Negotiation Skills

By: Kunal SamaniPresident-Business DevelopmentRolex Lanolin Products Ltd

Why Negotiation?Negotiation is needed to resolve intra-person or inter-person conflicts / disagreements / clash of interests. Negotiation is something that we do all the time and is not only used for business purposes. The aim of negotiation is to explore the situation, and to find a solution that is acceptable to both the sides. Only man negotiates; animals do not; when faced with larger predator, they do not ask for negotiation or justice rather just run away. Negotiation is one of the most difficult jobs a person can do. It requires not only good business judgment but also a keen understanding of human nature

NegotiationIntra-person NegotiationInter-person NegotiationUnplanned NegotiationPlannedNegotiationDistributiveNegotiationIntegrativeNegotiationHardNegotiationSoftNegotiationPrincipledNegotiation

Hard Negotiation Hard negotiation involves the negotiation of positions, rather than interests. It is highly competitive, seeing victory as the number one goal. Hard bargainers, see the participants as adversaries. They distrust the other side and play sneaky games to try to gain the negotiating advantage. Hard bargainers refuse to make concessions and demand one-sided gains as the price of an agreement.When confronted with a softer opponent, hard bargainers almost always will win. When confronted with another hard bargainer, however, it can result in no agreement, both losing.

Soft Negotiation Soft negotiation also involves the negotiation of positions, rather than interests. However, it treats the participants as friends, seeking agreement at almost any cost, and offering concessions easily in the interests of preserving (or creating) a good relationship with the other side. Soft bargainers trust the other side, and are open and honest about their bottom line. This leaves them vulnerable to hard bargainers who act competitivelyoffering few, if any concessions.

Principled Negotiation Principled negotiation is the interest-based approach to negotiation. Fundamental principles of principled negotiation are: it separates the people from the problem; focuses on interests, not positions; insists on objective criteria of the solution.

Negotiation StylesAssertiveUnassertiveUncooperativeCooperativeAvoidanceWin / LoseAccommodatingWin / Win (Collaborating)Compromise

Win Lose StyleThe win-lose is the most common style of distributive negotiation wherein a person pursues his or her own wishes at the expense of other party.Under this style negotiation is viewed as a game to be won. Losing may be taken as failure, weakness, and a loss of status.When engaged in this style, the parties may use different tactics to win like: persuasion, argument, power, or even threat.

Usefulness A forceful position during negotiation may be appropriate when the stakes are high and costs of indecision and compromise are non-affordable.It is useful when issues of legality and ethics are at hand. Where you do not expect to deal with people ever again, and you do not need their goodwill. When there is only one prize.At management level, this style is helping when unpopular but necessary decisions must be made.Win-lose is also a style to use when the other party has a tendency to take advantage of you.

Avoiding StyleAvoiding the conflict in certain situations need of no negotiation at all is also a negotiation.People may physically withdraw by simply leaving the scene of conflict or they can refuse to get involved by using silence, or changing the topic of conversation.Psychologically, avoiders can also deny the existence of conflict.During formal negotiation, avoiding style is exercised by paying deaf ear and / or blind eye to the conflicting stimulus.

Usefulness Useful when:your involvement will only result in negative outcomes for you;issue is insignificant;cost of challenge / cost is quite high;there is little chance of success;relationships are more important to be maintained;to buy time and / or get other party cool down.

Accommodating StyleAccommodating style of negotiation entails giving in to the wishes of the opponent party.Like avoidance, accommodating the other party almost in one-sided way, is also a negotiation.Unlike avoiders, the accommodators enter into negotiation and give in a way that strengthens the relationships.During negotiation, giving in totally / partially may be part of strategic maneuvering.

Usefulness When other issues are more important that need satisfying others and maintaining cooperation.When social credit is to be built for some latter issue.To minimize loss when one is already losing.When relationships are more important than the interests.Though frequent yielding is not a virtue, a yielding to a fellow in ire, a balanced yielding among spouses, or even the frequent yielding obedience of a child to a parent or teacher is a healthy move.

Compromising Style Compromising, the most common style of conflict resolution, entails splitting the differences and reaching an acceptable middle ground solution through give-and-take whereby each party should gain something and may have to lose something.Parties under this style of negotiation, generally use techniques like trading, bargaining, smoothing over differences, and voting etc.Most of the negotiations though start with lose-win style, do end up at the compromising style.

Usefulness It is useful:when two parties have relatively equal power and have mutually exclusive goals;when time is not available to solve problems that are complex and require a great deal of effort to sort out all the issues;to allow for a temporary solution until more time could be devoted to unravel and analyze the complexities; andwhen competition or collaboration fails to lead to a solution.

Collaborating (Win-Win) StyleCollaborating is based on a willingness to accept other partys needs while asserting your own needs as well. It assumes that there is some reasonable chance that a solution can be found to satisfy both parties in conflict without losing much.Such solution, most of the time, is not possible but a collaborator believes that it is worth trying to find that.

Illustrative StoryTwo brothers had an orange. Each of them wanted to have it. Ultimately they resolved the conflict through splitting the orange into two halves, one half for the each.Elder brother ate the pulp and threw the peeling. The younger brother who did not have an innate liking for the oranges and just wanted the peeling as a recipe ingredient, used the peeling and discarded the pulp.

