The Art of Negotiations

The definition of negotiation is, "the process whereby interested parties resolve disputes, agree upon courses of action, bargain for individual or collective advantage, and/or attempt to craft outcomes which serve their mutual interests." In simple terms, negotiating is an everyday action that is a means of attaining a goal. Parents negotiate with their children to get them to keep their grades higher. Consumers negotiate with salespeople to get a better price on an automobile. Lawyers negotiate with courts to get their clients a favorable outcome. The key word in all of these phrases is "get." Negotiating is almost always to acquire, or get, something.

In most cases, a simple "ask and you shall receive" method is not going to be the correct way to enter the situation. Negotiation is the most common way of problem solving, but it is not as easy as it may seem. There are rights and wrongs to negotiations, and there are skills that can only be learned with experience and time. Any well-rounded business professional should have a general understanding of the negotiating process and be able to handle themselves when trying to resolve a dispute.

Win-Lose and Win-Win Negotiation

Traditional negotiating is generally referred to as win-lose negotiating, because of the cut-throat style of the negotiators in the dispute. Also called the advocacy approach, one negotiator acts as an advocate to a certain party and tries to get the best possible circumstance for that party. The best example of this would be a lawyer and its client. The negotiator's main goal is to determine the minimum circumstance the opposite party is willing to comply with, and then tailor the defense around this. The best possible outcome would be for the negotiator to achieve all or most of the circumstances that its party desires, without the opposing party leaving the bargaining table. Although the advocacy approach is the traditional method of negotiating, this style of negotiating is not conducive to a typical business environment because it doesn't allow for two winners. No business wants to leave a negotiation thinking they have lost.

Win-win negotiating is the negotiation strategy of business. It is commonly referred to as mutual-gains bargaining, and widely known as 'Principled Negotiation'. Principled negotiation is an ethical form of negotiation that emphasizes joint gains. Instead of arguing into a conclusion where one party walks away happy and the other leaves dissatisfied, principled negotiation allows for both parties to leave the table content with their positions. In a business environment, long-lasting relationships are the keys to success. Mutual-gains bargaining will ensure that both parties' relationships don't suffer as a result of one dispute.

THE SEVEN ELEMENTS OF PRINCIPLED NEGOTIATION

Getting to Yes by Harvard's Roger Fisher and Bill Ury is widely known as the authority on principled negotiation. They have detailed seven main elements to a successful negotiation:

1. Explore Interests, Not Positions. Problem-solving negotiation focuses on the true needs and wants of the two sides. This will often lead the two parties to find a common ground and work together to achieve a goal.

2. Develop Options for Joint Gain. Working together to overcome a dispute will result in the two parties co-developing a variety of possible situations, and not limiting themselves to one or two options. Opening the door to a variety of options will increase the quality of the relationship.

3. Use Objective Criteria and Standards. Objective standards, or laws, will allow fair playing ground for both parties. This is a way of convincing the other party that an agreement is fair and protecting your party from being swayed into an unfair situation.Assess the Alternatives to a Negotiated Agreement. Each party should understand that an agreement may not be reached, and should have a plan if that situation should happen. A negotiator should go into an agreement with a Best Alternative To A Negotiated Agreement, or BATNA. They should never agree to a proposal that is worse than their BATNA.

1. Separate the People from the Problem. There are two basic parts of every negotiation: the people and the problems. A negotiator has to separate the emotions from the figures, or the people from the substance. They also have to learn not to make personal remarks in hopes of improving relationships.

2. Talk First, Decide Later. A party should never decide on a solution without first talking to the other side. Too often, a party enters a negotiation with a solution in mind, and immediately tries to press the solution on the ears of the other party. If negotiators talk to the other side and explore all of the possible outcomes before coming to a solution, they tend to produce better agreements.

3. Try to Understand Each Other's Perceptions. Walk a day in another person's shoes. Some demands are so outrageous that the other side can never come to the terms. Understanding the situation that the other party is in will allow a negotiator to fine tune the proposal, and evaluate the terms to make sure they are acceptable for both sides.

The Key to Quality Negotiating is to Listen

Many negotiators think that the more they talk, the better they look. In contrast, speaking too much will usually ruin a negotiation. Smooth talkers can be more of a turn off than a compliment. Listening to the other side allows the negotiator to understand the opponent and know where it is coming from. More often than not, the other party will express exactly what it is looking for, and what it will take to finish the process.

A GOOD NEGOTIATOR IS ALWAYS PREPARED

A good negotiator is full of energy. The day before a negotiation, a good debater will get a full night's rest, eat well, and watch her/his alcohol intake. A long negotiation is exhausting, and a tired negotiator is not at the peak of its game. The person with the energy has the will to continue, and a negotiator does not want to give that advantage to the other side.

Knowing your opponent is an essential part of any negotiation:

· Who has the upper hand? In any situation, one side has an advantage. One side may have better bargaining skills, or they may just have the desire to want something more. Know the other side's strengths and weaknesses, and a negotiator should know their own.

· Who is the decision maker? Know who you are dealing with, and where they fall in the chain of command. You may be asking for leverage that your opponent does not have the authority to grant, or you may not be taking advantage of a sit down with the CEO. Titles mean different things in different companies.

