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Why Empathy Is Necessary in Negotiation

Empathy is often both the most misunderstood, and least utilized tactic when it comes to business negotiations. However, successful negotiators who understand empathy and how it relates to negotiation, and can put it into practice, can experience a significant difference in their sales. Read on to find out more about empathy and how you can use it to your benefit in your negotiation tactics.

 

What Is Empathy?

Often confused or lumped in together with sympathy, empathy is all about relating to how others feel. Most of us have at one time sent a sympathy card to express feeling sorry for another’s misfortune or loss. Sympathy is what we say we feel for another person’s situation, and while empathy is similar, it goes a little deeper than that.

When you feel and express empathy, it means you truly consider what the other person is going through and understand the range of emotions that they feel as a result. Being empathetic involves being more compassionate, listening more, and imagining yourself “walking around in someone else’s shoes.” It’s often easy to tell the difference between sympathy and empathy because true empathy feels more genuine. It is felt on a deeper emotional level and helps to build trust in relationships.

 

Empathy in Negotiation

In any negotiation, the goal is a compromise or agreement between two parties. It can be very intimidating, especially if dealing with contentious topics. Arguments, discussion, and bargaining can all be part of the process of negotiating. You may feel inclined to rush through a negotiation quickly just to get it over with. But those who are most successful in negotiations know how to listen to the other party so as to understand their side of the negotiation and what their wants and needs are. Taking the time to listen and understand can defuse the tension, and lead to more satisfying results for both sides.

Negotiation usually involves some type of relationship building, and the process of listening and learning about the other party’s views. Empathy is a natural fit for this process, and when utilized can lead to much greater success in getting the other party to agree to your terms and compromises. Try to understand the other point of view by listening more. Vocalize your understanding of their feelings to let them know that you relate to their ideas or needs.

 

How to Be More Empathetic

Using and expressing empathy isn’t always easy, and it’s more than just “being nice” to others. In fact, to be empathetic, you don’t even have to like the other person or their viewpoints, or agree with them. You just need to genuinely understand their side of the negotiation. Some people are naturally better at using empathy, but it is a skill that can be learned, practiced, and honed over time. Here are some steps you can take to practice more empathy in any relationship:

1. Identify your own emotions. Make a mental note of your own feelings whenever you feel happy, sad, angry, or excited. Notice your facial expressions and body language and how they correlate to your inner feelings. When you understand and recognize your own emotions, you’ll be able to identify them in others more easily.

2.Watch for body language. Nonverbal cues include tone of voice, body language, and other hints. These hints can often give more information about emotions than what the other person is saying, and sometimes even contradict the spoken words to reveal true feelings.

3. Listen intently. Ask lots of insightful, open-ended questions of your opponent, but sit back and let them speak. Be open and show genuine interest in their answers.

4.Find common ground. Often called “building a bridge,” this involves discovering shared interests and ideas. Find out especially if there are any shared goals in your negotiation resolution. This can lead to compromise quickly and efficiently.

5. Do not express disagreement, judgment, or get defensive. Even if you disagree on the inside, try to remain as neutral as possible and continue to listen. Judging or attacking ideas can lead to the other person shutting down and delaying resolution.

6. Show you are listening. Encourage the other person to share, smile at them, and use your own body language to express interest, instead of appearing closed off. Relax, don’t cross your arms, and watch your tone of voice to show that you are open.

Practicing these steps in conversations, and in negotiations will demonstrate to the other party that you have empathy. You will find that others will then be able to trust you more easily and open up to you more.

 

Why Empathy Is Necessary

Without empathy in the negotiation process, it can be easy to come to an impasse. Those on either side of the table can just dig in their heels and be less willing to budge. However, when empathy is utilized, the opposing side feels understood, and that their feelings are heard. They may be more willing to understand your side as well, and it may be easier to reach an agreement.

Some people may fear that they can be too empathetic, taking it too far and getting so overwhelmed by the other person’s feelings that they forget their own needs. This can be tricky, but take a step back and remind yourself of your goals in negotiating. Use the insights you’ve gained from listening to the other person and come back to the table ready to reach an agreement. When you understand the other person’s needs and motivations, you can use this information to suggest bargains that will appeal to what they want, ultimately leading you to negotiating success.

Negotiation is an important business skill to master, and practicing empathy can make you a better negotiator. If you want to learn more about negotiation in general and find resources for negotiation training, contact Shapiro Negotiations. We have the necessary experience and tools to help you improve your negotiation skills or train your team through classroom training, consulting, keynote speeches, and virtual options.

 

How to Use Any Negotiation Location to Your Advantage

When it comes to negotiating, everyone wants a leg up on the competition. How can we get the best deal for ourselves? There is an abundance of books on achieving an advantage through every conceivable angle in bargaining. One that gets a fair amount of scrutiny is location.

While most experts agree that location can affect the proceedings, not everyone agrees on just how location affects things and what sort of location is best. It seems that different sites offer different advantages and disadvantages. The one you choose may depend on your own skill set.

