Wednesday, April 9, 2008

Powerful Negotiation Skills

Powerful negotiation skills are a key communication tool in almost all areas of finance. As a business owner, good negotiation skills are a necessary business skill that you will require to communicate with your customers, employees and suppliers. As an employee, job negotiation skills are a necessary work skill that you require to communicate your needs and wants to your bosses, colleagues and subordinates. As a manager or team member, negotiation is an essential management skill that you will need to communicate with other team members and/ or other teams. The list is endless. Negotiation is a good course skill to learn in a professional course if you have the opportunity. Otherwise, this article sets out the steps of a negotiation that you can follow if you are going to be involved in an important negotiation. Unless you are a professional negotiator in the negotiation business, it should almost certainly prove beneficial to your upcoming negotiation.

Powerful Negotiation Skill #1

Draw up a conflict map
A conflict map is critical to a successful negotiation. You can draw up a quick conflict map as follows:

  • List down the parties
    First, list down all parties that are interested in the outcome of the negotiation. This includes all parties, including those that are not part of the negotiation. By generating this list, interesting insights can sometimes emerge. For example, you may be able to identify parties currently excluded from the negotiation whose interests align with yours. You may then wish to include these parties in the negotiation.

  • List down the goals, interest and limitations
    For each party listed, list down their goals, interests, as well as the limitations that they face. For example, does your negotiation counterpart in the supplier organization have the authority to grant you the sales discounts that you are requesting? This may require some research.

  • Analyze the information
    Identify areas of common interests as well as areas of conflict between the goals and interests of the various parties. Emphasizing areas of common interests during the negotiation helps to maintain goodwill. Negotiation strategy will be directed towards resolving the areas of conflict in your favour.

For more details on conflict mapping, you can refer here.


Powerful Negotiation Skill # 2

Plan the negotiation

The following questions will help you prepare for the negotiation.

  • What is the style of negotiation of the counterparty? For example, if your counterparty is an aggressive, intimidating personality, are you prepared to deal with his aggressive behavior?
  • What negotiation style/ strategy will you adopt?
  • What is the minimum outcome that you can accept from the negotiation?
  • What is the minimum outcome that your counterparty most likely will be able to accept?
  • Who is in a stronger negotiating position?
  • Are there any “out-of-the-box” solutions that will enable the needs of all parties to be better met?

Powerful Negotiation Skill # 3

Select your negotiation technique

Negotiation tactics and strategies are often over-rated. What determines whether a negotiation is successful is whether all parties can ultimately walk away from the negotiation table with their objectives satisfied.
Some of the negotiation techniques that are used include:

  • Aiming high
    With aggressive negotiators, it is sometimes necessary to aim high as they will over-aim in the other direction. With such negotiators, if you do not aim high, you will only find the bid going even lower.

  • Building on common ground
    This technique is useful when you are dealing with a friendly negotiator and you are seeking to preserve goodwill. Begin by identifying common ground on which all parties can agree, then build on the common ground.

  • Making the cake bigger
    Offer alternatives that may be agreeable to the other party, without changing the terms. Find win-win solutions.

Powerful Negotiation Skill # 4

Negotiation

One of the keys to successful negotiation is to practice, practice and practice. Rehearse the negotiation with a friend and play out the various possible scenarios to reduce the possibility that you will be caught off-guard during the actual negotiation. During the negotiation itself,

  • Listen actively
    Your negotiation counterparty may reveal hidden agendas and needs at any time, and you must listen actively to remain to catch such revelations.

  • Don't give free concessions
    It is a matter of discipline to ensure that for every concession you give, you get something in return, even if that is simply a commitment by the counterparty to close the deal immediately.

  • Keep in mind the overall situation at all times
    Some negotiation tactics involve separating out single issues and introducing new ones later. The objective is to gradually erode the counterparty’s position. You need to keep in mind the overall situation to identify such tactics. If you find that you are the subject of such a strategy, do not be afraid to point this out and re-open issues previously agreed.

  • Keep accurate notes
    Bring an aide along who can keep accurate notes. Negotiations usually involve a series of meetings. Reviewing the notes after each meeting can provide useful insights into the negotiation that can benefit future meetings.

Powerful negotiation skills require constant practice and keeping up. Seize opportunities to negotiate whenever possible. Do not scorn minor negotiation opportunities (such as those at the grocery shop). In this way, you will find yourself developing powerful negotiation skills to take advantage of those situations in which you require such skills most.

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