A key aspect in almost all areas of finance is negotiation. As a business owner, you need to negotiate with your customers, employees and suppliers. As an employee, you will need to negotiate with your bosses, colleagues, and your customers if you are in a sales-related job. As a manager or team member, you will need to negotiate with other team members and/ or other teams. The list is endless. This article sets out the steps of a negotiation that you can follow if you are going to be involved in an important negotiation.
1) Draw up a conflict map
A conflict map is critical to a successful negotiation. You can draw up a quick conflict map as follows:
· List down the parties
First, list down all parties that are interested in the outcome of the negotiation. This includes all parties, including those that are not part of the negotiation. By generating this list, interesting insights can sometimes emerge. For example, you may be able to identify parties currently excluded from the negotiation whose interests align with yours. You may then wish to include these parties in the negotiation.
· List down the goals, interest and limitations
For each party listed, list down their goals, interests, as well as the limitations that they face. For example, does your negotiation counterpart in the supplier organization have the authority to grant you the sales discounts that you are requesting? This may require some research.
· Analyze the information
Identify areas of common interests as well as areas of conflict between the goals and interests of the various parties. Emphasizing areas of common interests during the negotiation helps to maintain goodwill. Negotiation strategy will be directed towards resolving the areas of conflict in your favour.
For more details on conflict mapping, you can refer here.
2) Plan the negotiation
The following questions will help you prepare for the negotiation.
i) What is the style of negotiation of the counterparty? For example, if your counterparty is an aggressive, intimidating personality, are you prepared to deal with his aggressive behavior?
ii) What negotiation style/ strategy will you adopt?
iii) What is the minimum outcome that you can accept from the negotiation?
iv) What is the minimum outcome that your counterparty most likely will be able to accept?
v) Who is in a stronger negotiating position?
vi) Are there any “out-of-the-box” solutions that will enable the needs of all parties to be better met?
3) Select your negotiation technique
Negotiation tactics and strategies are often over-rated. What determines whether a negotiation is successful is whether all parties can ultimately walk away from the negotiation table with their objectives satisfied.
Some of the negotiation techniques that are used include:
· Aiming high
With aggressive negotiators, it is sometimes necessary to aim high as they will over-aim in the other direction. With such negotiators, if you do not aim high, you will only find the bid going even lower.
· Building on common ground
This technique is useful when you are dealing with a friendly negotiator and you are seeking to preserve goodwill. Begin by identifying common ground on which all parties can agree, then build on the common ground.
· Making the cake bigger
Offer alternatives that may be agreeable to the other party, without changing the terms. Find win-win solutions.
4) Negotiation
One of the keys to successful negotiation is to practice, practice and practice. Rehearse the negotiation with a friend and play out the various possible scenarios to reduce the possibility that you will be caught off-guard during the actual negotiation. During the negotiation itself,
· Listen actively
Your negotiation counterparty may reveal hidden agendas and needs at any time, and you must listen actively to remain to catch such revelations.
· Never give away concessions
It is a matter of discipline to ensure that for every concession you give, you get something in return, even if that is simply a commitment by the counterparty to close the deal immediately.
· Keep in mind the overall situation at all times
Some negotiation tactics involve separating out single issues and introducing new ones later. The objective is to gradually erode the counterparty’s position. You need to keep in mind the overall situation to identify such tactics. If you find that you are the subject of such a strategy, do not be afraid to point this out and re-open issues previously agreed.
· Keep accurate notes
Bring an aide along who can keep accurate notes. Negotiations usually involve a series of meetings. Reviewing the notes after each meeting can provide useful insights into the negotiation that can benefit future meetings.
Other interesting sites:
