Becoming a winning Negotiator.

 Becoming a  winning Negotiator.

Master negotiators have superior negotiating capabilities in three major areas: the ability to understand and analyze issues (cognitive skills); the ability to manage emotions, especially negative owes (emotional skills), and the ability to connect with others by developing relationships and trust (social skills). These are the areas that you need to work on. If you are to have your negotiating skills and work towards becoming a master negotiators

Using masterful due diligence; master negotiators understand the dangers to being poorly prepared and invest ample resources in planning and gathering information.

Thinking strategically; negotiators are rarely a one-on-one business, so master negotiators speed time analyzing the interests of the player “players” who are not at the table, how the power balance lies and what opportunities exist to increase their power.

Being firm and flexible; master negotiators are firm and clear about the issues they must have, and flexible on the issues they would like to have.

Seeing the other side; master negotiators know that they can only present a good offer or trade-off if they know what their counterpart's interests are. They can easily shift from seeing things from their point of view to seeing things from that of the other party

 Investing in relationships; master negotiators use all possible opportunities to nurture trust and develop relationships and make sure that those connections remain intact over time.

Managing emotions; master negotiators make an active choice to always monitor and control their emotions constructively.

Appreciating uniqueness; master negotiators approach every situation afresh and adapt to the specific conditions of the current negotiation.

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 Negotiation Styles.

There are many approaches to negotiation. Some negotiators advocate a hard-line, Uncompromising style. Skilled negotiators know that you are more likely to achieve a satisfactory outcome by taking the interests of the other party into account and trying to create win-win deals, develop mutual trust and build relationships for the future.

Defining negotiation styles.

Negotiators come to the negotiation table because they have needs that they believe may be fulfilled through negotiations. To fulfill these needs, negotiators use different styles and engage in a variety of behaviors that they trust will help them get what they want.

There are three styles of negotiation;

Distributive style.

Negotiators that use the distributive style view negotiations as a competitive sport, a zero-sum game with a winner and a loser;

They dismiss the value of building relationships and trust as naïve and tend to use threats to obtain concessions and exaggerate the value of the small concessions that they make.

They also conceal their needs, do not share information, do not look for possible creative ideas, and even use deceptive tactics. In contrast to value-claiming negotiators.  

Integrative Style.

Integrative negotiators believe that the size of the pie is not fixed and can be expanded and that the negotiation process can produce a win-win solution.

Negotiators engage in value-creation behaviors.

They invest in building relationships and nurturing trust, share information openly, and are cooperative, flexible, and creative.

Mixed motive style.

The true nature of effective negotiations is often mixed, requiring both cooperative and competitive tactics.

The rationale for this is that through cooperation,  negotiators create value, They put money on the table. Following this once value has been created and the money is on the table, the parties have to split it amongst themselves. To secure the most profitable split. A negotiator has to switch from the cooperative model to the competitive mode. 

How to Negotiate with Power.

Power is a central factor in determining the outcomes of the negotiation process. Effective negotiators understand that power is not static and thus engage in continuously assessing and enhancing it.

However, it is equally vital to know how to negotiate when you do not have power. Understanding power sources in order to negotiate with power.

Power can come from a number of different sources like the following;

Information; Being well informed enables you to support your arguments and challenge the other party’s arguments.

BATNA( Best Alternative To a Negotiated Agreement); Having an attractive alternative to a negotiated agreement gives you the power to say “NO” to a bad deal and walk away from it.

Resources; The party that has more resources financial, technological or human has more power.

Needing the Deal; the less badly you need the deal the more power you have not to settle for it.

Time; The fewer deadlines you are pressed with, the more power you have to wait and explore opportunities for better deals.

Sunk Costs; the more willing you are to let go of your sunk costs (such as financial and emotional expenses), the more power you have.

Skills; The more skilled you are in the art of negotiation, the more power you have to produce better joint outcomes.

Set A Benchmark; Negotiators who are not fully informed tend to compare the cost of an item to a reference point or benchmark. You can influence the way they make their decision by setting a benchmark for them.

Give social Proof; People often use “social proof” when making decisions, they think that if many people are doing things a certain way, it must be good to demonstrate how your product or service has been successfully used by others.

 Let them say “NO”; Give the other party the opportunity to say ”NO” by making an outrageous demand before retreating immediately and putting forward a reasonable demand.

