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Negotiation Skills

Abhijith R

Negotiation

The word "negotiation" originated from the Latin expression, "negotiatus", which means "to carry

on business".

The process of conferring to arrive at an agreement between different parties, each

with their own interests and preferences.

“A give-and-take decision-making process involving interdependent parties with different

preferences.”

Definition

“Negotiating is the process of communicating

back and forth, for the purpose of reaching a

joint agreement about differing needs or

ideas.”

Features of Negotiation

Minimum two parties

Predetermined goals

Expecting an outcome

Resolution and Consensus

Parties willing to modify their positions

Parties should understand the purpose of negotiation

Why Do We Negotiate?

To reach an agreement

To beat the opposition

To compromise

To settle an argument

To make a point

Types Of Negotiation

Distributive Negotiation

Integrative Negotiation

Distributive Negotiation

Parties compete over the distribution of a fixed sum of value. The key question in a distributed negotiation is, “Who will claim the most value?” A gain by one side is made at the expanse of other.

The Seller’s goal is to negotiate as high a price as possible; the Buyer’s goal is to negotiate as low a price as possible.

Integrative Negotiation

In Integrative Negotiation, parties cooperate to achieve maximize benefits by integrating their interests into an agreement. This is also known as a win-win negotiation.

In an integrative negotiation,, there are many items and issues to be negotiated, and the goal of each side is to “create” as much value as possible for itself and the other side.

Distributive Versus Integrative Negotiation

TypeDistributive Negotiation Integrative Negotiation

Outcome Win-Lose Win-Win

Motivation Individual Gain Joint & Individual Gain

Interests Opposed Different. But not always opposite.

Relationship Short-term Long-term

Issues involved Single Multiple

Solution Not Creative Creative

Negotiation Process

Preparation

Information Sharing

Bargaining

Finalizing The Deal

Basic Principles Common To All Forms Of Negotiation

There are minimum 2 parties involved in the negotiation process. There exists some common interest, either in the subject matter of the negotiation or in the negotiating context, that puts or keeps the parties in contact.

Though the parties have the same degree of interest, they initially start with different opinions and objectives which hinders the outcome in general.

In the beginning, parties consider that negotiation is a better way of trying to solve their differences.

Each party is under an impression that there is a possibility of persuading the other party to modify their original position, as initially parties feel that they shall maintain their opening position and persuade the other to change.

During the process, the ideal outcome proves unattainable but parties retain their hope of an acceptable final agreement.

Each party has some influence or power – real or assumed – over the other’s ability to act.

The process of negotiation is that of interaction between people – usually this is direct and verbal interchange.

Characteristics Of An Effective Negotiator

He should be a good learner and observer.

Should know the body language of the people at the negotiation process.

Should be open and flexible and yet firm.

Exercise great patience, coolness and maturity.

Should possess leadership qualities.

Should control emotions and not show his weaknesses.

Should bargain from the position of strength.

Should know and anticipate the pros and cons of his each move and its repercussions.

Should know how to create the momentum for the negotiations and must know when to exit and where to exit by closing the talks successfully.

Should build trust and confidence.

Should be confident and optimist.

Should have clear cut goals and objectives.

If necessary, he should provide a face saving formula for his counter party.

Should be able to grasp the situation from many dimensions.

Should know human psychology and face reading

Should not be a doubting Thomas.

Should be a patient listener.

Should plan and prepare thoroughly with relevant data and information to avoid

blank mind in the process.

Should radiate energy and enthusiasm and must be in a position to empathize with his opponents.

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Types Of Negotiation In Organizations

Managerial Negotiations

Types PartiesInvolved

Examples

 Day-to-day/ Managerial

Negotiations

1. Different levels of Management

2. In between colleagues

3. Trade unions

4. Legal advisers

1. Negotiation for pay, terms and

working conditions.

2. Description of the job and fixation of

responsibility.

3. Increasing productivity.

Commercial Negotiations

Types PartiesInvolved

Examples

Commercial Negotiation

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1.Management 2.Suppliers

3.Government 4.Customers

5.Trade unions 6.Legal advisors

7.Public

1. Striking a contract with the customer. 2. Negotiations for

the price and quality of goods to

be purchased. 3. Negotiations with

financial institutions as regarding the availability of

capital

Legal Negotiations

Types PartiesInvolved

Examples

 Legal Negotiations

1. Government

2. Management

3. Customers

1. Adhering to the laws of the local

and national government.

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10 Techniques for Better Negotiation

1) Prepare, prepare, prepare

2) Pay attention to timing

3) Leave behind your ego.

4) Ramp up your listening skills.

5) If you don't ask, you don't get

6. Anticipate compromise

7. Offer and expect commitment

8. Don't absorb their problems

9. Stick to your principles

10.Close with confirmation.