Negotiation Skills

Last Sunday, I attended a workshop organised by the DSSC called "Advanced Negotiation Skills". Here, I will share some of the things I learned from there.

First of all, negotiation is defined as a process by which two parties communicate with each other in order to reach an outcome on which they mutually benefit.

There are 4 basic types of negotiation styles, and everybody has their own preferred style. However, not all negotiation styles are suitable in every situations. A person trying to negotiate should try the different styles based on the situation.

The first style is the Win-Lose style. (You win, the other party lose.) This style is best used when you need a quick decision and are in a strong bargaining position. If you are using this style to negotiate, you should make sure that winning is your goal and building relationships with the other party is not important.

The second negotiation style is the Lose-Win style. (You lose, the other party win.) This style should only be used when you are desperate to get a certain thing from the other party. You will need to concede to the other party's demands in order for this style to work.

The third style is the Win-Win style. (Both parties win.) This is the best style to use in most situations. This negotiation style emphasises mutual gain. You should make sure that all information presented is accurate and try your best to engage with the other party in a non-confrontational way.

The fourth and last style is the Lose-Lose style. (Both parties lose.) This style is best avoided unless you are dealing with very minor issues that do not require much negotiation. You could also use this style of negotiation when you are lacking of time.

There are six sources of negotiation power. They are:

Position: The higher your position, the more power you have over any negotiation. This is why people complain to the restaurant manager rather than the waiter.

Relationship: The more connected you are, the stronger your negotiation powers. Dealing with somebody you are familiar with allows you to be more forceful. Alternatively, you can get favourable deals from somebody you know well.

Options: The more options you have, the more powerful you will be in any negotiation. This is because you have more options available to you, and you do not necessarily have to make concessions to the other party.

Specialised skills & knowledge: The more skills you possess, the better your negotiating position. This is especially true if you are one of the few who possess that knowledge.

Information: The more informed you are, the better you will be able to make decisions when negotiating. Obviously, it is always good to have as much information about the deal as possible.

Time: Time can work both ways. If you are short of time, you can pressure the other party into agreeing with your proposals. If you spend  a long time trying to deal with the other party, eventually they will concede to your requests.

There are 5 steps in the negotiation process.

Step 1 is defining your goal. You must know about both parties' wants and needs. You must have a plan for a settlement range. You must also list all concessions you are willing to make. There are generally four types of concessions.

Finance: You make concessions in terms of price, discounts, and rates.
People: You make concessions in terms of manpower given/loaned.
Recognition & reward: You give the other party some form of prize, acknowledgement or favoured position.
Mitigation of risks: You make sure the other party is insured against loss. (Warranties, indemnifications of loss or guarantees).

Step 2 is using your interpersonal skills. You should exchange pleasantries and make compliments whenever suitable. Always be polite.

Step 3 is listening to the other party. You should explore your options after listening to the other party's wants and needs. You should try to match concessions to needs.

Step 4 is making concessions. You must be willing to make small concessions. Always avoid making the first major concession, always offer concessions in reverse order of priority, and behave as if every concession you make is important.

Step 5 is reaching a compromise. Always make sure to summarise your agreements and make formal documentations to ensure accountability. Explore the pitfalls of implementing the agreements with your superiors before putting pen to paper.

If you ever run into deadlocks during negotiations, don't panic. Remain calm and step back from the heat of the talks and try to understand what led to this deadlock. Try suggesting to the other party that you both take a break. As a last resort, you may choose to change the members of the negotiation team.

Lastly, there are some gambits (cheats) you can use when negotiating.

1. Ask for more than you expect to get. This gives you more room for negotiation.

2. Never say "yes" to the first offer. After all, the whole point of negotiating is to get a favourable outcome for both parties.

3. Flinch at proposals. Try to show that you are shocked at what the other party is offering you. This will signal to the other party that they may not get what they are asking for.

4. Play the reluctant buyer/seller roles. This can help a lot in squeezing the other party's negotiating range before the negotiation has even started.

5. Use the "vise" technique. In other words, say things like "you'll have to do better than that".

6. Refer to higher authority. This will allow you to pretend that you are not the one rejecting the other party's offers, but your boss.

I'll end this post with a quote from John F. Kennedy: "Never negotiate out of fear. but never fear to negotiate."