Your CommentsWhat negotiation style(s) the two brothers adopted to resolve the conflict? Offer your comments over degree of usefulness of the style(s) used in this situation.

Preparing for NegotiationThe Es of Negotiations:Establish GOALEstablish TRUSTEstablish RULESEstablish TRADEEstablish ALTERNATIVES

Establish GOAL

Establish TRUST

Establish RULES

Establish TRADE

Establish ALTERNATIVES

At the TableNegotiation StrategiesCommunication Skills

Negotiation StrategiesAhmad and Hassan decided to purchase an office for their newly started business three months ago. Their first choice was an office located in a new development, and priced Rs. 500, 000 (about Rs. 25,000 above their limit). Ahmad thought they could get the price down through negotiation with the salesman Mr. Sheikh around their limit while Hassan was less optimistic in that regard.

Ahmad conducted some research on the development and learned that several of the offices including the one they liked had been on the market almost a year. Though the house they liked was their first choice, other offices were also quality offices and could be accepted as a second choice. Ahmad met the other salesman, Mr. Agha and learned that the prices of those offices were also within their limit. With this homework done, he made an appointment with Mr. Sheikh and decided to meet him alone.

LOWBALLHe was going for the lowest possible price.ApproachStrategyVINEGAR-HONEY

Ahmad informed the salesman he really liked the office and might be sincerely interested at a lower price such as Rs. 450,000.

PINPOINT THE NEED

It had been established that the seller would take less than the asking price but not Rs. 450,000. The task then was to pinpoint how much less than Rs. 450,000?

A strategy designed to put the other party on the defensive in an effort to win some concessions. Added to the Pinpoint, the Need strategy assists in determining what the seller will actually take. CHALLENGE

FEINTINGThis strategy gives the impression one thing is desired whereas primary objective is really something else.

This planned action is leaked by a reliable resource to test acceptability before final action is taken.

LIMITED AUTHORITYLimited authority is an attempt to postpone the decision on a pretext to get approval from a competent authority. Whereas the real aim is to gain time for reconsideration, and / or keeping the opponent under pressure for a possible negotiation breakage.

GOOD GUY / BAD GUYThe good guy / bad guy is an internationally used strategy. One member of a team takes a hard line approach while other member is friendly and easy to deal with.

The builder has not been around, but I have availed my own limit and reduced the price to Rs. 482,000 provided you could give us your offer in writing today with the 20% deposit.

DEFERDeferring strategy allows the negotiators time to reevaluate their positions. Deferring a decision to make often proves that patience pays.

The salesperson told them,I called the builder while you were away. He gave a little, but Rs. 478,000 just wont do.

Approach Strategy Ahmad and Hassan returned in an hour and offered Rs. 478,000.

SPLIT THE DIFFERENCE Ahmad and Hassan looked towards each other and accepted with pleasure.

Approach Strategy However, if you would be willing to split the differences, and make it Rs. 480,000, we can make a deal, providing you sign the paper and put down your 20% cash today.

Communication SkillsOral CommunicationNon-verbal Communication

Oral CommunicationPhrase the words properly; it delivers.Two priests were so addicted to smoking that they desperately needed to puff on cigarettes even when they prayed. Both decided to ask their superior for permission to smoke. The first asked if it was okay to smoke while praying? Permission was denied. The second priest asked if he was allowed to pray while he was smoking. His superior found his dedication admirable and immediately granted his request.

Use simple language instead of complex terminology. However use frequent jargons when negotiating with your professional counterpart.Be as descriptive as possible. Avoid generalities.

Listening: a strong negotiation tool!Perhaps the best strategy to adopt while the other side lets off steam is to listen quietly without responding to their attacks.You often get more through listening by finding out what the other person wants than you do by clever arguments supporting what you need. Standard techniques of good listening are to pay close attention to what is said, to ask the other party to spell out carefully and clearly exactly what they mean, and to request that ideas be repeated if there is any ambiguity or uncertainty.

Non-verbal CommunicationVibesSymbolicHow something is said instead of what is said i.e. volume, rate and rhythm, silent pauses, sighs etc. Facial expressions, body gestures, dress etc.KinesicsParalanguageFeelings and emotions received from others through their body actions

Avoiding eye contactLack of confidence in bargaining positionTrying to bully or intimidateMaking excessive eye contactLack of confidence in bargaining positionFiddling with objects such as hair, pencils, or papersCrossing and uncrossing the legsImpatient wants to cut a deal quicklyNot receptive to your bargaining positionKeeping legs and arms crossed

Body LanguageWhat it could mean

When we do not know others, there body language remains the first source of building image about them.What people say may be reinforced or contradicted by the non-verbal cues.When there is no congruence between the verbal and non-verbal communication, reliance is placed on the non-verbal aspect that creates a credibility gap on part of the speaker labeled as the non-verbal liar. Be careful, actions speak louder than the words

Negotiation TipsDo not underestimate your power. Do not assume that other party knows your weaknesses.Dont be intimidated by status.Dont be intimidated by statistics, precedents, principles, or regulations.Most negotiation will require some concession making.It is a mistake to assume you know what the other party wants.Never accept the 1st offer.Dont fear to negotiate.

Common mistakes to be avoidedInadequate PreparationIgnoring the give/get principleUse of intimidating behavior.Impatience.Loss of temper.Talking too much, listening too little, and remaining indifferent to body language. Arguing instead of influencing. Ignoring conflict.