Ways of conducting interested-based negotiation

Negotiators often make the mistake of turning the negotiation process into a contest of positions. Some hard bargainers think of the party as an adversary; others take a soft approach, considering the other person to be a friend and making concessions easily. Instead of utilizing hard or soft bargaining tools. Effective negotiators tend to focus on the interests of both parties.

In interests-based negotiation, the negotiators come to the table with a clear understanding of what they want and why they want it, but also with an understanding that the other party has its own set of needs to fulfill. Knowing that both parties' needs can be stratified in multiple ways allows for the negotiation process to be more about constructive problem-solving.

That is collaborating to find out what they can do together to achieve their respective interests.

Focusing on interests involves concentrating on the “why” instead of the “what”. People always have a reason for wanting something.

Aim for joint gains; Instead of limiting the thinking to only one or two options, Work jointly with the other party to creatively explore many potential solutions.

Separate the issues; Keep people's issues, such as emotions, separate from substantive issues ( such as price or delivery dates).

Focus on interests; Make sure that you have a clear understanding both of your interests and those of the other party.

Exchange information; Before making any decisions, exchange information with the other party to jointly explore possible solutions.

Use standards; Base your negotiation on precedents, laws, and principles rather than arbitrary judgments. This makes it easier to explain the rationale to others.

Know your BATNA; Make sure that you have a clear understanding of your BATNA (Best Alternative To a Negotiated Agreement). The best option available to you is if the negotiation process falls apart.

See both sides: Assess the situation from the other party’s perspective. This improves communication and helps the other party understand how they stand to benefit from the deals.   

Actions used by negotiators to build trust.

Trust is an essential component of success in all types of negotiation, whether business, diplomatic or legal. Ambassador Denis Ron, Former US coordinator of the Middle East, Has stated that the ability of negotiators to develop Mutual trust is the most important ingredient of successful negotiation and without it, negotiation fails.

The following are actions used by negotiators to build trust;

Understanding the benefits 

Trust involves a willingness to take risks. It has to do with how vulnerable one is willing to a counterpart. There are many benefits to having trust between negotiators. It promotes openness and transparency and makes negotiators more flexible.

Keep your Commitments; Building trust is difficult but losing it is easy, especially if you break your commitments, 

The French diplomat Francois de Cellier, who wrote the first negotiation book in 1716, stated that a relationship that begins with commitments that cannot be maintained is doomed.

Shimon Peres; The president of Israel has said that promises have to be derived otherwise one’s reputation is at stake. Although people do sometimes make genuine mistakes and promises in good faith that they ultimately cannot keep, If you want to build trust, You need to make every effort to keep your commitment.

Building your Reputation; One of the most important currencies negotiators have is their reputation. It may sometimes be tempting to maximize short-term gains by overlooking the long-term consequences but experienced negotiators know that people prefer to do business with those that they trust and guard their reputation fiercely.

Developing Trust; Reciprocation is important for building trust. When negotiators offer information or concessions, they expect the other party to reciprocate.  Without reciprocation, the negotiating parties will be able to find ways to collaborate and create value for both.

Examples of Actions used by Negotiators to build Trust.

When Henry Hollis sold the Palmer House in Chicago to Conrad Hilton. He shook hands on Hilton’s first offer of $ 19385000. Within a week Hollis received several offers of more than a million dollars. However, He never wavered on his first commitment.

 In 1873 US financial markets were in pair shape and “King of steel” Andrew Carnegie needed to cash in a $500,000 investment with J.P Morgan. Expecting a $10000 profit, he asked Morgan to send him $60000, Morgan sent $70000. The investment had made a $20000 profit.

Ways To Ensure That The negotiation is fair.

Fairness is an important characteristic in negotiations. Negotiators need to believe that the negotiation process and its outcomes are fair, otherwise, they may choose to end the negotiations without agreeing or fail to put the agreement into action.

Ensuring fairness

These are several categories of fairness that contribute to successful negotiations. Distributive fairness relates to the distribution of outcomes (the splitting of the pie). Negotiators use three different principles of distributive fairness.

Equality; This states that fairness is achieved by splitting the pie equally.

Equity; This states that the outcome should relate to the contribution of each party.

Needs; This states that regardless of their contribution each party should get what they need.

Ways to Ensure that the Pie of Negotiation is Sliced fairly.

Clarity; be certain that the final decision is clear, without any potential misinterpretations.

Justifiability; Make sure that all parties can explain why you are slicing the pie this way to somebody else.

Satisfaction; Make sure that all parties are happy with the results they are then more likely to follow through with the agreement.

