Negotiation skills: definition and examples

Updated 5 September 2023

Negotiation is a type of discussion used to settle disputes and reach agreements between two or more parties. Negotiations occur frequently within the workplace. Professionals may negotiate contract terms, project timelines, compensation and more. In this article, we cover what are some of the most common types of negotiations you might encounter as well as how to improve your negotiation skills.

What are negotiation skills?

Negotiation skills are qualities that allow a dialogue between two or more people with conflicts to be resolved. The primary aim of negotiating is to help settle differences by reaching a compromise that satisfies all parties involved in a situation. Typically, negotiation is a soft skill that brings abilities such as analysing, strategising, persuasion, teamwork and communication together. Here are some of the main negotiation skills:

Analysing

The ability to analyse a situation is typically one of the first things that a good negotiator focuses on when trying to find a compromise. It allows them to look at a situation objectively and clearly see all threats and opportunities that it involves.

Analysing and understanding a situation are also some of the most important elements of critical thinking and can positively influence the outcomes of a discussion.

Strategising

Strategising is a skill that allows people to consider all possible outcomes of a situation and plan individual steps accordingly to avoid mistakes or failure. Two main elements of strategising are strategic thinking and planning. When combined, their primary purpose is to help prepare for all situations that may occur in the future.

Persuasion

Persuasion is a negotiation skill that allows people to convince others to look at things differently and change their minds about something. Therefore, good negotiators have the ability to influence others and, in a way, inspire them to follow certain paths that lead to a compromise.

Communication

Communication skills allow you to understand and be understood by others. For many, good communication is one of the top priorities in succeeding at work, regardless of the role or career path. It involves being able to listen to and pay full attention to someone, understand their needs and values and confidently talk to them about ideas and thoughts in a clear and organised way.

Teamwork

Being an effective negotiator that can influence others also requires the ability to work within a team. Working well with others can allow you to understand people's needs and thoughts better, and empathise with them to notice what motivates them to behave a certain way. Gathering that kind of information can help you plan out what and how you want to share your ideas when negotiating.

Types of negotiation

Most negotiation outcomes will fall into one of two categories: 'win-win' or 'win-lose'. By understanding the different types of negotiations you may encounter, you can determine the most relevant skills for your role and work to improve them. We have prepared descriptions of some of the most common forms of negotiation:

Distributive negotiations

This is a 'win-lose' type of negotiation, meaning that any gain for one party means a loss for the other. This form of negotiation, also known as 'distributive bargaining', usually occurs when there is a limited amount of recourses, such as money, that need to be distributed between the parties involved.

Distributive bargaining works best for products or services that don't have a fixed price. For example, a buyer decides to purchase a car for £5,000 and feels that if the seller doesn't lower the price to meet this expectation, they will be paying too much. This works both ways. If the buyer succeeds in paying a lower price, the seller feels like they're losing money.

Integrative negotiations

Often referred to as a 'win-win', integrative negotiation occurs when everyone benefits from the agreement in some way. Typically, in this form of negotiation, there are several issues to be discussed and the parties involved focus on finding mutually beneficial solutions. It also allows trade-offs to take place.

For example, if a buyer thinks a deal they're interested in should be reduced to £800, but the seller insists on keeping the original price of £1,000, they can create a 'win-win' situation by agreeing to set the price to £900 instead. In this case, each one 'wins' £100 that they would have otherwise lost.

Management negotiations

Management negotiation occurs when an employee negotiates something about their position with a supervisor or someone in a senior position. During your career, you may encounter many situations like that. Although this can be stressful, knowing how to present your wants and needs is important because it can help with negotiating better benefits or different job duties.

Knowing what your goals are is also helpful during the job searching process when a recruiter or potential employer wants to discuss your salary. In case that happens, you may consider preparing by setting realistic goals for the position you're applying for, which you can communicate to a recruiting manager in a job interview.

How to improve your negotiation skills

Although for some people negotiating comes naturally, it is a skill that can be improved with time. Here are some proven tips that can help you work on your negotiation skills and become a more effective negotiator:

1. Identify your goals

It's important you enter negotiations knowing what you want out of an agreement and how much you're willing to compromise. For example, your objective may be to negotiate a salary of £80,000, but you would be willing to settle for £75,000. You may consider asking yourself these questions to identify your goals:

What are the minimum terms I need?
How much am I willing to negotiate?
Are my goals realistic for this position and/or industry?

2. Consider the opinions of others

Although good negotiators are typically determined and decisive people, their ability to empathise and understand people's motivations can massively influence the outcomes of their negotiations. To learn how to do that, practice looking at a problem through someone else's eyes by taking into consideration their goals, values and situation they're in. Doing that can influence others to see you as a reliable and trustworthy person with valuable ideas, which might lead to reaching a compromise that everyone's satisfied with.

3. Understand your strengths and weaknesses

Knowing your strengths and weaknesses can help you understand which approach to negotiating best matches your unique talents and personality. Some negotiators may prefer spending more time analysing a situation and designing a clear strategy when trying to compromise, whereas others find that improvising and using their communication skills fit their personality better.

To know which approach is right for you, you may want to think about the things you're good at, your values and motivation, as well as your past negotiating experiences and what you'd like to change about them.

4. Build your confidence

It can be challenging to ask for what you want. However, successful negotiation requires self-assurance. Remember to never take things personally or get discouraged by someone's opinion in a discussion. Their goal is to change your mind and achieve their goal, which usually has nothing to do with how they perceive you as a person. By exercising confidence in your negotiation, the other parties can be more inclined to believe in the benefits of your proposal.

5. Don't be afraid to make mistakes

Although striving for perfection can be something that motivates you to improve your skills, it's important to remember that everyone makes mistakes from time to time. If you make a mistake during negotiating, don't be afraid to admit it. Instead, focus on controlling your emotions and try to look at the situation realistically to come up with a solution to fix it. The ability to do that can be essential at work, even though it takes a lot of courage especially when you're discussing something significant to you.

6. Don't rush

When it comes to negotiating, practice makes perfect. Giving yourself enough time to experiment with different tactics and practices can improve the quality of your negotiation. To achieve that, you might consider entering into role-play situations with friends, family or co-workers. It's even possible to find yourself a professional negotiation coach who could help you practice. Going through fictitious situations and discussing them with someone out loud can help you to learn how to influence others and compromise more effectively.