 

Negotiating at Their Place

While your first instinct might be to avoid playing an away game, there are several reasons why it can be to your advantage. If you feel comfortable with the idea, taking a trip to the other party’s home base can provide you with a few subjective as well as objective advantages.

• Confidence. A willingness to visit the other side’s turf can be a keen demonstration of confidence. Confidence is always a good thing to demonstrate during negotiations and can elicit concessions that otherwise would not have been forthcoming.

• Opportunity. Going to the other side’s place is a chance to demonstrate respect for them. A good negotiation is usually more of a partnership than a battle, and visiting them can set the right tone to achieve that partnership. It also tells the other side that you don’t fear them either.

• Comfort Zone. By allowing the other party to remain in his or her comfort zone, you might make them more amenable to a partnership-based negotiation rather than a more hostile encounter. You may increase the chance of cooperation rather than competition.

• Intelligence gathering. By visiting their site, you afford yourself the opportunity to learn more about them. You might discover what drives them, or where they are weak. Knowledge like that can be an advantage in a critical moment.

• Information. When you go to their place, you deprive them of the excuse that they don’t have certain information on hand. Their files are right there, ready for perusal. It also gives you that same excuse you have just taken away from them.

 

Negotiating on Home Turf

If negotiating on the road can be advantageous, then for the same reasons negotiating at home can give the other party those same advantages. Nevertheless, there are ways to make a home field negotiation work for you.

• Impress. When they come to your home turf, you can put on a display of your strengths. You can show your prowess and influence the way they see you. If they come to the bargaining table properly impressed, you may have an easier time getting concessions from them.

• The Ego Wall. In your office, you can build your own personal Hall of Fame. You can fill it with awards and newspaper clippings and anything else that portrays you in the light you want to convey.

 

Neutral Location Negotiations

A neutral site is often seen as a fair way for both parties to meet in the middle. No one will have the benefit or detriment of a meeting in their own territory. However, even in neutral space, the playing field may not be entirely level.

The site chosen is still likely to be in the orbit of one of the two parties. It can still be a way for one party to be ostentatious about how they do things, or miserly if that is the tactic they have chosen. They can choose a noisy site where communication is difficult, or a place where business negotiations are prohibited. Every choice sends a message of some sort.

 

A Few More Tips for That Extra Advantage

If you can choose the site of the negotiation, you may be able to manipulate things to your advantage. There are a few psychological tricks which studies indicate can be helpful for you at the bargaining table.

• A hot drink. Studies indicate that the temperature of an object we hold in our hand affects the way we perceive the world and other people in it. According to research, when we hold a warm object in our hands, we tend to have “warmer” thoughts about other people. Likewise, a cold object makes us more negative about those around us. If your negotiating partner views you more warmly, you may be able to get better concessions from him or her. The next time you negotiate, you may want to offer the other party a warm beverage.

• A soft surface. Psychologists believe that in our childhood we develop associations with the hardness and softness of objects, and with their smoothness and roughness. Smooth and soft objects are associated with comfort and security, while rough and hard objects the opposite. If you want the other party to drop his or her guard and relax during the negotiations, you might consider providing them with a chair with a soft cushion. Make sure the negotiating table is smooth to the touch. You can combine this with a warm drink for extra effect.

• Seating arrangements. The seating arrangements can have a subtle yet significant effect on how the negotiations turn out. According to some experts, you should arrange the seats based on your strategy. If you plan on establishing a warm rapport with the other party and have a friendly negotiation, it might be better to put the seats closer together. On the other hand, if you want to establish a logical, formal negotiation, it might be better to separate the chairs more. More distance allows for more dispassion and can avoid emotional reactions to objective information.

• The environment. Contrary to what some suppose, an active background with ambient noise and the activity of other people can promote good negotiations. Background activity keeps us alert and aware of the surroundings, which aids in the negotiation process. If your negotiations seem to have reached a stalemate, changing the location might be an emotional cue that gets things going again. If you choose a vibrant background, this can aid your cause even more.

 

Sometimes, even a small advantage can make a big difference. Negotiators are always on the lookout for that small aspect that makes them more competitive as negotiators. Choosing the right location can give you that edge, but be sure you know yourself and your opposing party. Each location comes with drawbacks along with advantages.

15 Factors to Consider Before You Start Negotiating

Negotiating is a part of life. It doesn’t always have to involve money, but sometimes another party has what we want and we want to make a deal. Naturally, we want to make the best deal for ourselves that we can.

There are important factors to consider before you enter into negotiations with another party. Preparation is essential and can make the difference between coming out of a deal with excellent terms or leaving the negotiating table with no deal at all. This preparation involves knowing yourself and your own goals, knowing the other party and understanding the field in which you are negotiating.

Before you sit at the negotiator’s table, consider these factors and what they mean for you when it comes time to trying to convince the other party:

 

1. Have a goal. The goal of a negotiation is not merely to negotiate. Negotiation is a means to an end. What is that end for you? What is it you want? If you go into a negotiation without a firm sense of what it is you are after, you are unlikely to come out satisfied. Always clearly define your ideal outcome before you start to negotiate.

