18 Must-Have Negotiation Skills For Procurement Professionals
What is Integrative Negotiation? 3 Powerful Strategies + Examples
What is Negotiation?
Negotiation is part of our everyday life. You negotiate your needs, desires, feelings, what you want to eat, movies to watch, and many more.
Negotiation in the professional aspect is a term that refers to the approach of parties that seek to reach a concession by finding a solution that they can both agree with.
in negotiation, there are also three possible outcomes which are:
- One party gains and the other loses a benefit in the outcome;
- Both parties benefited from the outcome; and
- The outcome is shared equally by both parties.
IntegrativeNegotiation Style: What is it?
✔ The integrative negotiation style is characterized by the intention of a win-win for both parties. It is also called interest-based bargaining or win-win bargaining.
✔ Integrative negotiation focuses on building mutually beneficial agreements based on the interest of the parties in dispute.
✔ The interest includes the desires, needs, and concerns that are important to the parties involved in the negotiation. These are the reasons why people often have conflicts with the negotiation as it is overlooked by both parties.
✔ The word integrative in negotiation refers to the possibility for the parties’ interests to align in ways that create a joint value.
✔ The possibility for integration only exists when there are numerous factors or issues that are involved in the negotiation. The parties should be capable of meeting halfway across issues for both parties to be satisfied with the outcome.
How to use Integrative Negotiation?
1. Outline the needs of each party in the negotiation
Before you present your solutions in the negotiation, you must know first the hopes and concerns of every party in the negotiation.
This step enables the parties involved in the negotiation to gain many insights into what they can do in the negotiation.
2. Know what are your common goals
After you outline your needs with the other party, it is time for you to look for common goals. Finding common goals can allow you to find a solution that is acceptable for both parties.
3. Collaborate to formulate multiple solutions
After you checked your common goals, it is time for both of you to collaborate in order to formulate a solution acceptable to all the parties. You can list many solutions as you want and compare what benefits the parties in the negotiation the most.
What is your negotiation style?
Answer 10 questions and find out your negotiation style!
Whyis Integrative Negotiation Important?
✔ Integrative negotiation is crucial as it produces satisfactory outcomes for the parties in dispute. Integrative solutions are more gratifying for the parties involved in the negotiation as the true needs and concerns of both parties can align.
✔ Integrative negotiation is a collaborative process that makes the parties end up helping each other. This prevents any ill will after the negotiation concludes.
✔ Interest negotiation promotes a constructive and positive relationship between parties who have been in dispute previously.
In general, there are 2 types of negotiations:
Distributive negotiation = one party wins, the other loses.
Integrative negotiation = both parties win, creating value on both sides.
Sure, many negotiations contain elements from both sides. For example, if I’m buying a new bike, the bike seller doesn’t want to give too much discount. Although, he probably also wants me to be a happy customer. Because if I am, I’ll probably return to him for bike maintenance and additional accessories.
There are many situations that call for an integrative negotiation, as it will create a long-lasting mutual value.
This article contains 13 negotiation principles that will lead to an integrative negotiation.
Difference Between Distributive Negotiation and Integrative Negotiation
Advantages – use this style if:
✔ The word integrative in negotiation refers to the possibility for the parties’ interests to align in ways that create a joint value.
✔ The possibility for integration only exists when there are numerous factors or issues that are involved in the negotiation. The parties should be capable of meeting halfway across issues for both parties to be satisfied with the outcome.
Integrative negotiation example
- John is a 35-year-old procurement manager who works at a large global retailer of electronica.
- He is in charge of air conditioners and is negotiating with a small supplier. John’s company is responsible for 70% of the total sales of the air conditioning producer.
John calls the supplier and asks how the business has been going the last period, shows interest in the life of the wife & kids and takes time to discuss last night match.
After talking about personal life for a couple of minutes, he subtly brings up the reason for his call. “I’m looking for 5000 air conditioners and would love to close a deal that’s great for both of us.”
John is off course looking for a good price, but he understands what are main variables to the supplier in this negotiation and asks them which one is important to them today.
Turns out, the supplier would like to be paid in advance, as they’re in a tough cash position.
“Fair enough”, says John. Let’s take a 2% discount on our previous deal, but I’ll make sure the money is on your account by the end of this week.
“Deal!”
Outtake John: “Great news, same product for a cheaper price, proud of my savings”
Outtake Producer: “Awesome guy, this John. A 2% discount isn’t great, but he definitely listened to my needs. I would definitely do business with him again.”.
Learning: the distributive negotiation from John leads to a long-term relationship and a direct discount on his purchase.
