Negotiation Skills

Negotiation Skills
Topic Outline

What Is Negotiation?

The Nature of Negotiation

The Need for Negotiation

Situations Not Requiring Negotiation

Factors Affecting Negotiation

Persuasive Skills and the Use of You-Attitude

Stages in the Negotiation Process

Negotiation Strategies

Reaching an Agreement

Summarizing

Deadlocks

What Is Negotiation?
Negotiation is a process of bargaining in which two parties, each of
which has something that the other wants, try to reach an agreement on
mutually 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 Negotiation

The 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 Negotiation

Situations requiring negotiation
Negotiation can take place only when both concerned parties are willing to
meet and discuss the issue at hand.

Formal negotiations

There 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 negotiation
The 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 Negotiation

Negotiation is affected by the following factors:

Location
The location of a
negotiation can
influence the level
of confidence of
one party.

Timing
The choice of time for
holding discussions and
the length of the
discussion should be
fixed according to
mutual convenience. To
be effective,
negotiations should be
timely.

Subjective factors

Persuasive skills and

the you-attitude

The outcome of a
discussion does not
depend wholly on
objective factors such
as logic and the facts
of the matter under
consideration. It is also
affected by subjective
factors. (e.g.,
individual
relationships, fear of
authority, personal
considerations, etc.)

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 all

Stages in the Negotiation Process

According to Alan Fowler, the stages of an effective discussion are:
Preparing
and
planning

Exchanging
initial views

Exploring
possible
compromises

Searching
for common
ground

Implementing
the agreement

Securing
an
agreement

These six stages can be grouped into three basic phases:

A preparation
phase before
the negotiation
begins

The actual negotiating

processthe interaction
that leads to the final
agreement and an
outcome

The implementation
of the agreement

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 response
thus, 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 phase
Some 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 Strategies
Initial 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 Strategies
Win Win Strategy
Win Lose Strategy
Lose - 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..

Deadlocks
Reaching 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.