What's Negotiation? The Ultimate Guide
When talking about negotiation, people often associate it with business or commercial negotiations immediately. This is not wrong, yet most negotiations actually occur in our daily lives, not in business settings. Underestimating the importance of negotiation can actually be a hindrance in our daily lives, and in the worst cases, cause depression. What do I mean by this?
Well, by definition, negotiation is a process whereby two or more parties seek to reach an agreement on the terms of a mutually beneficial exchange. The process of negotiation can be used in a wide variety of situations, from business deals to peace treaties. Negotiation can also be as simple as negotiating which restaurant to go to with your friend, or what time shall you meet up with your sister.
Shaking hands after a successful negotiation
Not knowing how to negotiate will often lead to subpar quality of life, where one consistently fails to achieve one's own desires. It is human nature to be caring and thoughtful, not wanting to hurt others by overly insisting on one's own desires, yet it is also extremely unhealthy to never object or disagree with anything with anybody.
Negotiation is simply a way of communication to resolve any differences civilly in most cases. It is important that people learn how to say "no" in a polite matter and more vitally, understand that saying "no" is sometimes necessary for the benefit of all parties involved.
In order to be successful in negotiations, or in other words, being able to achieve what you want whilst leaving all parties involved satisfied, can take years and years of negotiation practice and refinement. Successful negotiators have a common ability - the ability to identify the interests of all parties involved, find common ground, and develop creative solutions that meet the needs of all parties. The process of negotiation can be complex, but understanding the basics is essential to getting the best possible outcome.
This guide will teach you everything you need to know about negotiation, from the basics of the process to the skills you need to be a successful negotiator.
So let's dive deeper - what are the basics of negotiation?
These elements include:
The art of persuasion: A good negotiator must be able to persuade others to see their point of view and accept their proposals. This requires a deep understanding of human psychology and an ability to appeal to the interests of those you are negotiating with.
a) Reciprocity - This refers to offering help voluntarily to others without expecting anything in return. It is human tendency to then return a favour, which could leave you better off. Negotiators often employ this tactic by voluntarily offering small concessions in return for larger concessions.
b) Commitment/Consistency - To influence others, you must show commitment in your offer by appearing to be consistent. Inconsistency leads to doubts, which is the worst thing you can do in negotiations. This is why I often stress the need to convey a clear, coherent and consistent story behind the reason for a demand made in negotiations. To influence your negotiation opponent, you must show confidence in what you are asking for and why.
c) Social Proof - This is related to leverage in negotiations, or in other words, what power you have over your negotiation opponents. Social proof is a great tool for enhancing leverage, since people are more easily persuaded when others around them are acting in similar manners. For example, businesses often mention how other users perceive their products positively in a bid to influence you into making a purchase. Social proof elicits FOMO - the fear of missing out, enhancing your position in a negotiation to dictate proceedings when leveraged appropriately.
d) Authority - Humans often defer to those with authority, such as doctors, officials and experts in certain fields. To influence others, you should try and create social proof by linking your messaging or offer to authorities in your field.
e) Liking - We are often more persuadable by people we like. To make your negotiation opponent like you, try and come across as more empathetic and understanding with problems they face. When they reject your offer, instead of being defensive immediately, try asking more questions to understand more about what they are thinking, and most importantly, acknowledge their concerns. Negotiations are not all about threats and aggression as some people might incorrectly associate with.
f) Scarcity - The fewer something is, the more likely humans want it. This is just human nature. In your future negotiations, try creating a proposition that elicits feelings of scarcity from your opponent. For instance, a technology startup when pitching to venture capitalists could say that they have mastered a technology that few others have, whilst showing social proof of the success of their product.
2. Ability to think on your feet:
A good negotiator must be able to adapt their approach on the fly and come up with solutions to problems that have not been anticipated. This requires a great deal of creativity and quick thinking.
In the business world, negotiation skills are essential. For instance, experienced negotiators are often able to secure more favourable terms for their employers, whether in the form of lower prices from suppliers or more favourable contract terms. In some cases, they may even be able to help their employers avoid legal disputes.
It is very hard to teach somebody how to think on their feet. This can only come through years of practice and deep knowledge about human psychology.
3. The ability to compromise:
In any negotiation, both sides will have to make concessions to reach an agreement. A good negotiator must be willing to give up some of their own demands in order to achieve a greater goal. The key here is learning when stand your ground, and learning when to compromise in return for something more valuable. Great negotiators will always know how to make less compromises compared to their opponents.
