NEGOTIATION SKILLS BASICS FOR MBA

NEGOTIATION SKILLS BASICS FOR MBA

NEGOTIATION ELEMENTS

NEGOTIATION GOALS

NEGOTIATION OUTCOMES

Eventually, every negotiation comes down to this question: what is the right thing to do? Assuming that you're The Negotiator, the answer depends on your value system and how you believe the other party will respond. The answer also stems from a series of questions that you should ask yourself. There are no right or wrong answers to these questions, you simply need to decide if the answer you choose is compatible with your ethics and value system.  Following list presents a few of these questions:

·        How much Candor is required for a successful negotiation?

For example, we advise you not to reveal your walk away price or your batna. Because doing so will put you in a weaker position to negotiate. One could say that you're failing to disclose material information but one could also argue that disclosing too much information may make a win-win solution impossible.

·        Are you required to ensure that the ultimate outcome is fair

If the outcome is win-win you can assume fairness. But how do you judge a win-lose outcome as fair? You probably don't consider it fair. That's why win lose should only be undertaken when win-win isn't a possibility.

·        Is the use of economic pressure unethical

Most people are inconsistent in their views of this answer. People may resent the store owner who increases the price of generators and lumber just before hurricane season. But they're okay with the airlines charging more for the same seat a week before the flight than they charged two months before.

Only you can decide how you would respond to these questions. You also need to recognize that your opponent may have a different value system. For example, your opponent May believe that a win-lose negotiation is fair and a good resolution. Figuring out your opponent's value system isn't easy but you can get a clue from her tactics after you've spent some time in negotiation with that person.

 

NEGOTIATION ELEMENTS

To understand what really goes on in a negotiation, you need to consider the three critical elements of any deal: power, time and information. You'll be successful in your negotiating efforts to the extent that you can control these three factors. Playing the negotiation game is much easier if you know the rules and you think about how you're going to play before the negotiation starts.

Season negotiators recognize the natural sequence of activities that take place during a negotiation. A sequence that assumes you've done the necessary preparation. The reason the sequence is natural is that it makes sense and the order is logical. When you don't follow the sequence, things can get crazy and negotiating becomes more difficult. The simple sequence of negotiation has four parts:

1)     Set the stage and chat with the players.

Creating an environment conducive to good negotiation is important. Often this environment is a neutral playing field, so that one side doesn't have the home court advantage over the other. You also want to spend some time on pre-negotiation chatter to put everyone at ease and to establish procedures for the negotiation process.

2)     Separate interest from positions.

Most negotiations start with the parties stating their positions such as “i must get 45 dollars per unit” however, position statements reflect a win-lose attitude and don't leave the door open for other potentially more effective negotiating strategies. You must get beyond position statements to discover what the other party really wants. Their interests in the negotiation separate the people from the problem. Perhaps the other party's real goal is to cover his costs. If that's the case, you may be able to satisfy this interest in many ways. As a result, you have the potential for a mutually beneficial outcome.

3)     Create alternatives that can offer a win-win solution.

After you understand each other's interests, you can begin to develop proposals that can meet them all. Don't worry about making a proposal complex and legally correct at this point. You merely want to establish agreement on the fundamental points of the negotiation. It's important however, that you consider all possible solutions that fall into the win-win category.

4)     Construct a winning agreement.

The final stage of the negotiation is where all the fun happens. If the negotiation is typical, you'll be running up against the deadline (yours or the other parties) now it takes some trading bargaining, swapping and perhaps even compromising to mold the agreement into a form that's acceptable to both sides.

If you can find some objective criteria for making decisions that suit your situation, you'll be more likely to reach a fair agreement. Each time you reach final agreement on a point. Have both parties initial that point of agreement so you feel like you've accomplished something and can move forward.

 

NEGOTIATION GOALS

One of the biggest problems people have in negotiations is that they don't know what they want to have achieved by the time the negotiation is over. How do you successfully negotiate when your target keeps moving? If you can't define a goal for a negotiation, don't negotiate. You can become a more effective negotiator if you consider the following tips:

·        Go in with a plan

Negotiating for something important isn't the time to wing it. Set some objectives that you want to achieve and decide what you're willing to give up to make things work. Put yourself in the other person's shoes, try to figure out the other party's interests and needs, ask questions and try to see things from the other person's point of view.

·        Be a super listener

You always learn more by listening than by speaking. In fact, talking too much in a negotiation can hurt you because you give away too much information. Always let the other party begin and do most of the talking.

·        Never threaten or intimidate

Explaining your point of view is necessary, but don't issue subtle threats about what will happen if the other party doesn't accept your proposal. This only serves to alienate the other party. In addition, you're less likely to achieve an amicable solution.

·        Be patient

“patience is a virtue” is certainly true in negotiation. The japanese for instance, use their incredible patience as a negotiating tool and it works. Most people have deadlines and are in a rush to make things happen. If a japanese negotiator discovers your deadline, he or she won't even begin the actual negotiation until just before your deadline so that you'll agree to almost anything to close the deal and meet your deadline.

·        Define an acceptable backup strategy

What if you can't come to a win-win agreement? This is a very important question because you need to know whether you can afford the luxury of walking away from a negotiation. If you've defined an acceptable backup strategy, you put yourself in a better position to walk away from a bad situation.

 

NEGOTIATION OUTCOMES

How many times have you heard people boasting about great wins at the negotiating table? Usually they attribute their wins to some great tactical skill on their part. A negotiation is successful to the extent that it achieves the goals set by the parties involved. In other words, both parties in the negotiation must define what success means to them.

The following list looks at some signs of a good outcome:

·        A good outcome beats your other choices

Working on an agreement with the other party must be more valuable than your best alternative to the negotiation, or negotiating doesn't make sense. Your backup option your batna or second choice should be a good one but the outcome from a negotiated deal should have much greater value because you put more effort into it.

·        A good outcome makes everyone happy

To get the other party to accept your deal, you must satisfy his or her interests at least in part. The classic story of two siblings fighting over an orange illustrates this idea. Each sibling wants the entire piece of fruit but each is willing to accept something less rather than get nothing at all. So they divide the orange in half. First sibling proceeds to throw away the fruit and use the peel to bake half a pie; the second sibling throws away the peel and eats the fruit. Of course if they had understood each other's interests, they could have found a better way to satisfy them both.

·        A good outcome is the best solution among many

Generating more than one solution to a situation and then choosing the best of the alternatives is an important step in negotiating. With this method, you're more likely to choose the most optimal solution. In the case of the siblings with the orange, a much better solution would have been to give one sibling the whole fruit and the other the whole peel. That additional option would have satisfied both their interests and provided a win-win outcome.

·        A good outcome occurs when no one is

Taken to the cleaners, everyone should come away from the negotiation feeling that given the circumstances, the achieved outcome is the best possible end. If both parties don't clearly understand the rationale for the outcome, you haven't achieved an optimal outcome.

·        A good outcome tells everyone what to do and how

After you've reached an agreement, ensuring that both parties understand what to do and when is important. Coming up with some action steps is a good way to make sure that both parties carry out the agreement in the way that everyone expects.