UNIT-3 Negotiation Skills

                                                       

                                                                      Negotiation Skill 

What Is Negotiation?

 

Negotiation is a process by which two or more people (or groups) resolve an issue or arrive at a better outcome through compromise. Negotiation is a way to avoid arguing and come to an agreement with which both parties feel satisfied.

Negotiation can be used by a variety of groups in a variety of situations—for instance, between individuals at a market looking to get the best price on an item, between startups looking to merge organizations through business negotiations, or between governments who want to come to a peace agreement. In your daily life, you may find yourself at work in salary negotiations or sales negotiations. Negotiation strategies are also a great tool for conflict management and conflict resolution—even in your personal life.

 

The 2 Types of Negotiation

There are two possible types of negotiation, depending on the point of view and leadership styles of each negotiating party:

1.   Distributive negotiation: Also sometimes called “hard bargaining,” distributive negotiation is when both parties take an extreme position and one side’s win is believed to be the other side’s loss (a win-lose solution). This operates on a “fixed pie” principle, in which there is only a set amount of value in the negotiation, and one side will walk away with the better deal. Examples include haggling prices in real estate or at a car dealership.

2.   Integrative negotiation: Parties engaging in integrative negotiation don’t believe in a fixed pie, instead asserting that both sides can create value or mutual gains by offering trade-offs and reframing the problem so that everyone can walk away with a win-win solution.

The 5 Stages of the Negotiation Process

While there are many approaches to negotiation tactics, there are five common steps that most effective negotiations follow to achieve a successful outcome:

1.   Prepare: Negotiation preparation is easy to ignore, but it’s a vital first stage of the negotiating process. To prepare, research both sides of the discussion, identify any possible trade-offs, determine your most-desired and least-desired possible outcomes. Then, make a list of what concessions you’re willing to put on the bargaining table, understand who in your organization has the decision-making power, know the relationship that you want to build or maintain with the other party, and prepare your BATNA (“best alternative to a negotiated agreement”). Preparation can also include the definition of the ground rules: determining where, when, with whom, and under what time constraints the negotiations will take place.

2.   Exchange information: This is the part of the negotiation when both parties exchange their initial positions. Each side should be allowed to share their underlying interests and concerns uninterrupted, including what they aim to receive at the end of the negotiation and why they feel the way they do.

3.   Clarify: During the clarification step, both sides continue the discussion that they began when exchanging information by justifying and bolstering their claims. If one side disagrees with something the other side is saying, they should discuss that disagreement in calm terms to reach a point of understanding.

4.   Bargain and problem-solve: This step is the meat of the process of negotiation, during which both sides begin a give-and-take. After the initial first offer, each negotiating party should propose different counter-offers for the problem, all the while making and managing their concessions. During the bargaining process, keep your emotions in check; the best negotiators use strong verbal communication skills (active listening and calm feedback; in face-to-face negotiation, this also includes body language). The goal of this step is to emerge with a win-win outcome—a positive course of action.

5.   Conclude and implement: Once an acceptable solution has been agreed upon, both sides should thank each other for the discussion, no matter the outcome of the negotiation; successful negotiations are all about creating and maintaining good long-term relationships. Then they should outline the expectations of each party and ensure that the compromise will be implemented effectively. This step often includes a written contract and a follow-up to confirm the implementation is going smoothly.

 

Negotiating is a part of living; we do it all the time. 

When you walk down a crowded street you negotiate the path you take.

Over the years we noticed that some people are very good at getting terrific deals.

Most others simply get what the other party is willing to give.

What’s the difference?

The first group knows how to negotiate.

Where do people learn to negotiate successfully?    

There seems to be no school of negotiating.

Those who are successful at negotiation become so by doing many deals, in other words they learn from their experiences, but some just have a natural talent for it.

Over the years I have discovered a number of rules regarding negotiation.

If you understand these rules, this will help you become a Power Negotiator.

Rule No 1  – Everything is negotiable

This does not mean you are always going to get what you want or win every negotiation, but you must remember that everything is potentially up for negotiation.

Rule No 2 –  Know what you want before negotiating

Always know the result you want – your bottom line –  before commencing negotiations.

It’s a bit like when you’re planning your holiday.