 

2. Form a plan. A plan is not just imagining how you want the process to go. A plan is about contingencies. You must picture the hypothetical scenarios, to expect the unexpected and figure out how best to react to each scenario. If you are prepared for all the likely responses to your entreaties, you can transition smoothly and confidently into a new tactic because you already prepared for it beforehand.

 

3. Know your disadvantages. You need to be honest with yourself. In what aspects of the talks is your position weak? If you are asking for a pay raise, for example, you may be hampered by the fact that you use a lot of sick days. Anticipating possible objections beforehand allows you to counter with your strengths at the right time.

 

4. Know what you are willing to part with. In a negotiation, each party sacrifices something in exchange for getting something else that they want. You have a goal, you know what you want to achieve with the bargaining. But do you know what you are willing to give up? Some things are off limits; have a firm idea of what this means for you before negotiating.

 

5. Know what the other party wants. You have a goal, but so does the other party. They want something if they are going to give up something else. This ties in with the previous point. What is the other party going to ask for, and are you willing to give that up? If so, under what conditions?

 

6. Know when to say when. Sometimes you must walk away. If you go to the negotiator’s table unwilling to just say, “No thank you,” you put yourself at a disadvantage. Being willing to walk away gives you a certain power in the proceedings, and the other person will sense that. After you walk away, you may find that they reopen the negotiations with you on terms that are more favorable to you.

 

7. Know your limits. How experienced are you as a negotiator? How experienced is the other party? Is it reasonable to think you will be able to walk in and smooth-talk the other side until they give you what you ask for? The more practice you get as a negotiator, the better idea you will have of what you can achieve and how far the other side is willing to bend to your ideas.

 

8. Gather background information. Don’t just study the other party. Learn about the field you are negotiating in. What are the typical salaries? What are the trends? What is hot and what is on its way out? No matter what it is that you want, external factors can play a decisive role in the outcome of any bargaining talks. Know which way the wind is blowing before you even set your goals for the process.

Preparing yourself along these lines will set you up for a strong negotiation. However, you still have to do the actual bargaining before you can achieve your goal. Even the best preparation is no cure for weak technique. After you have prepared, make sure you put your best foot forward when the time comes to go after what you seek.

 

9. Confidence. Confidence at the negotiating table gives you more bargaining power. If the other side senses hesitancy or uncertainty, they will become emboldened and demand more.

 

10. Self-Interest. There is nothing wrong with looking out for yourself. The other party is going to take care of their own interests. You need to take care of yours.

 

11. Objectivity. Don’t be carried along by undue optimism nor held back by pessimism. Make a realistic assessment of the situation before you start, and revisit your assessment at key points during the process.

 

12. Creativity. Price is not the only aspect of a negotiation. Is there something else you would be satisfied with if the other party cannot agree to a price? Are there other concessions you are willing to make if the other side asks for too much?

Finally, after you prepare yourself beforehand and enter the process with good technique, there are three maxims to keep in mind. These ideas can help put everything into perspective.

 

13. Everything is negotiable. It all depends on the price.

 

14. No one is going to give you their last dollar. If they are at the negotiating table, it’s because they are willing to bargain. Don’t let them tell you that they are down to their last dollar.

 

15. Ask for more to get more. The first step to getting more for yourself is to ask for it.

Negotiation is a delicate process. It is part willpower and part social agility. There are many factors to consider and if you come ill-prepared you are likely to be disappointed with the result. The more important the result of a negotiation is to you, the more time you should spend preparing for the process. It’s about getting the best deal for yourself that you can, and that means adequate preparation.

What Is BATNA?

Sometimes, the worst scenario occurs: a negotiation breaks down and an agreement may fall apart between the parties involved. When all else fails, having a prepared BATNA is essential in keeping the negotiation from shutting down and a last resort at resolving conflict. If a salesperson is careful enough, they can still have control of the deal.

Definition of BATNA

You might be wondering, what is BATNA? BATNA is the acronym for Best Alternative to a Negotiated Agreement. According to the Business Dictionary, BATNA is defined as “a term used by negotiators to describe options available to their side if negotiations fail.” The entry continues and points out that, “negotiators who have a strong, well-defined BATNA have an advantage because they have a clear benchmark to which they can compare any negotiated settlement.”

 

Importance of BATNA in Negotiation

Before you even schedule a business meeting or agree to see your negotiating partner, you should have a BATNA in mind. Preparing a BATNA ahead of the meeting yields numerous rewards for you, such as:

  • Giving you an alternative when the negotiations fall through
  • Giving you negotiation power over your negotiation partner
  • Considering the lowest point that you are willing to offer

In contrast, by having a weak BATNA or no BATNA at all, your partner can take advantage of your flaws, it will reduce your bargaining options, and will leave you in agreement for something lower in value than what you expected.

