What is negotiation?
The term “negotiation” covers a huge range of activities. An obvious example is two lawyers talking (or writing) to each other on behalf of their clients to try to resolve a legal dispute – or to strike a deal for the acquisition of one company by another. A personal example is buying or selling a house or car. Negotiation also includes interactions that are less formal or that don’t involve “bargaining”. For example, housemates are negotiating when discussing who should do the dishes, as are a group of colleagues sorting out their teamwork allocations. When you stop to think about it, you may be surprised to discover how much of your life you spend negotiating.
These examples begin to illustrate a number of differences among negotiations, which include:
- the personal and the professional
- the very important and the seemingly trivial
- the quick and the drawn out
- deal-making for mutual future benefit and the resolution of disputes over past events
- actions on behalf of ourselves or someone else (whether a client, an employer, or even a country)
- difficult conflicts and easy–going collaborations.
The reality is that we are negotiating all the time and we have been negotiating from a young age.
People often think about negotiation as a quality or a talent. They think about people as being born with the skill or not. This is simply not true. It’s very much as skill that can be developed or improved by understanding the 7 elements through practice.
The role of managers
Managers are often seen as the glue that hold teams together. They plan, organise, direct, and control resources to achieve specific goals. The motivate, individuals manage timelines and events. Much like an orchestral conductor, managers keep teams moving. Without doubt managers negotiate regularly. As a manager the ability to negotiate successfully is essential.
Meet Fred. Fred is manager at a large-scale telecommunications organisation. He’s regularly engaged in negotiations with a multitude of stakeholders. He’s looking to improve how he negotiates. One of Fred’s major priorities when negotiating is to maintain and build relationships with the many stakeholders as he negotiates. He understands that he is a better manager when he takes time to acknowledge and nurture the stakeholders he engages with. Fred is looking for a type of negotiation that doesn’t compromise an ongoing relationship.
Within his role as a manager Fred has encountered many different types of negotiations.
Types of Negotiations
We are often exposed to different types of negotiations in our personal and professional lives. Some types to consider may include, the positional negotiations, whereby one or both parties identify what they want and don’t budge from those position(s). It’s also not uncommon to come across an adversarial negotiation. Where one or both parties become focused on winning – the negotiation is viewed as a battle of sorts. In some cases, we may find ourselves in what’s referred to as the bargaining dance. We may find ourselves in a bargaining dance type negotiation. It’s where a series of back and forth exists, ‘bids’ until a compromise is reached.
Let’s use an example to unpack these three types of negotiations.
In a negotiation between a landlord and tenant for a commercial property, the landlord wanted to increase the rent and the tenant wanted to continue to pay the same amount of rent. The landlord’s position was that he wanted to increase the rent by 7 % per annum and he would not budge. In response, the tenant would accept a 2% per annum increase, and nothing more. You can see very quickly that this negotiation is troubled because neither party looks likely to move from their positions.
If this same example was pursued by adversarial negotiation, each party would use their strength and power to try and dominate the other. An approach which could very easily end up in court.
In this case the parties ended up engaging in the bargaining dance – back and forth between a 7% and 2% increase. They considered settling on a 4.5% increase. This might seem like a fair outcome, but in reality, it’s a mere compromise and not an ideal outcome for either party.
In these types of negotiations – positional, adversarial, and bargaining – the parties generally reach an outcome that is not ideal for either of them. Or is ideal to one party but not the other.
What if I told you there’s another way? One that’s mutually beneficial, and in fact strengthens the parties’ relationship? There is! It’s called interest-based negotiation.
Interest based negotiation
Interest based negotiation is form of negotiation that focuses on the underlying interests and goals of each party. Rather than looking at what each party wants, we examine why they want it. By focusing on the underlying goals of each party, and their relationship, we can improve the likelihood and quality of the outcome.
This approach to negotiation was founded by Roger Fisher and William Ury, from Harvard University’s Program on Negotiation, (formerly the Harvard Negotiation Project). For decades, it has been shared far and wide across the globe to personal, organisational and critical acclaim.
Let’s now apply an interest-based approach to the situation of the landlord and tenant.
After a string of threats and unproductive conversations, we sat down with both of the parties to encourage an interest-based approach. What we sought to uncover was why the landlord was looking for an increase and why 7%? After a detailed discussion the landlord revealed his intention to sell the commercial property. It was his belief that a higher rental income would inflate the sale price. He was also seeking a 7% increase (higher than usual) because he wanted to ensure that any new tenants would take care of the property. This property was the landlord’s first commercial venture, and he was emotionally vested in looking after the building.
