Whether you recognize it or not, you conduct negotiations every day. Despite how fundamental negotiation is to achieving our goals, the ability to negotiate successfully is not innate. Becoming a master negotiator involves understanding the primary approaches to negotiation, uncovering the psychological basis behind successful negotiations, and developing an effective negotiation style. These skills become even more important when encountering other experienced negotiators. Read on to learn more about the rules of negotiation, then contact Shapiro Negotiations to schedule negotiation training for your employees to prepare your business for the future.
The Four Approaches to Negotiation
When entering into a negotiation, you have four primary approaches available, each of which significantly influences the outcome of the negotiation:
1. Win-Lose or Distributive Negotiation
Also referred to as the competitive, claiming value, or zero-sum approach, this technique revolves around the assumption that it is only possible for one party to win at the expense of the other party. In this approach, the negotiation concerns resources that only exist in a fixed amount, meaning as one party gains these resources, there are fewer of them available to the other party. The primary concern of both parties is to maximize their own interests by maintaining an advantage over the other party, so their interests are considered to be in opposition to one another.
The goals of a win-lose approach are to influence the other party to become less confident in their ability to reach their goals and to promote your objectives as desirable, righteous, imperative, or inevitable. Concealing or forcing information, misleading the other party, and engaging in other manipulative tactics are common in this approach, all of which violate the rules of negotiation and can result in detrimental consequences. To conclude this negotiation, both parties must believe the achieved outcome was the best possible and worthy of acceptance.
2. Lose-Lose
The last avenue that should be taken in any negotiation, this approach is implemented if one party feels their interests are at risk and wants to do anything possible to make sure the negotiation outcome is equally unsuitable to the other party. A situation like this arises when each of the parties ignores the rules of negotiations, believing the desire for an equal level of loss to be more important than agreeing on an acceptable solution. Negotiations that adopt a lose-lose approach are least likely to conclude with a desirable outcome, and both parties ultimately end up losing.
3. Compromise
To avoid a lose-lose outcome, negotiating parties can agree to a compromise. This approach involves both parties conceding part of their original terms to settle for a less beneficial solution. Similar to the lose-lose approach, the resources in dispute are limited and both parties have demonstrated they are unable to convince the other to meet their demands. While offering a better outcome compared to the lose-lose approach, neither party achieves all of their goals.
4. Win-Win or Integrative Negotiation
Also referred to as the collaborative approach, this negotiation technique is superior to the others in every respect. Both parties begin the negotiation with an adequate amount of resources that may be divided in a way that allows both parties to win. Their primary concern is to maximize the outcome for both of them, so they carefully follow the rules of negotiation and employ strategies such as sharing information, solving problems together, and other forms of cooperative behavior. Collaborative negotiators achieve better, more reliable results than competitive negotiators, with both parties feeling confident that they achieved their goals and are satisfied with the outcome.
Sometimes the win-win approach is termed “creating value” because the outcome leaves both parties with the assurance that they gained greater value than they possessed before the negotiation. By following the rules of negotiation, both parties gain their desired resources without fear of aggression or malice. This approach not only resolves the current negotiation but also builds mutual respect and trust that creates a foundation for the growth of a long-term business relationship.
The Psychology Behind Successful Negotiation – Principles of Persuasion
For decades, researchers in a wide range of academic disciplines have studied the factors that drive us to agree to the requests of others. Common sense suggests that when someone must make an important choice, they carefully consider all available information to create an informed decision. However, research conducted by social psychologist Robert Cialdini indicates that our decision-making is guided not by logical examination of the facts but certain universal shortcuts our brain takes to make quick decisions in the face of overwhelming information.
