Negotiations
Vitally Important, Rarely Taught Series
I am starting a mini-series today. It’s called – Vitally Important, Rarely Taught.
These are the essential life-skills we use on a daily basis and yet the concept has never been clearly explained to us. For example, from an early age our parents and teachers constantly “told us” to concentrate. Unfortunately, no one taught us “How to concentrate”.
Evidently, our understanding of these super important things stems from personal experiences; exposing us to the possibility of gaps in our knowledge.
The next few posts are dedicated to this theme. I will explain the fundamentals of these vitally important skills.
Today’s post is on – Negotiations.
Negotiation is a crucial skill in both personal and professional settings. In a negotiation, typically, there are two parties trying to reach an agreement. The process involves give and take. While every negotiation is unique, there are four fundamental steps to follow to ensure a successful outcome.
1. Preparation stage
2. Effective communication – this involves active listening and asking clarifying questions.
3. Be flexible – find the middle ground and find creative solutions.
4. Follow-through.
Before we dive deeper, let’s first understand how different cultures view negotiations.
In some cultures, it is tug of war between the parties. It’s a win-lose game. And each party tries to extract the maximum from the other. They may look calm from the outside but in their mind it’s like a war - they don’t want to surrender any ground. In this style, irrespective of the outcome, both parties are dissatisfied, and the relationship is spoiled.
In other cultures (typically western), it is approached with a win-win mentality. It is when both parties come away from the negotiation with a positive outcome. It turns out that in a negotiation, agreeing with someone else’s argument is disarming.
Imagine a dance competition in which you are paired with an unknown partner. The aim is to get into rhythm as quickly as possible. The problem is that most likely your dance partner has a different set of steps on her mind. On the one hand, you can't stand still and expect the other person to make all the moves. On the other hand, if you try hard and lead her into your steps, she may resist. What if you quickly adapt to her moves and get her to do the same. To get into harmony you both need to step back at times.
Let’s now see the four parts of effective negotiations.
1. Part I – The Preparation Stage – This is the most important part. It involves doing your homework before entering into a negotiation. Like in a game of poker, it is important to know (or make an intelligent guess) about the other players cards. Before we get into a negotiation, we must work diligently to gather as much information as possible about the other party. We must understand what matters to them and why. What are their interests and goals, what is their BATNA (Best Alternative To a Negotiated Agreement). In the dance analogy above this phase is about understanding what steps your partner has in mind. This will help you to understand their perspective and come up with potential solutions that address their concerns. For this stage, I strongly recommend making notes.
It's also a good idea to identify your own priorities and your BATNA so that you can clearly communicate your needs and stand firm when necessary.
BATNA, is an important concept in negotiation. It refers to the option a party has if they are unable to reach an agreement with the other party. It’s your other best option. For example, in a salary negotiation, a job applicant's BATNA might be the offer from another company they received, which serves as their backup option if the current negotiation fails.
Having a strong BATNA provides leverage in negotiations, as it gives you the confidence to walk away if the current offer does not meet your needs.
This can help you to negotiate from a position of strength and increase your chances of getting a better deal.
Your strength in negotiation comes from being okay with losing the deal. BATNA gives you the confidence that you have an alternative.
2. Part II – Effective communication - is key in a negotiation. It involves clearly communicating your points as well as actively listening to the other party to fully understand their perspective. This will help in avoiding conflicts or misunderstandings. We must avoid making assumptions and ask questions to better understand the priorities of the other party. Please note that staying calm and respectful helps in building trust and creating an atmosphere conducive to successful negotiation.
3. Part III - Be flexible and open to compromise in a negotiation. This doesn't mean giving up everything you want, but rather it involves being open to finding middle ground and exploring innovative solutions that addresses the needs of both parties. As mentioned above, we must enter negotiations with a win-win mindset because it encourages both parties to find creative solutions that meet the needs of both sides. This is often considered the ideal outcome of a negotiation because both parties feel that they have gained something of value. It leaves them satisfied and builds trust and goodwill between them. It's also important to avoid becoming too attached to any one outcome, and to be prepared to walk away from the negotiation if an agreement cannot be reached.
4. Part IV - Follow Through. This means being clear about the next steps, setting clear deadlines and holding all parties accountable for meeting their obligations. I have noted that several good negotiators do not become great negotiators because they fail to follow through. It is important that the agreement is amicably implemented in a timely manner.
In conclusion, doing our homework, understanding and utilizing BATNA, effective communication and striving for a win-win outcome are important principles in successful negotiation. By keeping these concepts in mind, we can improve our chances of reaching agreements that are fair and beneficial for all parties involved.
If the topic of ‘negotiations’ intrigued you, then I strongly recommend reading about the world’s greatest negotiator – Herbie Cohen.
Very well articulated. Recently, during one business negotiation, I have used another important skill i.e. emotional quotient (IQ), due to which I was able to negotiate the deal in my favour.
It is an extremely important aspect which everyone experiences or exercises in their daily life. Very well articulated and brought out . Henry Kissinger’s name comes out at the top being known as a successful negotiator. Looking forward for the next one .