Negotiation – a scary process for many of us, but is it really?

I’m no expert by any stretch of the imagination but here’s a short introduction to the art of negotiation. I’ve written it because I recently had to research the topic for a writing project and found it fascinating. Given the frequency with which we negotiate (usually several times a day) I was shocked to realise that I had never really thought about what the process entailed …

Negotiation is a process in which two or more parties move, by way of discussion and compromise, from their disparate starting positions to mutually agreeable end positions.

Although seemingly complex, it’s an activity that all of us do, in a variety of circumstances, on a daily basis.

Look at the following statements – each one is likely to lead to some kind of negotiation process:

• I’ll get the report finished tonight but there’s no way I can get twenty copies bound before tomorrow’s meeting.
• The beer at the Rose & Crown sucks – let’s go somewhere else.
• I’m sure you can do me a deal for cash…
• Honey, would you do the washing up tonight? I’m too tired to even look at it.

Whether you’re dealing with your boss, your mate, your mechanic or your partner, the rudiments of negotiation remain constant. And on that basis, it does make sense to try and fathom out exactly what’s involved and to see if we can use that knowledge to improve outcomes.

After all, wouldn’t we all like to see a 5 or 10 per cent increase in our pay package or the equivalent percentage improvement in the quality of our relationships with our partners, parents and children?

To most people, the concept of negotiation conjures up negative and pejorative images and associations. Indeed, the word itself has a meaning that relates to navigation – specifically to tackling problematic or hazardous terrain. Other typical associations might include confrontation, conflict or adversity.

There are several personality-driven factors that fuel and perpetuate this negative connotation and explain why we tend to shy away from negotiating.

Many people for example confuse assertiveness (a positive trait) with arrogance (a negative trait). The more modest and empathetic among us are simply uncomfortable with winning or appearing to be winning at the expense of others. There are those who lack the confidence to even enter the negotiation game for fear of losing or humiliation. Then there are those at the other end of the spectrum whose brash outspoken behaviours may win arguments in the short term but ultimately damage relationships in the long term.

Negotiation would therefore appear to be a process that we engage in quite happily throughout our daily personal lives, but one that many of us are fearful of within a work-related context.

Game analogy

Our first hurdle, therefore, is to liberate ourselves from all this negative baggage, and start looking at negotiation in far more positive and favourable terms.

A great starting point is to look at something called game analogy, an incredibly simple but clever concept in which the activity of negotiation is treated as a game.

There are many parallels:

• All sides play to win
• There are rules – some implicit, some explicit (which become clear during play)
• The winner is the one who plays most skilfully within the parameters of those rules
• A player who gets emotionally charged will usually lose
• The process has a specific end point, after which it is over

The beauty of the game analogy is that it allows us to depersonalize the activity, and, in doing so, helps to take away the fears, the embarrassments and the angst that we may feel come with the territory.

So the potential nightmare situation of having to convince your boss that your work really is top quality and that your desired pay rise is fully justified – despite the company clearly flailing in the market and despite your boss having recently had to ditch the Jag for a Fiesta – is now, in fact just a game of chess … in which he or she will make some moves, and you’ll make some moves.

Objectives

Ultimately, the objective of most negotiations is to identify and action a resolution that pleases both parties. This “win-win” situation resolves the problem in hand, maintains the relationship between the parties and encourages further future co-operation.

Negotiations can of course result in other outcomes such as “win-lose”, in which one party achieves its desired objectives while the other receives little or nothing in return; and “lose-lose”, in which neither side makes any gains.

The ideal “win-win” outcome from your perspective occurs when you secure your objectives while leaving the other party believing that they too have “won”.

With Integrative (or Principled) Negotiation, there are normally many variables at stake and it is quite possible, for skilful negotiators, to create exactly that outcome.

Take this example

You are negotiating the remuneration package for a new senior member of your staff. The variables might include salary, health insurance, company car options, holiday benefits, working from home flexibility, etc. The perceived value of those elements to your potential employee may not necessarily correlate to their actual cost to your company, and as a consequence, you may be able to offer a seemingly handsome package that is actually well within the costs parameters within which you were working.

In Distributive (or Fixed Pie) Negotiation, such as in the sale of a car or a house, where one party’s gain is effectively the other party’s loss, it is more difficult. That said, by examining the concept of the Negotiation Arena, we can see that even here, we might be able to create a “win-win” outcome, albeit one in which one side’s win is greater than the other’s.

Take this example

You have just bought a house for £365,000. You were hoping to pay £360,000 (your ideal position) but would have been prepared to offer up to £370,000 (your fall-back position). The seller was hoping for upwards of £372,000 (their ideal position) but would have taken an offer of £362,000 (their fall-back position).

