Negotiation Skills Negotiation Skills and Strategic Management The Need for Negotiation Skills Negotiation forms an important part of our daily lives. Everyone negotiates to some degree every day, this may occur either in the domestic, social or work areas of our lives. Almost all aspects of our lives are subject to some form of negotiation. These common daily occurrences demand the utilisation of our best negotiation skills. Within Strategic Management negotiation is a central element of all phases in the overall process. Negotiation takes place in establishing the organizations Vision, Mission and Values. Then in the determination of Strategic Goals, Objectives and Plans negotiation needs to be achieved between the various key stakeholders if a uniform and integrated strategic effort is to be achieved. Finally negotiation is needed in performance management particularly when intervention is necessary to adjust performance or implementation activities. Negotiation skills are also critical within Strategic Management to be able to manage conflict that is inherent in the process. Awareness of negotiation is a prerequisite for improvement. An increased awareness may highlight different approaches to negotiation, allow recognition of when people are negotiating with you, and increase your ability to recognise opportunities for negotiation. Without this awareness of negotiation, there may be a danger of being in the midst of negotiation without recognising it. It may also be true that many people miss the opportunity to make a more favourable exchange because they fail to recognise the opportunity to negotiate. What is Negotiation? Negotiation is, in effect, a procedure for constructively resolving conflicts within a group. Negotiation is a process by which persons who want to come to an agreement try to work out a settlement. Negotiation specifies what each team member gives and receives in a transaction between them. The process focuses on concrete issues. The goal of negotiation is to reach an agreement without damaging the basic co-operation among the individuals involved. Some definitions of negotiation include the following: “Negotiation is a process in which two or more parties, having both common and conflicting interests, state and discuss proposals concerning specific terms of a possible agreement. Negotiation normally includes a combination of compromise, collaboration, and possibly some forcing on particular issues that are vital to one or more of the parties.” “To bargain or confer with others in order to reach mutual agreement”. A further definition of negotiation is: Negotiation is a process of building on common interests and reducing differences in order to arrive at an agreement which is at least minimally acceptable to all parties concerned. The parties cooperate by getting together, and then must try to reduce the conflict of different interests. Any negotiation must therefore involve both cooperation and conflict. There are many interpretations of negotiation, however all of the definitions contain the same general theme of negotiation being the process of resolving conflict between two parties, whereby both parties modify their demands in order to achieve a mutually acceptable compromise. 1 Negotiation Skills Negotiation can be thought of as existing on a continuum. Negotiations are about the movement of the opposing parties towards each other until they reach a mutually acceptable position. On the continuum, each party has as a list of wants, and usually a list of expectations which are more realistic than his or her wants - in simple terms ‘could get’, ‘should get’, and ‘must get’. The range for settlement open for the negotiator lies between the ‘should get’ and the ‘must get’. This is conditional in that there exists an overlap on the continuum between the two parties’ expectations. It is in this area of overlap or common ground that a successful negotiation may be formulated. The skills of the negotiator are directed at moving the minimum distance along the continuum commensurate with obtaining settlement. Negotiation is not necessarily just about winning. Negotiation must encompass more than winning the position one has taken. The key words in the negotiation process are trade and compromise. As with other communication processes, negotiation is a two-way street. Both parties and the organisation must benefit for the negotiation to be beneficial. The outcomes of negotiation may be judged by using the following three criteria: it should produce a wise agreement if agreement is possible it should be efficient it should improve or at least not damage the relationship between the two parties Principled Negotiation Traditional models of negotiation rely on adopting a clear position and bargaining with the other side so that they compromise with you. This is positional negotiating which involves both sides spending a lot of time defending their own position and attacking the position of the others. Principled negotiation on the other hand starts from the needs and interests of the people or parties involved and it aims to achieve a mutually acceptable outcome. The principled approach is based on four points: Separate the people from the position Focus on interests not positions Generate a variety of possibilities before deciding what to do Insist that the result be based on some objective standard 2 Negotiation Skills Three Crucial Variables in Negotiation There are three variables in negotiation that may be thought of as crucial, which are: 1. Power The