Negotiating Effectively

Negotiation skills don't come naturally—they're usually learned. But once you've learned them, you'll be comfortable in the various situations that require you to negotiate with other business professionals. The following are three steps for successful negotiation:

1. Clarifying objectives You need to understand your objectives before entering into a bargaining session, and you must be able to clearly state them to the opposition. Then you need to ask pointed questions that will elicit clear identification of the other party's objectives during the opening phase of the negotiation.

2. Offering reasonable propositions These should address both your company's interests and the interests of the opposition. For example, a reasonable approach to negotiations might entail following the normal standards for your industry.

3. Compromise effectively Compromising is often required for negotiations to conclude successfully. In the beginning, the two parties usually set objectives that represent a win for each of them. The art of compromise alters those objectives until each side believes it has gained the most it can hope to gain while losing the least.

You may decide to offer concessions in incremental steps because you don't want to offer more than is needed. You can't be bashful in asking the other side to revise its position. Ask for what you need in order to move the negotiations forward to a successful conclusion. In the end, compromising effectively results from offering viable alternatives to your original position and requesting the same from the other side.

You are negotiating effectively when you clarify objectives, offer reasonable propositions, and compromise reasonably.

The Four Steps in Negotiation

What is negotiation? It is, quite simply, the act of conferring with another in order to come to terms or to reach an agreement. However, to be successful at negotiation, you should be aware of underlying issues, and be prepared for the negotiation process. Consider the following four steps.

Step 1. The first step in negotiation is to be sure you are clear on the outcome you want. Outcomes look at the end result—the solution—and should be stated specifically and positively. The trick is to have this conversation with yourself before you enter into negotiations.

Step 2. The second step in negotiating is to find out as much about the other party's position as possible. Knowing what is influencing your opposition will enable you to negotiate more strategically. Any number of outside issues might be affecting your opposition's position. These issues can be economic, social, political, emotional, personal or physical in nature. Do a little digging and attempt to find out what is driving the opposition's thinking before you reach the negotiating table.

Step 3. The third step in the process is to be sure you are negotiating with someone who can make the final decision. Having someone in the middle just muddies the water. However, there are times when using a skilled negotiator is necessary or more productive than doing it yourself. Hire a negotiator if the situation is:

deadlocked—if all else has failed emotionally charged out of your range of expertise.

Step 4. Finally, you and the party you're negotiating with have to be clear that you have a reason to be in negotiation—that you are both working toward a mutually satisfying outcome. Once you have clarified the other party's outcome and your own, you have a premise for negotiating. You can work toward a mutual outcome.

Skillful negotiation is both a goal and an art. Tomorrow's manager works toward mutual satisfaction, and strives to achieve a common goal. The successful negotiator should view the other party as a partner, not an adversary, in achieving a goal. It should be a win-win negotiation.

Characteristics and Skills Needed for Negotiation

Negotiating isn't easy. It takes determination and skill to arrive at terms agreeable to both you and the client. And while practice will improve your results, certain skills and characteristics are necessary to negotiate successfully through complex sales.

self-confidence and assertivenessExecutives prefer to deal with people who have authority. Being confident and assertive ensures that you convey an authoritative stance and display the same communication style as your prospects.

excellent verbal communication skillsCommunication skills are essential to negotiation. As a negotiator, you will use your verbal communication skills to build rapport and trust in the people that you negotiate with. You will also use them to convey the benefits of your solution as applied within the client's organization. Your ability to communicate effectively will reduce conflict and facilitate a collaborative approach—the best and quickest route to mutual benefit.

active listening skillsActive listening is also essential during negotiations. To be a good listener, you must be objective. Try to understand the real intentions behind the prospect's words and don't assume that they are what you want them to be.

As you listen, try to determine whether the information you are being given is relevant and valuable to the negotiation. If what you're hearing is of little consequence then you must determine its real meaning or purpose.

People often say things to test the reaction of the other party. If this happens to you, decide how the client wants you to react and whether that reaction is appropriate and beneficial to you. Try to determine if the prospect has hidden motives or a hidden agenda. Consider their tone, pace, and volume as they speak. Watch their body language. Use your knowledge of nonverbal cues to read between the lines.

emotional controlAnger interferes with the problem-solving process, leading to blurred thinking and flawed decisions. When you lose your temper, you lose control of the negotiation. To be certain you are communicating the "right" message, you need to control your emotions and your verbal and non-verbal communication cues.

resilience under pressureIn the negotiation process, so much is at stake that you often feel under pressure. The resulting stress may cause you to sabotage your chances of success.

Stress can make you act erratically. In negotiation, consistency is important, as it demonstrates reliability and trustworthiness. Stress also reduces your resistance to

coercion. In stressful situations, you are more likely to submit to unreasonable demands.

Improving your resilience under pressure allows you to remain cool and calm throughout the most intense bargaining situations.

patience and a flexibilityThe old adage "patience is a virtue" is never more true than when applied to negotiation. It is important not to display impatience or anxiety as this might be interpreted as vulnerability.

