When it comes to negotiation, there are a lot of possible outcomes. In fact, there are often outcomes that you hadn’t even considered, or weren’t on your list of possibilities. Though it’s always good to be prepared, it’s impossible to be ready for every single scenario. Instead, it’s best to develop a list of acceptable outcomes that you or your client are willing to agree to.
Bargaining zone negotiations make this possible. With this idea, you can come to an agreement that suits everyone involved, while avoiding lengthy negotiations and tiresome debate. When you have a bargaining zone negotiation, it’s possible to reach a solution that makes everyone happy and maintains your sanity as well.
Bargaining Zone Negotiations: The Basics
Understanding the basics of a bargaining zone can help you to achieve higher success rates with your tactics of choice. No matter what method of negotiation or argument you use, it’s important to know your bargaining zone first.
The bargaining zone, otherwise known as the zone of possible agreement, is a realm of acceptable outcomes. These outcomes are potentially effective for both sides of the negotiation, and therefore have a higher chance of being selected. Think of your negotiation as a Venn Diagram. Your argument is one circle, your opponent’s argument is the other circle, and the bargaining zone is where the two overlap.
Essentially, this area encompasses possible compromises that you may strike during your negotiations.
Aiming for Bargaining Zones
When you are negotiating, it’s naive to think that the other side will cede to your argument and you will “win” outright. This simply isn’t the way most things go in adult life, and it is unlikely that a true negotiation will end like this. Instead, negotiations aim to find some middle ground that works for all involved. By doing this, you can come to a conclusion that works for everyone, rather than fruitlessly arguing for your own best-case scenario. Though sometimes you can achieve everything you want, more often than not, you will need to aim for the zone of possible agreement.
When you aim for the bargaining zone, you open yourself up to a successful negotiation. When you dig your heels in and refuse to budge on your perspective, it can be difficult to come to any conclusion at all. If the argument goes nowhere, the negotiation has failed.
Defining the Bargaining Zone
Perhaps the most important part of the bargaining zone is determining what it is. You must speak with your team or your client before the negotiations to decide what an acceptable bargaining zone might be. After all, you’ll likely be giving something up to achieve a successful bargaining zone negotiation. You must decide what’s acceptable to give up, and what must remain on the table.
For example, if you are negotiating a merger and know that you can only have 10 total employees when the merger is over, you may ideally want to keep 10 of your own employees. At the same time, the merging company will want to keep 10 of its employees.
Before you enter negotiations, discuss with your fellow leaders how few employees you’d be willing to keep while still accepting the merger. You may decide that you would accept the merger if 5-10 of your own employees remain on the team. Any fewer than 5 would not be to your benefit, and therefore outside of what you are willing to agree to. However, you know that your opponent won’t agree if more than 8 of your employees are chosen. Taking both your boundaries and your opponent’s boundaries into account, 5-8 employees would be your bargaining zone.
Positive Bargaining Zone
The above example is a fairly straightforward example of a positive bargaining zone. This is because both sides’ acceptable compromises overlap with one another. This is a good scenario, as negotiations are often successful when there’s a positive bargaining zone. In these scenarios, both sides can get something that they want.
For example, let’s say you are buying a new couch and are willing to pay $800-$1,200 for it. Your neighbor is selling their couch, and they are willing to accept between $1,000 and $1,400 for it. Therefore, you have a positive bargaining zone of $1,000-$1,200, because you both are willing to pay/accept payment within that range. Both sides can get what they want.
Negative Bargaining Zone
Unfortunately, not all negotiations have positive bargaining qualities. In some scenarios, what either party is willing to accept does not overlap. These are called negative bargaining scenarios. Using the above couch example, let’s say that your budget remains between $800 and $1,200, but your neighbor won’t accept less than $1,300 for the couch. In this situation, neither person can get what they want under their current terms.
Handling a Negative Bargaining Zone
When the bargaining zones overlap, your negotiation is in jeopardy. You’ve already determined the terms that you would agree to, but if the other side’s acceptable terms do not match, then it’s difficult to move forward. If you’ve tried to negotiate within your bargaining zone and are unable to do so, you need to move to an alternate plan.
You and your team or client should determine what you’re willing to do if a negative bargaining zone occurs, and you can’t move past it. Determine what is the absolute last situation you would accept, even outside of your bargaining zone. Use this only as a last resort — it’s called a best alternative to a negotiated agreement, or BATNA.
It’s important to remember that you can walk away from negotiations too. If your opponents won’t compromise, or if your bargaining zones are too different, the negotiation may simply be lost. Success in negotiation is not just about negotiation skills. Even the most talented negotiators have to walk away from deals if the details simply don’t line up.
A Changing Bargaining Zone
As mentioned, it’s extremely important to determine your bargaining zone before you begin your negotiations. Communication on this topic is key in order to make favorable progress and reach a deal. However, it’s also important to remember that the bargaining zone can change as negotiations progress. It’s possible for your opponent to offer something you hadn’t imagined or have terms that you didn’t foresee. This is why we mentioned that you can’t prepare for every scenario. If your opponent brings something to the table that changes your bargaining zone, that’s okay.
For example, let’s say you are getting ready to accept a job. Your range of appropriate salaries is above $55,000. However, the company offers you $50,000 and better health benefits than you’d been expecting. This new information may make a slightly lower salary worth it for you. If that happens, you may be willing to negotiate outside of your original bargaining zone.
Ultimately, it’s important to begin with boundaries, but accept that they may change. Be clear with your team about what you will accept right away, what terms could change the zone of agreement, and what other factors may be compelling.
Don’t Be Combative
Negotiations, especially when they involve bargaining zones or compromises, can create a defensive attitude. It’s easy to enter these arguments ready to launch into a prepared argument or prepared topic. If you can, you should avoid doing this. Being combative or defensive only hurts your negotiation and minimizes any bargaining zone you may have. If you are aggressive, your opponent will likely reel in their compromises, leaving you with less beneficial outcomes.
Try to enter negotiations slowly. Be conversational and try to get as much information as possible without showing your hand. Make small talk about business and begin by asking what their goals are for the negotiation. Truly listening to your opponent often works in your favor.
Look at the Whole Picture
When you develop a bargaining zone, it’s easy to become hyper-focused on your own terms. Though this is natural, it’s important to remember that there is a bigger picture at hand in your negotiations. Looking at the situation holistically may bring to light benefits that you hadn’t considered, and that would change your zone of possible outcomes. Try to step back and look at the entire situation before you make any decisions. This can help to preserve the negotiation and make you feel better about any boundaries that may have shifted during the process.
Our team is here to help you hone your persuasion and negotiation skills to improve your deals and business output. No matter what your industry may be, we can help you to approach negotiations with confidence and ease.
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