Importance of Negotiating Successfully:
Negotiation is a process where two or more parties with different needs and goals discuss an issue to find a mutually acceptable solution. In business, negotiation skills are important in both informal day-to-day interactions and formal transactions such as negotiating conditions of sale, lease, service delivery and other legal contracts. Think of all the times in your business week you negotiate: with new hires and existing employees; with sales prospects and long-term clients; with vendors and suppliers.
Good negotiations contribute significantly to business success, as they:
- Help you build better relationships
- Deliver lasting, quality solutions – rather than poor short-term solutions that do not satisfy the needs of either party
- Help you avoid future problems and conflicts.
Negotiating requires give and take. You should aim to create a courteous and constructive interaction that is a win-win for both parties. Ideally a successful negotiation is where you can make concessions that mean little to you, while giving something to the other party that means a lot to them. Your approach should foster goodwill, regardless of the differences in party interests.
A good negotiation leaves each party satisfied and ready to do business with each other again. Strong negotiators master written, verbal and non-verbal communication. They adopt a conscious, assertive approach to their communication.
Skills required to become a master negotiator and close deals:
In the business world, learning to negotiate can be one of the most valuable practices you can carry throughout your career. The most successful negotiators, those whose track record enables them to be called Master Negotiators, are both excellent problem solvers and opportunity seekers. See our six steps for mastering negotiations:
- Come to the table incredibly well-prepared
The biggest mistake people can make is to come to the table overly confident and under-prepared. No matter how experienced you are, you should not assume that each negotiation will be alike. You do not want to realise in the middle of a negotiation that you are missing some key information or are lacking direction.
- Understand your negotiating style
There are a number of negotiating styles which can be effective and ineffective depending on who is delivering them and how. Therefore, you must understand your own negotiating style, how effectively you use that style and how your style interacts with others who use a similar or different style. Master negotiators don’t assume that they know where their style works for them and where it works against them, they have learned to be flexible and to compensate for any weakness by constantly asking others for feedback.
- Create and claim maximum value
Creating and claiming value are at the heart of the negotiation process. Creating value is our ability to effectively develop creative solutions to meet the needs of all parties at the negotiating table. Whereas claiming value is our ability to effectively get our needs and interests met through the negotiating process. Most negotiators do a good job either at creating value or claiming value, but master negotiators do a good job of both.
- Be aware of yourself and the process
Negotiators have to be aware at all times of the effect that their behaviour, both verbal and non-verbal, can have on the negotiation process. Negotiators must develop awareness in three critical areas, which can be characterised as a three-legged stool. The first leg represents the outcome, the second represents the people and the relationships they have, and the third leg represents the process the parties will use to reach an agreement. If any of the legs do not measure up, the stool can become unstable and the negotiation process can be disrupted. Therefore, negotiators must ensure each part of the process is monitored to move towards optimal performance.
- Master networking skills
Master negotiators are also master networkers. They use their networks superbly, when necessary, to help them come to the negotiating table better prepared, to help them manage the negotiation process more effectively, and to overcome seemingly insurmountable obstacles.
- Become a life-long learner
Learning how to negotiate and learning from our negotiations are so important. Master negotiators learn continuously and that learning is compounded by what they have learned previously. For truly important negotiations, ask your colleagues to help you role play the negotiation. Just as you would not show up on opening night for the lead role in a play without going to rehearsals, you want to rehearse your most important negotiations playing your role and then the role of the person with whom you will be negotiating.
Why Negotiations Fail?
Following are six main reasons negotiations fail:
Lack of preparation
It’s vital you prepare externally, learning about market conditions, history, and other factors that might influence the deal.You also need to prepare internally, knowing what your objectives and bottom line are. If ill-prepared, externally or internally, you will likely stumble.
Many deals are killed by pride and self-importance. You might not ask for information you need or be unwilling to give up something relatively minor that wounds your ego.
But there’s the opposite as well: Individuals not accepting their own worth. That is common with freelancers, contractors and others who quote an hourly rate but fold at any sign of resistance from clients because, in their heart, they don’t feel they are worth the prevailing amount.
Wanting to be liked can also be a killer: You make a concession to win the other side’s appreciation. Wrapped up in ego can be a dangerous determination to win at all costs.
There are many ways fear can assert itself in bargaining but the most common are fear of failure and fear of the unknown. If you are uneasy, the contract you are negotiating won’t work out well and you could sabotage the deal rather than addressing and perhaps calming those fears.
Negotiations will fail if you are too rigid about the structure of what is being developed – rather than simply being clear about your end purpose, and open to how to design the deal – and unbending on time. Some people are so desperate for an immediate deal, they give everything away while others push too hard and send the other side packing.
You can’t be a robot. But you also can’t allow emotions to get out of control in bargaining. Simply take note of your emotions – why are you upset? Losing your temper can ruin a deal.
Lack of integrity
Deceitful tactics will come back to haunt you. But you also want another form of integrity: ensuring the deal is in line with what you really need and want.
Know from the start what you truly seek. Be detached. You should have a preference for making a deal but also be comfortable if it doesn’t happen. If you have ever found yourself bidding more for a home than you thought it was worth, you lost your detachment. Don’t get thrown off in the heat of negotiations. Maintain equilibrium.
Fairness in Negotiation:
In negotiations, you should strive to bring fairness considerations to the surface, so that everyone will understand one another’s needs and wants.
When negotiating a deal that will result in an ongoing relationship, consider the “fairness” strategy. It’s simple: Have a discussion up front with your counterpart in the negotiation. Make the case that you want to reach a fair deal for both parties.
Then, in preparing to make your offer, put yourself in your counterpart’s shoes to determine what they should fairly expect (and deserve). Do the same thing for yourself. Ultimately, you will arrive at a number that can be backed up with a transparent analysis that you’re willing to share with your counterpart. If the relationship is healthy, you will both want what’s fair.
Bottom line, the “fairness” strategy will pay off over time. Next time you enter a negotiation, think beyond the number. Remember that the end of a negotiation is the start of a relationship with the potential to create tremendous value over time.