 

Know Your Partner’s BATNA

As you develop your BATNA, it is just as important to learn as much of your partner’s BATNA as possible. For one, it will leave you less vulnerable in case your partner is just as savvy as you. Also, you need to figure out your partner’s business needs and position in order to meet them. If you can understand what your partner wants, you will come up with a deal that will benefit both parties involved.

In general, to create the ideal BATNA, assess your business needs and make of a list of everything you would do to meet a solution with the negotiating partner. Then, pick the lowest option that is only better than not working with the partner at all. The most balanced approach is to meet the Zone of Possible Agreement (ZOPA), which is the compromise range that lies between the highest amount a buyer will pay and the lowest a seller will go for before both parties walk away.

 

Approaching BATNA

Once you have your BATNA set, proceed with the negotiations. If you and your partner come to an agreement immediately, then the bargaining went well and there is no need to reach that next stage. If the conflict escalates to the point of ending the negotiation, then offer your BATNA. However, when you set up the BATNA, make the impression that you are ready to get up and leave if the other party doesn’t consider it. This action communicates to your partner that they are acting like an opponent, and that you are better off not doing any business with them. In addition, you can avoid the other party taking advantage of you and forcing you to settle for less, or no deal.

At the same time, ensure that both of you ultimately reach a mutually beneficial result. Every time you agree to a concession, ask one for yourself as well. Ultimately, negotiations are about maintaining a power balance between the involved parties when reaching an agreement. If you remain both insistent in your bargaining and fair when reaching out to the other negotiator, it will boost your reputation as a negotiator and potentially bring further business to you.

 

Examples of BATNA

Though BATNA is a last resort when it comes to negotiation, it manifests in plenty of scenarios where any amount of negotiation is present. The following are examples of how BATNA operates in different negotiation scenarios:

  • Customer needs. A customer needs a product that has no alternative, and his BATNA is to live with it, while the salesperson can offer the product for a discount, but nothing lower than that.
  • Customer preference. A salesperson can tell a customer prefers their products to the competition. The customer’s BATNA is choosing the competition, while the salesperson will hope to complete the deal with a discount.
  • Sales target. A customer notices that a salesperson has not hit a sales target. The salesperson’s BATNA is missing their sales quota. The customer is willing to persuade the salesperson for some discounts, so the salesperson can close the deal and meet the target.
  • The employer knows that the economy is in danger and jobs are hard to find. The employer has the negotiating power, since the candidates have no other options besides unemployment.
  • In the reverse of the employment scenario, an employee is talented and in high demand, while the employer needs the employee’s talent for their business and has much to lose if the negotiation fails. Therefore, the candidate can demand more, and the employer’s best interest is to accommodate.
  • A customer in the process of buying a product declares a specific brand superior to the others. His or her BATNA is to end up buying an inferior brand instead, which motivates them to buy. However, the customer may use bluffing to hide their interest and deal with the salesperson.
  • A product is in short supply because the industry cannot keep up with the high demand. The customers have the BATNA of not buying a product at all or to cut back, while the manufacturer is able to offer the highest price available.

 

Improve Your Negotiation Skills

Despite the importance of having a best alternative to your negotiating agreement ready for every negotiation, it is always best to avoid that situation in the first place. Shapiro Negotiations’ training course can prepare you to become a better negotiator. The course is available in different methods, from classroom and virtual training, to keynotes and consulting, and will bring you benefits such as developing better business partnerships and increasing confidence and results in negotiations. Contact us for more information and improve your negotiation skills today.

What Is ZOPA Negotiation?

A key element to mastering the art of negotiation is knowing the value of a deal and the limits of your interests. Going into an agreement, you should know how much you’re willing to sell a product for and the optimal terms that will benefit you or your company the most.

Negotiation science has developed several terms that define key concepts in determining the worth of the agreement and the ability of a negotiator to walk away from the table satisfied. One of these tools is known as the zone of possible agreement, or ZOPA. These negotiations are critical to the practice of negotiation, because they express the financial range in which the terms of an agreement can be reached.

 

The Definition of ZOPA Negotiation

ZOPA negotiation is concerned with the range in which deals can be made so both negotiating parties can leave the agreement satisfied. ZOPA is also referred to as the “bargaining range.”

For example, imagine you are selling your used car. You purchased your car for $25,000. You hope to sell your car for $18,000 but will go as low as $15,000. A buyer contacts you and explains that they have a budget of $17,000 to purchase a new car. The ZOPA would be between $15,000 and $17,000, as this range is above the seller’s lowest selling price and below the buyer’s highest purchasing price. Both parties will leave the deal satisfied if the car is sold within this range.

 

ZOPA Versus BATNA and Reservation Price

ZOPA can be easily confused with two other terms that describe the possible outcomes of a negotiation: BATNA and reservation price.

