Negotiations are complicated, even in the most straightforward of scenarios. The blending of two companies’ ideas and objectives will inherently present some resistance and opportunity for challenges to occur.
The best thing you can do in any negotiation scenario is to be prepared. Improvising your negotiation methods often leads to poor outcomes, forgotten terms, and unethical behaviors. On the other hand, preparation makes the negotiations easier to navigate and often results in more desirable outcomes.
Early preparation also ensures that you meet all or most of the criteria of both parties. Many negotiation solutions require creative thinking, and preparation gives you additional time and space to think creatively about potential solutions to the issue. The more options you have during negotiations, the more likely you are to develop a solution that suits both parties.
Part of the preparation process is learning and mastering tools that you can use in negotiations. Though you cannot always know how these tools will work, you can perfect them to ensure that you use them correctly and they are at the forefront of your mind during negotiations. A good negotiator keeps themselves up to date on training, tactics, and methods that may support their negotiations. Though negotiations may change, the necessity of mastering negotiation tactics will not.
Your negotiator tools can be used in a myriad of negotiation situations. However, there are some key scenarios that you need to look out for. These negotiation situations are common and can usually benefit from expert negotiation tools. In order to properly use your tools, you must first understand the different scenarios that you may encounter.
ZOPA, or the zone of possible agreement, is key to negotiating and one of the central tools that you need to understand to be an effective negotiator. ZOPA is the area where the potential solution to your negotiation lives. In other words, it is the range of options where both parties’ boundaries are met.
Positive Bargaining Zone of Possible Agreement
When considering the ZOPA in a negotiation, if your team and the other team have potential overlapping options, you are in a positive bargaining zone. This means that you have a range of solutions that will work for both parties.
Consider the process of buying a home, for example. You and your spouse are willing to spend no more than $250,000 on a given house. Simultaneously, the seller is hoping to sell the home for between $245,000 and $255,000. In this scenario, your positive bargaining zone is between $245,000 and $250,000. This price range meets both your requirements and the requirements of the seller.
When you have a positive bargaining zone, it is easy to identify the zone of possible agreement. Though you may negotiate within the ZOPA, it is entirely possible that everyone’s boundaries can remain intact while you strike a deal. Unfortunately, negotiations are not always this straightforward.
Negative Bargaining Zone of Possible Agreement
In a negative bargaining zone, it is not possible to meet both parties’ requirements without negotiation or concession. In the above example, let’s say that you wish to pay no more than $250,000 for a home, but the seller will not accept less than $260,000. In this scenario, there are no prices that meet both of your standards. Negotiations are more difficult in these scenarios, but they are also more necessary to achieve an agreement.
BATNA, or best alternative to a negotiated agreement, is a key situation that may require your negotiation tools. BATNA is a way to address a situation in which there seems to be an impasse or where you have exhausted possibilities. A BATNA is a solution outside of the current range of solutions that may be acceptable for both parties.
Consider the purchase of an automobile, for example. Let’s say you are shopping for a new car and find one listed for $25,000. You find the same car in similar condition at a different dealership for $20,000. The second dealership’s $20,000 is your BATNA if the first dealership will not negotiate their price down to or lower than $20,000.
MDO/LDO or most desirable offer/least desirable offer encompasses the range of your negotiations. This outlines your ideal situation as well as the basics that you would need to remain in the negotiations. Your MDO/LDO may frame your ZOPA and give you a place to begin your negotiations, as well as a boundary that will cause you to leave if it is left unmet.
Your MDO should meet the following criteria:
- It is attainable.
- You can measure it.
- It is definable.
- It is agreed upon internally.
- It is aligned externally.
Your LDO should meet the following criteria:
- It is the minimum acceptable offer.
- If an offer is between your LDO and MDO, it is preferable to coming to no agreement at all.
- It encompasses multiple issues and satisfies a broad range of interests within your company.
- It is distinct from a “bottom line,” which implies that it is a reluctant or poor result to your negotiations.
MDO/LDO is closely related to ZOPA and can be used to define the negotiating range. This helps to save time and avoid potential agreements that are undesirable or unacceptable.
Tactics for Successful Negotiations
These key negotiation concepts appear in many different kinds of situations. By understanding these scenarios, you can better apply the following tips for successful negotiations.
