How to Negotiate

I remember some time back when a friend of mine casually mentioned that the most important thing he learned during his MBA is negotiation. While decision making is concerned with optimizing resources (click here for the post),

negotiation seeks to solve differences between 2 or more parties.

(1) 4 elements of negotiation:

  1. People – 3 kinds of people problems:
    • Perception
      • look for opportunities to act inconsistently with their perception
      • face saving
    • Emotion
      • allow the other party to let off steam + listen quietly + not responding to attacks + occasionally ask to continue from last spoken words.
      • don’t react to emotional outburst.
    • Communication
      • speak about yourself, not them. (e.g. instead of saying ‘you are stupid’, say ‘I don’t understand this point’).
  2. Interest – separate from positions
    • Talk about interest and not on position. (e.g. between a buyer and seller, interest refers to the merchandise, position refers to ‘lowest possible price’ for buyer and ‘highest possible price’ for seller)
    • Talk about interest + reasoning first, conclusion and proposal later
  3. Options
  4. Objective criteria – fair standards/procedures

(2)  Other pointers

  • identify BATNA (best alternative to negotiated agreement). E.g. if I seek to buy oranges, my BATNA (if the negotiation fails) could be either apples or walk away.
  • If someone asserts their position forcefully, look at the interest behind it.
  • If someone attacks your idea, seek to understand (a) their concerns (b) what would the other party do
  • If someone attacks you, (a) recast as attack on problem (b) ask question + pause for silence

(3) Negotiation style

  • Are you cooperative or competitive?
  • Who is the other party’s key decision maker?
  • For other principles of influence, click here.
  • Leverage – who has the upper hand? Leverage doesn’t mean actual power and it’s often the perception of the situation vs the actual facts
    • who controls status quo?
    • are the threats credible?
    • for whom time is a factor?
    • who has more to lose from no deal?
  • Situational matrix – identify if (a) conflict is high/low and (b) relationship is important

image002

p/s:

(1) Suggested reading (a) Getting to Yes by Roger Fisher and William Ury (b) Bargaining for Advantage by Richard Shell

One thought on “How to Negotiate”

  1. Good post 🙂
    To add on, most people go in to a negotiation as though it is a competition where the outcome is only win or lose, so you either go in with a mindset of either attacking or defending. But that is not true as both parties aims to achieve a certain goal and that’s why the 2 (or more) is on the table.
    What is most important is everyone must understand that you do not have complete information about the other party. Having a “war” mindset going in, you forgot there’s an option called asking. So, perhaps the next time you go into negotiation, the words you may want to start with are what, where, how, why…..

Leave a Reply

Your email address will not be published. Required fields are marked *