Understanding these shortcuts and properly implementing them along with following the rules of negotiation greatly increases your chances of successfully persuading a negotiating partner to agree with your request. This leads to a better outcome for your business and can encourage useful negotiations in the future. Throughout his experiments, Cialdini found six main principles of persuasion that guide decision-making:
1. Reciprocity – When someone receives a gift or service from another person, they feel obligated and motivated to give something back of equal or greater value. Similar to other social contexts, negotiations benefit from reciprocity because a negotiating partner is more likely to say yes to terms put forth by the other person when they feel indebted to them in some way. Utilize the principle of reciprocity by being the party that gives the initial gift and making sure this gift is unexpected, personalized, and valuable.
2. Scarcity –People tend to want more from resources when they are limited. Effective negotiation requires you to not only inform the other party of the benefits they enjoy if they select your product but also demonstrate the value of the product and its limited availability. You must explain why your proposal is unique and convince the other party of what they may lose by neglecting to consider this proposal.
3. Authority – In any type of negotiation, people will follow knowledgeable, credible experts they can trust for honest information. It is vital to signal your authority to the other party before you attempt to influence their decision. Convincing potential clients cannot be done by simply telling them how beneficial your proposal is but must involve support from outside sources the other party finds reliable. When meeting new clients, ask someone to make the initial introduction who can be trusted to offer persuasive information about your proposal’s value.
4. Consistency – Even if their previous decisions resulted in a less than desirable outcome, people tend to act consistently with past statements they shared and actions they performed. Research from several studies supports the conclusion that when a person agrees to a small commitment, this leads to a higher likelihood of agreement when approached with a larger commitment consistent with the initial one. Take advantage of this information in your negotiations by requesting small initial commitments made easily by the other party without much hassle.
5. Liking – Simply put, the principle of liking states that people prefer to accept the requests of others they like. The science of persuasion indicates that we like people for one of three reasons: they are similar to us, they pay us compliments, or they cooperate with us in the pursuit of common goals. But how does this translate to negotiation? Research shows that likability is one of the most important factors in reaching a beneficial outcome during negotiations, so take time to discover areas of similarity with your negotiating partner before you start proposing any terms.
6. Consensus – When people are uncertain about how to behave, they analyze others’ behavior to make decisions. While negotiating, you should not rely solely on your ability to influence others directly but also call attention to what other people are doing in the same situation, especially when these people are similar to them.
The Psychology Behind Successful Negotiation – Emotional Intelligence
Key to any successful negotiation is emotional intelligence, or the ability to recognize and manage your own emotions, as well as the emotions of the people around you. Popularized by psychologist Daniel Goleman, emotional intelligence includes four key elements: self-awareness, self-management, social awareness, and relationship management. To become an emotionally intelligent negotiator, you must spend time honing all of these valuable skills.
Self-awareness is the ability to understand one’s emotions, identify how they affect others, and determine their role in making decisions. Self-awareness provides the framework for self-management, or the capacity to control one’s emotions and adapt behavior to suit changing circumstances. Social awareness consists of the ability to perceive, interpret and react to the emotions of others. Relationship management concerns affecting others by inspiring them, influencing them, and aiding in their development.
The Most Important Rules in a Win-Win Negotiation:
1. Do your homework. Before you begin a negotiation, prepare by completing thorough research on the other party so you can determine a way to proceed that carries the highest possibility of success.
2. Set clear objectives. Prioritize your interests, consider the goals you hope to achieve in the negotiation, and design a plan that will create value benefiting both parties.
3. Work toward a win-win resolution from the beginning. This is the most imperative rule of negotiation as a win-win outcome offers the most favorable results for both parties.
4. Nurture honest, respectful lines of communication. This includes providing necessary information, asking the right questions, and engaging in active listening. The other party should feel that you understand their perspective and their priorities and are willing to work with them to resolve any issues.
5. Be empathetic. Empathy is a component of social awareness that is critical to handling any successful negotiation.
Contact Shapiro Negotiations to Improve Your Business
If you are interested in learning more about how our negotiation training can assist your team, contact our team of expert negotiators today. You can call (410) 662-4764, send an email to sni@shapironegotiations.com, or submit the form on our website.
