Negotiation is a medium of reaching an agreement between individuals or parties. Negotiation is non-negotiable in the business world. In fact, the majority of professionals say negotiation has a great impact on business performance.

Besides business, negotiation is part of our everyday life- we use it at home, in buying our favorite car, house, even in dealing with disputes. Therefore, it is vital to understand the definition of negotiation also develop negotiation skills.

What is Negotiation?

Negotiation is an approach to reaching a point between two individuals or parties where both parties agree. It also means influencing the other party to make them agree to what is best for you through effective dialogue.

It occurs in many areas including the workplace, government, legal system, international relations, etc.

It is also important in the home. Having negotiation skills will help you manage your home effectively. Knowing how to negotiate effectively is highly essential in all aspects of life even in the home.

However, for effective negotiation, you need to possess the negotiation skills.

Types of Negotiation

Knowing how to negotiate successfully depends on your familiarity with different types of negotiations. The types of negotiations have two possible outcomes.

  • The first outcome: everyone benefits, also called a win-win situation
  • The second outcome: only one part benefits, also called the win-lose situation

On these two outcomes we need different types of negotiations.

Integrative Negotiations:

This form of negotiation occurs when the parties involved benefit from the agreement i.e. a win-win situation. The integrative agreement could take a long time because both parties must be completely satisfied with the agreement.  

An example of negotiating integratively is a consumer refusing to buy a product at the initial rate of $500. After an effective dialogue, the seller and the buyer may agree at a lesser price that benefits both of them. This negotiation definition is called integrative agreement.

An example of integrative negotiation

Distributive Negotiations:

This form of negotiation is not based on the needs or interests of both parties. They negotiate to gain more than the other party. It is a win-lose outcome. It often occurs in a situation where there are limited resources or a scenario whereby a service provider or a consumer is not interested in a win-win situation.

A simple example of distributive negotiation is buying a product at the supermarket. The prices of products at the supermarket are fixed, which may not be based on the consumer interest or need, and it may not be equivalent to the value of the product. A consumer will either buy or ignore.

Five Stages of Negotiation

To have the right results in negotiating you need to develop a structured technique. These stages of negotiation guide you on how to negotiate in any circumstance.

  1. Preparation
  2. Define the ground rules
  3. Clarify information
  4. Negotiate and agree   
  5. Conclusion and Implementation

1. Preparation:

This is the first phase of negotiating, but it is often overlooked as unnecessary. If it is impossible to present a proposal without, first, thorough preparation then it is likewise impossible for you to go the bargaining table without good preparation and planning.

Preparation allows both parties to have a smooth negotiation. This phase of how to negotiate involves both parties doing their homework before coming to the table.

It includes researching the policy, history of the other party, and compare with your own policy. It also includes determining the possible outcome and the least possible outcome.

Corporation A will try to determine the least amount corporation B will settle for, while corporation B will try to figure out the highest amount corporation A can pay. You get this information through planning and preparation.

2. Define the ground rules:

This stage involves establishing the rules and procedures that will set the ball rolling for the negotiation. It includes:

  • Where the negotiation will occur?
  • When will the negotiation take place?
  • With whom are you negotiating?
  • Will there be time constraints? And under what time will it exist?
  • Will there be an occurrence of out of bounds issues?
  • What if there is no agreement?

It is on these rules that you kick-start the negotiating. This also includes both parties stating their initial price, their interests, demands, and the expected possible outcome.

3. Clarification:

This is the stage you clarify your position on the discussion in stage two, in the event of disagreement or misinterpretation. Also, to further justify and strengthen your claims. It is important and necessary for both parties to discuss amicably any indifferences or disagreement to reach a compromise.

4. Negotiate and agree:

This is where the show begins. While integrative negotiations are not possible sometimes, it should be your aim. Aim for a win-win outcome where both parties’ claims are taken into consideration. After the initial offer from both sides, each party can offer different proposals to reach an agreement.

5. Conclusion and implementation:

After an agreement is reached, both parties can conclude the discussion with appreciation irrespective of how the discussion ends and that is real negotiation definition. Successful negotiations are not just about reaching a compromise but building a long-term relationship.

After the agreement, there is a need to take into consideration the outcomes of the meeting and create a strategic plan to implement them. This may involve written contract as well as tracking the progress of the implementation.

Negotiation Skills

This is where the negotiation lies, you cannot have an effective negotiation without these skills, and you should always seek to improve them. Learn the negotiation skills and you will know how to negotiate.

1. Active Listening skills

Active listening skills are not just about listening attentively to the other party, but it also includes the ability to read the other side body language as well as verbal communication.

It is important to pay full attention to what the other party is communicating to find an angle for debate or compromise. This is better than using most of the time explaining your perspective.

2. Put your emotion under control

It is vital to keep your emotions under control during negotiation. Of course, there is a tendency to get emotional especially if the party does not agree to your terms. However, try as much as possible to control it because poor emotional intelligence might cause stress the negotiation to end poorly.

3. Communication skills

During bargaining, you must be able to state your claims clearly and effectively to prevent misunderstanding, or unnecessary elongating the duration of the bargaining. If you need to present your views, take good preparation to develop your presentation skills.

4. Good Decision-making

A negotiator must have the ability to make a good decision, to arrive at a compromise promptly.

5. Build a lasting relationship

Part of a successful negotiating is creating a long-term relationship even if both parties did not come to a compromise.

6. Teamwork

If a team is involved in a negotiation, it is important for the team to work together effectively to create an atmosphere of unity during the negotiation.

Five Elements of effective Negotiation

1. Communication:

Choose your most preferred mode of communication. Face to face communication, email or phone calls, or teleconferencing.

You may choose based on the situation, or based on what the environment warrants. That said, you should not rely on one mode of communication, be flexible. Face to face may be necessary for a certain situation and it may not be in another. Also, consider the other party when making a decision.

2. Developing relationship:

You should not take it as business as usual. You should seek to establish a positive relationship with the other party. Try researching on the habits, and background of the other negotiator.

3. Emotional intelligence

A study by Edward shows that emotional intelligence is very significant in negotiation and another study published on Wiley online library with other studies also confirms this assertion. 

Therefore, emotional intelligence is an excellent strength in negotiation, which you must employ at the bargaining table. Emotional intelligence involves noticing and controlling your emotions at the same time recognizing the other party’s emotions and respond to it.

4. Know the stakeholders

Take into consideration the stakeholders too and other people that will be impacted by the outcome of the decision.

5. Determine the value of what you are offering

It is important you determine, expressively and extensively discuss the value of what you are offering. For instance, a real estate agent will not just talk about the beauty of the house, but also the proximity of the house to public transportation and good schools.

Examples of Negotiation

  • Contractors to client negotiations
  • Employee to third party negations
  • Bargaining the price of a car or a home  
  • Purchasing of products or services
  • Negotiation is necessary when dealing with new hires, clients, prospects.  

Conclusion

Negotiation is a must have skill in life. Anyone can develop the skill naturally, to some extent. But knowing more on how it works will help you to develop your skills.