There are four distinct phases in the negotiation process, each one with its own unique pitfalls and opportunities.
Negotiation is a central feature of day-to-day living. Whether it’s negotiating your fee for client services, manoeuvring through the maze emanating from the Brexit vote, or agreeing on who is responsible for cooking the dinner this evening (and cleaning up afterwards!). It’s all about negotiation. For some people, this can be a formidable challenge, so they too-readily give in to their counterpart’s arguments and demands. Thereafter, emotions of resentment and ill-feeling about a ‘lousy deal’ kick in, to the detriment of both parties. But it doesn’t have to be like that.
For starters, it’s worth remembering that you are a negotiator. In fact, you’ve been negotiating since you first looked for pocket money, swapped toys or cried in the cot. That is, you’ve always engaged in purposeful persuasion and constructive compromise. While the key criteria for successful negotiations are information and power, to get the best deal, there are some unwritten rules that should be noted.
First, agreement is the aim of negotiation. However, the wish of both parties to reach a mutually satisfactory conclusion does not preclude the use of threats, sanctions and associated tactics like attacks, hard words and (controlled) losses of temper. These are all part and parcel of the charade we call ‘negotiation’. Another tactic extensively deployed in consequential negotiations is the ‘off-the-record’ discussion. This is a means of probing attitudes and intentions, and smoothing the way to a settlement. In tense scenarios, this approach often enables progress when parties return to the formal negotiating arena.
It is also important that each party be given an opportunity to state their (opening) position, which they will move from as negotiations proceed via alternate offers and counter-offers, eventually leading to a settlement. To enable progress, concessions made are not withdrawn. Nor are firm offers withdrawn, although it is legitimate to make and withdraw conditional offers.
To smooth the process, adjournments are taken by mutual agreement, serving the purpose of reviewing progress against one’s objectives and assessing your counterpart’s objectives or latest offer or proposal. That is, adjournments provide an opportunity to update strategy. It’s also an unwritten rule that third parties are not engaged until both parties are agreed that no further progress can be made.
Whatever the stakes, you’ll get the best deal if you break the negotiation process into four stages: preparing, opening, negotiating and closing.
The key at the preparatory stage is to establish one’s objectives and to assign a relative priority to each one. This process also entails knowing:
- The ideal settlement point you would like to reach;
- The minimum you will accept or the maximum you’re prepared to concede; and
- The opening claim or offer that will help you achieve your target and provide sufficient room to manoeuvre in pursuit of your target. The difference between the ‘claim’ and the ‘offer’ is called the negotiating range.
Thereafter, the good negotiator decides the ideal route or stages to be followed in moving from the opening to the closing position, and the negotiation package or items that one is prepared to trade in pursuit of his or her goal(s). In other words, at this preparatory stage you decide what needs to be achieved and how to achieve it.
Good preparation also involves assembling all relevant information and structuring it in a logical manner. Identify your strengths and include facts to support your case. Support for your negotiating position may also be derived from an existing or previous agreement, comparator norms, custom and practice, previous statements from your counterpart and hard evidence.
The good negotiator will also know the main weaknesses in his or her position. As one’s negotiation counterpart is likely to raise these points, prepared responses are essential. As Nelson Mandela put it when negotiating a change of regime in South Africa, “I rehearsed the arguments they might make and the ones I might put in return”.
The main purpose of the opening stage is to reveal the broad outline of one’s position while gathering as much information as possible about that of your counterpart. The more extreme the opening positions, the more time and effort it will take to discover if agreement is possible.
To keep your negotiation partner at the table, it is advisable to open realistically before challenging their position, exploring their attitude(s), asking questions, observing behaviour and, above all, listening. This should enable assessment of their strengths and weaknesses, tactics and the extent to which they may be bluffing. One should not make concessions at this stage.
After the opening moves, the main bargaining phase begins. Now, the gap is narrowed as parties persuade the other side that their case is strong enough to force him or her to move. This negotiating stage is about exchanging – something gained for something given. Ideally, something relatively unimportant or cheap to you is traded in exchange for something that is valuable to you.
This is the most intense stage of the process. The best way to avoid disaster is to lead with conditions: “if you will do this, then I will consider doing that”. Related to this, good negotiators negotiate on the whole package. By stating that nothing is agreed until everything is agreed, you refuse to allow your opponent to pick you off item by item, and you extract the maximum benefit from any potential trade-offs at the final hurdle.
When and how one closes negotiations is a matter of judgement and depends on the assessment of the strength of both cases. Standard techniques include:
- Make a concession from the package, preferably a minor one, which is traded off against an agreement to settle: “if you agree to settle at X, then we’ll concede Y”;
- Do a deal (e.g. split the difference, introduce something new such as extending or shortening the settlement timescale, phased increases, making a joint declaration of intent to do something in the future such as review the deal);
- Summarise what has happened to date, emphasise the concessions made and the extent to which you have moved, stating that you have reached your final position. But never make a final offer unless you mean it;
- Apply pressure (e.g. a threat of dire consequences if your final offer isn’t accepted); and
- Give your opponent a choice between two courses of action: “you can have X or Y, but not X and Y”.
This closing stage is a dangerous time for negotiators. If one is too keen to get agreement, it is easy to neglect the finer details of that agreement. This can cause problems when the agreement is implemented and each side has its own interpretation of what was agreed. The final agreement should therefore mean exactly what it says – that is, unless it needs to be what Henry Kissinger described as “constructively ambiguous” whereby the parties carve out spaces within which more than one interpretation is possible for the purpose of securing a deal.
It should also be borne in mind that while a successful outcome is important, so too is the maintenance of the relationship between the parties. Hence, one’s negotiation ‘opponent’ can become one’s negotiation ‘partner’. This helps when problems arise at the negotiation table, as progress is more easily achieved when parties have a good relationship based on mutual respect and trust.
Dr Gerry McMahon is Managing Director at Productive Personnel Ltd., a human resources consultancy and training company.
This article was originally published in the August 2018 issue of Accountancy Ireland.