Be a Human Being
Though negotiations are often about business and professionalism, you should not shy away from your own human nature and personal life. Build a rapport with the other party and make sure that they know that you are a person before you are a negotiator. It is possible to be both a well-rounded individual as well as an effective negotiator.
Bringing your whole self to the negotiation builds trust and connection to the negotiations. When the other party gets to know you and ultimately trusts you, you are almost guaranteed to see better outcomes, smoother negotiations, and a relationship of ongoing respect. If the other party simply sees you as a negotiating automaton, they have no real reason to offer respect or listen to what you have to say. This results in poor outcomes and less-than-ideal agreements.
Aim for a Win-Win Solution
There are several outcomes to a negotiation, including win-win, win-lose, and lose-lose. Though it is entirely possible for the latter two options to occur, it is best to always have your sights set on a win-win situation. This type of solution ensures that both parties are happy with the outcome and can foster better long-term business relationships and the opportunity for further negotiations.
If you go into a negotiation believing that you will achieve a win-lose scenario, you are more likely to fall flat in your negotiations. You are also less likely to consider the other party’s needs and offers if you already believe that they are going to be in a losing position.
If you aim for both sides to win, you put yourself in a headspace of listening and ethical negotiation. You will automatically consider the other side’s needs and form a stronger relationship when in a win-win mindset.
Release Your Expectations
Of course, negotiators often enter the room with an outcome goal in mind. However, it is important to remove this from the forefront of your mind during the negotiations. If you are too focused on one specific outcome or expectation, you will miss what the other party is saying to you. You may also miss desirable outcomes that hadn’t even occurred to you because you are so focused on your idea of how the negotiations must go.
Releasing your expectations for the negotiations opens up significant possibilities. Collaboration in negotiations is a powerful force and can develop some truly effective outcomes that would have otherwise gone unseen if either party had acted alone or refused to listen to potential options.
Ask and Listen
When you understand the other party’s motivations, needs, and objectives, you have an advantage during negotiations. The best way to do this is by asking questions about their values and getting to know what is driving them in the negotiation process. Preparing key questions before you enter the negotiation room can help you to be ready to get to know the other party.
However, a key part of this tactic is listening to the answer that the other party gives. Though this may seem obvious, many people go through the motions of negotiation without truly listening to the person they’re speaking with. Though asking the questions may momentarily make the other party feel appreciated, missing their answer because you are preparing what to say next makes the entire ritual fruitless and somewhat offensive.
There are few things more infuriating than speaking with someone who is clearly not actually listening to what you are saying or who is only thinking about what they want to say. In order to be a truly effective negotiator, you need to learn to listen. This does not only apply to situations in which you ask a question; it is important during all parts of the negotiation process. You can always take a moment to gather your thoughts between topics and focus on the other person when they are speaking.
Emotions Are Key
Many people falsely believe that business negotiations are purely logical. Emotions play a significant role in negotiation of all kinds, and it is beneficial for you to understand this. When you start to read the other party’s emotions, you gain a competitive edge in the negotiations while simultaneously becoming more relatable.
For example, let’s say that the other party becomes frustrated or angry around a certain negotiation term. Though it may be easy to become frustrated in return, it is more advantageous to think about the emotion and what it could really mean. Perhaps this individual is under pressure from their superiors to secure a certain part of the negotiations. If they believe that they cannot achieve this, they may become fearful of reprimand or even of losing their job. This often presents as anger and frustration, especially in adults who may have no clear outlet for their emotions.
Understanding this kind of basic psychology can help you to react to the situation more effectively. By taking their feelings into account, you foster trust and respect in the negotiations and are more likely to get what you need in the end. For example, in the above scenario, you might say, “I see that this topic is really important to you. Can we talk about that further? Perhaps we can discuss your company’s boundaries in this area.” You are not conceding to your opponent’s terms but are respecting and acknowledging their emotions while asking for clarification that will help your negotiations.
Contact Shapiro Negotiations Institute
Becoming a master negotiator requires time, effort, and the right guidance. Our team is ready to give you the tools you need to negotiate properly for your company. For more information, contact Shapiro Negotiations Institute online.