What is negotiation? It is the action by which two or more parties attempt to come to an agreement. The definition is simple, yet the process can be complicating.
Each party approaches a negotiation depending on their differences, their goals, their past experiences and their desire to reach a decision. There are some people who treat all business negotiations as being competitive, and wanting to win at all costs. However, when negotiations involve ongoing business relationships, this approach stumbles.
Effective negotiators characterize negotiations by type and apply suitable strategies.
Many professionals categorize negotiations into two broad types: distributive or integrative.
Distributive negotiation creates winners and losers. The more one gets, the less for others. Distributive negotiations are illustrated as adversarial, bargaining, competitive, transactional, zero-sum, or win-lose. Compromises can leave all parties displeased.
Integrative negotiation is working together to magnify the goals of each party. Integrative negotiations are illustrated as collaborative, transformative, or win-win. Negotiators include non-monetary trade-offs and benefits.
To drive a hard bargain when negotiating, experts recommend these following steps:
Know your BATNA. This means your “best alternative to a negotiated agreement.” Identifying alternatives in advance enhances your leverage by clarifying at what point you should accept a deal or walk away.
Gain an information advantage. Don’t give yourself away. By expressing all of your preferences, needs, or motives, you are only weakening your bargaining position. Reveal as little as possible about your position, while trying to get as much information as possible from the other party.
Don’t make the first offer. Let the other party make the first offer because this reveals their position and informs your negotiating stance.
Show alternatives. By showing alternatives, you are reminding the other party that you may walk away from the negotiation. Sharing this information with them will strengthen your position.
Be reasonable. It’s important to make reasonable concessions. Don’t try for too much, especially if the offer is better than your BATNA.
Some people believe all negotiations can be integrative. Others think that distributive and integrative approaches can be mixed together. Business negotiators need to be able to understand both. Learning to negotiate win-win outcomes is crucial for sustainable, long-term business relationships.
