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 assertiveness

Executives 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 skills
Communication 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 skills
Active 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 control
Anger 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 pressure
In 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 flexibility

The 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 choices

You 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. Exploration
At 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 bargaining

At 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. Settling
At 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.