A reservation price is the lowest possible price a negotiator would feel comfortable selling goods and services for. It can also be the highest possible price a buyer would feel comfortable paying for a product or service. The reservation price is also known as the “walk away” point and is always expressed by a number. In the same example, if you are selling your car for $18,000 and you are willing to sell it for as low as $15,000, your reservation price would be $15,000. It is unlikely that you will sell your car to a buyer below that amount.

BATNA stands for the “best alternative to a negotiated agreement.” Unlike the reservation price, it is not expressed as a number but rather a scenario in which you settle for a “plan B.” Again, imagine that you are selling your car for $18,000, but will go as low as $15,000. Your younger sister has recently gotten her driver’s license and your parents are looking for a cheap used car to give her for her birthday.

Your parents tell you if you are unable to find a buyer, they could give you $10,000 for your car – lower than your reservation price and much lower than your selling price. If you are unable to find a buyer, your parents become your BATNA.

ZOPA is a different concept entirely. It explains the financial range at which an agreement can be met, and both parties can leave happy, neither a worst-case scenario nor absolute lowest selling point. ZOPA can work in tandem with these concepts, however. The reservation point can be the low or high end of the ZOPA range and can be used when determining if a BATNA is the best option to pursue.

 

Why Are ZOPA Negotiations Important?

ZOPA negotiations are not always as simple as the used car example. When entering a business negotiation, the reservation price of the opposite party is not always explicitly stated or shared beforehand.

A negotiator should always enter a deal knowing their own reservation price and the BATNA. That way, when a negotiator learns the reservation price of the opposite party, they can quickly calculate the ZOPA. From there, the negotiator can begin to sketch out the preliminary terms of the agreement and use collaborative techniques to close a deal.

However, it is possible that no ZOPA is present. For example, a negotiator can enter an agreement with a reservation price for selling their product is $15,000. During the negotiation, the negotiator can discover that the reservation price at which the opposite party would feel comfortable purchasing the product is only $10,000.

From there, the negotiator can try to negotiate with the opposite party to raise the price limit to $15,000. The opposite party will attempt to persuade the negotiator to drop the price to $10,000. Both parties are attempting to create a ZOPA, so they can reach a satisfactory negotiation.

ZOPA, BATNA, and reservation prices are all key concepts to mastering the art of negotiation. To hone these skills, a novice negotiator must familiarize him or herself with the terminology and best practices necessary to effectively close major deals.

 

To learn more about this practice, contact Shapiro Negotiations today to enroll in our negotiations training program.

What Are the 5 Negotiation Styles?

People have different communication styles. Individuals bring sets of experiences, skills, and tools that affect the way they interact with others, both at home and in the workplace. Individual communication styles also translate into how they negotiate. From these patterns of communication, five distinct negotiation styles have emerged: competing, collaborating, compromising, accommodating, and avoiding.

Negotiators often fall into one or more of these five styles whether they are trying to reach an agreement or resolve a conflict with multiple parties. Master negotiators know how to use their primary negotiation style to their advantage and when it’s beneficial to introduce the others. Read on to learn about the common characteristics of the five negotiation styles, their strengths, and their weaknesses.

 

Negotiation Style: Compete

A competitive negotiation style follows the model of “I win, you lose.” Competitive negotiators tend to do whatever it takes to reach their desired agreement – even when it comes at the expense of another person or entity. They are results-oriented and focused on achieving short-term goals quickly. Their desire for success motivates them, though the process of negotiation can blind them to potentially harmful impacts.

Competitive negotiators use all tools possible to boost their negotiation success, including:

  • Their position within a company structure
  • Their personality and humor
  • Aggression
  • Their economic prowess
  • Their company’s strength and size
  • Their brand’s visibility and influence

A competitive negotiation style is beneficial when you need to reach a short-term agreement quickly. If the terms of an agreement are critical and must be complied with, a competitive negotiator will be your secret weapon. If the second negotiator is also competitive, having another competitive negotiator on your team will be able to counter-balance their aggression.

Competitive negotiators work best in a highly competitive industry or for once-off sales, such as selling a home or a car. However, for negotiations with another highly competitive body, it is best to blend negotiation styles to avoid gridlock between two competitive negotiators.

These types of negotiators may focus more on winning than reaching a mutually beneficial agreement with the other party. Business relationships might break, and a company’s reputation may tarnish if a negotiation style is too competitive and crosses the line into bullying.

If you are a competitive negotiator, make sure to blend your style with a bit of accommodation or collaboration. Invite a partner to balance out your natural competitive streak. Business is as much about building strong relationships as it is about closing deals!

 

Negotiation Style: Collaborate

In contrast, a collaborative negotiation style follows the “I win, you win” model. Collaborative negotiators focus on making sure all parties have their needs met in an agreement. They value strengthening, establishing, and building relationships without compromising their company’s best interests.

Collaborative negotiators often evolve into this negotiation style from another. As time goes on and a negotiator gains confidence in reaching agreements, they become more comfortable advocating for their needs. They also become skilled in finding a mutually beneficial balance between their needs and the other party’s.