relative power of the parties is a key issue to consider when considering negotiation situations. Power, in this instance, is not defined as the ability to force an action but the power to influence an outcome by logic, validity, or legitimacy of a position. There are many sources of power including the following: The power of options: if the other party perceives that you have options, the other party will also perceive that you have power. You will also have a stronger perception of your own power if in fact you do have genuine alternative options that are equally attractive to the one that you are negotiating. The power of attitude: a person’s attitude is expressed in the words they use, the clothes they wear and the aura of confidence or lack of concern that they can demonstrate. The power of language: this involves the power of persuasive capacity, in which you should endeavour to persuade the other person by appealing to their needs and desires rather than relying on a dry logical argument. The power of your intention and commitment: if you can develop the power of commitment so that it shows up not only in your language but in your body and in the things that you do, you become a force to be reckoned with. The power of legitimacy: the use of printed documents may increase your bargaining position as it increases your power of authority and legitimacy. The power of expertise: if you prepare yourself well and are perceived as having expertise, your negotiating position will be increased. 2. Time Time and the way it is used in negotiations is crucial to success. You must ensure that you have sufficient time to negotiate. In almost all negotiations one party has a different deadline from the other and the party with the earlier deadline is generally in a weaker position. If you negotiate under real time pressures, you may not achieve the best result, therefore it is important to maintain a conscious awareness of the overall timing and time allocation within the time frame available. 3. Information Information is an essential element in the negotiation process. If, before the negotiation, you were able to obtain complete information of your opponent’s wants you would start bargaining at the opponent’s resistance point and not budge. If you had full information there would probably be no need to negotiate at all. It may be said it is the lack of information that creates the need for negotiation in the first place. The information that the negotiator should try to ascertain is the other party’s needs and wants. Styles of Negotiation Negotiation style is the manner or behaviour that we express when negotiating. A basic fact about negotiation is that you are dealing not with abstract representatives of the ‘other side’ but with human beings. As human beings, our personal negotiating philosophy is translated into our negotiation style. 3 Negotiation Skills The ability to identify different styles, to recognise our own ‘natural’ style, and to determine the style of the parties we are negotiating with is an important competence. This competence allows a conscious adjustment of behaviour as it becomes appropriate during the negotiation. Open handed gesture showing openness in negotiation What is your preferred negotiation style? Directions: This questionnaire is designed to help you gain a deeper understanding of your negotiation style. There are no right or wrong answers. The data provided by this instrument will only be valid if you respond candidly to each of the statements. When you apply your data you will discover how you most characteristically negotiate and how that style compares to other styles of negotiating. This data will help you determine whether changes in your style could increase your negotiating effectiveness. There are 30 statements in this questionnaire. Please respond to each statement by inserting a number between 1 and 7 for the response that most accurately reflects the extent to which the statement is descriptive to you and your thinking. The numbers for the responses are the following: Strongly disagree 1 Disagree 2 Slightly disagree 3 Neither agree or disagree 4 Slightly agree 5 Agree 6 Strongly agree 7 4 Negotiation Skills Statement Response 1. When I negotiate, my interests must prevail. 2. I try to reach a result based on objective criteria rather than just my demands. 3. I put aside unpleasant confrontations in favour of a friendly approach. 4. Negotiators are adversaries. 5. I try to identify shared principles to use as a basis for resolving negotiating dilemmas. 6. I often feel I lack the power to produce a successful outcome. 7. I enjoy the reputation of tough battler. 8. Negotiation may be said to be effective when both parties get their needs satisfied. 9. Half a loaf is better than none. 10. Negotiation is a contest of wills. 11. You have to make concessions to the other party to build the relationship. 12. Realistically, you can only get what others are willing to concede. 13. You should do unto others before they do it to you. 14. Affable relationships produce the best results. 15. Compromise is the essence of effective negotiating. 16. An effective negotiator employs threats, bluffs, surprises. 17. I keep a low profile during a negotiating discussion. 18. Split the difference is my motto. 19. Effective negotiators develop a partnership. 20. A soft word can win a hard heart. 21. By playing down certain hot issues one can reduce or eliminate time consuming conflicts. 22. When negotiating, I attempt to work through our differences. 