Elements of Effective Negotiation, Part One
By Michael Walsh
Almost everywhere you go in business you hear about the great deals that were negotiated. It seems that negotiation is a larger and larger part of our business reality. Yet, we seem to differ widely on just what it entails.
What is negotiation? Is there always a winner and a loser? What about this "win-win" that people talk about? How do you do that, anyway?
Definition
Like so many words, negotiation is used in different ways for varying situations. The formal dictionary definition of negotiation is: to discuss with the view of reaching an agreement; to settle (a transaction, treaty, etc.).
In order for negotiation to be present, there must be a real or perceived disagreement either present or possible.
It has been said that every human interaction has the potential to turn into a conflict. If this is true, then a working definition of negotiation might be: managed conflict. The best time to manage conflict is before it arises, so that conflict never shows up.
There are two main types of negotiation. These are:
1. Dealing with problems, issues, and concerns. This may include conflicts with co-workers, customer concerns, or difficulties with suppliers, to name a few.
2. Tapping opportunities. Examples might be seeking a new promotion or pay increase, up-selling a customer or securing a new account.
How do you keep negotiations effective? There are three main elements to consider:
1. People versus Issues
2. Positions versus Interests
3. Protect the other party’s self-regard
People versus Issues
One of the traps we fall into in human interactions is to collapse the distinction between people and issues. While this is a natural inclination many of us have when emotionally stressed, it camouflages what the real issue is, and increases the chances for potential conflict to turn real.
"Joe is such a jerk! He never shows up on time. We end up waiting around for him to waltz in whenever he pleases. What an insensitive jerk!"
What is the issue here? Joe may be a jerk (or maybe not . . . we haven’t heard Joe’s side yet), but the issue is that he is late, and that people have to wait. By setting aside attributions and judgments about the people and sticking to issues, it is far easier to implement effective negotiations to resolve conflicts and to move situations forward on a productive footing.
Positions versus Interests
Regardless of your stated position in a negotiation, or the stated position of the other party, where agreements are reached is at the level of your (and their) interests, not the positions. What is it that they really want out of this negotiation?
Statistics indicate that 23% of the buying public makes purchase decisions based upon price alone. The other 77% use some other measure of value. However, absent some other measuring stick (for value), everyone will start with price as the differentiating factor. A shopper may be asking for a reduced price, but through active listening you may detect that she is really interested in high quality, and to feel important as a customer of yours. One way to feel important is to gain a preferential price. However, there are many others ways to accomplish this "interest" which do not reduce your profits.
By discovering what the interests of the other party are, and overlaying those with your interests, you are much more likely to achieve an outcome that will serve both sides better.
Protect the other party’s self-regard
Maintaining safety in an interaction is critical to keeping it productive. By actively protecting the other party’s self-regard, you will increase your ability to keep people and issues separated, and focus on interests, not just positions.
Stay tuned for part two of this three-part series on negotiation.
Filed under Business Development by Michael Walsh.
