How to negotiate effectively



                        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 of:

. 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

. Overlap

The situations of negotiation can be shown diagrammatically in terms of
ideals and limits.

                                            Ideal
  Limit
                            HIM

Bargaining area


  Limit                                      Ideal         YOU


The limit may be the limit of negotiators 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.



. No overlap

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 broken down.

                               Ideal                                Limit

                        HIM
      No deal



    YOU

                      Limit                                       Ideal


. 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
Limit
                           HIM


                                   YOU

                                                   Limit             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 opponents 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



                                     Ideal
                 Limit

                     AREA OF NO DEAL
                                      Like

                                                  Intend

         Must



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 is
                 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 negotiators 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 are
twofold:

. 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 opponents 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 ones 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
between:

. Closing too early         More concessions from the opponent could have
  been
                        squeezed
. 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 planning
skills.

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
Listening skills
. Judgement and general intelligence
. Integrity
. Ability to persuade others
. Patience
. Decisiveness



5. Conclusion

In spite of the existence of negotiating theories, it is frequently
difficult to apply theoretical and conceptual knowledge in a practical
situation. In order to be a good negotiator, one should have negotiation
skills as well as a theoretical knowledge. But without a practical
experience it is hard to negotiate effectively.

Interpersonal skills are very important in the negotiation, but what can
help a negotiating party while thinking what to do is not an elaborated
theory, but rather is it a simple analysis and intuition.



Bibliography

1. Raiffa, Howard. 1982. The art and science of negotiation. Harvard
  University Press. Pages 119-133.

Murcott, Owen. 1991. IBS Management Training. Hanzehogeschool. Groningen.


"How to negotiate effectively"