4. The art of communication:
Similar to the art of persuasion, a good negotiator must be able to clearly communicate their proposals and explain their reasoning behind them, so as to persuade others involved in negotiations. They must also be able to listen carefully to the concerns of the other side and take them into account when making decisions.
As humans, we tend to like people who are more coherent and good at saying more with fewer words. We dislike, or even disdain those who always go around in circles without being able to convey the main points. To get your negotiation opponents to like you more, try learning the art of summarization - summarizing complex ideas and presenting these with a few short sentences. This may sound easy but is actually very difficult to master. There is no such thing as "the best communicator" in the world - always invest your time in further equipping your communication skills to get what you want in negotiations.
5. The ability to stay calm under pressure:
A good negotiator must be able to keep their cool in difficult situations and maintain a professional attitude at all times. This can be a challenge when the other side is being difficult or when the stakes are high.
This is a skill that can be learned with years of negotiation experience. Good negotiators realize that there is nearly always a third option other than a "yes" or a "no", which is to "let me think about it", or even a fourth option which is giving a "yes" or "no" but under certain conditions.
Sun Tzu, the famed war strategist, says that "appear weak when strong, and appear strong when weak". Strong negotiators understand that aggressive opponents may be concealing their weakness, and can calmly dismantle their proposition by taking a step back and refusing to commit to a simple "yes" or "no" in response to aggressive demands.
Understanding the differences between a negotiation and mediation
While a negotiation and mediation both involve coming to an agreement, there are some key differences between the two:
-In a negotiation, the parties involved negotiate directly with each other to come to an agreement. In mediation, the parties work with a mediator who helps facilitate communication and guide the conversation in order to help the parties come to an agreement.
-A negotiation is typically more adversarial in nature than mediation, as each party is trying to get the best possible outcome for themselves. In mediation, the goal is for both parties to come to a mutually beneficial agreement.
-If the parties are unable to come to an agreement through negotiation, they may go to mediation as a last resort. If mediation is unsuccessful, the parties may then go to arbitration or litigation.
Here are 5 more negotiation tips that will help you get the best deal out of any scenario:
1. Do your homework and know what you want
Before you even start negotiating, it’s important that you do your research and know exactly what it is that you want. Once you have a clear idea of your goals, you’ll be in a much better position to negotiate effectively.
The worst thing one can do is come unprepared for negotiations. Far too many people overestimate their ability to "wing it" in negotiations. A strong negotiator can always sense a weak negotiator who has come unprepared and will be ready to take advantage of it.
2. Start high and be prepared to compromise
It’s important to remember that you won’t always get what you want in a negotiation. With that in mind, it’s often best to start high and be prepared to compromise. This way, even if you don’t get exactly what you want, you’ll still end up with a result that is acceptable to you.
I always recommend clients to aggressively "anchor" in negotiations, meaning taking the initiative to put out an aggressive, first offer. This is due to the psychology of "anchoring", where humans tend to take reference from the first reference point giving. This implies that negotiation proceedings will often be consciously or consciously "controlled" by the initial aggressive anchor, leading to more favourable outcomes for the initial aggressor. However, being overly aggressive can have detrimental effects in a negotiation, such as destroying the trust other parties may have had towards you, which brings back to the importance of research and preparation ahead of negotiations.
3. Listen more than you speak
One of the most important aspects of effective negotiation is listening. It’s often said that we have two ears and one mouth for a reason – so make sure you use them in that proportion! Listening carefully to what the other side has to say will give you a much better understanding of their position and what they are looking for in the negotiation.
Always be aware that you may be overspeaking. When this happens, try slowing down the speed in which you talk.
4. Use “I” statements and passive voice
In any negotiation, it’s important to avoid coming across as confrontational or aggressive. One way to do this is by using “I” statements rather than “you” statements, whilst using passive voice. For example, instead of saying , “You think I don’t understand what it’s like to be a first-time parent. But I should Have a seat at the table in these meetings,” you can say, “I feel like my voice has been overlooked when it comes to nailing down meeting plans, and maybe that’s because I’m new. Can we talk about this together?"
5. Be willing to walk away from the deal
A big part of a successful negotiation is being willing to walk away from the deal if you can’t reach an agreement that works for both parties. If the other party knows that you’re not afraid to walk away, they’ll most likely be more open to negotiating with you.
In fact, avoid going into negotiations if you feel like you don't have the option of walking away, since this could lead to desperation. Desperation is the worst enemy to securing a favourable deal, not to mention that experienced negotiators can sense desperation and take advantage of it.
Hope you will find this comprehensive negotiation guide useful! If you wish for more similar content, simply comment on this blog post and we will respond to your requests!
