Negotiation is one of the decision making techniques such as direct, instruct, arbitrate or mediate. Negotiation is the preferred decision making technique in situations where the parties involved do not have the direct power or control to determine what the other party should do. For instance, the buyer has money and the seller has the product/service, neither can legally obtain what the other has without given up something in return. That does not mean they will end up with the same real value of what will be exchanged – that depends on the skills of the negotiators. However, to both parties the worth of what is received and what is given up is considered the same or at par.
Negotiation in good faith means that an agreement for exchange is reached based on the merits of the options proposed. That is, you do not reach an agreement by tricks and ploys such as threat, aggression, condescending behaviours etc.; but by decent and legal means.
The following four key phases are critical to a successful negotiation: preparation, debating, proposing and bargaining. The key steps in each phase are discussed next.
- Identify the negotiating parties’ interests.
- Identify key issues that need to be resolved and tradables (exchangeable items) required to fulfill your interests.
- Rank the tradables in order of importance and (guess) estimate the same for the other party.
- Establish your entry point and exit point (the maximum tolerance level or value) for the identified tradables that will fulfill your interests.
- The priorities you established will become valuable tools in your negotiation process.
- Discuss in good faith – you can be reasonable and firm without given in to others’ tricks, ploys and hypes.
- Debates constructively, do not engage in destructive debate (argument). Debate leads to solution, argument leads to deadlock.
- Constructive debate behaviours include making neutral or non-offensive statements, asking questions instead of assertions and assumptions, give assurance (a demonstration of paying attention to others’ concerns) and summarizing negotiating parties’ point of views.
- Argumentative behaviours include irritation, assumptions and assertions, interruption, point scoring, attack and blame game, and threats.
- Essentially, debate moves you to proposal. When you make a proposal to fulfil an interest, ensure that you make it conditional, using firm language, without committing yourself. Proposal is for consideration, it is not a bargain or agreement, but could lead to an agreement, if both parties agreed to it. Proposals move from being tentative to specific as you move towards the bargaining or agreement phase.
- Your condition or demand on other negotiating party could be vague or specific, and your offer must be vague, in order to avoid committing yourself. Express the condition before the offer. Examples: if you are prepared to pay $1500 (specific condition), I may consider selling a measurable part (vague offer) of the goods; If you are prepared to lease at a reasonable (vague condition) discount, I may (vague offer) be willing to review the duration (vague offer) of the contract.
- Also, when you receive a proposal, your response should follow the above conditional statements. Ask questions to clarify the proposals before you respond.
- Having gone through series of proposals, you may have to summarise them and ensure clarity between what you are getting and what you are giving up.
Bargain (Close):§ Bargaining is about reaching an agreement.
§ In bargaining, both condition and offer must be specific. Examples include: if you pay $1500, I will deliver 10 pieces of the temperature measuring devices; if you lease the vehicle for $250 per month, covering use and regular maintenance, I will accept the 4 year lease contract. Bargaining makes proposal specific.
§ Ensure that the condition statement comes before the offer. ‘Yes’ response to a bargain means agreement. ‘No’ response means deadlock or another round of debate and proposals.
§ Effective bargaining leads to an agreement.
§ Once you have an agreement, put it in writing and obtain both parties approvals/signatures to make it bidding on both parties. This way you will avoid counter offer and/or counter claims after an agreement has been reached.