Another key characteristic of the salesperson is flexibility Although advance planning is essential to negotiation, you need to be flexible enough to abandon an ineffectual strategy in favor of one that works. Unless you are fortunate enough to have all of your proposals accepted the first time, you need to possess the ability to generate new options and alternative proposals that still match your objectives.

the ability to create and assess choicesYou must also be able to rapidly assess how the prospect's variations and counter-proposals affect your company's interests.

Developing these skills and characteristics will ensure that you are prepared for the various situations that arise during negotiations. When you negotiate at an executive level, you encounter individuals who are proficient at extracting the maximum number of concessions from unsuspecting and inexperienced salespeople. However, these competencies will support the specific techniques and strategies that can overcome such buyer tactics.

Negotiation Skills for External Consultants

As an external consultant, you may need to use negotiation skills at times when dealing with your clients. For example, you may need to negotiate on resources, time, staff, outcomes, or other issues.

Negotiation is necessary to find the best outcome for all parties. According to Neale and Bazerman, negotiation is "a decision-making process among interdependent parties who do not share identical preferences." Hayes gives another definition: "Negotiation is described as a joint decision-making process where people with varying preferences resolve their differences."

In 1981, W. P. Scott proposed a number of key stages in the negotiation process with each stage requiring different skills. The three key stages proposed by Scott are exploration, bidding and bargaining, and settling.

1. ExplorationAt this initial stage, you analyze what is wanted and what is required. You propose ideas and establish minimum and maximum acceptable outcomes.

Information-gathering is vital at this stage. You'll also need planning and organizational skills to devise a suitable game plan.

In the exploration stage, you choose an appropriate strategy. You'll need to determine whether a competitive or a collaborative strategy will work best for your particular situation.

Competitive strategy. Use the competitive strategy if you believe you will be exploited by the other party. You'll start with bids and work toward a mutually determined point.

Collaborative strategy. With this strategy, a reciprocal arrangement may be made. You'll bargain with the other party to achieve an acceptable outcome.

2. Bidding and bargainingAt this stage, negotiation begins in earnest. Either competitive or collaborative tactics are used. A series of offers, counter-offers, and concessions also may be made.

If you use the competitive strategy, the seller starts with the highest bid and the buyer starts with the lowest bid. Bids should be realistic and not too extreme. Otherwise, they may discourage agreement. At this point, either party may apply pressure by increasing the cost of the negotiation, using delaying tactics, setting deadlines, or other means. Resistance can be reduced by using threats, rewards, or persuasion.

If you use the collaborative strategy, you may disclose goals, priorities, and limits to achieve an exchange. This strategy is particularly effective if there is trust between all negotiating parties. Indirect communication or holding informal

discussions can be low-risk strategies for collaboration. Making smaller concessions before making a larger one minimizes the loss of image and reputation.

3. SettlingAt this stage, the negotiations end, and agreement is reached. You will need to be perceptive at this stage, identifying the correct time to reach agreement. Presentation skills are a must for drafting negotiation documentation.

If you're using competitive tactics, this is the "crunch" of the negotiation process. Continued negotiation at this point can lead to a collapse of discussions. If you're using collaborative tactics, watch out for narrowing and acceptance of differences and signals of a last and final offer, such as, "This is the best we can do."

Based on the strategy you choose, there are four different outcomes that can result from a negotiation. These outcomes are Lose-Lose, Lose-Win, Win-Lose, and the preferred strategy, Win-Win.

Lose-Lose. With this outcome, neither party wins. There is dissatisfaction all round. This happens when a stalemate or deadlock occurs, and final agreement cannot be reached between the negotiators. To resolve a stalemate situation, you can delay the contract, revise requirements with the client, or take other actions.

Lose-Win. This negotiating outcome, where the client loses and the consultant wins, is unsatisfactory for any consulting assignments. There is a short-term gain, and a quick decision and outcome is reached, but there is likely to be long-term dissatisfaction. Clients will feel that your will is being imposed on them, and there will be mistrust and competition.

Win-Lose. This outcome, where the client wins but the consultant loses, may result in both parties being reluctant to work together again. The parties may conceal vital information from each other, deceive each other, and regret any agreement that is reached. As a consultant, you may feel undermined, and your reputation may be damaged.

Win-Win. This outcome is by far the best and is necessary for long-term satisfaction. The win-win outcome may take longer to reach, but everyone will be on board and there will be all-around support. With a win-win outcome, there is a high level of trust and cooperation. Negotiators focus on common interest and long-term satisfaction.

Every client is different, and each consulting situation you encounter may require a different approach. To secure the best outcome, you need to find and apply an appropriate strategy. Your ultimate aim is to foster team spirit and trust with your clients. There should never be a "them" and "us" situation, since this is unlikely to bring about the best outcome.

Like it or not, negotiating is a vital skill for any external consultant. You may be involved in both minor and major negotiations. How you deal with the other party members—how

you respond to their needs—speaks volumes about your approach and determines how you will be perceived by others. Adopting a collaborative strategy doesn't mean that you are seen as a soft touch or someone who will cave in under pressure. But it is the best strategy to cement an enduring relationship where you and your clients move forward.