· What is negotiable and what is not negotiable? A business may declare an issue non-negotiable as a ploy to quicken the process. Knowing the company's history in negotiations will help to know their true stance on issues.

· What is negotiable and what is not negotiable? "Two kids are squabbling over the last orange in the fridge. When Dad hears the ruckus, he goes into the kitchen and he's sure he has the answer. He slices the fruit into equal halves and gives one to each kid. Surprisingly, no one is happy. Why? Because one kid just wanted the pulp, and the other just wanted the rind." Don't jump to conclusions about the other side's desires. They may want exactly what you want to give. To get a deal, you must ask for a deal.

· How does the other side negotiate? More often than not, a negotiator may figure that a veteran is going to be a tough sell, and a new kid on the block will be a pushover. That is actually not the case. A veteran usually knows a good deal when it sees one, and will jump on it. A new person is inexperienced, and will put up a wall of defense to avoid being steamrolled. Never underestimate your opponent.

A widely known phrase in the world of sales is, "He who mentions the first number loses." This is true in any negotiation sequence. A negotiator will never know if its number or offer was the best possible if they speak first. The other side may have offered more, or the seller may have sold for less. If the negotiator just stays silent, someone will eventually speak. This is the person who is more desperate for the deal. Also, the meetings should never be conducted before 10 a.m. or after 4p.m. Before 10 makes the party appear too anxious, and after 4 they think you're desperate.

MISTAKES AND FAILURE IN NEGOTIATION

In the wake of all the successful negotiation ventures, about one-third actually fails. In most deals that fail, the negotiator makes one or more of the following mistakes:

• They only recognize their own interest in the deal. These people only see what they get and what they give, not the other side of the picture.
• Price is more important than the overall cost. Many negotiators focus on a payment rather than an overall total cost. This is dangerous because they aren't looking at the entire life cycle.
• They do not actively search for added value. A negotiator will constantly throw something into the mix without getting something in return. This loses money.
• They break down and end up in a fight. Proving as many arguments is sometimes the way a negotiator tries to win a point, but it usually just ends up in disgust for both sides.
• They do not take into account that the other guy has to make a profit as well. A person who feels content about their deal is more likely to play an added role and be willing to participate in future negotiations.
• They are afraid of opening up. A good negotiation is give and take. Many debaters fear that giving too much information is dangerous, but in the same respect, holding back information can be more costly.
• They are unorganized. A poorly organized negotiator will kill a deal quickly. Insecurity, lack of preparation, poor skills, and sloppy work will always show.
• They have not delegated roles within their group/lack of leadership. There should be a leader, a listener, an economic advisor, and an expert at all times to keep everyone in check.
• They are afraid of bargaining, or are weak at it. Knowing the skill of your opponent and taking occasional breaks (away from opponent) will lighten the situation.
• They make offers which are so low that they insult they other side. Underestimating the opponent is the worst thing that a negotiator can do. It makes both sides look bad and begins a bad relationship that may be short lived.
• They are not good at listening. As stated before, listening is the key. The other side will usually hint what it will take to make a deal.

NEGOTIATING TACTICS

Skilled negotiators use many tactics to try to make their offer sound better or more acceptable.

• Presenting Demands. Many negotiators will realize that certain parties are on a time restraint, so they will set demands that need to be met in order for the deal to consummate. This proves the thought that you shouldn't be in a negotiation if you cannot walk away.
• Deadlines. A party will tell another party that they have until a certain date or time to make up their mind or the deal is off. This is typical in a situation where one party is trying to meet a quota. These deadlines are ways of putting pressure on a party.
• Good Cop/Bad Cop. Just like in the movies. Person A says that their manager is as far as he can go, "but if you say that you'll sign now, maybe I can push him a bit." The buying party should always remember that the "cops" are still on the same team and are working together.
• Trust. Very simple. A negotiator makes a person think they are their lifelong friend and says, "Trust me." They are looking towards the emotional aspect.
• Walking Out. Many negotiators will push and push, and then walk out. This will make the other party desperate and put a very small window of time to compromise. If the other party gets to their vehicle, the deal looks to be dead.

CONCLUSION

After the negotiations, the best outcomes are the ones that last. A good negotiation is the beginning of a lasting relationship. A bad negotiation is the end of any more talks. The negotiator should always remember that if the negotiation is so lopsided that it crushes the other party, the party is not going to be very happy when they find out. Fair negotiation gives the opportunity for future commerce and talks.

A well negotiated deal occurs when respect has been shown at all times, communication has been good, both parties are satisfied, and most importantly, both parties have learned something. The great American negotiator, Herb Cohen, once said, "Within reason, you can get whatever you want if you are aware of your options, if you test your assumptions, if you take shrewdly calculated risks based on solid information, and if you believe you have power." That sums up the true art of negotiations.

In either case, the first offer should be well above the negotiator's bottom line. Aiming high will start the process off at a point where there is leverage to be given. A good debater will never accept the first offer, and this is generally expected. Both of the sides have a wish list, or desired terms that would make an agreement. The best possible outcome for both sides would be to end up in the middle of both buyer desired terms. If the two cannot come to an agreement, or fall too far out of the picture, they would end up in the buyer C.A.N, or Consequences of No Agreement.