Effective Negotiation
Effective Negotiation
The new lecturer was fortunate to have a discussion on managerial issues with his mentor, a former lecturer who now holds the position of Head in the new lecturer’s department. Recognising the mentor's extensive experience in negotiation, the new lecturer sought his guidance on effective negotiation techniques for an upcoming school negotiation. The mentor, pleased to be of assistance, readily agreed.
Need to practice
Over pastries and coffee, the Head stressed that negotiation is not just a theoretical concept, but a practical skill best learned through practice. He drew a parallel with dancing, a skill honed through repeated practice. Recognising the new lecturer's need for practical advice, he swiftly moved on to the foundational principles of negotiation.
What is negotiation and why do we negotiate?
First, the Head clarified that negotiation is a process we engage in when the other party does not immediately agree. It is an interactive process where parties seek to find common ground on issues of mutual interest, aiming to reach a mutually acceptable agreement. He stressed that everyone, from the CEO to the newest staff member, needs to understand this process, with some more than others. He reminded the new lecturer that every interaction leading up to an agreement is a negotiation, underlining its direct relevance to his role as a new lecturer.
Types of negotiation
Continuing, the Head underscored the importance of understanding the two types of negotiation: distributive (I win, you lose) and integrative (I win, you win). He explained that the choice a negotiator faces is whether to compete in a distributive way for as big a share of a small pie as possible or to collaborate in an integrative way in the hope of doing well. Regardless of the choice, he emphasized that the negotiation is bound to be more complex if it is multi-phased or involves multiple parties, and thus, a good rule of thumb is to always ‘keep our negotiation simple’. This strategic insight left the new lecturer feeling more knowledgeable and prepared.
BATNA – Your ‘Plan B’
The Head, underlining the importance of a strong foundation for successful negotiation, reiterated the significance of understanding one's negotiation alternatives and those of the other party. He explained that the ‘Plan B’, or ‘Best Alternative to the Negotiated Agreement’ (BATNA), is a crucial source of negotiating strength. He emphasised that a party without a BATNA is a deal taker, not a deal maker. Therefore, the stronger one's BATNA, the more likely they will achieve a successful outcome. The new lecturer felt empowered with this knowledge.
The way forward
The mentor stated that to be successful, negotiators must know the ‘Holy Trinity’, that is, the difference between issues, interests and positions. He said that an issue is a topic that the parties would like to discuss and usually relates to their interests. An interest is a reason for negotiation, for example, the purchase of a machine, and this is usually not negotiable as you either need it or you don’t. A position is a specific proposal or solution adopted to reach an interest. Positions are usually negotiable, but interests are usually not. He summarised that negotiations should focus on achieving one’s interests, and thus, a negotiator should not yield to pressure but only to interests. Continuing, he stressed that a negotiation is not about getting to yes but getting to the ‘right’ yes.
Negotiation styles
The two discussed ways to negotiate, and the Head said that conflict is a natural part of our interactions with others because no two individuals have the same expectations and desires. He said we can categorise conflict based on two basic dimensions: assertiveness and cooperativeness. This categorisation results in five negotiation styles: win-win, lose-win, win-lose, lose-lose and compromise. Understanding our categorisation and that of our counterparty provides information about the negotiation and the way forward. He told his mentee not to be fooled by a counterparty’s assertion to aim for a win-win result, and if this occurs, great, but watch out as many negotiators use it to lure their counterparty into their spider’s web of a win-lose agreement, with the spider taking the win part.
Negotiation phases
The Head said that a negotiation, like a human, has a lifecycle and that effective negotiators understand the lifecycle’s phases and the key risks and issues that appear at each of the critical phases. He said that each negotiation should start with preparation, and this should start before the parties are first face-to-face. Then, they can discuss the merits of their situation face-to-face and propose ways to settle the negotiation. The negotiation ends when the parties agree. If it does not, then it goes back to the preparation or debate phase and continues. It may not ever settle.
Risk
The new lecturer asked about risk. Risk! The Head bellowed. He was so pleased that his mentee raised risk. He said that risk is a critical issue in negotiations, as it refers to the probability or likelihood of an event or outcome that may harm sought outcomes. He feels that many different types of risk can affect a negotiation, and in his opinion, when negotiating, one should only take calculated risks. Effective risk management can help parties navigate uncertainties and improve the likelihood of achieving their negotiation objectives while minimising potential negative outcomes.
The Head reiterated that a negotiator should never yield to pressure but only to interests, as negotiation is not about getting to yes but getting to the ‘right’ yes. The Head also said that negotiators must be aware of critical risk, relationship, legal and financial issues, as they are issues that can affect the outcome of a negotiation. Getting up to go to his next class, he gave his last piece of advice: negotiators should only take calculated risks when negotiating, and thus, one should eliminate as many risks as possible before signing a contract.
The new lecturer thanked his mentor for his time and felt more confident regarding his upcoming negotiation. He was excited to try out what he had learned. However, he wanted to practice first, so he thought that he would try at home. To his despair, he could not get out of doing the dishes that evening. That made him think that he needed more negotiation practice. His mentor said to practice, practice, and then practice.
Associate Professor Cyril Jankoff is Associate Dean, Scholarship at UBSS and a member of the GCA Compliance Directorate
