The Art of Effective Negotiation in Business

Before entering into a negotiation, it makes sense for an individual to identify his or her goals and objectives. It also helps to have several fall-back proposals in mind to prevent a deal from unraveling due to unanticipated factors.

Many people go into negotiations with the mindset that it’s “my way or the highway.” However, effective negotiators are willing to compromise.

Preparation is Key

It’s vital that business leaders prepare for negotiations, as a lack of preparation will give the other party an unearned advantage. Thorough preparation will help negotiators collect relevant information, clarify their goals, and determine their priorities.

It also helps negotiators understand the other party’s goals and preferences, allowing them to create more flexible solutions that will satisfy both parties. Effective negotiators view their role as a problem-solving process, and seek to establish trust and rapport with counterparts by demonstrating empathy and active listening.

It’s also important for business leaders to consider their own value drivers, and the potential impact of any concessions they may have to make during a negotiation. This will help them remain strong and firm on their key objectives, even in the face of a tough adversary. By prioritizing their objectives and knowing their walk-away point, business leaders can create innovative trade-offs to achieve the best possible outcome. By incorporating these practical negotiation tactics, leaders can improve their effectiveness and strengthen their business relationships.

Be Flexible

Flexibility is important to successful negotiation because it allows you to reassess tactics during the course of a negotiation. It is also a way of demonstrating that you are prepared to move the discussion forward in order to achieve your desired outcome.

For example, if an employer’s primary objection to your flexible working request is that it will impact productivity, you might be able to address this by suggesting other arrangements such as job sharing or compressed work patterns. Additionally, if you have any colleagues who work flexibly, it is worth gathering information about their experiences so that you can highlight the benefits of flexible working to your manager.

Being flexible can also help to avoid deadlock in negotiations because it means that you don’t use up all of your available concessions. Think of your flexibility as a bank account; each concession should bring you closer to your ideal outcome, otherwise you risk running out of money at the end of your negotiation.

Be Honest

Honesty is important to successful negotiation in business, as it creates a positive impression of the negotiator and increases the trustworthiness of their dealings. It also helps ensure that the parties are aligned and have a common view of the situation they are discussing.

However, there is a fine line between being honest and being deceptive. Some writers have found that it can be morally acceptable to use dishonest tactics during negotiations, especially when it is felt to reduce costs and increase efficiency.

The key is to always be aware of how much power you have during a negotiation and to not underestimate yourself. Be able to explain why your actions are beneficial to the other party and that they will gain value from what you are doing. Using a consistent approach in all negotiations and getting agreements in writing can help with this. For example, a standard letter of engagement outlines the terms of the deal and can be referred to should an issue arise.

Be Prepared to Make Concessions

In the end, successful business negotiation is about establishing trust and reciprocity with your counterpart. This is especially important if your company will be negotiating with that counterpart on a regular basis. Well-planned concession strategies play an integral role in that process. A well-thought out concession strategy allows you to manage your counterpart’s perception of what is a mutually acceptable result and helps the parties discover innovative options and combinations that satisfy their interests at the lowest cost to both parties.

It is important to avoid large initial concessions as this signals rigidity and limits the negotiating range. Instead, conceding in diminishing amounts shows flexibility and encourages reciprocity. It is also essential to know what is negotiable and what is non-negotiable. This will help you determine what concessions are necessary and which are just cosmetic.