23. I search for a solution the other party will accept. 24. My approach is always to meet the other party half way. 25. The most successful negotiation makes everyone a winner. 26. I often let others take responsibility for solving the problem. 27. When I negotiate, I put a lot of effort into looking for trade-offs so each party gets something out of the deal. 28. People with whom I negotiate know me as a friendly peacemaker. 29. I put aside decisions until conflicts have quieted down. 30. In a successful negotiation everyone gives something but everyone also gains something. 5 Negotiation Skills Scoring Key The 30 Statements in the questionnaire have been set up in five columns in the table below. Transfer the number of the response given to each statement to the appropriate space in the table below. Then, add up the total number of points in each column and enter the total in the space provided. Question number 1 2 3 6 9 4 7 10 13 16 5 8 19 22 25 11 14 20 23 28 12 17 21 26 29 15 18 24 27 30 Total Compete Collaborate Accommodate Avoid Compromise Interpretation: The style with the highest number represents your most preferred negotiating style. If two or more styles have the same total, you probably use both styles and use them equally or alternatively. Perhaps you use one as a primary or first approach style and switch to the second style as a backup. The Negotiation Styles Compete: The person who adapts a competing style is likely to be an aggressive negotiator. This is an aggressive style in which a win/lose predicament will result. The competing style’s position may be described as “I can only win if you lose.” Accommodate: The accommodating style is adopted by the person who is prepared to concede , in order to gain agreement. The accommodating style is likely to be non-assertive and as a consequence a lose/win situation occurs, in which the accommodating party is the loser. Avoid: The avoider does not even start negotiating or discontinues the negotiation and therefore neither party wins. The avoiding or withdrawing position can be characterised by either a passive or aggressive posture. The consequence of this style is a lose/lose situation. Compromise: The compromiser is prepared to win some and lose some. As with the accommodator, the compromiser is normally non-assertive. Collaboration: The person who adopts the collaborative problem-solving style is normally assertive and wants to reach an agreement that will benefit both parties. As a consequence, a win/win situation will be the likely outcome. 6 Negotiation Skills Plan for Negotiation Although there are many variables in negotiation, and flexibility plays an important part in any negotiation, planning for negotiation and an understanding of a systematic approach is beneficial to negotiators. A framework allows the negotiator to identify the stage of the negotiation that has been reached and to take appropriate action to move forward. The steps may not occur in strict sequence, as negotiators may move back and forth between the steps spending varying amounts of time in each area. Different skills and abilities are used in each step. Once you can identify what step you are in you can set your course of action. Planning involves several tasks: Identify objectives to be clear about what you want Gather all relevant information about the issue Decide on the order in which you will discuss issues Try to identify what they other party’s objectives will be and their style of negotiating Identify your bottom line, the minimum you will accept Once you have planned the negotiation, it is also important to have a framework for conducting the negotiation. An eight step negotiation framework for negotiation is the following: 1. 2. 3. 4. 5. 6. 7. 8. Prepare discuss/argue signal propose package bargain close agree 1. Prepare One of the most important and often least recognised steps in negotiating is the preparation required before the formal negotiation takes place. The planning process outlined above is part of the preparation process, and involves the following: Objectives: you must clearly define what objectives you seek from the negotiation and what importance you attach to these objectives. Categorise your objectives under one the following headings: Could Get Should Get Must Get Information: you must decide what information you require about the other party and what information you will divulge during the negotiation. Strategy: by deciding on a strategy before the negotiation, you will be in a better position to manage the negotiation process rather than be carried along by the negotiation itself. 2. Discuss/Argue The discussion phase will occur over and over during the negotiation. All discussion and argument must be directed towards clarifying attitudes, establishing facts and testing assumptions. The purpose of the discussion is: to reveal your attitudes and information which you are prepared to divulge; to identify the other party’s needs, 7 Negotiation Skills desires, concerns and fears; and to answer the questions “Is the negotiation necessary?” and “Is negotiation possible?” It is important in negotiation to focus on the problem and to avoid focusing on the people involved. This means that the problem should be tackled from all directions and a wide range of options should be considered, but the people should not be attacked. When considering the needs and wants of the other party, analyse their interests and positions. Always assume that the other party has more than one interest for each position stated. Improve your skills as a negotiator by taking the time to find out the interests behind the position that is being stated. Ask questions such as ‘Why’ and ‘Why not” to identify interests. 