Examine why people negotiate

But once the device maker had defined a strategy to narrow the scope of the deal with the incumbent distributor, the negotiations moved to a considerably more even footing.

In fact, the distributor stopped making demands and threats and became willing to engage in a collaborative process. The two sides jointly evaluated where it was especially costly for the distributor to service the device maker business the distributor was actually happy to give up and where it would have been most difficult for the device maker to move to alternative distributors.

The narrower scope made the distributor willing to reduce some of its requirements meant to cover the costs of distributing low-margin products in expensive-to-service segments.

For the device maker, the cost of agreeing to much of what the distributor was requesting dropped significantly. All too often dealmakers conflate negotiation power with a strong BATNA and the concomitant ability to hurt the other party.

Such a mindset leads to pressure tactics. It also makes negotiators who lack attractive walkaway alternatives conclude that they have no power, which in turn causes miscalculations and unwarranted concessions. Moreover, their sense of powerlessness can breed fear and resentment—negative emotions that hamper creative thinking about potential avenues to an optimal outcome. The solution is think beyond walkaway alternatives and consider multiple sources of not only coercive leverage but also positive leverage.

By positive leverage, we mean things negotiators can uniquely offer to make the other side desire a deal rather than fear the absence of one. Many technology firms have IP teams that seek to persuade consumer electronics companies such as Apple, Sony, and LG to pay for licenses. The negotiation of IP rights in this market is dauntingly complex.

Patent infringement is pervasive—though often unintentional. Legitimate efforts to collect royalties are vastly complicated by the well-known phenomenon of patent trolls. The IP licensing team at one well-known tech firm had a strong claims portfolio and compelling market data about the rights that other companies were infringing.

The team tried to be creative and flexible, offering to blend payments for past infringement, ongoing royalties, and cross-licenses. And so they did.

Those opportunities made it worthwhile for the electronics companies to engage in meaningful negotiations with the team. Though this strategy required a lot of time and effort, the payoff was worth it.

Most negotiators focus exclusively on maximizing the value of the deal at hand. In doing so, they often undermine the success of future negotiations—their own and those of their colleagues. A strategic approach requires considering success beyond the current deal and, in particular, how the precedents it sets will create anchors and shape dynamics in future negotiations. After all, except with pure sales and purchases of assets, most high-stakes business negotiations are repeat transactions undertaken in the context of long-term relationships.

Analyzing links across multiple negotiations can unearth hidden forms of leverage. Consider the case of a global semiconductor company that felt continually squeezed by unreasonable price increases from OEM component suppliers. A major problem was that negotiations over initial licensing or codevelopment of technology for new products were conducted by one group, whereas subsequent contract negotiations with the same suppliers, but occurring years later were handled by another group, with relatively little coordination between the two.

Meanwhile, negotiations with those suppliers and other third parties for maintenance and repair services and spare parts were handled by yet another group, and all three kinds of negotiations occurred on different timetables. One key to negotiation strategy is putting yourself in the shoes of your counterparts and truly understanding their motivations and likely actions.

Of course, most negotiation planning involves analyzing the goals and likely actions of the other side. In our experience, however, failures of imagination and inevitable human bias tend to limit and distort such efforts.

Especially when the stakes are high and power imbalances create fear and resentment, strong emotions stunt thinking and warp rational analysis. In some cases, simulations might be done as part of strategy development and negotiation planning.

By looking at these separate but related negotiations holistically, the semiconductor company was able to alter the power dynamics. They also shared data about maintenance and repair revenue streams and their growing ability to redirect such business to partners who demonstrated reasonableness and good faith. Now the benefits of increased cooperation and the potential loss of opportunities were tangible to suppliers—and hence persuasive.

Many people seek to speed up or slow down negotiations to put pressure on the other side and extract concessions. But pressure tactics often backfire. Careful consideration of how the other side is likely to respond should guide when to accelerate, slow down, or pause a negotiation. Several years ago a small technology company was in negotiations to renew a critical deal with an internet behemoth.

The small company depended a lot on the revenue the deal produced, and the thought of going without it for even a short time was frightening. That turned out to be a major miscalculation. That time was well spent.

In the end the contract with the behemoth was renewed for a nine-figure value that represented a nearly five-fold increase over the expiring deal. While the passage of time did make the small firm nervous about its dwindling cash reserves, it also gave it the opportunity to substantially alter the landscape in which the negotiation took place. Choreographing the sequence in which you address issues or engage different players is also important. Good interpersonal skills are essential for effective negotiations, both in formal situations and in less formal or one-to-one negotiations.