Individuals with a collaborative negotiation style are willing to invest time in finding innovative solutions and building business partnerships with other organizations. Other negotiation styles are often too impatient to invest this time, but collaborative negotiators are confident that they will benefit in the end.

A collaborative negotiation style is effective in most business negotiations. Collaborating with competitive negotiators is something to be wary of, however; since this negotiation style focuses on winning the most for their company, they might not be interested in developing a collaborative relationship. As a result, the more collaborative company can lose out – so be careful and always keep track of the agreement’s value.

 

Negotiation Style: Compromise

Many students of negotiation styles confuse the collaborative style with the compromising one. Unlike the “win-win” collaborative style, the compromising negotiation style follows a “I win/lose some, you win/lose some” model. When reaching the terms of the agreement, compromisers often relinquish some terms in favor of gaining others.

For example, if two governments are trying to reach a trade agreement, a compromiser might give the other government greater access to their country’s dairy market to gain protections for digital media trade. Simply put, a compromising negotiation style is a form of bargaining. Compromisers split the agreement’s value between the two parties versus finding a solution so that everyone benefits from an agreement’s full value. A competitive negotiator can easily take advantage of a compromising negotiator.

A compromising negotiation style is most useful in situations where the opposite party is trustworthy, and the agreement is under a tight deadline. However, compromising will cause your company to lose out on collaborative partnerships and innovative solutions.

 

Negotiation Style: Avoid

An avoiding negotiation style follows a “I lose, you lose” model. People who identify with the avoiding negotiation style highly dislike conflict and tend to talk in vague terms about the issue at hand rather than the issue itself. If an agreement is reached and an avoiding negotiator dislikes the outcome, they may try to take revenge on the opposite party before the party even knows that they were unhappy with the agreement.

Since avoiders dislike conflict and struggle with direct communication, they come off as passive-aggressive. This can cause rifts in interpersonal business relationships. Avoidance is a typical reaction when a negotiator is pitted against someone who is highly competitive. Avoiding negotiation styles work best in situations where the negotiation concerns a matter that is trivial to both parties. In conflict resolution, avoiding negotiators work best in situations where the investment of time to resolve the issue outweighs the outcome of the discussion.

 

Negotiation Style: Accommodate

An accommodating negotiating style follows the “I lose, you win” model – which does not seem to be in a negotiator’s best interest. Accommodating negotiators are the direct opposite of competitive negotiators. They focus on preserving relationships and building a friendly rapport by sacrificing some of their company’s interests in favor of the opposite party’s interests.

Accommodators tend to try to win people over by giving in to their requests. They tend to share more information than they should. They are often well-liked by their colleagues because of their kindness – but kindness doesn’t work in every negotiation situation. Accommodating negotiation styles work best in situations where your company has caused harm to another and needs to repair a significant relationship. These negotiators are skilled at peacemaking between different bodies.

However, don’t send a pure accommodator alone to a negotiation with a competitive body. They can easily be taken advantage of. An accommodating style can easily turn into a collaborative style with proper training and teamwork.

 

Which negotiation style describes your negotiation practices the best? Do you tend to compete, collaborate, compromise, accommodate, or avoid? Or do you practice a mixture of negotiation styles, expertly bringing in competition or accommodation to fit the environment? To learn more about how to use your negotiation style to your advantage, visit Shapiro Negotiations today to schedule a negotiation training session.

What Is Reservation Price in Negotiation?

The art of negotiation requires that people know the definitions of some confusing terms. Reservation price, BATNA, surplus, demand, ZOPA – these words can easily overwhelm a new negotiator.

However, once you know the simple definitions of these not-so-simple words, you will be able to use them with ease and authority and apply their concepts to negotiate successfully.

 

Reservation Price Definition and Examples

Reservation price is the least favorable price at which a negotiation will be accepted. This price is always a numeric amount. Simply put, the reservation price is the lowest amount that a seller will accept for an agreement and the maximum amount a buyer will pay. This is also known as the “walk away” point.

For example, imagine that you are selling the house you purchased 15 years ago at $500,000. Your house is worth $1.5 million, but with the current state of the housing market and the demand for purchasing a house, you would be okay with selling your home for $1 million.

You meet with a prospective buyer, and they tell you that the highest they are willing to pay would be $1 million. This would be your reservation price. From this point, you can decide whether to sell your home to this buyer or wait for a higher offer.

Many people confuse reservation price with BATNA. BATNA stands for “best alternative to a negotiated agreement” and, unlike reservation price, it expresses a scenario rather than a number. BATNA answers the following question: “What will you do if you are unable to reach a negotiated agreement with your partner?” While the reservation price is dependent upon reaching a negotiation, the BATNA is a back-up plan in case negotiation fails.

Using the previous example, imagine that you are still selling your home worth $1.5 million. Your reservation price is $1 million, as it will be the lowest price you would accept from a buyer. However, a close relative is moving to your city from out of state and is looking for a place to live. She offers you $900,000 for your home, a little more than half of its current worth but nearly twice what you paid for it.

