SKILL NUMBER 8: NEGOTIATING

THE BOOK OF MANAGEMENT

THE TEN ESSENTIAL SKILLS FOR ACHIEVING HIGH PERFORMANCE

SKILL NUMBER 8: NEGOTIATING (pg. 485 - 553)

 

Negotiation is challenging, complex and exciting.  It requires a mixture of knowledge, skills, experience and intuition.  Each negotiation is unique.  There is no single technique to improve your success.  Negotiating is about having the right attitude and mindset such as:

• Being diligent in preparation and planning
• Being resilient in the face of multiple challenges
• Being creative by inventing mutually beneficial options
• Being ready to walk away from poor deals

PREPARING TO NEGOTIATE

Many people shy away from negotiation.  Negotiation is actually a creative interpersonal process in which two parties collaborate to achieve superior results.  It is a skill that can be learned and developed through practice and experience.  Negotiation is now increasingly being recognized as a core competency.  Through negotiations, you can:

• Secure cost effective and reliable flows of supplies
• Enhance financial value of mergers and acquisitions
• Settle potentially damaging disputes
• Resolve internal conflict constructively

Good negotiators are made rather than born.  They always think about solving problems and creating opportunities.  To be a successful negotiator, to have to feel psychologically comfortable in negotiation situation such as:

• Tolerate uncertainty
• Unexpected behavior
• Taking measured risks
• Making decisions based on incomplete information.

The negotiating task is very complex.  There exist a number of dilemmas.  Thus, to be successful in negotiations, you need to understand the true dilemmas that need to be address.  Negotiation success depends largely on the quality of your preparation by taking the following steps:

• Thinking through your position
• Have clear goals
• Set specific, quantifiable and measurable objectives
• Set a limit on how far you are prepared to go
• Understand yourself and your interest
• Understand the issues and interest of the other party
• Prepare an exit strategy

Every successful negotiations starts with s clear structure.  You need to structure the processes that will steer the negotiation through its various phases.  There are three (3)distinct processes and each of these requires a different set of skills:

1. The negotiation process
• Managing information and communication during discussion
• Planning and re-planning
• Coordinating efforts between negotiators
• Making moves and countermoves
• Making important decision under conditions of uncertainty and time pressure
2. The temporal process
• Managing time and the way the negotiation moves from one stage to the next by pacing the speed of each space and synchronizing the actions of the negotiators
3. The psychosocial process
• Requires knowledge of human behavior and an understanding that people will take on ‘roles’ during negotiations
• Able to overcome barriers to rational negotiation and avoid psychological traps

NEGOTIATION STYLE

There are many approaches to negotiation.  The three (3) negotiation styles are:

1. Distributive
• Views negotiation as a competitive sport, a zero-sum game with a winner and a loser
• Characterize by

·   Compete fiercely for the distribution of the outcome

·   Dismiss the value of building relationship and trust as naïve

·   Tend to use treats to obtain concessions

·   Exaggerate the value of small concessions that they make

·   Conceal their needs

·   Do not share information

·   Do not look for possible creative ideas

·   Use deceptive tactics

2. Integrative
• Value claiming negotiators
• Believe that the size of the pie is not fixed and can be expanded
• Views the negation process able to produce win-win solution
• Integrate the needs of all the negotiators
• Characterize by

·   Engage in value creation behaviors

·   Invest in building relationships and nurturing trust

·   Share information openly

·   Cooperative

·   Flexible

·   Creative

3. Mixed motive
• Both cooperative and competitive tactics

Negotiators often make the mistake of turning the negotiation process into a contest of positions.  Effective negotiators tend to focus on the interest of both parties.  In interest-based negotiation, the negotiators have a clear understanding of what they want and why, and also of the other party.  People always have a reason for wanting something.  Focusing on the interest involves concentrating on the ‘why’ instead of the ‘what’.

We all think differently.  Understanding the strengths and weaknesses of your thinking style, and tailoring the approach to take into account the counterpart’s style can greatly improve negotiation success.  There are four thinking styles:

1. The rational self
2. The safekeeping self
3. The feeling self
4. The experimental self

Negotiating is a whole-brain task requiring the ability to be diligent and rational (the rational self), to plan and organize well (the safekeeping self), to interact well with other (the feeling self) and to be bold and taking risks (the experimental self).

Effective negotiators employ techniques to ensure that they can create win-win situation.  More than one winner can be produced in an effective negotiation.  Effective negotiators not only need to be task-oriented and pragmatic, but also good in building relationship.  Do not undermine the value of good relationship.

Trust is an essential component of negotiations.  Trust involves a willingness to take risks.  Trust between negotiators will:

• Promote openness and transparency
• Makes negotiations more flexible and efficient
• Reduces emotional stress and other transaction costs

Building trust is difficult but losing it is easy.  Although people sometime do make genuine mistakes and promises in good faith that they ultimately cannot keep, trust can still be built if you make every effort to keep your commitments.  One of the most important currencies negotiators have is their reputation.  Experienced negotiators know that people prefer to do business with those that they trust, and guard their reputation fiercely.  It is also important to be seen to be fair.

Fairness is another important characteristic in negotiations.  Fairness is a very subjective matter, so make sure you understand the standard of fairness that your counterpart adheres to.  As the saying goes, past behavior is often used as a predictor for future behavior.  There are several categories of fairness that contributes to successful negotiations; one of them is the distributive fairness which covers three (3) principles:

• Equality
• Equity
• Need

CONDUCTING THE NEGOTIATIONS

Power is the central factor in determining the outcomes of the negotiation process.  Power in negotiations can come from:

• Information
• BATNA
• Resources
• Needing the deal
• Time
• Sunk costs
• Skills

In negotiations, there involve a certain amount of give and take.  Each negotiation event is unique.  A successful negotiation process also requires effective persuasion.  Remember that negotiations do not always conclude with an agreement.  Be mindful not to harm the self-image of your counterpart.  There are three (3) types of emotional approach in negotiations:

• Rational
• Positive
• Negative

The positive approach is more helpful in building a long-term, constructive relationship.  Emotions need to be managed intelligently.

DEVELOPING NEGOTIATION TECHNIQUE

Some negotiation is done in a team.  Working in a team may give better results, but it requires a high degree of internal coordination and smooth flow of information between members.  Team negotiators are best use when negotiations demand a diverse set of abilities.

Multi negotiations are in many ways similar to two-party situations with additional complexities:

• Informational complexities
• Strategic complexities’
• Procedural complexities
• Social complexities
• Emotional complexities

Many negotiators have blind spots, hold false assumptions, and are prone to repeating mistakes.  Many also do not realize that they could improve their techniques.  Working with a coach may help

• identify patterns in beliefs and behavior
• identify the skill set and attitudes to focus on
• able to diagnose possible pitfalls in your negotiating style
• uncover issues
• learn from mistakes, achievements and missed opportunities

Master negotiators have superior negotiating capabilities in three (30 major areas:

• ability to understand and analyze issues (cognitive skills)
• ability to manage emotions, especially negative ones (emotional skills)
• ability to connect with others by developing relationship and trust (social skills)

There are seven (7) characteristics common to all master negotiators:

• using masterful due diligence
• thinking strategically
• being firm and flexible
• seeing the other side
• investing in relationships
• managing emotions
• appreciating uniqueness

By mastering the negotiation tactics and strategies, and by developing the right attitude and mindset, you will achieve superior results.

 

Short notes from:

THE BOOK OF MANAGEMENT

The Ten Essential Skills For Achieving High Performance

Darling Kindersley Limited (DKL), Penguin Group (UK)