18 Must-Have Negotiation Skills For Procurement Professionals
13 Negotiation Principles To Crush Your Next Deal
In this article, we’ll discuss the 13 negotiation principles which are based on the Harvard methodology. We’ll share some powerful examples and will give you a greater insight into negotiation strategies. But let’s start with defining the 2 building blocks of every negotiation.
Every negotiation involves two levels:
- A rational decision-making process
- An emotional process
The result of any negotiation will always be a result of both. Most people understand the importance of the rational part. It’s mainly the emotional process where it gets tricky for a lot of people:
- How comfortable are you with conflict?
- How do you perceive the other? And how will you be perceived?
- Do you trust the other? Will he trust you?
- Is it important to avoid a conflict?
- Do you like the other? Will he like you?
- Do you have to avoid looking foolish?
- It is important for you to win?
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. Here are the 13 negotiation principles for an integrative negotiation.
1. Know your BATNA
2. Have a clear strategy. What is important to you, and why?
3. Aim for a win-win approach
4. Focus on interests instead of positions
5. Separate people from the problem
6. Aim for an outcome based on objective standards
7. Pay attention to the flow of a negotiation
8. Don’t forget the intangibles
9. Use the power of active listening
10. Do your homework
11. Set clear objectives
12. Nurture honest, respectful lines of communication
13. Be empathic
1. Knowyour BATNA
BATNA stands for “Best Alternative To a Negotiation 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.
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. Have a 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.
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3. Aimfor a win-win approach
Research shows that the way you approach a negotiation has a key role in the process of the negotiation. If you aim for a win-win outcome, the chances of this result will be significantly higher.
To accomplish this, it’s critical to put yourself in the shoes of the other party. What are their goals? Their interests? By doing this, you’ll be able to turn win-lose situations into a win for both parties.
This includes creating additional alternative solutions by giving something which has little value to you, but great value to the other. Look for solutions that give your opponent the scenario to declare victory – while achieving your own goals.
4. Focus on interestsinstead 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.
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5. Separate peoplefrom the problem
Separating people from the problem is probably one of the biggest drivers for a successful negotiation. If you decide to attack your opponent personally, he will feel threatened. He will defend his pride and will give you a hard time. That’s unnecessary.
Try to maintain a rational and goal-focused state of mind. If your opponent decides to attack you, don’t give him an emotional reaction. Just let him blow off steam. Then go back to the original problem, acknowledge the conflict of interest, and work to a solution.
6. Aim for an outcomebased on objective standards
Try to find objective criteria that both parties can use to evaluate alternatives. Don’t get stuck in emotions and pressure. If you make your negotiation decisions based on objective principles and results, it will be easier to make a win-win deal.
7. Pay attentionto the flow of a negotiation
Negotiation isn’t an individual event – it’s a sequence of events
Many people think of a negotiation as an isolated situation. However, it’s better to think about negotiation as a process. A complex process over time that involves internal and external factors, as well as social and emotional factors. Think of it as a chess match. You have a strategy, you’ll anticipate how the other response, you consider your position as well as the others.
A negotiation usually involves several steps including a proposal and several counter-proposals. Just make sure to ‘ignore’ the initial offer, as they are considered the point of departure. As both sides are expected to make concessions, it’s your job to gain information that will help you understand the underlying interests of your opponent.
Next, both you and your opponent are likely to experience an emotional reaction. And finally, all intentions will be put into behavior.
8. Don’t forgetthe intangibles
The intangibles are other subtle aspects that affect the negotiation. It is important to spend more time listening than talking.
Having the skill to detect body language has been proven to be just as powerful. For example, your negotiation opponent might say he’s got offers lined up from your competitors. However, when paying close attention, you notice that he’s scratching his neck and his nose when talking about the other offers. This could indicate he’s uncertain about the other offers, or perhaps even lying.
Pro tip: Use the word “and” instead of “but”. It helps you to send the signal that you’re interested in the other party and are looking for a win-win. This will help in the process of lowering the guard of the other party.
9. Use the powerof active listening
Active listening isn’t just listening to what the other says. It’s actively involving and paying full attention to what someone has to say. Active listening is a great skill to have, as it will give the speaker the feeling his words matter. This will make the other person more honest, open, and willing to cooperate.
You can train active listening by maintaining eye contact, nodding your head, saying ‘yes’, or nodding when the other one is talking.
10. Doyour homework
Before you begin a negotiation, prepare by completing thorough research on the other party so you can determine a way to proceed that carries the highest possibility of success.
11. Setclear objectives
Prioritize your interests, consider the goals you hope to achieve in the negotiation, and design a plan that will create value benefiting both parties.
12. Nurture honest, respectful linesof communication
This includes providing necessary information, asking the right questions, and engaging in active listening. The other party should feel that you understand their perspective and their priorities and are willing to work with them to resolve any issues.
13. Be empathic
Empathy is a component of social awareness that is critical to handling any successful negotiation.
+ What is a negotiation principle?
It is an approach where it focuses on solving disagreements between parties. It aims to find solutions so that both parties will mutually benefit at the end of the negotiation.
+ What is BATNA?
It is a backup plan technique when your negotiation does not lead you to a deal.
+ What is significant in negotiation?
The important thing is that both of you must feel like you are in a win-win situation.
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