Consistency; Make sure that you apply the fairness principles (equality, equity, needs) in the same manner throughout the negotiation process.

Consensus ; Confirm that all parties in the negotiation are in complete agreement on the method of slicing the pie.

Simplicity; Ensure that all negotiating parties can understand and describe the pie-slicing procedures you use to guarantee smooth implementation.

Principles of making and Interpreting Concessions. 

Experienced negotiators know that successful negotiations involve a certain amount of giving and take, and are well versed in the process of making concessions. They tend to develop offers that leave room for concessions, as these are the oil that lubricates the making of a deal.

Enabling reciprocity; label the concessions you make as ones that are costly to you and then reduce your value. This sets up the expectation that you will receive a concession in return, implying value for value.

Using contingency; if you suspect that your concession will not be reciprocated, offer a concession that is contingent upon the other party providing a concession in return. For example “I will be willing to extend the terms of payment to 45 days if you will increase your order by 500 items”.

Setting boundaries; some negotiators put the deal at risk by asking for too much. Set boundaries for the other party by being clear and precise about what you can concede and what you absolutely cannot.

Setting rules; sometimes negotiators make final concessions but then withdraw them or make them contingent on receiving a new concession.  Set a clear rule that a concession cannot be withdrawn unless it was explicitly offered as a tentative or conditional concession.

Spotting deal-breakers; some concessions are deal-breakers, if they are not offered your counterpart will walk away from the negotiation table. Try to distinguish these from value-enhancing concessions, which are demands that are designed to get a better deal, but if not provided would not result in the other party abandoning the negotiation.

Competitive tactics and How to Avoid them.

In competitive win-lose position-based negotiations, negotiators use various manipulative tactics to maximize their interests while disregarding the interests of their counterparts. They usually believe that these tactics are quite effective. Often, however, these tactics can backfire, escalating the level of negotiation or even leading to an impasse. Skilled negotiators recognize these tactical traps and know how to avoid and neutralize them.

Making a high ball or low ball offer; a negotiator assumes that you are not fully informed and tries to take advantage by making a very high offer as a seller or a low offer as a buyer. The objective is to replace the benchmark you have in your mind with one in their favor

To avoid – Be confident in your benchmarks and try to see clearly through this ploy.

Playing good guy or bad guy; one negotiator plays tough and uses aggressive tactics such as threats and ultimatums.  Another empathizes to make you believe that he or she is on your side. Neither is on your side, both are trying to maximize their interests.

To avoid —  Focus squarely on protecting your interests.

Nibbling; the deal is done, but at the last minute the negotiator asks for another small concession. Most negotiators concede, fearing that the last-minute demand might derail the deal if it is not fulfilled.

Using emotional blackmail; a negotiator tries to intimidate or influence you by fabricating anger, frustration, or despair. They try to emotionally shake you and make you feel responsible for the lack of progress.

To avoid this – use your emotional intelligence, stay calm and centered and try to steer the negotiations back on track.

Separating the issues; a negotiator insists on reaching an agreement on a single issue before moving on to the next issue. This prevents you from bundling issues together and creating opportunities for trade-offs.

To avoid – negotiate multiple issues at once, stating that “Nothing is agreed upon until everything is agreed upon”.

Applying time pressure; the other party uses the pressure of time to try to get you to concede by setting tight deadlines for an offer or using delaying tactics to reduce the amount of time available for the negotiation.

To avoid: use your judgment to decide whether a deadline is real or not.

Strengthening your hand with Persuasion Techniques

A successful negotiation process requires effective persuasion when attempting to influence your counterpart, It is crucial to identify your moments of power and take advantage of them. Seasoned negotiators understand how to use appropriate persuasion techniques to sell their ideas to the other party.

Effective negotiators use a range of persuasion techniques that take the advantage of the natural responses of negotiators to certain types of information. For example, negotiators are generally more motivated to avoid losses than they are to obtain gains.

Persuasion Techniques

 Use scarcity; It is human nature for people to want more of what they cannot have. When you present your offer to the other party. Inform them of the unique benefits you are offering that they would not be able to get elsewhere.

 Gain Commitment; Encourage the other party to agree to an initially modest request. They are then more likely to follow up with their commitment by agreeing to your key demand to justify their past decision to say yes to you.

 Give a reason; People are much more likely to agree to demand if you have given a legitimate justification for it. Try to give a reason that can be backed up with evidence but using even a frivolous reason increases your chances of reaching an agreement. 

