advantage and gain information about the objectives of the other party. He or she should focus on the need to reach a mutually satisfactory conclusion by joint problem-solving.The negotiator should sell sunny-side up. He or she should think about how the other person will see the proposal and should try to identify and sell the benefits of his or her case.The negotiator should be able to alter his or her position (within planned limits) if needed to achieve this approach. Instead of talking compulsively, a good negotiator allows the other party to say what they wish and develops a dialogue with them.

Negotiation StrategiesWin Win StrategyWin Lose StrategyLose - Win Strategy Lose Lose Strategy

Negotiation Strategies Contd..Reaching an agreement

Tips for reaching a final agreement are:

After a long and difficult discussion, final should be taken as final. No further concessions or compromises should be allowed. Negotiators should be tactful and persuasive to ensure that the final outcome is seen as beneficial by the other party. The key strategy in any negotiation is persuasion. Negotiators should emphasize the other partys benefits and should be enthusiastic about the other partys cooperation and suggestions.

Negotiation Strategies Contd..Summarizing

It helps to summarize the agreements and conclusions at the end of the discussion.

The negotiators can suggest something such as, I think it would be helpful if we could summarize all that we have discussed to reach this agreement. Alternatively, one party might suggest: Lets note it down so that no point is later missed by anyone.

Negotiation Strategies Contd.. DeadlocksReaching a mutually satisfactory end is the basic objective of any negotiation. If there is no final agreement reached, even after a prolonged discussion, the following strategies must be employed:Instead of going round in circles on a controversial/debatable/arguable point, move on to the next point on the agenda. Point out that no further concessions can be made regarding the point of contention, as they would be of no benefit to either party. Explain and emphasize the consequences that would result from a deadlock.Use the ethical aspect of agreement, such as upholding the organizations values, the greatest good of the largest number of people, and so on. Even in the situation of a deadlock, remain positive about reaching a mutually agreeable solution.Understand that it is best to decide the matter through mutual understanding rather than third-party intervention.