5 Approaches to a Negotiation – (Negotiations and everyday life)

The ability to negotiate effectively is one of the key skills to have in life.

Do you have a practical model to think about a negotiation? Something that will work at a fruit market as well as a high status negotiation table.

Read on if you want to find out about a model I have found extremely useful and easy to explain to my 9 year old, as well as, esteemed colleagues and can be used as an additional framework for any occasion.

WHAT IS YOUR PREFERRED STYLE?

Before you read about this particular model check the below case study and choose your 2 preferred responses.

This will provide an indicator to your preferred negotiation style.

CASE STUDY

You hire a component for a particular gadget and the contract is up for renewal. Your supplier, who you have used for a while has good service quality but not excellent. Your company is expanding with the requirement for this component increasing by 30%, and therefore are looking for a reduction in the price. You would settle for no price increase; your boss would be satisfied if an increase was held to 2 per cent. Your supplier’s first offer, taking into account the increased volume, is at the same unit price as last year. How do you respond?

Potential Responses

1. Accept the offer
2. Explain you were looking for a 10% reduction, ask to be met halfway, i.e. a 5% reduction in the unit price
3. Explain that you should also be looking elsewhere as a matter of company policy
4. Stress the 30% increase in business you have to offer and the fact that the basic cost of the equipment has fallen, due to improvements in technology
5. Suggest improved payment terms and a longer contract period in exchange for a better offer.
6. Show appreciation for the offer that has been made and mention the ‘bad time’ users have given you over servicing

Now, spend a minute to consider your answers. Remember choose only two of the above six choices.

Ready. Well done! Let’s move on.

THE MODEL

Categorisation is essential for it is the way to frame and really understand how things work. In this model, the negotiation approaches are split in the below general categories (the #numbering corresponds to the above suggested responses):

• Logic #4
  
• Threat #3
  
• Emotion #6
  
• Compromise #2
  
• Bargaining #5
  

• and then there is Acceptance #1 but then this is not really a negotiation (if Acceptance is the first response).

So, which were your preferred responses?

Your choices are an indicator of what is your instinctive preferred style is.

What you choose to use at every negotiation should be quite different and should dependent on the context, the relationship, the required outcome etc.

Using one behavioural style at every negotiation despite the different power dynamics and the different preferred outcomes is not wise as this would not enhance the potential for maximising the value of the deal.

For example, as an extreme case, imagine you have decided upon a collaborative approach for R&D (mutual product development) with a supplier but your natural style is to Threaten (#3). Well, this is not an approach that builds bridges towards greater collaboration.

WAYS TO USE THE MODEL AND BE EFFECTIVE AT A NEGOTIATION

1. Know what you naturally prefer (in this CIPS white paper there is a test that more accurately measures your negotiation style)

2. Pay attention on what is the preferred method from the other side.

An easy way to do this is to identify key themes. Notice again the above 6 responses and compare them for key differences.

3. Get on your team people with natural talent at different negotiation style.

4. Prepare, Prepare, Prepare. Prepare on what style and arguments you should use. Prepare for what naturally you would expect from the other party. Prepare BATNA, WATNA etc

FURTHER USEFUL READING

Previous Blog posts about Negotiations:

• Definition on what the term negotiation really means (here).
• The first step towards an effective negotiation (here).
• A useful guide to identify and avoid bad reasoning in a Logical argument (here).
  A checklist on prerequisites for an effective negotiation (here)

Great Books

1. Clive Rich- The Yes Book
2. Robert Cialdini – Influence
3. Roger Fisher & William Ury – Getting to Yes

[Image courtesy of Andalousia / www.morguefile.com]