Factors to consider in international negotiation

In today’s global economy, ever more business deals are made across national borders. Negotiating international deals is a considerable challenge because you must be familiar with the complexities of the immediate negotiation context, such as the bargaining power of the parties and relevant stakeholders, as well as the border context such as currency fluctuations and government control.

Understanding the differences

You are likely to experience significant differences in several key areas when you engage in international negotiation.

Agreements; Western negotiators expect to conclude the process with a comprehensive bulletproof legal contract in other countries and notably in Asia memorandums of understanding (MOAs) which are broader but less substantial agreements, may be more common.

Time sensitivity; In countries in which a “doing” culture is prevalent, people believe in controlling the event and managing time strictly. In some countries, time is not viewed as a critical resource and negotiations can be slow and lengthy

Degree of formality; Negotiators from informal cultures tend to dress down, address one another by their first names, maintain less physical distance and pay attention to official titles. In constraint negotiators from formal cultures tend to use formal titles and are mindful of seating arrangements.

Factors to consider in-international negotiation

Political risk; While some countries have long traditions of an abundance of resources and political stability, others have scarce resources and are marked by volatile political changes.

Ideology; In an individualistic culture like ours, the purpose of the business is to serve the interests of its shareholders, but in collective cultures, the business has a larger purpose to contribute to the common good of society.

Culture; Different cultures have starkly different cultural beliefs about the role of individuals in society, the nature of relationships, and how people should communicate, these have a fundamental effect on how you need to approach negotiation.

International finance; Currencies fluctuate and affect the balance of expenses and profits. The stability of the currency your investment is made in affects the risk to you. Many governments also control the flow of currency, limiting the amount of money that can cross their borders.

Bureaucracy; Business practices and government regulations vary from country to country. In some countries, the government bureaucracy is deeply embedded in business and are constantly required to secure government approval before they act.

Political and legacy systems; Different countries have different tax codes, labor laws, legal philosophies, enforcement policies, laws that govern joint ventures, and financial incentives for attracting business investments. 

Principles of Effective Mediation

Mediation is a structured process in which an impartial third party facilitates the resolution of a conflict between two negotiating parties. For success, the person selected to mediate a dispute must be acceptable to both parties.

The following are principles of effective mediation;

Encourage self-determination; Ensure that the disputing parties recognize their differences and know that their participation in the mediation process is voluntary and they are free to leave at any time.

Give ownership; Let the disputing parties know that they must take responsibility for the conflict and its resolution and are expected to identify the mediation process, rather than actively trying to influence the outcomes of the conflict

Advocate confidentiality; Make it clear to all parties that the mediation process is confidential. Disputing parties are only likely to share important information if they believe that the mediator is neutral and trustworthy.

Use an integrative approach; Try to understand the interests of each of the disputing parties, and help them reach an integrative (win-win) resolution that they would both find acceptable.

Keep the goal in mind; Always remember that the aim of mediation through integrative negotiation is not to achieve absolute justice, but to develop options and find the most workable and satisfactory option. 

The Asian Style Of Negotiation

Succeeding in any international means taking the time to understand the complex negotiating environment, being sufficiently flexible to be able to change your ways if necessary, and learning to work within governmental bureaucracies

The cultural and business landscape in Asia is especially unfamiliar to western organizations and with the region's rapid rise to economic prominence every manager needs to be aware of how it differs.

Relationships (GUANXI); Chinese business leaders invest heavily in making interpersonal connections and creating a dependable social network known as “guanxi”. They prefer to do business within their trusted work.

 Emotions; The confusion teaching Xinping qihe meaning “being perfectly calm”, makes it difficult for western negotiators to “read” their counterparts and to know where they stand.

Fairness; The concept of fairness is based on needs: those who have more should give to those with less.

Trust from the heart; Asian businesses like to do business with trustworthy individuals rather than faceless organizations. The lengthy process of building trust is based on openness, mutual assistance, understanding, and the formation of emotional bonds.

Face; Dignity and prestige are gained when individuals behave morally and achieve accomplishments. The face is a formidable force in the Asian psyche that negotiators in western organizations must be particularly aware of.

Legalism; You risk insulting your Asian counterparty if you emphasize penalties for dishonoring commitments in detail. Contracts are short and merely a tangible expression of the relationships being created; they are not treated as “fixed” legal instruments.

Decisions; Although Chinese and Japanese societies and hierarchical, they use the consensus style of decision-making. Lead negotiators refrain from dictating a decision to preserve relationships and give a face to others