HOW TO NEGOTIATE EFFECTIVELY
1. What is negotiation
Negotiation is an essential part of the every-day business life. It can
take place at any time and in any place. Negotiation is a kind of
meeting, but contrary to the latter it may be held in some unexpected
and uncomfortable place such as the street or on the stairs.
There are several definitions of negotiation. It is said to be “the
process for resolving conflict between two or more parties whereby both
or all modify their demands to achieve a mutually acceptable
compromise”. Thus, it is “the process of changing both parties’ views of
their ideal outcome into an attainable outcome”.
The need of negotiation arises when we are not fully in control of
events. Negotiations take place to handle mutual differences or conflict
interests (wages, hours, work conditions, prices: seller vs buyer)
rights (different interpretations of an agreement)
The aim of a negotiation is to come to an agreement which is acceptable
to both sides, and to preserve the overall relationships. While specific
issues are to be negotiated, common interest are yet still to be
maintained. Negotiations do not mean “war”. Negotiators can still be
friends and partners.
2. The negotiation continuum
The situations of negotiation can be shown diagrammatically in terms of
ideals and limits.
Limit Ideal YOU
The limit may be the limit of negotiator’s authority, such as a minimum
(e.g. price) acceptable. If there is overlap it is possible to settle.
The final position within the bargaining area, where settlement takes
place, depends on the negotiators’ relative strength and skill.
The aim of the negotiator is to achieve a result, i.e. to find a
solution, within the bargaining area. However, it is possible that both
parties set limits which do not provide overlap. In this case the
negotiators have to move their limits, otherwise the negotiation will be
Too much overlap
The opposite case is also possible. When one is careless and settles for
less than he could. In this case the limit of the opposite side should
be found and the ideal should be revised.
Ideal Revised Ideal
3. The approach
There are four main stages of negotiation:
Preparing objectives, information, strategy
Discussing (argue) and signalling willingness to move
Propose and bargain
Close and agree
While preparing to the negotiation it is important not only to prepare
supporting arguments but also to define objectives. Objectives should be
realistic and attainable and have certain priorities. It is also
necessary to investigate the opponent’s plans and priorities, which can
be rather difficult.
The objectives should be classified basically as follows:
Like Ideal but least important
Intend Achievable, a range of possibilities
Must The real limit
AREA OF NO DEAL
The general strategy for negotiation is to have a negotiating team of
three people, who will also be involved in the preparation.
Leader The person who will do the talking and conduct the negotiations
Summariser The person who will ask questions and summarise for control
Observer The person not involved in the actual negotiations, whose role
to watch, listen and record
80 % of the negotiating time is spent arguing. If it equals 100 % the
negotiation will break down. There are two kinds of arguing:
Reasonable and constructive Debates, discussions
Unreasonable and destructive Emotional quarrels
The opponent may try to divert you by escaping into destructive
behaviour. In this case, your behaviour should be not to interrupt, but
to listen and control your feelings. Even if the battle is won, the war
can be lost.
A negotiator should be constructive in arguments and try to get
information by asking open questions or even leading questions. One
thing should be tackled at a time and the opponent should be made
justify his case item by item.
It is important to be non-committal and to state only ideals at first.
Later, the information about the negotiator’s position can be given, and
later alternative proposals can be made. Sometimes it is necessary to
challenge the opponent, so that he demonstrates his strengths.
Negotiation means movement. It may be that both parties move on one
issue. It may be that each moves on different issue. The motive forces
Sanctions The penalty of not agreeing
Incentives The benefits of agreeing.
In both cases, the parties seek to protect their self-interests. They
will show willingness to move by sending signals.
To signal is not to show weakness. But if both parties wait for the
other to signal, the result will be deadlock.
The opponent’s signals will show his willingness to move. So one should
listen, recognise his signals and interpret them, looking for the
qualified words which are evidence of willingness to move.
Another very important point of negotiations is proposing and
bargaining. Proposals should be realistic in order not to cause argument
and deadlock. The language of the proposal signals one’s firmness. Weak
language such as “we hope…, we like…, we prefer…” should be avoided.
Instead, a phrase “we propose…” is appropriate.
The final step in a negotiation is closing and agreeing. There are two
aspects to it:
When to close
How to close
The first is the most difficult moment to recognise. There is a balance
Closing too early More concessions from the opponent could have been
Closing too late The opponents squeezed excessive concessions.
The aim of closing is to get the opposition to stop bargaining and to
make an agreement. The final thing to do is to write down the agreement
and agree what is written down. It is necessary to do this before
leaving the negotiating table.
4. Characteristics of an effective negotiator
What characteristics should one have to be an effective negotiator. The
first and the most important characteristics, from the standpoint of
many executives and managers of large corporations, is preparation and
The other very important characteristics are:
Knowledge of subject matter being negotiated
Ability to think clearly and rapidly under pressure and uncertainty
Ability to express thoughts verbally
12 October 1996