Firstly; the definition of negotiation: Negotiation is an interactive communication process that may take place whenever we want something from someone else or another person wants something from us.
Hence, it can be deduced that very often we are all in some form of negotiation, whether it be negotiating with a sales agent on the purchase price of that new Beach house or negotiating with business partners on how to go about executing the new market penetration program.
There are 5 basic bargaining styles, of which every person will predominantly have 1 or 2 of. These 5 styles are:
- Avoider,
- Compromiser,
- Accommodator,
- Competitor, and
- Problem-solver
There are 2 basic types of negotiation:1
1. Distributive negotiation, and
2. Integrative negotiation
1. Distributive Negotiations - the Fixed Pie
The term distributive means; there is a giving out; or the scattering of things. By its mere nature, there is a limit or finite amount in the thing being distributed or divided amongst the people involved. Hence, this type of negotiation is often referred to as 'The Fixed Pie'.
In the real world of negotiations, two parties face off with the goal of getting as much as possible. The seller wants to go after the best price they can obtain, while the buyer wants to pay the lowest price to achieve the best bargain.
A distributive negotiation usually involves people who have never had a previous interactive relationship, nor are they likely to do so again in the near future.
Secondly, when we are dealing with someone unknown to us, and it's a onetime only occurrence, we really have no particular interest in forming a relationship with them, except for the purpose of the deal itself. We are generally less concerned with how they perceive us, or how they might regard our reputation. Ours and their interests are usually self-serving.
2. Integrative Negotiations - Everybody Wins Something (usually)
The word integrative means to join several parts into a whole. Conceptually, this implies some cooperation, or a joining of forces to achieve something together. Usually involves a higher degree of trust and a forming of a relationship. Both parties want to walk away feeling they've achieved something which has value by getting what each wants. Ideally, it is a twofold process.
The process generally involves some form or combination of making value for value concessions, in conjunction with creative problem solving. Generally, this form of negotiation is looking down the road, to them forming a long term relationship to create mutual gain. It is often described as the win-win scenario.
Multiple Issues - Integrative negotiations usually entails a multitude of issues to be negotiated, unlike distributive negotiations which generally revolve around the price, or a single issue. In integrative negotiations, each side wants to get something of value while trading something which has a lesser value.
Effective negotiations2:
Negotiations often take the form of positional bargaining. In positional bargaining each party opens with their position on an issue. The parties then bargain from their separate opening positions to agree on one position. Haggling over a price is a typical example of positional bargaining. Positional bargaining does not tend to produce good agreements. It is an inefficient means of reaching agreements, and the agreements tend to neglect the parties' interests. It encourages stubbornness and so tends to harm the parties' relationship.
The four principles of effective negotiation:
1. Separate the people from the problem,
2. Focus on the interests rather than the positions,
3. Generate a variety of option before settling on an agreement, and
4. Insist that the agreement be based on objective criteria.
1. Separate people and issues:
People tend to become personally involved with issues and with their own side's positions. They often take responses to those issues and positions as personal attacks. Separating the people from the issues allows the parties to address the issues without damaging their relationship. It also helps them to get a clearer view of the substantive problem.
There are three basic sorts of people problems:
- Difference in perception among the parties,
- Emotions are a second source of people problems, and
- Communication is the third main source of people problems.
2. Focus on the interests rather than the position
Good agreements focus on the parties' interests, rather than their positions. "Your position is something you have decided upon. Your interests are what caused you to so decide." Defining a problem in terms of positions means that at least one party will "lose" the dispute. When a problem is defined in terms of the parties' underlying interests it is often possible to find a solution which satisfies both parties' interests.
3. Generate options
There are four obstacles to generating creative options for solving a problem:
- Parties may decide prematurely on an option and so fail to consider alternatives.
- The parties may be intent on narrowing their options to find the single answer.
- The parties may define the problem in win-lose terms, assuming that the only options are for one side to win and the other to lose.
- Or a party may decide that it is up to the other side to come up with a solution to the problem.
4. Use objective criteria
There are three points to keep in mind when using objective criteria.
- First each issue should be approached as a shared search for objective criteria. Ask for the reasoning behind the other party's suggestions. Using the other parties' reasoning to support your own position can be a powerful way to negotiate.
- Second, each party must keep an open mind. They must be reasonable, and be willing to reconsider their positions when there is reason to.
- Third, negotiators must never give in to pressure, threats, or bribes. When the other party stubbornly refuses to be reasonable, the first party may shift the discussion from a search for substantive criteria to a search for procedural criteria.
References:
1. Negotiation Experts – Creating Value, Negotiation Types, http://www.negotiations.com/articles/negotiation-types/, accessed: 23/10/2011
2. “Getting to Yes”, by Roger Fischer and William Ury and Bruce Patton. ISBN: 9781844131464
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