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Effective Negotiation Guidelines

Your company’s success may rest on your negotiating ability. Marketers must negotiate with vendors and suppliers, employees, other owners in mergers and acquisitions, and sometimes even customers. While the lucky few may have a natural talent for successful negotiating, the rest of us usually have to work at increasing our skills.

One of the most difficult aspects of negotiating is our tendency for win-lose negotiations, not win-win. We’re brought up with sporting contests, which always have a winner and a loser. We are taught to “go for the throat” or “defeat the competition.” While this mentality may work fine on the football field, it tends to backfire in business.

The objective of a win-win negotiation is for both sides to walk away from the table feeling good about the transaction, feeling more like partners than adversaries, each with needs fulfilled and better off than when they began.   If you want more win-win negotiating outcomes, use the following strategies. Meridian thanks negotiation expert Michael Avery of Avery Training International for providing the core framework for these strategies at our last Acquisitions seminar.

Define Your Goals and Objectives. What do you want out of this transaction?   Understand exactly what your bottom line is, what items are negotiable, and what concessions you are willing to make. In addition, what concessions can you expect the other side to make? What are your time constraints and those of the other side? Win-win negotiation is typically more time-consuming than win-lose and in any negotiation, the party with the most time usually ends up having their needs met more completely than the party under a time constraint. Time constraints typically force unwanted concessions (i.e. price reductions).

Define the Issues. What are your issues in this negotiation? For instance, if you are negotiating a new grocery supply contract, and the main reason you’ve gone out to bid is because of problems with vendor check-in procedures, these procedures are just as much an issue as price. Next, what are the other side’s issues? In this same example, your grocer needs to get in and out of your store as quickly as possible to lower their delivery costs. If your procedures cause waiting time, you immediately have conflict.

Know going into the negotiation what you will propose. Without a proposal, you can easily be swayed to their proposal, which may or may not meet your needs. Anticipate any significant differences between your position and theirs. What strategies will you use to overcome those differences? The more prepared you are for areas of potential differences with ready solutions, the smoother and faster the negotiation will proceed.

Gather Information. List everything you know about the other side. Why are they willing to negotiate? What is their bargaining style? There are five documented negotiation styles. An effective negotiator uses all five, but a person without formal negotiation training will rely heavily on one style. The five styles are Accommodation, Withdrawal, Defeat, Compromise, and Collaboration.

Accommodation is essentially giving in to the other party’s wishes – you lose, they win. Withdrawal is when you take away an option or walk away from the table. This style is overused by conflict avoiders, but is often used cleverly by skilled negotiators to force a concession when a negotiation has stalled. It’s a lose-lose if it does not force a concession because it effectively ends the negotiation. Defeat is the typical “go for the throat,” “force them into it” style. You win, they lose. Although Compromise sounds nice, it’s also a lose-lose position where both parties give in and no one is truly happy. Finally, Collaboration is the win-win position where both parties are ultimately better off because of the negotiation.

When negotiating with a particular individual, in addition to knowing their negotiating style, also know that person’s level of authority. Furthermore, clearly think through and list all the advantages you bring to the table. What benefits can you sell? What is their position? What are the other implications of this transaction?

Establish a Positive Climate. This means establishing rapport with the other side. How will this best be accomplished? Are you willing to work towards a win-win outcome? Are you prepared for disagreement? What issues will be the most sensitive for both sides? How will you distinguish between their and your wants versus needs – feature and function?

The Deal Closing. Know going into the transaction how formal the closing must be. Will it only require a handshake, or does it require a formal contract signed by both parties? What is the approval process for each side that must happen to bring this transaction to full closure? Finally, what is the schedule and process for implementation?

Use these guidelines before your next negotiation to catapult you toward success. If you want to hone your negotiations skills further, there is an excellent resource book published by Harvard University Press in 1982 titled The Art & Science of Negotiation by Howard Raffia. Pick it up if you’re anxious to learn more. In today’s tough marketplace, there may be no better skill to learn and perfect than negotiation.

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