3. Signal After identifying the issues to be negotiated in the discussion step, the next step involves one or the other party signalling their willingness or intention to modify their declared position. As negotiation is about movement, that is, movement towards each other, it is important that the other party’s willingness to move signals are recognised. Our ignorance of the other party’s signal to negotiate will only prolong the argument or discussion phase. 4. Propose The proposition in the context of negotiating as may be described as an offer or claim which either establishes for the first time an opening position, or which moves away from an initial position. The proposals and counter proposals allow the two parties to move towards a mutually acceptable compromise. The purpose of the propose step of the negotiation is for each party to look for areas of potential agreement rather than those of difference. This is done by making two sided proposals using the ‘if/then’ technique. In using the ‘if/then’ technique you can propose solutions and offer minor concessions which are cheap for you to give. During the propose step you should also seek alternative proposals from the other party. The three rules for receiving a proposal are: do not interrupt, say nothing, hear them out, question, clarify and summarise, and respond to the proposal. When responding to a proposal, you should answer it indicating what parts, if any, are acceptable to you, and what parts are unacceptable to you and why. 5. Package Packaging is the arrangement of the variables within the negotiation into an opening response in the negotiation. The package offers no new concessions, but simply presents the variables in a form which more closely matches the other party’s interests and inhibitions. The package may consist of modified existing proposals without further concessions in order to make them more acceptable to both yourself and to the other party. The three rules for packages are: address your package to the interests and inhibitions of the other party think creatively about all the possible variables value your concessions in the other party’s terms 8 Negotiation Skills 6. Bargain The bargain step of negotiation involves the process of exchanging concessions. Bargaining is accomplished by using the conditional offer of if... then..., that is, “if you do this, then I will do that.” In using the conditional IF, nothing is given away for free. Placing an IF in front of your statements sends a clear signal to the other party that any concessions from you must be paid for by concessions from them. The three rules for bargaining are: lead all your offers with your conditions, that is, “if you do that, then I will do this” give to get value your concessions in the other party’s terms When valuing your concessions in the other party’s terms it is important to remember that it may be easy for you to concede a certain point, but it may be very important to the other side. Therefore you should ensure that the concessions you demand are of real value to you. 7. Close Closing is the process that closes the gap between the parties. It is the final bargaining concession. Either party may opt to take the initiative by making this final concession. The final concession is always conditional on the same condition, that is, agreement. The two most commonly used closes in negotiating are: The concession close where it terminates the bargaining step by offering a concession to secure agreement. The summary close where it terminates the bargaining step by summarising everything that has been agreed up to then, highlighting the concessions that the other party have secured, and emphasising the benefits of agreeing to what is on the table. 8. Agree Agreeing is the last step in the negotiation process and can be a very dangerous time for negotiators. It is not uncommon for negotiators to reach a settlement only to find the following day that their opinions as to what has been agreed differ. In order to avoid this situation, the following three steps should be taken: agree to what has been agreed by summarising, record the agreement in an acceptable form, and agree to an action for implementation. 9 Negotiation Skills Good interpersonal communication skills are essential when planning an effective negotiation and achieving an agreed outcome. We will investigate two essential skills for negotiation; that being assertiveness and effective listening. Assertiveness The skill of appropriate assertiveness is like the other side of the coin of empathy. It is about being heard and expressing your thoughts, feelings and beliefs in a direct and appropriate way that does not violate the other person’s rights. The aim of assertive behaviour is to satisfy the needs and wants of both parties involved in the conflict situation. Assertiveness may be thought of as lying on a continuum between aggressive and passive. Aggressive behaviour which, while expressive of one person’s feelings, attitudes, wishes, opinions or rights, does not respect those characteristics in others. Aggressive behaviour is often a response to feeling attacked, rather than seeing constructive criticism as focused on an action, not a person. On the other hand, a passive response means that the sender is typically denying self and is inhibited from expressing actual feelings. People who behave passively often feel frustrated anger, hurt and anxious since they allowed others to choose for them. They seldom achieve their own goals because they do not get what they want or stand up for their rights. Aggressive Assertive Continuum of behaviours/responses Adapted from Saunders, S from Alberti, RE and Emmons, M. L. (1982) 10 Passive Negotiation Skills Assertiveness Questionnaire Directions: There are 18 statements in this questionnaire. Decide whether the following 18 statements apply to you by inserting a number between 1 and 4 in the response. The numbers for the responses are the following: Never true 1 Sometimes true 2 Often true 3 Always true 4 Statement Response (1 – 4) 1. I respond with more modesty than I really feel when my work is complimented. 