If you are unable to reach a negotiated agreement with an outside buyer, your BATNA would be selling your home to your relative. Your reservation price will remain the same and while you would not be able to sell your home at the desired price, you will still make money off the negotiation.

Often, reservation price and BATNA do not yield such a wide profit margin. Imagine you are selling a guitar online. You purchased the guitar five years ago for $500, and it is still in good condition. You decide to list the guitar for $350 and decide that your reservation price is $200.

A buyer contacts you after six months of waiting for a response. He offers you $150 for your guitar, which is lower than you’ll go. You negotiate for $200, but he refuses. You decide to wait for another offer to come along but inform the buyer that if no one gets back to you, he can have the guitar for $150. This buyer would be your BATNA.

 

Why Is Reservation Price Important?

Simply put, reservation price is important because it allows a negotiator to define their baseline. For consumers and sellers alike, reservation prices help us make rational, informed decisions during negotiations, ensuring that no shady deals or lowballing takes place. Reservation prices protect everyone during negotiations and enable appropriate discourse.

 

To learn more about the art of negotiation, contact Shapiro Negotiations to schedule an expert training session today.

 

3 Keys to Effective Negotiation Skills Training

Negotiation is a critical business skill for all sectors of an organization, from sales representatives to high-level leadership. However, for an optimal learning experience, a negotiation course or program requires more than PowerPoint lectures and worksheets.

For a negotiations skills training course to be as effective as possible, students must obtain hands-on experience, learn tools that they can take with them and use later, and learn how to apply these tools to multiple scenarios. Using innovative learning strategies to administer a negotiation course can turn a class of untrained negotiators into masters of the art.

 

Negotiation Skills Training Programs Must Be Interactive

Using hands-on activities and roleplay scenarios are effective learning tools for multiple subjects, and they are especially effective for negotiation skills training.

When designing the training program, make sure to insert interactive activities to break up the monotonous instruction. Allowing participants to get their hands dirty will allow them to develop their own influencing styles and negotiation skills in a safe environment. This will also help participants practice the tools they are learning in the course, making them more likely to retain those tools for future use.

To administer a simple but effective scenario exercise, follow these three steps:

1. Make sure to make the scenario realistic. Participants want it to be in “their world” and will take it more seriously if that is the case.

2. Don’t overcomplicate the scenario with too many details. While participants want it to be real, too much information can be overwhelming and can have unintended consequences. Keep in mind that the more information the scenario has the more “outs” and “justifications” the participant’s have if it doesn’t go their way.

3. Have clear objectives in mind when creating scenarios. What specific negotiation aspects do you want it to test? Participants ability to ask questions? Conviction with which they deliver a first offer? Preparation process? Figure out what you want to address with the scenario and then build it.

 

Negotiation Skills Training Programs Must Supply Useful Tools

If students can use what they learn during the course in future situations, that is the sign of a successful training program. For this to occur, negotiation skills training programs can supply participants with tangible tools, such as training manuals or worksheets for future referral. Design the training program so that participants can easily answer the following question: “What will you do differently in your job as a result of this training?”

The goal of a negotiation skills training course is to ensure participants’ success in conflict. The program should be practical, and solutions should not be hard to find. Designing training materials that explicitly state the best practices for negotiations will be simple guides for participants to refer to in future situations.

 

Negotiation Skills Training Programs Must Be Customizable to Multiple Situations

Negotiation skills training programs must be relevant to the participants’ organizations or companies. Without this relevance, the facilitator will lose credibility. In addition, the participants will have to make their own connections to the material while learning new skills, which decreases their ability to retain information.

Implementing scenario exercises that are relevant to the participants’ industry is a correct approach to negotiation course design. If multiple industries are involved, design multiple scenarios. Using multiple examples throughout instruction will also allow connections to develop between practice and theory.

Negotiation skills training programs are tricky to administer effectively but following these easy steps will turn a program from mediocre to excellent. To learn more about negotiation skills training and to schedule an expert session for your organization, visit Shapiro Negotiations today.

When to Use Principled Negotiation

We understand that conducting contract negotiations can be overwhelming at times. Emotions can run high, and one party may feel as though their ideas are not being heard. Learning to approach talks in a more positive way, using principled negotiation, will help to avoid conflict. When you are at the negotiating table and you see there are options for you both to get what you want, it’s an idea time to use principled negotiation.

 

The Definition of Principled Negotiation

Principled negotiation is an approach that resolves disagreements between parties. It is also referred to as a “win-win” outcome. It focuses on bettering the interests of everyone and finding solutions that are mutually beneficial. Principled negotiation can help people achieve objectives and satisfy expectations by removing the “all-or-nothing” attitude. Consider these guidelines to ensure your negotiations go as smoothly as possible.

 

Separate Emotions from the Problem

Sometimes, emotions can cloud negotiations. If you feel as though you are at a disadvantage, you may react defensively. During any mediation, it’s important to maintain composure and not be influenced by fear or anger. Principled negotiation draws on principles instead of opinions. Seeing each other as partners will help keep the lines of communication open between parties.

