Negotiation in Action:Win, Hardball, BATNA, ZOPA

Basic Principles of Negotiation

.The Win-Win Approach to Negotiation

Many professional negotiators prefer to aim towards what is known as a Win-Win solution. This involves looking for resolutions that allow both sides to gain.

In other words, negotiators aim to work together towards finding a solution to their differences that results in both sides being satisfied.

Key points when aiming for a Win-Win outcome include:

  • Focus on maintaining the relationship - ‘separate the people from the problem’.

  • Focus on interests not positions.

  • Generate a variety of options that offer gains to both parties before deciding what to do.

  • Aim for the result to be based on an objective standard.

Focus on Maintaining the Relationship

This means not allowing the disagreement to damage the interpersonal relationship, not blaming the others for the problem and aiming to confront the problem not the people. This can involve actively supporting the other individuals while confronting the problem.

 



 

The Win-Lose Approach to Negotiation

Negotiation is sometimes seen in terms of ‘getting your own way’, ‘driving a hard bargain’ or ‘beating off the opposition’.  While in the short term bargaining may well achieve the aims for one side, it is also a Win-Lose approach. 

This means that while one side wins the other loses and this outcome may well damage future relationships between the parties.  It also increases the likelihood of relationships breaking down, of people walking out or refusing to deal with the ‘winners’ again and the process ending in a bitter dispute.

Win-Lose bargaining is probably the most familiar form of negotiating that is undertaken.  Individuals decide what they want, then each side takes up an extreme position, such as asking the other side for much more than they expect to get.

Through haggling – the giving and making of concessions – a compromise is reached, and each side’s hope is that this compromise will be in their favor.

A typical example is haggling over the price of a car:

“What do you want for it?”


“I couldn’t let it go for under $2,000.”
“I’ll give you $1,000.” 
“You must be joking.”
“Well, $2,000 and that’s my limit.”
“$2000” … “$1,300” … “$1,700” ... “$1,500” … “Done!”

Both parties need good assertiveness skills to be able to barter or haggle effectively.

 

While this form of bargaining may be acceptable in the used car market, and even expected in some cultures, for most situations it has drawbacks. These drawbacks can have serious consequences if applied to social situations.

 

For example, win-lose negotiation:

  • May serve to turn the negotiation into a conflict situation, and can serve to damage any possible long-term relationship.

  • Is essentially dishonest – both sides try to hide their real views and mislead the other.

  • Reaches a compromise solution which may not have be the best possible outcome – there may have been some other agreement that was not thought of at the time - an outcome that was both possible and would have better served both parties.

  • Agreement is less likely to be reached as each side has made a public commitment to a particular position and feels they must defend it, even though they know it to be an extreme position originally.

While there are times when bargaining is an appropriate means of reaching an agreement, such as when buying a used car, generally a more sensitive approach is preferable. 

Negotiation concerning other people’s lives is perhaps best dealt with by using an approach which takes into account the effect of the outcome on thoughts, emotions and subsequent relationships. You may find our page on emotional intelligence helpful.

 

Here are Some Basic Principles of Negotiation

1. Be Prepared

  • Know about the party you will be negotiating with

  • Take advantage of your strengths and of their weaknesses

  • If possible, speak with other business people who have negotiated with the other party in the past / do your research

  • Many negotiators have their patterns and styles that you may be able to use against them.

  • Most importantly, before you begin the negotiation, make sure that the other party has the authority to make binding commitments; you don’t want to find yourself in a situation where to believe you’ve closed the deal only to find out that your agreement has to be approved by someone higher up the ladder.

2. Have a Strategy

  • The first offer is usually always the most important offer as it becomes the benchmark by which the following offers will be judged or compared.

  • You will never get what you do not ask for; make your first offer aggressive.

  • Have something to give away without hurting your negotiating position

  • Consider adding decoys for the other party to find

    • Include nice-to-have items that are not critical to the success of the project.

    • Spare parts that may or may not be required in the end

  • If your customer decides to take those items out to reduce the overall cost, you haven’t lost anything, and you have helped your buyer reach their target budget.

  • Watch for clues like body language and speech patterns

  • Be prepared to stop or cancel negotiations if the other party seems stuck with their position.

  • Be clear with your unwillingness to continue under their conditions and make them wonder if you will be back.

    • If they are on the hook to cut a deal, they will feel pressured to agree to your terms.

3. Know when to Stop Talking

  • Many smart negotiators make this mistake. They just don’t know when to stop talking even after the other party said “Yes.”

  • This happens when you are trying to prove a point. This is not “negotiation.”

  • Great negotiating is more listening than talking

  • Once you have said something, you cannot take it back – choose your words carefully

5. Find the Influence

  • Concentrate on taking maximum advantage of your strength

  • If you are the sole source of a product, you have tremendous leverage across the board.

  • If economic circumstances created a market that your product is in great demand and low supply, you have more bargaining power to name your price.

  • Establish a strong foundation early on in the negotiation by demonstrating your skills on the matter.

  • Playing “catch-up” during a negotiation can be very difficult

6. Your Offer and Closing the Deal

  • An offer is not just a dollar amount.

  • Includes all the elements of the bargain and the formal agreement or contract.

  • Make sure you nail down all the specifics in your offer

  • Your offer should include but is not limited to the following:

    • The Price

    • Scope of work

    • Identification of services and or products (if any)

    • Warranties (if any)

    • Terms and conditions

  • All documents incorporated by reference

  • Your primary focus is on price; it is critical keep all the other components of the deal in the forefront of your mind.

  • Offers should be presented in writing and must include all the elements of the bargain.

  • Successful negotiating requires a sense of timing, resourcefulness, keen awareness and the ability to anticipate the other party’s next move.

  • Negotiation should be designed to set up not only your next move but your subsequent moves down the process.

  • Always have the endgame in mind as your plan your strategy.

  • All offers leading up to the final number are important: they will set the stage for final handshake.

copyright@usild 2020. All rights reserved