2. If people are rude, I will be rude right back. 3. Other people find me interesting. 4. I find it difficult to speak up in a group of strangers. 5. I don’t mind using sarcasm if it helps me make a point. 6. I ask for more pay if I feel I really deserve it. 7. If others interrupt me when I am talking, I suffer in silence. 8. If people criticise my work, I find a way to make them back down. 9. I can express pride in my accomplishments without being boastful. 10. People take advantage of me. 11. I tell people what they want to hear if it helps me get what I want. 12. I find it easy t ask for help. 13. I lend things to others even when I don’t really want to. 14. I win arguments by dominating the discussion. 15. I can express my true feelings to someone I really care for. 16. When I feel angry with other people, I bottle it up rather than express it. 17. When I criticise someone else’s work, they get mad. 18. I feel confident in my ability to stand up for my rights. 11 Negotiation Skills Scoring Sum your answers for the following items: Question Number 1 2 3 4 7 10 13 16 5 8 11 14 17 6 9 12 15 18 Total Passive Aggressive Assertive Your score for each will range between 6 and 24. Interpretation A high passive score indicates an unwillingness to confront problems. You are likely to be perceived as one who can be bullied by others. Your desire to please others may result in your being viewed as inconsistent. In the effort to please everyone, the passive person my please no one. A high aggressive score indicates that you are likely to be seen as a ‘dictator’. Your desire to take command and dominate others is often interpreted as pushy. Both excessive passiveness and aggressiveness negatively affect interpersonal relations. The higher your assertiveness score, the more open and self-expressive you are. You confront issues in a straightforward manner. You say what you mean; but you are not rude or thoughtless. You are sensitive to the needs of others and receptive to what they have to say. Generally speaking, assertiveness is a desirable quality and tends to facilitate effective interpersonal relations. The purpose of this questionnaire is to increase self-awareness. Recognise how you are likely to be perceived by others and your strengths and limitations. For example, suppose you are low on assertiveness and high on aggressiveness. If you meet with a person you are supervising to set goals jointly and collaboratively, you may need to work extra hard to reduce your desire to control the goal-setting session and impose your standards on the other person. 12 Negotiation Skills Steps to Assertiveness When choosing to act assertively, the following steps are a useful guideline: Be aware of your feelings and ask yourself “What do I want to do with this feeling?” Be aware of your irrational self-talk (if any): Challenge any uncomfortable ‘shoulds’ you find. Be aware of your rights: eg “I have the right to express my opinion or feelings”. Decide what to do or say “This may depend on the level of the relationship you have with the other person. You may not wish to share your innermost feelings.” If you choose to speak, send messages without blame by: Careful timing Using an ‘I’ statement (refer to the next section of the workbook) Being congruent (verbal matches non-verbal) Being specific about other’s behaviour Acknowledging the other’s feelings when appropriate Keep the ‘we’ in the relationship. Be prepared to negotiate. You may choose to be passive if the risk to the relationship is too great. The basic message is assertiveness is: This is what I think This is what I feel This is how I see the situation This is what I would like to see happen Assertive messages, also called ‘I’ statements, can be a very effective technique for appropriate assertiveness. Assertive messages allow us to present our views clearly and without blame to other people. This technique can be very effective if stated in three parts (not necessarily in a prescribed order). The three parts are: When ….