Negotiation is not just a business activity – it’s part of everyday life. Many people dread it. They fear they’ll be outsmarted. For most, it’s simply a question of calmness and confidence. There’s no need to be apprehensive if you follow a few simple guidelines and of course, the more you practise, the better you become.
Negotiation has been defined as ‘the gentle art of persuading someone that you can help them get what they want if they help you get what you want’. It’s about working together to come to an agreement by offering your cooperation in exchange for theirs.
It’s also been defined as ‘the art of the possible’. You rarely get everything you aim for. Nor should you necessarily want to – if one party feels crushed, the agreement rarely sticks. But with the right approach, you will get the greater part.
Zero-Sum or Non-Zero-Sum?
Zero-sum negotiations are those in which one person’s loss inevitably leads to another’s gain. Most buying and selling transactions are like this. If I’m selling, the more I can persuade you to pay, the more I win, and the more you lose.
Non-zero-sum negotiations are those in which both parties could win, and both could lose. Most business deals are of this kind. For example, a supplier approaches a retailer with a new product. The retailer stands to gain by stocking the product, but demands a 10% reduction in the wholesale price. The supplier could still make a profit by complying, but refuses to lower the price more than 5%. So the retailer rejects the product and both miss out.
Far-sighted negotiators would have been more flexible and struck a compromise that would have been profitable for both.
Preparation
Negotiations happen in three stages:
- Preparation
- The bargaining
- Follow-up
90% of success in negotiations comes from thorough preparation.
Build up a detailed picture of the other’s wants and needs. If they represent an organisation, find out as much as you can about it – how it operates, its procedures, rules and regulations, and time scales.
Know what you want from the negotiation. Write it down. For example, if you’re selling your car, decide:
- How much do you want? What’s your target/ideal outcome?
- What’s the absolute minimum you’d accept, after taking account of extras, your costs etc.?
- What will be your initial asking price, one that would allow you some room for manoeuvre?
Think about add-ons and trade-offs – what would you be willing to concede to close the sale? E.g. would you accept a lower offer for cash?
If you’re buying, you’re looking at the negotiation from a different point of view. Consider your target price, your initial offer, the absolute maximum you’re willing to pay, and what you’d be willing to concede.
Once you’ve set your targets, stick to them and mentally rehearse. The better you mentally rehearse, the calmer, more confident and more successful you’ll be!
The Bargaining
The golden rule in bargaining (as in life) is listen more, talk less.
Your priority is to fully understand the other person’s point of view. This means paying attention to what they say and how they say it, probing their argument and reflecting back. Let them know you value their opinion; then you’ll be more likely to interest them in yours.
Hold back. Don’t try to get all your points in first. If you say too much, too soon, you miss opportunities to gather information and prevent the other from laying his cards on the table.
Be willing to concede a few minor points.
If you hit a stumbling block – you have three alternatives:
- Either agree to go away and think about it and continue some other time; or
- Try to get round it by looking for a secondary point of agreement before returning to the main issue; or
- Recognise that it is not possible to come to a deal which is satisfactory to both of you and terminate the negotiation.
Be pleasant and courteous at all times, even if you can’t agree. You may want to negotiate with this person again.
Once you’ve made a deal, stick to it. If you break your word, the other person will rarely want to have anything more to do with you.
And remember: the real issue at the end of a negotiation is not, ‘Who won?’ but ‘Was everyone happy with the outcome?’ Your objective is win/win. Unless both of you gain something from the negotiation, you’ve failed!
©David Lawrence Preston, 1.7.2016
Follow me on Facebook and Twitter @David_L_Preston
How to Books, 2004