 

What Is Most Important?

Instead of focusing on winning your position, start by discussing common interests you share and specific details of agreement during negotiations. From there, identify the interests of each party. You may discover that the underlying motivations of both parties are similar and will allow you to stay focused on the solutions instead of the problems.

 

Use Objective Criteria

If there is a strong conflict between the parties, using objective criteria may be useful. Objective criteria can include scientific evidence, legal rulings, industry standards, and cost estimates. For example, if purchasing property is under negotiation, presenting the market value of comparable properties in the area will validate the price. The goal is to establish a fair outcome.

 

Make Options Available

Think beyond having only one avenue for settling conflicts. Instead, generate diverse options to reach solutions. During brainstorming sessions, propose ideas that will offer mutual gain and refrain from judging. Consider ideas that are more important and more widely used. Begin with the most promising ideas and don’t get hung up on small discrepancies. Keeping an open mind to all ideas presented is key and prevents hindering the negotiations.

 

Avoid Pressure

Again, a win-win situation is the ideal for principled negotiations. Deny the temptation to pressure the other party to accept your terms. Pressure from either side is considered a power tactic. The great thing about principled negotiation is that it works even if you’re the only one practicing it. If the other party does not use principled negotiating, its tools still have power at the negotiating table. Instead of responding to attacks, redirect to solve the problem. Do not take it as a defeat if you need to walk away from a mediation.

However, no one should walk about from the negotiations feeling as though they had to make a sacrifice. Principled negotiations won’t work for every situation. Scenarios that may not be a good fit for principled negotiation are:

  • When one party is set on winning at the other party’s expense.
  • When negotiating for inexpensive, widely available products that do not have a significant role in business.

Keep in mind: with proper principled negotiation tactics in place, both parties can get what they want – a win-win and a desirable outcome for all.

What Is Distributive Negotiation?

In some cases, such as when there is a fixed amount of value on the table, distributive negotiation is the preferred method to reaching a desired outcome. While integrative negotiation typically involves several complex factors, distributive negotiation involves a process where the outcome revolves around one factor, such as price.

For example, you might use integrative or interest-based bargaining when negotiating several aspects of a job – salary, benefits, time off, or even start date. By contrast, distributive negotiation involves one fixed point, and the assumption that both parties want to divvy up the pie in the best manner possible. Distributive negotiation examples typically involve purchases, such as a used car (for a consumer) or a large order from a vendor.

Distributive negotiation tends to be simpler than the integrative approach, simply because of the lack of external factors involved. However, both benefit from a thoughtful and exhaustively prepared approach. The more you prepare for any negotiation, the more likely you are to come out with a desirable outcome. Using a variety of strategies can help ensure that you’re coming away with a fair piece of the pie. Here’s how to do it:

 

1. Come Up With a Compelling BATNA

At the heart of any negotiation should be an effective BATNA, or best alternative to a negotiated agreement. In other words, what will you do if you cannot reach your first desired outcome? Generally, parties entering a distributive arrangement have a desired end goal, such as a price they’re willing to pay, or accept as payment.

The best way to improve your BATNA for distributive negotiation is to create various alternatives through research. For example, if you’re in the process of ordering a large amount of supplies from a vendor, it can be helpful to pursue several negotiations from different vendors at once. This better positions you to negotiate and achieve the best price possible by maximizing available benefits and even bouncing the possible alternative across vendors.

 

2. Find Your “Reservation Point”

Another key aspect of distributive negotiation is determining when you will walk away from the negotiation. For distributive negotiating, this is usually a fixed price point. For example, you might decide ahead of time, based on conversations with stakeholders and management, that you’re willing to buy supplies for $5,000, but will walk away if the other party refuses to come to that level.

It’s essential to determine your reservation point well before entering any negotiation, whether it’s a price you’re willing to pay, or what you’re willing to sell a product or service for. If you don’t determine this point before the negotiations begin, you could end up in a low-ball situation.

 

3. Think About the Other Party Involved

The key to understanding and effectively navigating any negotiation is accepting that you are only one of two parties involved. You don’t want to go beyond your reservation point, but neither does the other party involved in the negotiation. Knowing the other party’s BATNA and reservation point can help streamline the negotiation and smooth any major differences in opinion. In some cases, it can even narrow your options and determine when a negotiation simply isn’t worth pursuing.

Better understanding the other party requires proper research. Using the same example of vendor supplies, you might research the availability of other services in the area and how willing (or desperate) the other party might be to make a deal. When you have an idea of how much flexibility the other party has on price, you’re better suited to aim as high (if you’re the one selling) or as low (if you’re the one buying) as possible.

The distributive approach to negotiation involves acknowledging the differences that are inherent to both parties and understanding the basic definitions of BATNA and reservation point. When negotiating, keep those elements in mind and use them as strategies to achieve the best possible price. Remember, distributive bargaining involves taking home the largest slice of pie possible, a process that can require practice and additional training.