The drama and theatrics one sees during conflicts and confrontations easily lead one to believe that successful negotiation lies in persuasion, eloquence, and clever maneuvering. What good courtroom drama would be without these critical entertainment factors? While these elements may be the enjoyable part for some negotiators and certainly are the entertaining parts for observers, they are not the keys to negotiation success.
The following quote was so important in Lewicki, Saunders, Barry, and Minton’s “Fundamentals of Negotiation” that the authors italicized it. I point this out because I want you to pay close attention to this: “The foundation for successful negotiation is not in play or role-play. The dominant force for successful negotiation is the planning that takes place before the deal.” dialogue”. .” Yes, the tactics used during negotiations are important and success is also influenced by how you react to the other party and how you implement your own negotiation strategy. However, the foundation of success is preparation.
There are many ways one can prepare for negotiation, and none will be perfect for everyone. By sharing different strategies, I hope you’ll be able to absorb what’s useful for your trading style and decide what planning steps are necessary for the trades you’re involved in.
In “Fundamentals of Negotiation,” the authors lay out ten areas to focus on when planning effective distributive and integrative negotiations. I want to share and briefly discuss the ten areas to consider:
1. Definition of the problems. Analyze the general situation and define the topics to be discussed. The more detailed the better.
2. Assembly of the problems and definition of the negotiation mix. Gather the problems that have been defined into a comprehensive list. The combination of lists on each side of the negotiation determines the negotiation mix. Large trading mixes allow for many possible components and arrangements for payout. However, large trading mixes can also prolong trades due to the many possible combinations to consider. Therefore, the issues must be prioritized.
3. Defining your interests. Once you have defined the problems, you must define the underlying interests and needs. Remember, positions are what a negotiator wants. Interests are why you want them. Asking “why” questions will help define interests.
4. Knowing your limits and alternatives. Limits are the point where trading stops instead of continuing. Agreements beyond this point are not acceptable. You need to know your starting point. Alternatives are other offers that you could achieve and still meet your needs. The better alternatives you have, the more power you will have during negotiations.
5. Establishment of objectives and openings. The destination point is where you realistically expect to reach an agreement. You can determine your goal by asking what outcome you would be comfortable with or at what point you would be satisfied. The opening offer or sales price generally represents the best deal you can hope to achieve. Care must be taken when inflating opening offers to the point where they become counterproductive because they are too unrealistic.
6. Evaluation of my constituents. When negotiating in a professional context, there are likely to be many components to the negotiation. Things to consider include direct stakeholders, opposing stakeholders, indirect stakeholders, interested observers, and environmental factors.
7. Analysis of the other party. Meeting with the other party allows you to learn what issues are important to them. Things to consider include your current resources, interests, and needs. Also, consider your objectives, alternatives, negotiation style, authority, and likely strategy and tactics.
8. What strategy do I want to follow? Chances are, you are always determining your strategy and have been throughout the planning stages. However, remember not to confuse strategy with tactics. Determine if your compromise strategy will be Competition (Distributive Bargaining), Collaboration (Integrative Bargaining), or Accommodative Bargaining.
9. How will I present the problems to the other party? You must present your case clearly and provide ample facts and arguments to support it. You’ll also want to rebut the other party’s arguments with your own counterarguments. There are many ways to do this, and during your preparation you should determine how best to present your problems.
10. What protocol should be followed in this negotiation? Elements of the protocol or process to consider include the agenda, the location of the negotiation, the time period of the negotiation, other parties that may be involved in the negotiation, what can be done if the negotiation fails, and how the parties follow up on what was agreed? In most cases, it is better to discuss procedural issues before the main substantive issues are raised.
There are many different planning templates. Each one emphasizes different elements in different sequences. These ten areas represent what the authors of “Fundamentals of Negotiation” believe are the most important steps in the planning process. There is more to each of these areas than I have had space to describe in this column. However, if you consider each of these ten areas during your planning, you’ll be well prepared for the challenges you’ll face during negotiations.