Negotiations are a part of life; sometimes small, like deciding where to grab coffee with friends, and sometimes big, like trying to get a better price from a vendor. Negotiations happen when there are two or more possible outcomes, but the parties involved have not yet come to an agreement that meets the needs of all involved. There is no way to guarantee success in every negotiation, but there are ways to have a better chance of reaching the ideal outcome, even if that outcome was not the original goal.
The two major types of negotiations are distributive and integrative. Distributive negotiations happen when both parties are solely focused on the best outcome for themselves, instead of looking for ways to compromise or build a relationship. An example of a distributive negotiation would be haggling the price of car. Integrative negotiations, on the other hand, occur when both parties are interested in reaching an agreement that benefits everyone. An example of integrative negotiation would be two people who both want a whole orange but there is only one available.
Most people would say the best way to handle this situation would be to divide the orange in half because it is a fair and equal outcome, but this would leave both sides dissatisfied with the outcome. Through integrative negotiation, the parties would discuss everyone’s needs and find that one side wants the orange only for the juice and the other side wants the orange only for the zest, meaning both sides can get what they want. Because of the relationship-building nature, integrative negotiations are the best option if future negotiations with the other party are needed or desired.
Types of Negotiation
Good negotiators can resolve disagreements more quickly and ideally avoid arguments, and there are many different styles of effective negotiation. Each negotiation style has its own strengths and weaknesses but having a blended style or being able to switch styles is ideal because you can then apply the most appropriate style to the situation.
- Factual negotiators ensure no facts get missed and they have all the required information on hand but do not always take emotional issues into account.
- The relational negotiator establishes relationships and builds trust, but sometimes does not keep track of the reason for the negotiation.
- Intuitive negotiators focus on the key issues and can overlook irrelevant details. They also come up with unexpected solutions but can be regarded with suspicion because of their unconventional approach.
- Logical negotiators make an agenda, set rules and argue in an unemotional, rational way. These negotiators sometimes see the process as more important than the result.
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A lot of negotiators believe that talking a lot during negotiations is the best way to get the upper hand, while the opposite is true. Talking too much can make the other side feel disrespected or ignored, which can make it harder to get them cooperate. Letting the other side talk will make them trust you more, leading to a more positive and beneficial negotiation all around. It could also lead to the other side giving away more information than they intended, giving you the upper hand.
Good negotiation is about give and take, meaning you should not always give things away without asking for something in return. Always giving in to the other party’s requests can lead to them stringing your side along with no real intention of closing the deal.
Tips for a Successful Negotiation
When preparing for a negotiation, one of the first things your team should do is develop a best alternative to a negotiated agreement (BATNA). This idea was developed by the founders of the Harvard Program on Negotiation (PON), Roger Fisher and William Ury. Forming a BATNA gives you an idea of the appropriate walk-away point. The four steps to creating a BATNA are as follows:
- List the alternatives you are open to should the negotiation end with no deal
- Determine the value of each alternative
- Choose the alternative with the best estimated value (this is your BATNA)
- Decide on the lowest acceptable value (or reservation value)
If the other party offers something lower than the reservation value, your BATNA is the better course of action. If you are offered something higher than your reservation value, you should accept the offer in most cases.
Creating a BATNA is not the only preparation recommended for a negotiation. When preparing for a business negotiation, look at the other business’ website, press releases, articles and anything else that will help in understanding their philosophy and culture. Knowing a little about the person on the other side of the table and the pricing from competitors gives you a better chance of getting your ideal outcome.
You also need to enter the room with clear goals. The three key questions to ask yourself before the negotiation are:
- What is the best-case scenario?
- What is the least acceptable offer?
- What is your BATNA?
These answers can be kept close to the chest, but the clearer they are in your mind, the easier negotiating will be.
Once at the negotiation table, there are several methods to use to get the optimal result. Giving in to lower-priority items can make the other party feel as if they are winning, but it is important to remember that constantly giving in can lead to worse, or something even no, results. As the seller, have the initial offer be too high so there is plenty of room to come down, or vice versa as the buyer. Paying attention to the body language of the other party can give you an idea of how they are feeling toward the negotiation. Perhaps most importantly, listen to the other party’s ideas, goals and suggestions.
When reaching the end of talks, most negotiators are unsure whether to make the first offer. Some feel that waiting for the other party grants them an advantage because it will give them valuable insight into the other party’s bargaining position. This could be the case in some situations, but this philosophy does not consider the influence the first offer has on the way people think.
The Harvard Business School cites a study that found making the first offer gives you a better chance to come out on top because you control the starting point of the bargaining range, giving yourself the advantage. When the first offer comes to you, it is not always the best idea to accept it. This can lead to the other party second guessing themselves, wondering if they should have made a more aggressive offer, which might make them look for a way out of the deal. Typically, people expect a counteroffer, so some back and forth will likely lead to both parties being satisfied and committed to closing the deal.
Although you may not realize it, negotiation is a big part of life. Becoming a better negotiator can be beneficial in both business and personal relationships. SafetySkills offers a Negotiation Skills course to help you identify the benefits of negotiation and walk you through several different negotiation techniques.