(and a clear neutral description of specific behaviour) I feel (description of your specific feelings with no blame) Because I … or And what I’d like is … (Description of the tangible effects on you of the specific behaviour and what behaviour you would like instead) The aim of this technique is to let someone know what you are feeling without being too aggressive. If we look at the structure of these statements we note that: The when is followed by a neutral description of the event. It must simply be a statement of fact. The I feel must use a word or a few words which describe exactly the feeling the person has. It is important to work out exactly how you feel about the situation. Are you angry, frustrated, overwhelmed, annoyed, irritated? The final part of the statement should describe the outcome you want, without demanding that the person behave in a certain kind of way. 13 Negotiation Skills This avoids the use of “You” statements (eg You make me so annoyed when you …) which gives the impression that the blame lies solely with the other party. Example: “When you ask me to increase my Key Performance Indicator levels for the number of new accounts signed up each month (specific behaviour) I feel pressured (your specific feeling) Because I don’t have adequate time or other resources to contact more potential customers than I presently do.” (tangible effects on you – why it makes you feel that way, what behaviour you would like instead) These ‘I’ messages are effective because often the other person has no idea of the effects of their behaviour on us. If the other person values the relationship, they will respond to a clearly stated and delivered ‘I message’. If the other person does not respond and the issue is important to you, you may have to repeat the ‘I message’ several times. When you have delivered an assertive ‘I’ statement, listen intently to the response of the other person with active listening. For example, tell the other person what you understood by their response to your assertive message. This clarification of the other’s response will then lead to both of you determining the outcome of the interaction. Active Listening Everyone filters the vast amount of information they receive. We tend to concentrate on the interesting and ignore the boring. Unfortunately there is no rule that says ‘Interesting = Important’ and ‘Boring = Useless’. In fact the reverse is often the case. We need to focus our listening so we find out exactly what others are saying and keep an open mind – don’t block out information because the speaker has different ideas or beliefs. We should show the speaker that we respect their words and ideas, although we may not agree. The art of active listening lies in being an active participant. Our bodies should reflect our active minds. Recall for example, how your body almost automatically reacts to important news; you quickly assume an upright posture and turn your head to the person talking. Active listening involves listening to the points that the other parties are making, and responding by summarising and paraphrasing the main points of the arguments. Through active listening you will learn more about the needs, the wants, and the position of the others in the negotiation. Active listening improves not only what you hear, but also what they say. If you pay attention and interrupt occasionally, the other side will realise that they are not just killing time, and that they are not just going through a routine. They will also feel the satisfaction of being heard and understood. It has been said that the cheapest concession you can make to the other side is to let them know they have been heard. Three major techniques are recommended for active listening: Paraphrasing the speaker’s thoughts Expressing understanding of the speaker’s feelings Asking relevant questions Observe the way you listen to others. When others are speaking do you: Try to finish their sentences for them 14 Negotiation Skills Think about other things Lose eye contact, look around Sit back in the chair, fidget Interrupt them, cut them off Make gestures that indicate that you are listening Remember what they have told you Are there things that you can improve? Negotiate to achieve an agreed outcome In entering negotiations, you will need to use all your interpersonal and communication skills. Interpersonal skills such as conflict management, assertiveness, understanding non-verbal signals and active listening can result in considerable gains for the work team when undertaking a negotiation. These skills also give an insight into the other party’s behaviours, which in turn improves working relationships. You will also need to be clear on what your objectives are, and what you are prepared to give up, and what you are not. In negotiating you are trying to persuade the other party that you are entitled to certain things, and you are also prepared to compromise in a positive and realistic way where necessary to reach an agreement. In negotiating you need to be aware of your own emotional barriers (eg wanting to be nice, feeling intimidated, fear of conflict), which could reduce your effectiveness. You need patience, confidence, to be well organised and have researched thoroughly, and assessed the other party’s needs. Applying these skills within the various stages in the Strategic Management process will greatly assist your ability to achieve a satisfactory outcome for each element in each stage. Failure to do so increases the time required to complete each stage as well as increasing the probability of ongoing conflict between various key stakeholders. 15 Negotiation Skills Reference Texts: Bolton, R. (1987). People Skills. Simon and Schuster, Sydney. Galvin, M. Prescott, D. & Huseman, R. (1992). (Chapter 20). Harcourt, Brace & Co, Sydney. Business Communication, Strategies and Skills Hall, D.T. et al. (1982). Experiences in management and organisational behaviour (2nd edn). John Wiley and Sons, New York. Nutting, J., Cielens, M. & Strachan, J. (1996). The Business of Communicating (3rd edn). McGrawHillBook Company, Sydney. Robbins, S. and Mukerji, D. (1994). Managing organisations: New Challenges and Perspectives. (2nd edn). Prentice Hall, Sydney. Saunders, S. (1993). Developing Interpersonal Relationships. Faculty of Education, UTS, Sydney. 16