Case study from the founder of Procurement Tactics
“Negotiation styles are a very important variable to master to achieve great deal results. Your ultimate deal will be determined by how skilled you are as a negotiator. The more skilled you are in using different styles, the more the other party will be drawn to settle close to your ideal outcome and closer to their limit.
Your selection of negotiation style should depend on your personality and the results of your earlier research on the styles that will probably be used by your negotiating counterpart. Getting to recognize the different negotiation styles will help you to negotiate way more efficiently! It’s important to know how and when to use particular styles to get more of what you want from the negotiation.
In my time as a Procurement Manager, I had to deal with 1500 different products delivered by 70 suppliers every year. Suppliers were traditionally better equipped; most account managers that I had been dealing with, only had to focus on one customer and thus the negotiator: me. This led to what I call, the knowledge gap. They had way more time to prepare for negotiations. Most of them kept detailed notes on my negotiation style, likes and dislikes, interests, family details, and so on. In general, they were in a better position to choose the most appropriate style to approach me in the upcoming negotiation. My advantage, on the other hand, was the fact that I was negotiating all day & year: that experience leveraged the knowledge gap mostly: I practiced a full year with changing styles & using tactics. This helped me to have one important skill in any negotiation: I was not predictable.
Do you also want to learn to apply effective tactics yourself and become unpredictable? There are a large number of styles & tactics that you can use in negotiations! In our Certificate Program, we will teach you when which styles to use and in what way you should use them to your advantage!”
Want to check out more negotiation case studies?
CERTIFICATE COURSES
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1. Negotiation Course for Procurement
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3. Sustainable Procurement Course
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4. ChatGPT & AI in Procurement Course
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Integrative negotiation tips and strategies
1. Know your BATNA
BATNA stands for “Best alternative to no agreement”. It’s your backup plan if your negotiation doesn’t lead to a deal. By determining a BATNA you’ll have more confidence because you have a backup plan if the negotiation doesn’t work out. Because of this, you won’t feel forced to make a bad deal.
Going into any negotiation, it’s important to have a clear understanding of your BATNA. If you’re negotiating with a supplier, be sure about the pricing of alternative suppliers. If you’re negotiating over salary, your alternatives might be a different job offer.
For example:
Mark, a procurement manager of a large supermarket is negotiating with a supplier of canned food. The supplier offers to deliver 100,000 pieces for a price of $1.50 within two weeks. The procurement manager knows that a different supplier offers the same product for $1.40, therefore Mark knows this offer is worse than his BATNA and he shouldn’t agree.
2. Havea clear strategy. What is important to you, and why?
Before your negotiation, it’s important to plan. Key things you should have a clear answer to:
- Are you in a win-win or win-lose situation?
- What is your goal?
- What is your position? What is their position?
- What are your interests? And theirs?
- What is the best possible outcome?
- What would be a fair deal?
- What is your minimum acceptable deal?
It is very important to think about these things thoroughly. Too many negotiations fail because people get worried about being taken advantage of that they forget what they really need. It’s silly to only focus on preventing the other party from winning, instead focus on your own goals.
In most negotiation situations you will have a continuing relationship with the other person. That’s why it’s important to come to a mutual feeling of ‘winning’ for both parties. If the other person feels like he lost, he might lack commitment in the execution phase of the deal. Or even worse, he will be after retaliation.
3. Focuson interests instead of positions
A key in integrative negotiation can be found in underlying interests. Sounds vague? Let me explain.
Mark, a procurement manager for a big supermarket is negotiating with a supplier of canned food. Mark’s main goal is to purchase the cans for $1.40 per piece, and he assumes the supplier tries to sell them for $1.60 per piece.
They could just simply negotiate about the price of the cans. But what if they explore the underlying interests? After talking for a bit, Mark finds out the supplier has cash flow problems.
Suddenly an interesting variable is added to the table. Mark offers to do an upfront payment of 100% of the deal value if the supplier is willing to accept his price. The supplier agrees.
Frequentlyasked questions
+ Why is integrative negotiation so hard to achieve?
Integrative negotiation is difficult because you have to focus on the interest of the other party as well. Since you’re also aiming for your own personal targets this will cause a conflict of interest. If you’re planning to work with your partner in the future, it’s extremely important to keep both parties happy. Because of this, integrative negotiations will usually take relatively long.
+ What is different about integrative negotiations?
Integrative negotiations focus on achieving the maximum result for both negotiation partners. Distributive negotiation is the exact opposite, both parties only care about their own interests. Because of this, integrative negotiations have the goal of a happy ending for all parties involved. Therefore, integrative negotiations usually take relatively long.
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