Whenever there is any form of disagreement, whether it’s at governance, business, or personal levels, good negotiations play a critical role in building bridges to arrive at a solution that is acceptable to all parties. The importance of good negotiations skills in the business environment can therefore not be wished away, and as such, it is important for every business leader to emulate and improve their chances of obtaining a favorable outcome.
In this article, we explore 4 skills or strategies that can help one negotiate better in business environments.
1. Adequate planning and preparation
One of the popular quotes by Benjamin Franklin states, “If you fail to plan, you plan to fail!” While this saying may seem simple and easy to forget, it is a profound truth that is applicable in virtually every part of human lives. Applying this adage into context, successful negotiators take time to plan thoroughly for their engagements.
According to Mark Trowbridge, a seasoned procurement specialist, success goes to the most prepared. In his article on ‘7 Techniques for Preparing Winning Negotiations with Your Key Suppliers’, he argues that every negotiator worth their salt must know what they want out of a deal. It is therefore incumbent of the professional to develop a negotiating strategy that outlines the elements of negotiation, states whether they are must-haves or optional, supported solutions, and the last acceptable offer.
This strategy must include the Best Alternative to a Negotiated Action (BATNA), should the deal not fall through. The negotiator must make sure that the BATNA is feasible, offers value for cost, impacts the business positively, and has no adverse consequences on the company.
Still, on planning and preparation, Katie Shonk suggests that a good negotiator must endeavor to know their opponent well. This is according to her write-up, ‘A Negotiation Preparation Checklist,’ done for Program on Negotiation, Harvard Law School. Some of the top areas the negotiator should be interested include the business operations of the other party, key partners, and the real decision makers. With this information, it is easy for one to gauge what they are up against.
Moreover, a good negotiator never walks alone. They should handpick a team of trusted and qualified professionals from their company. This team must be involved in creating the negotiation strategy and should be in agreement on how to execute it.
2. Effective communication skills
When it comes to executing one’s negotiation strategy, employing a mix of excellent communication tactics is sure to bear good results. These range from questioning to listening skills. Let’s take a closer look at each of these skills.
- Asking the right questions
Writing for Forbes magazine on ‘15 Tactics for Successful Business Negotiations’, Richard Harroch – a seasoned venture capitalist writer, points out the importance of driving negotiations by asking the right questions. He argues that by asking many questions that are specific to the deal at hand, a negotiator can extract useful information from the other party to up their stakes in the negotiation.
These questions, he reiterates, should revolve around aspects such as pricing, unique product features, additional benefits, value for money, and what makes the party standout among its competitors. If the negotiator then compares this information with what they are likely to get from their BATNA, they stand a good chance of bargaining for a better deal.
- Active listening
In order to master the art of communication, it’s important to appreciate the fact that people convey their thoughts and emotions in diverse ways. As Dr. Albert Mehrabian – currently Professor Emeritus of Psychology, UCLA, puts it in his extensive research on human personality and communication; people convey their feelings 7% through words, 38% through tonal variation, and 55% through body language. These findings of his study sound a wakeup call to negotiators to pay close attention to any incongruence between the spoken word and the silent communication cues.
Now, the Conflict Research Consortium, University of Colorado, USA, defines active listening as paying attention and responding to another person in a way that improves mutual understanding. With this in mind, good negotiators should be able to identify any mismatch in the communication cues and seek clarification with a view to establishing a common understanding.
3. Exercising utmost self-control
It is no secret that negotiations can elicit strong emotions, especially, when one party or both become unreasonable. In such situations, it is hard to have any meaningful discussions. As Greg Williams, the master negotiator and body language expert, says, “Your thoughts control your actions. Your mind controls your thoughts. Your actions control your life. So, when you control your mind you control your thoughts, which control your actions, which controls your life. To control your life, control your mind.”
He further states that the outcome of a negotiation is not determined by what happens but by how an individual responds to the actions of the other party. It, therefore, goes without saying that if a negotiator can master their emotions, they can successfully execute their negotiation strategy and close any business deal.
On the other hand, Keld Jensen warns in his article, ‘What’s Your Negotiation Strategy?’, that emotionally charged and combative approaches to negotiations lead to low-quality solutions without viable business partnerships. In this case, both parties lose and their businesses suffer.
4. Focus on win-win results
The former British Prime Minister Tom Blair will forever be remembered for brokering the Good Friday Agreement between Northern Ireland republicans and unionists on 10th April 1998. According to him, one of the strategies he used to midwife this agreement was establishing a common framework that was agreeable to both parties as a foundation for the peace talks. This framework was not skewed to benefit one party or forged to force the other side to surrender.
Likewise, when closing business deals, negotiators should settle for win-win agreements where everyone gets the best terms within the prevailing market conditions. Brokering such deals doesn’t necessarily mean conceding all the way to avoid impasses in order to please the opponent. In actual sense, some of the most successful negotiations encounter deadlocks as parties push to get most of their interests accommodated. However, with a few trade-offs from both parties, as was in the Good Friday Agreement, it is possible to reach an agreement that is favorable to both parties.
For instance, a manufacturer sourcing for factory raw materials will push for the lowest price possible in order to maximize profits. Similarly, the supplier will want to negotiate a higher price. In the event of an impasse, either can concede their ground on condition that the other party takes care of secondary costs such as transportation. The supplier can also agree to lower the price of the materials depending on the quantity purchased by the manufacturer.
Such arrangements require negotiators from both parties to think outside the box for other areas of compromise that will see them benefit from the deal. The most important thing is to ensure that all parties are satisfied. This way, it is possible to foster strong and long-term trading relations which are pivotal for business growth.
The secret to meaningful business negotiations lies in the ability to prepare and develop a great negotiating strategy. Moreover, executing this strategy requires excellent communication skills and utmost self-control with a view to achieving a win-win outcome for the involved parties. This makes it possible to build strong business connections that are pivotal for organizational growth.