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– Key Concepts for Effective Negotiations

Keys Concepts for Effective Negotiations

What is negotiation?

Negotiations occur in many different settings. We negotiate with family members, friends, and
business associates. Negotiations happen so frequently that we often don’t even realize that one is
occurring.

So what is negotiation exactly? At a very high level, negotiation is the process by which we exchange
things we want for things we have. A more specific definition of negotiation is that it is the process of
bringing two (or more) parties together who have different interests, and enabling the people involved
to reach an acceptable agreement.

Fundamental negotiation concerns

As we engage in negotiations, there are four fundamental concerns that we should be aware of:

• Being clear about goals

• Being cognizant of emotional goals

• Specifying desired outcomes that are consistent with goals

• Paying attention to the importance of the relationship with the other party

Interests vs. positions

Interests represent the underlying reasons why people get involved in a negotiation. The position of
each party can be thought of as the “what” of the negotiation. The interests, however, are the “why” of
the negotiation. In general, interests are usually less tangible than positions. Typically they are not
revealed during a negotiation.

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MindEdge, Inc. – Key Concepts for Effective Negotiations

Negotiating Strategies

There are five different strategies which may be used during a negotiation:

- Accommodating. This strategy may also be referred to as “lose to win.” In this

instance, one party values the relationship to such an extent that they will deliberately “lose” in
order to preserve the relationship.

- Collaborating. This strategy may also be called “win-win.” In this case, the parties
involved in the negotiation have dual goals – they want to preserve the relationship and they
want to maximize the outcome. The result of a collaborative strategy is typically an outcome
that meets the needs of all parties.

- Avoiding. This strategy may also be referred to as “lose-lose.” Since neither the
relationship nor the outcome are important, one or both parties may stop active negotiation or
avoid negotiation entirely.

- Competing. This strategy may also be called “win-lose.” Parties will use this approach
if they want to win at all costs and have no concern for the relationship whatsoever.

- Compromising. A compromising strategy is one where each party sacrifices something

to find common ground. It may be used in a variety of situations. A compromising strategy
may be used if the parties in the negotiation cannot reach true collaboration, but still want to
make progress towards reaching an outcome or maintaining the relationship. It may also be
used if there are tight timelines for the negotiation and an outcome must be reached quickly.

Principled Negotiation

Principled negotiation is a concept that is based on the book Getting to Yes by Roger Fisher and
William Ury. This approach to negotiation focuses on the interests of the parties and emphasizes
conflict management and conflict resolution. Because the goal of principled negotiation is to find a
mutually shared outcome, it is sometimes referred to as “win-win.”

There are four central tenets to principled negotiation:

• Separate people from the problem

• Focus on interests, not positions

• Generate options for mutual gain

• Insist that the outcome is based on objective criteria

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Distributive Negotiation

Distributive negotiation is used when two (or more) parties are trying to claim the maximum amount
of profit for oneself. The focus is on individual gain – the parties will divide a fixed pie and focus on
getting as much as possible for themselves. This is different from situations where the parties try to
make the entire pie bigger, so there is enough profit and value to satisfy everyone. In a distributive
negotiation, one person will inevitably lose something and the other will gain as a result.

Integrative Negotiation

Integrative negotiation emphasizes the development of mutually beneficial agreements based on the
interests of the parties. Integrative negotiation may be referred to as interest-based bargaining or win-
win bargaining. Certain conditions make integrative negotiation more likely to occur and to succeed.
The involved parties must be motivated by joint gain. Integrative negotiation is very much a
collaborative process, rather than a competitive one. In addition, the interests of the parties must be
congruent, instead of in opposition. A final, key element is the presence of multiple issues.

Mixed Motive Negotiation

Mixed motive negotiation is a strategy whereby as much additional value is created as possible
(“expanding the pie”), in order to meet the needs of all or most parties. After this has been done, then
each party claims an appropriate share. Mixed motive negotiation includes both integrative elements
(expanding the pie) and distributive elements (dividing the pie). There is no one way to conduct mixed
motive negotiations. The parties may blend tactics from the integrative and distributive negotiation, or
they may switch from one strategy to the other.

What is BATNA?

BATNA stands for “best alternative to negotiated agreement.” This term was introduced by Roger
Fisher, William Ury, and Bruce Patton in the book, Getting to Yes. When a person goes into a
negotiation knowing what their BATNA is, it defines the limits for the negotiation.

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MindEdge, Inc. – Key Concepts for Effective Negotiations

One of the determinants of your power in a negotiation is the attractiveness of your BATNA as
compared to the proposals made during the discussions.

- The more attractive your BATNA is, compared with the proposals you receive, the
more power you have in the negotiation.

- The less attractive your BATNA is compared with the proposals, the less power you
have in the negotiation.

Since there is a direct relationship between negotiating power and a good BATNA, it is important to
improve your BATNA whenever possible.

Reservation Prices

In a negotiation, each party has their own unique reservation price. From the buyer’s perspective, the
reservation price represents the maximum that they would be prepared to pay. In contrast, the seller’s
reservation price is the minimum they would be prepared to accept. The reservation price may also be
referred to as the “walk away point.”

What is ZOPA?

ZOPA stands for “Zone of Possible Agreement.” The ZOPA is the range that all parties find
acceptable. If there is overlap between the acceptable range for the buyer and the seller, this is where
we find the ZOPA for a negotiation.

Researching the Other Party Before a Negotiation

There are six areas that you will want to understand about the other party in a negotiation. These
include:

• Objectives

• Interests and needs

• Alternatives

• Reputation, negotiation style and behavior

• Authority to make an agreement

• Likely strategy and tactics

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Using and Obtaining Negotiating Power

The issue of power is always present in every negotiation. Those in a position of power may exert their
influence in different ways such as being directive, making threats, or reframing the discussion to
focus instead on interests and rights.

Parties who seek power in a negotiation can use a variety of approaches:

• Offer a reasonable and fair position

• Seek additional information
• Ally with a powerful person
• Use time as a negotiating tool

Recognizing Negotiation Challenges

In negotiation situations, there are likely to be challenges. In some cases, the discussions may reach an
impasse. It is useful to recognize challenges early on and take proactive steps to remedy them.
Examples of potential roadblocks include:

- Nickel and diming

- Invisible partners

- Hidden agendas

- Constant changing of position

- Double messages

- Parties who play good cop/bad cop

- Splitting the difference

- Missing information

- The other party walks away

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