Negotiation

Negotiation

Negotiation happens every day. It is not just important in business, or international diplomacy, or when there is a North-South Summit.

It is important when you are having a job interview, bargaining for discounts at Namdaemun, choosing a place to holiday with your friends or asking your Professor for more grades.

A negotiation is when 2 parties with different positions but need each other, work with each other to find the best way forward. Assuming the negotiation is between Party A and Party B, the possible outcomes for a negotiation could be

• Win : Win – both A and B get something
• Win Much : Lose – A wins a lot more than B
• Lose : Win Much – B wins a lot more than A
• Lose : Lose – both A and B lose

We can use the example of buying a house. Assume A is buyer and B is the real-estate agent. A likes the house but wants a lower price. B doesn't want to reduce too much because he will lose his commission. Here are the possible outcomes

• Win : Win – both A and B get something (A pays a little more and B accepts a little less comission)
• Win Much : Lose – A wins a lot more than B (A gets his cheap price and B gets a very low commission)
• Lose : Win Much – B wins a lot more than A (A pays a lot and B get his big commission)
• Lose : Lose – both A and B lose (the sale is not made, A doesn't get the house and B doesn't get the commission. Someone else buys the house from another agent)

Purpose of Negotiation

Before you start a negotiation, you need to plan what exactly is the purpose of the negotiation. Effective negotiation, just like effective communication, depends a lot on having good control. You cannot have control, if you don't know what exactly you want to achieve.

Ask these questions to yourself and imagine them for the other party you are negotiating with.

Define what is Win

1. What exactly do I want? - This is not only limited to money. This could be a client, image, future relationships. Either way, you should also be as exact as possible . If you have more than one objective, you should make a list according to priority. For example, in a job interview, you could want a monthly salary of 3 million won, your own office, a car allowance, the right to hire your own staff.
2. What exactly am I willing to give up? - This is deciding the things you are willing to compromise on. Are you willing to lose a little money, some holidays , some time? Depending on your strategy, you can either tell you opponent these things early in the negotiation or wait and use them to break a deadlock.
3. How much do I want to preserve this relationship? - Negotiations are not always one time affairs. Most often you have a long relationship of negotiations with another party. You might also need the other party to help you after the negotiation. Preserving or building a good relationship could be a purpose of the negotiation.

Prepare for the Negotiation

The following questions help you prepare your negotiation strategy. There are many strategies, but they basically differ based on how hard or how soft your approach is.

1. What are my alternatives? - What happens if the negotiation fails? Do you have any other options? This helps you decide how hard you need to push and how much to give up.
2. Who has what power in this negotiation? - Who has control over what resources? Who can make things easy or difficult after the negotiation?
3. What are the possible outcomes/consequences of winning/losing this negotiation? - Will this seriously affect your job or the other person's job? Will it affect other negotiations?
4. What is the precedence or history of these negotiations? - Have you negotiated with this person before? How did it go? What usually happens if you win or lose?
5. What do we both have in common? - What are things both of you care about?
6. What are some of the possible solutions? - In case there is a deadlock, what are some of the possible compromises or solutions that you can think of?

Outcome and Strategies

Win-Win

This is when both sides gain from the negotiation or feel comfortable after the negotiation. Perhaps the other person is willing to lose what you want to gain, and you are willing to lose what they want to gain.

Often negotiation is about exploring each other's positions and finding a mutual compromise that gives both of you as much as you want as possible.

Win- Win Less

Sometimes one person has already, and winning for them now becomes about the type of compensation that they can get. For example, when someone has made a mistake and must lose their job, they can negotiate on the terms.

Win-Lose

You only want to win and don't care about compromise. Only approach this result if you are never going to work with the other person again. Also, the other person might be more reluctant to give you your winnings.

8 Steps of Successful Negotiation

1. Prepare

• Clearly identify your purpose, what you willing to lose, what you want to gain

2. Open : Clearly state and understand case

• State your case and listen to the other person. Give a background if necessary, but only if it will help your outcome
• “I want to buy a safe car for my family. I don't want something sporty or nice looking, but it has to be spacious and have good mileage”
• “My wife's pregnant and my current car is too small to comfortably carry a child. I didn't realize there would need to be so many changes and extra expenses!” (explaining you cannot spend too much money)

3. Argue

• Show why your case is more reasonable and logical. Use your persuasive skills. Show why the other person's case is less logical.
• “Well it's true the metallic paint looks nicer but it is also more expensive to maintain and repaint”

4. Explore : Seek understanding and similarity

• Look at possible areas of agreement, things you both care about, things you both agree on.
• “The price of fuel is just crazy these days isn't it? I don't know how people can afford to drive those big cars in the city!”
• “Yes, I think this is about the right size and not too old”

5. Signal : Show readiness to work together and reach a compromise

• Tell the other person you are ready to come to an agreement. Signal this using body language, or by offering concessions.
• “So if I agreed to sign the contract today, would you give me a 10% discount?”

6. Package : Prepare the final agreement

• Identify things you and the other person are willing to concede and what must be done in order to do that. Use conditional agreements. Start with smaller things and move on to bigger things.
• “So we agree that if I pay by cash then you will take 200 dollars off the price. And the first 3 regular maintenance will be for free?”

7. Close

• Finalize and summarize the details. Symbolically end the negotiation (shaking hands). Sign the contract.
• “So we agreed that for this final price, you'll put a new set of tyres on the car and I can pick it up tomorrow”

8. Sustain

• Make sure the other person fulfills promises, and make sure you do too.

Negotiation Do's and Don'ts

Don't

1. Don't be confrontational – negotiation is serious business but it is not war. Arguing with the other person makes it less likely that they will be willing to compromise
2. Don't become emotional – it is normal to get angry or frustrated sometimes, but if you show this, you can lose control of what you are doing
3. Don't blame the other person – both sides are trying to protect their own interests. If you blame the other person for any deadlocks, this will create an angry situation and not be helpful for your negotiation.
4. Don't focus on the person, focus on the issues – don't be distracted by how much you like or don't like the person you are negotiating with. You must be focused on your issues.

Do

1. Try to understand the other person – understanding why they want something helps you understand what they are willing to lose and how to convince them. Also, being more understanding builds trust and leads towards more compromise.
2. Consider timing – there are good times and bad times to negotiate. Pick a time when you think you and the other party will be most focused on the negotiation and emotionally positive (no tiredness, stress, anger, distractions)
3. Ask for their perspectives – find out what the other person thinks. This builds a more consultation based environment, which leads to solutions.