This illustrates the point. Both sides have won, but the extent of their respective wins is different. You have paid £5,000 less that you would have been willing to pay, while the seller got only £3,000 more than their lower limit.

The Negotiation Arena is the overlap area between the two parties’ Negotiating Ranges; in the case of the house purchase above, between the two fall-back positions – i.e. the buyer’s upper limit and the seller’s lower limit.

Negotiation is only worthwhile provided there is an overlap, and a “win-win” outcome will only be found within those parameters. Without a ‘Negotiation Arena’ available, the negotiations are effectively doomed from the start. Indeed, there are also other situations in which negotiation has no place and should be avoided. These would include situations in which you have the authority to dictate rather than negotiate as well as those in which you do not have the requisite decision-making authority to see the process through.

There is one other hugely important situation in which negotiations are best avoided – and that is when you have not had the opportunity to prepare. Preparation is vital, and therefore invitations to impromptu negotiations ought to be declined as a matter of course.

Improving our powers of negotiation

Assuming the necessary scope to negotiate is available, your aim is always to reach an agreement that is as near as possible to your ideal and your opposite’s fall-back positions.

To do this, you need a good understanding of the distinct stages of negotiation as well as the dynamics involved in the process.

Negotiating is not formulaic – there are far too many variables for it to be that simple. However, the process does tend to follow a certain pathway and there are various models available that help us make sense of it.

The model highlighted below breaks the activity down into six distinct stages.

1) Preparing

Any accomplished negotiator will attest to the fact that preparation is vital to any successful negotiation.

It involves specific research into the person or organisation with which you are negotiating, general research on ‘market-place’ information as well as detailed analysis of your own position.

This preparatory work helps you to decide, in the first place, whether or not to negotiate at all. Assuming you do, it will enable you to set your ideals, objectives and limits, while also providing the necessary information to guide your tactical choices.

2) Opening

The opening stage ‘sets the scene’ for the activity that follows, and allows the parties involved to;

1. Build rapport with one another in order to create the ‘warm’ or sympathetic relationship necessary for successful negotiations
2. Demonstrate their assertive stance, to show each other that they mean business
3. Establish the purpose of the negotiations, clarify the agenda and agree how the negotiations are to be recorded. In so doing, they are effectively laying down the rules and parameters of the ‘game’ about to be played.

3) Exploring

During exploration, each party has an opportunity to question the other, thereby discovering more about their position.  Conversely, each party will also have to answer questions asked of them.

The content of, and manner in which, we ask our questions will demonstrate our negotiation stance and how well we have prepared. Equally, the way in which we answer questions is critical to how we wish to present our position.

This phase is therefore considerably more than merely one of information exchange.

4) Testing

Also known as solution generation, this is the most creative part of the process. During testing, each party offers up potential solutions to the problem, which are analysed and then either accepted, rejected or modified. In modifying potential agreements, each party will indicate areas in which they feel movement is possible and where it is not.

There are a variety of creative ways of approaching a problem, and each will lead to different kinds of potential solutions.

5) Bargaining

Bargaining is what many might call the hard-core element of negotiation. It’s when deals are done and concessions are traded. It’s possibly the most difficult stage of the process and certainly the one in which experienced and skilled negotiators will have the upper hand.

Bargaining is what ultimately shapes the look and feel of the final agreement, effectively setting out its terms and conditions.

In that sense it is the place where conflict comes to a head, but also the place where it is resolved.

6) Closing

There are two distinctive aspects of negotiation closure. The first converts the ideas that have, in principal, been agreed, into a ‘hand-shake’, while the second, done after the event, seals that hand-shake.

Although there are many different closure techniques, they all involve summarising the various agreements that will have been reached during the course of the process. A summary distills that information and gives clarity and precision to the potential agreement, making it easier for both parties to commit to it.

Sealing the commitment, usually by way of a more detailed written summary, soon after the commitment has been made is just as important. It is commonplace for negotiations to end on a euphoric high, but by the time a summary is produced, the lustre on the glass has faded and issues become subject to greater scrutiny and become increasingly open to interpretation.

So strike while the iron is hot.

Further information

If this article has unleashed your desire to become a negotiating champion, there are all kinds of resources available online to help you make practical sense of stage models such as the one above. Indeed there’s a whole industry out there that’s focussed on developing people’s powers of negotiation.

Either way, simple models such as this do help provide a framework within which to think about the process and, as with the game analogy, to depersonalise it. That, I think is crucial for anyone who felt any resonance with the ideas highlighted at the beginning of this article.

The truth is that a little understanding of the processes involved, along with an imaginary parrot on our shoulder repeating the words “it’s only a game”, can have a very significant positive impact on our ability to negotiate in an astute, sincere and ultimately profitable way.