Firstly decide your destination  –  where you want to end up, then work backwards to decide the best way to get there.

In negotiations and in life, if you don’t have a plan of your own, you’ll be part of someone else’s.

Rule No 3  –  Aim for a Win/Win negotiation

Win/win is created when we help another person to get what they want while we get what we want so that both parties feel they have won.

To achieve this: 

• 
  You can sometimes do this before the negotiations formally begin by observation and by asking questions and then listening carefully. Never  offend the other party
  The secret is to try and establish what is on their agenda and in what order, in other words what is most important for them.
• Try and build a rapport with the other party during the initial stages of the negotiations. This will help you satisfy their needs by understanding what they really want, as explained in the next point.
• When negotiating, try to look beyond the requests and demands of the other party and attempt to understand their real intentions and motives. Seek to meet this dominant, often hidden, need and you are well on the way to winning the negotiation.
• Don’t assume that the items on your agenda are the same as those on the other person’s agenda. There may be one or two similar items on your lists, but the order may be different.

Although you are trying to create a win/win, don’t seek total approval from the other party.

Don’t fear rejection or be afraid to be seen as unreasonable, otherwise you will give in to things you want and that’s not really a win/win.

Rule No. 4. – Treat Negotiating as a Game

When it comes to negotiations, you need to be involved but not too much.

If you are too emotionally involved, you will lose your perspective and make emotional rather than subjective decisions.

Like all games, you must understand the rules.

A skilled negotiator understands the structure and stages of negotiation.

If you play a game and don’t know the rules, how do you know when the game has begun, reached its mid point, or neared its conclusion?

Rule No 5 –  Never believe anyone else is entirely on your side

Trust yourself; you have your own interests entirely at heart.

As a buyer, would you go up to a seller, show your bank account, explain how desperate you are to buy the property, then ask the seller to tell you what you should offer?

If you are a seller, would you tell a potential buyer your absolute bottom line?

No sane person would do such things, yet every day buyers allow others to make decisions for them.

These others could be an accountant, a relative, a friend or even a real estate agent.

Yes, you certainly want to ask others advice, but my point is that while these people may not consciously deceive or purposely lead you astray; everybody’s interest is different, each has their own goals and yours are always going to be different and sometimes conflict with mine.

Rule No 6 – Strive to be innocent

To Power Negotiators, smart is dumb and dumb is smart.

When you are negotiating, you’re better off acting as if you know less than everybody else does, not more.

Have you ever noticed that as soon as people admit they really don’t understand something, a lot of people rush in to help them out?

Try saying something like “I don’t know … I’m new to this, you’re the experts, so you’re going to have to help me out understanding this.”

You will often find others smile, thinking they have this pigeon just where they want him, take him under their wing and help him out.

Of course that’s usually just when you have them where you want them.

They often reveal more than they care to about their own needs and what they are willing to concede.

Most of us are too eager to show off just what we know.

This can work against us.

We can often reveal too much too soon about what we are willing to give up to get the deal.

We must let go of our ego satisfying position of “know it all” and instead assume the profit making position of innocence.

In fact, his success was directly attributable to how smart he was-by acting dumb. 

His demeanor was so disarming that the murderers came close to wanting him to solve his cases because he appeared to be so helpless.

The reason for acting innocent is that it diffuses the competitive spirit of the other side.

How can you fight with someone who is asking you to help them negotiate with you?

How can you carry on any type of competitive banter with a person who says, “I don’t know, what do you think?”

Most people, when faced with this situation, feel sorry for the other person and go out of their way to help him or her.

Rule 7. Ask Questions

Power Negotiators are never afraid to ask the other party questions or for advice.

Asking questions tends to establish a climate of trust.

If you are not happy with the response you get try and ask another question such as, “Why do you say that?”Even if you know the answers.

This does two things; it buys you some thinking time and it forces the other party to better justify their stated position. 

Always ask why.

Most people are afraid to reveal their true motives.

Ask why and it may get this information out in the open.

Listen carefully.

If you listen carefully enough, you will discover everything the other party really wants out of the deal.

Most of us listen to how a person talks more than what he or she says.

Try to understand what is really being said.

To become a successful property investor you need to learn these skills of Power Negotiators, or at least get a professional negotiator on your side as part of your team.