Upon hearing this, the tenant mentioned his interest in purchasing the property. In fact, the tenant shared his interest of keeping the per annum percentage quite low because it would allow him to gain access to more financial funding.
The landlord sold the property to the tenant at an agreed price and with a promise to take care of the property for as long as possible.
By understanding each other, the landlord and tenant reached an outcome that was far more beneficial than a positional, adversarial or bargaining dance approach.
So, before you engage in your next negotiation, consider what’s motivating you and the other party.
Managers and Negotiation
Mangers are often engaging with a variety of stakeholders. They are meeting the needs of a variety individuals, balancing relationships and outcomes. Utilising a systematic approach to their negotiations will assist them to not only improve the outcomes of their negotiations but also boost their confidence.
What should managers focus on when negotiating?
Strategically creating higher value outcomes, both in terms of substance and the relationship
One’s ability to create value for both parties through their negotiations not only improves the likelihood of reaching agreement but also builds the relationship. As a skill, this is useful in most professional and personal conversations.
Develop confidence and an increased willingness to negotiate
To build confidence and willingness to engage in negotiations we need practice. We need to prepare and follow a systematic process that eventually becomes a behavioural norm. The more we normalise preparing for our negotiations, the easier they become and the more confident we become.
Enhance their organisations brand and reputation as a fair, collaborative and commercially savvy online organisation
Leaders lead. Defining your organisation as one who is fair, collaborative, commercially savvy and adept at negotiation online sets you apart from your competition. Establishing your brand reputation helps others see you the way you want to be seen.
Dealing with Negotiation difficulty
Any conversation, especially tense or uncomfortable negotiations, can turn into a competition for airtime. People make long-winded statements, they interrupt each other to argue back, and generally don’t try to understand their counterparts’ point of view. Even when things seem to be running more smoothly, we can be so quick to move onto the next point that we rarely pause to take stock of what has already been said. As a result, we may fail to notice that we each have quite different understandings and recollections of what has been said so far. This is one of the main reasons that so many negotiations are plagued by misunderstanding, unnecessary conflict, protracted argument and damaged relationships. To reverse this trend, clarify meaning before moving to the next step in conversation. We need to listen to understand not listen to reply.
Relationship and reputation
Our relationships are based on our perceptions of others – who they are, how they’re behaving and so on – and their perceptions of us. If a relationship is strained, it may be because one person assumes that the other person is trying to take advantage of them, or that they will never tell the truth. These negative assumptions are less helpful and may result in parties being more guarded or more likely to resort to defensive tactics. However, positive assumptions about the other party – such as their willingness to negotiate or intention to reach a fair outcome – can go a long way in moving the negotiation process forward. Generally, we’re more likely to give the benefit of the doubt to, and want to work with, people that we perceive positively. So some questions to ask yourself are: How are others perceiving you? What could you do or say to help them make more helpful assumptions about you? How are you perceiving others? How accurate are the assumptions you’re making about them?
Our relationships are not just one-to-one but exist within a web of interconnected relationships. For example, if an employer does something that damages their relationship with one employee, it’s likely that other employees will hear about it, and the employer’s relationship with them will also suffer. Or word may get around so that others, whose connection with the employer is only through reputation, may also become wary of them. Thus, reputation is an important part of the relationship element.
How to improve negotiation skills for managers
It’s not uncommon for organisations to seek negotiating and influencing skills for senior managers. Many organisations actively educate their managers and invest in negotiations skills training. They know that their managers will continue to educate their team members. Engaging in negotiating skills course can allow you to engage in an practice negotiations relevant to your role.
Whether you choose to engage in negotiating training in Australia or offshore, many providers tailor their programs to specific audiences. If we’re looking to develop and learn negotiating skills for managers, then it’s best to choose a provider that has case studies that align with the skills you’re looking to build.
Many providers become very specific in their offerings. Some very targeted negotiation trainings include:
- project manager negotiation skills
- product manager negotiation skills
- sales manager negotiation skills
Each of these programs focus on the nuanced challenges and common negotiations associated with these roles.
Managers deal with a large array of negotiators and challenges. Given the volume and frequency of negotiations managers navigate, it’s fair to say that the skill of negotiation is quite central to their role. It’s an important skill for them to master.
There are multiple ways for managers to improve their negotiations skills. They may consider face to face training. Alternatively, modern technology provides knowledge, information and development at the click of a button. The skill of negotiation is one that can assist managers both in their personal and professional lives. It equips individuals with the tools to build lasting relationships long term.