Monday, February 06, 2006

Negotiation for Mutual Gain

Life is a long negotiating situation where we are all selling and buying all the time. I am not sure that the same acitivity is happening in the subconcious even when we are sleeping. Freud could have interested about this issues of constant negotiation in two parallel lines: conscious and subconscious. Aren't we even negotiating with ourselves on conflicting matters of influence in our lives? The more I think of these issue, the more I realize that we need still to know more about the art and science of negotiation, especially on the psychological side of it that greatly influence people's mode of thinking, perception, and attitudes. Negotiation skills help you to resolve situations where what you want conflicts with what someone else wants. The aim of negotiation is to explore the situation to find a solution that is acceptable to both parties. this means that we are constantly playing a game where we want to win. But can we do this each time? The answer is obvious: winning is not an absolute value where we can use to measuere how much we got, but it has a lot to do with the goals we want to achieve and how much we succeeded in doing so. Doing so will always be constrained by the other side of the negotiations we are making. Therefore, it seems unavoidable that unless the other party get part of the cake, we will be unable to get our part of it. there will still be one party who will get a greater part of the cake. That's natural, but the fact that he cannot get the whole cake alone should always underline any negotiation process.

There are different styles of negotiation, depending on circumstances. Where you do not expect to deal with people ever again and you do not need their goodwill, then it may be appropriate to ‘play hardball’, seeking to win a negotiation while the other person loses out. Many people go through this when they buy or sell a house – this is why house-buying can be such a confrontational and difficult experience. Similarly, where there is a great deal at stake in a negotiation (for example, in large sales negotiations), then it may be appropriate to prepare in detail and use a certain amount of subtle gamesmanship to gain advantage.

Both of these approaches are usually wrong for resolving disputes with people you have an ongoing relationship with: if one person plays hardball, then this disadvantages the other person – this may, quite fairly, lead to reprisal later. Similarly, using tricks and manipulation during a negotiation can severely undermine trust and damage teamwork. While a manipulative person may not get caught out if negotiation is infrequent, this is not the case when people work together on a frequent basis. Honesty and openness are the best policies in this case.
Preparing for a successful negotiation…Depending on the scale of the disagreement, a level of preparation may be appropriate for conducting a successful negotiation.

For small disagreements, excessive preparation can be counter-productive because it takes time that is better used elsewhere. It can also be seen as manipulative because just as it strengthens your position, it can weaken the other person’s.

If a major disagreement needs to be resolved, then it can be worth preparing thoroughly. Think through the following points before you start negotiating:
Goals: what do you want to get out of the negotiation? What do you expect the other person to want?
Trades: What do you and the other person have that you can trade? What do you each have that the other might want? What might you each be prepared to give away?
Alternatives: if you don’t reach agreement with the other person, what alternatives do you have? Are these good or bad? How much does it matter if you do not reach agreement? Does failure to reach an agreement cut you out of future opportunities? What alternatives might the other person have?
Relationships: what is the history of the relationship? Could or should this history impact the negotiation? Will there be any hidden issues that may influence the negotiation? How will you handle these?
•‘Expected outcomes’: what outcome will people be expecting from this negotiation? What has the outcome been in the past, and what precedents have been set?
The consequences: what are the consequences for you of winning or losing this negotiation? What are the consequences for the other person?
Power: who has what power in the relationship? Who controls resources? Who stands to lose the most if agreement isn’t reached? What power does the other person have to deliver what you hope for?
Possible solutions: based on all of the considerations, what possible compromises might there be?
Style is critical…For a negotiation to be 'win-win', both parties should feel positive about the situation when the negotiation is concluded. This helps to maintain a good working relationship afterwards. This governs the style of the negotiation – histrionics and displays of emotion are clearly inappropriate because they undermine the rational basis of the negotiation and because they bring a manipulative aspect to them.

Despite this, emotion can be an important subject of discussion because people's emotional needs must fairly be met. If emotion is not discussed where it needs to be, then the agreement reached can be unsatisfactory and temporary. Be as detached as possible when discussing your own emotions – perhaps discuss them as if they belong to someone else.
Negotiating successfully…The negotiation itself is a careful exploration of your position and the other person’s position, with the goal of finding a mutually acceptable compromise that gives you both as much of what you want as possible. People's positions are rarely as fundamentally opposed as they may initially appear - the other person may quite often have very different goals from the ones you expect!

In an ideal situation, you will find that the other person wants what you are prepared to trade, and that you are prepared to give what the other person wants.If this is not the case and one person must give way, then it is fair for this person to try to negotiate some form of compensation for doing so – the scale of this compensation will often depend on the many of the factors we discussed above. Ultimately, both sides should feel comfortable with the final solution if the agreement is to be considered win-win. In the commonly used sense of the phrase, a win-win negotiation is a deal that satisfies both sides. In an ideal world, a win-win agreement is the only kind of deal that would ever close. Even in today's world, the vast majority of negotiations end in win-win situations.

Win-win negotiating does not mean that you must give up your goals or worry about the other person getting what they want in the negotiation. You have your hands full looking out for your own interests. Let others bear the primary responsibility for achieving their goals. Don't think that you need to ride rough-shod over your opponents. Practice honesty and respect in all your negotiations. But looking out for the other side isn't your job. It's theirs.
Recognizing a good deal. A good deal is one that is fair under all circumstances at the time the agreement is made. It provides for various contingencies before problems arise. A good deal is workable in the real world.