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Search SkillsYouNeed:. We'll never share your email address and you can unsubscribe at any time. What is Negotiation? See also: Transactional Analysis. Always be aware that: Negotiation is not an arena for the realisation of individual achievements. There can be resentment of the need to negotiate by those in authority. Interpersonal Skills Good interpersonal skills are essential for effective negotiations, both in formal situations and in less formal or one-to-one negotiations.

These skills include: Effective verbal communication. See our pages: Verbal Communication and Effective Speaking. We provide a lot of advice to help you improve your listening skills, see our page Active Listening. Reducing misunderstandings is a key part of effective negotiation. Rapport Building. Build stronger working relationships based on mutual respect. See our pages: Building Rapport and How to be Polite.

Problem Solving. See our section on effective Problem Solving. Decision Making. Learn some simple techniques to help you make better decisions, see our section: Decision Making. Assertiveness is an essential skill for successful negotiation. See our page: Assertiveness Techniques for more information. There are five major points that one should consider in the negotiation process:.

With these suggestions, Fisher and Ury made a huge impact on the art of negotiation. Do Fisher and Ury provide the only way to negotiate? Of course not! Many books out there take Fisher and Ury as the starting place and work from there. Pulitzer Prize-winning journalist and Wharton Law Professor Stuart Diamond was the associate director of the Harvard Negotiation Project with which Fisher and Ury were affiliated , and he takes a different approach to negotiation strategy in his book Getting More.

Getting More emphasizes valuing the trust aspect of negotiations, encouraging participants to be transparent and constructive, not manipulative.

Getting More takes the idea of preserving a relationship during the bargaining process and escalates it to the next step by actually leveraging the personal connection. This negotiations model has been adopted by U. Special Operations Command for the training of U. Special Forces, Green Berets, U.

Navy Seals, the U. Marines and other units, and Google has used the book to train 12, of their employees worldwide.

Chris Voss also provides some psychological techniques that help connect you, as the negotiator, to the other party. Mirroring helps the other party feel more secure and heard. Tomas Chamorro-Premuzic, professor of business psychology at University of London and Columbia University, suggests that high emotional intelligence is key if a negotiator is going to be successful.

If the process is followed and strategic considerations are made for the problem and people involved, personality should neither help nor hinder the negotiation process. Continued emphasis is placed on collaborative, integrative negotiation, and both men and women can succeed with this approach. But there is evidence that gender affects the outcome of bargaining.

Why is that? Research also shows that women have less confidence in their negotiation abilities, which may lead to hesitation to engage in negotiation practices. Women penalize themselves by avoiding these situations when engagement is in their best interest.

The cultural aspect of negotiation significantly affects the amount of time for preparation and planning, so the negotiator can determine how to handle these cultural differences. Negotiations are often difficult even when there are no obstacles involved, but being aware of issues triggered by personality, gender and culture can help the parties overcome them and deal with the matter at hand. When a person is in a negotiation process to get something he or she needs, ethical concerns may surface.

How far do you go to get what you want? Should you always tell the truth and reveal your plan, or does doing so compromise your position? Difficult questions like these arise often in negotiations. Some unethical or at least questionable behaviors that often occur during negotiations include:. A lot of unethical behavior is still on the right side of the law. The most you can do to monitor ethical behavior in a negotiation is to bring it to the table yourself and be willing to say no and walk away if the other party does not.

Preparation and planning are key in avoiding common negotiation mistakes, but even the most experienced negotiator can still make them. Perceptual bias and poor decisions account for most of them. Again, preparation and planning can help a negotiator avoid these issues, but practice is another way to get better at avoiding mistakes! For every negotiation that goes well, there is one that crashes and burns. In the last section, we talked about some of the ways a negotiation can go wrong—one of the parties might have an abrasive personality, might be from a different culture, or even be unethical.

Or perhaps there seems to be no resolution that will satisfy all parties. A judge, a lawyer, and even an agent for a movie star is a third-party negotiator. Anyone who negotiates on your behalf or listens to your pleas and then decides your fate fits into the third-party negotiator role. There are four basic third-party negotiator roles: arbitrator, conciliator, consultant, and mediator.

Each of these third-party negotiator roles provides a specific service for the parties who have employed him or her, and their services are often situation-dependent.

An arbitrator is a third party with the authority to dictate agreement. Arbitration can be voluntary or forced on the parties of a negotiation by law or contract. In arbitration, there is always settlement. Often used in the U. If two people are, for example, involved in a car accident, they might agree to use an arbitrator in order to determine a fair amount of repayment for damages caused. In entering into the arbitrator situation, both parties agree to let that person make the final decision.