To be sure that you have a good deal and a win-win situation, ask yourself the following questions just before closing:

  • Does the agreement further your personal long-range goals? Does the outcome of the negotiation fit into your vision statement?
  • Does the agreement fall comfortably within the goals and limits that you set for this particular negotiation?
  • Can you perform your side of the agreement to the fullest?
    Do you intend to meet your commitment?
  • Based on all the information, can the other side perform the agreement to your expectations?
  • Based on what you know, does the other side intend to carry out the terms of the agreement?
  • In the ideal situation, the answer to all six questions is a resounding yes.

If you are unsure about any one of them, take some extra time. Review the entire situation. Assess how the agreement could be changed in order to create a yes answer to each question. Try your best to make the change needed to get a firm yes to each question. Then, close the deal. Don't go for any more changes even if you think that the other person wouldn't mind. You never know!

When you work in a culture other than your own, being sure that you have a win-win solution takes a little extra effort. During a cross-cultural negotiation, be thorough in your investigation of what is and isn't acceptable.

If you can't alter the deal so that you can answer yes to each question, be very thoughtful about closing. If you decide to go forward, write down exactly why you are closing the deal anyway so that you don't become part of that army of people with tales of exploitation. This exercise is particularly helpful to your state of mind if the results don't work out; you have a record as to why you took the deal. You won't be so hard on yourself.

Knowing your counterpart
Remember that the people you are dealing with are more important than the paperwork you draft. Know your counterpart very well before you enter into a long-term relationship. No lawyer can protect you from a crook. Lawyers can just put you in a position to win your lawsuit. People do bad things all the time. Checking out references is one of the most overlooked resources. You can learn a great deal from checking out references, even from the most obviously biased sources. Some people, especially women, tend to be overly concerned about the other party's welfare in a negotiation, smothering their own goals in the process. When you're engaged in a negotiation, you must allow other people to take care of themselves. You don't have to make things "nice" for everyone. That's not a negotiator's job. Your job as a negotiator is to get what you want. Remaining true to that objective may involve upsetting someone. Part of negotiating well is having the strength to take that risk.

Is there a businessperson alive that hasn't been bombarded with the phrase 'win/win negotiation'? Is there anyone else who'd like to shriek if she/he hears it again? Or, ban it from print, as I know one editor did… Although the phrase may seem cliché, it's hard to find a replacement to describe a process where the intent really is for those involved to come out feeling like ALL have succeeded in achieving their desired results. Personally, I prefer to call this 'mutual gain' negotiation. A negotiation occurs any time there are two or more parties (which could be individuals, organizations or businesses) that each have something the other party wants. If there isn't a mutual desire, there's no negotiation (e.g. "I want to sell you this vacuum cleaner." "No thanks, don't need one".) As soon as there is a mutual desire, there is an opportunity for negotiation, which really is a give and take process (e.g. "I want to sell you this vacuum cleaner." "Yes, I need one, let's talk".) It's give and take. Some people get carried away with the 'take' part of the process and forget that there's a 'give' part, too. These are often highly competitive negotiators who are far more concerned with getting the maximum result for themselves and care little about the relationship. (I sometimes call these folks the T-Rexs of the negotiation world.) Contrast that with folks who are so concerned with preserving the relationship and avoiding conflict that they will give up results and get a poor deal to keep good feelings. (I sometimes think of these folks as doormats as in, "Can I lay down any flatter for you to walk on me?") What we want is a balance between give and take - we want mutual gains. I'll compare and contrast this mutual gain process to another type of negotiation that I'll refer to as 'positional bargaining'. Positional bargaining is typical in many business situations and in many cases accepted as the norm. A party involved in positional bargaining will typically review the situation, decide what outcome she/he wants and then state their desired outcome (their position) to the other party. Sometimes it is stated softly as an offer, (e.g. "I'd like to buy your business for $x."), other times as a demand, (eg. "Sell me your business for $x or we'll go head-to-head with you."). What happens next is each side then attempts to persuade, cajole, sometimes threaten the other to accept what has been offered. It's an argument about solutions. In many cases, people will compromise - split the difference. I sometimes say those negotiations end when both sides walk away equally unhappy! This is not to say that compromise is always bad, there are times when it is the most appropriate resolution. What is missing in the positional bargaining process that is of prime importance in the mutual gains or (dare I say it) win/win negotiation is time spent on the parties' real concerns. What are the real issues that underlie the proposed solutions? What is REALLY motivating them? In mutual gains negotiating, you have to understand what the other party would like to achieve as well as knowing what YOU want to achieve. That way, you can then craft an agreement that meets both parties' needs. That's why it's called win/win - "I get what I want and you get what you want as long as our goals are not in direct conflict with each other." In mutual gains negotiating, much time is spent asking questions. That is how you find out what's really important to the other side. Think about the last negotiation you were involved in. Who was asking questions and who was listening? A good negotiator knows how to ask the right questions and, most importantly, she/he LISTENS to the answers!! You'll figure out exactly how to structure a deal to make it most attractive to the other side if you just ask appropriately and then be quiet. This is when you are well advised to remember why you have one mouth and two ears! A good negotiator is a master at extracting relevant information from the other party. He/she knows his/her own concerns and priorities, compares them to the other parties' needs and concerns and can then determine if a deal is possible, because sometimes no deal is the best deal

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