The 7 most effective negotiation strategies in business
Updated 30 September 2022
Whether it's in business or life in general, knowing how to negotiate properly is a valuable skill. If you're equipped with the right negotiation strategies, you may be able to achieve your desired outcome more easily and improve your chances of success in whatever you do. Understanding negotiations and being well equipped for them can enable you to achieve greater levels of success in business. In this article, we outline 7 effective negotiation strategies to help you achieve success.
7 of the most effective negotiation strategies
Whether in business or life, having good negotiation skills can be extremely beneficial. Here are seven of the best negotiation strategies that you can use in all kinds of discussions and scenarios:
1. Focus on good relationships
Don't limit negotiations to individual events. Instead, successful negotiations come from strong relationships. In many cases, positive negotiation outcomes are a result of positive relationships. One of the best negotiation strategies is to constantly develop and build your relationships. Focus on creating and nurturing strategic, positive relationships. This can help to win many future negotiations.
2. Take a positive approach
Negotiations are not arguments. Avoid the use of aggression at all times. A great negotiation technique is to stay positive throughout the negotiation and display this positivity at all times. You want to display your confidence in your terms and show that the outcome you want to achieve is a good thing. Being positive about negotiations makes it easier for the opposing party to consider the outcome you're after.
3. Don't underestimate yourself
Negotiators also know what they want and not underestimate their chances of achieving this. This relates to the previous point of staying positive. Never think that your desired outcome could be out of reach. Instead, keep a positive mindset that what you want to achieve is possible and always remember the power you have in a negotiation. If you lower your terms too quickly, the other party may see that you're not confident in achieving your outcome.
4. Enter negotiations fully prepared
The key to a successful negotiation is coming into the discussion fully prepared. Always prepare yourself with as much information as possible. This could include information on the party you're negotiating with, information on past negotiations this party was involved in and information on what you want. Facts and knowledge support successful negotiation terms. The more knowledge you have, the stronger your point may be. Avoid situations where a question you don't have an answer to catches you off guard.
5. Prepare for best and worst-case scenarios
While it's important to stay positive, also be prepared to lose the negotiation. One of the most important strategies for negotiation is to understand your best-case and worst-case scenarios before entering into these discussions. Know what your lowest possible desirable outcome would be and know what the consequences of the negotiation may be. If both parties come prepared with their best and worst possible outcomes, a mutually beneficial middle ground is likely to be found.
6. Give and take in negotiations
While you might want to be the winner of a distributive negotiation, a good outcome is usually the result of both parties coming to the table. Negotiations ought to be flexible and involve give and take from both parties. If you win something from the other party, be prepared to give something back in return. By using give-and-take strategies for negotiation, you can find a mutually beneficial outcome more easily while maintaining a stronger relationship with the other party.
7. Be clear and highlight the benefits
Whenever you enter a negotiation, focus on being articulate. Conveying your message and your terms are essential for keeping negotiations going smoothly. Clearly articulating your side of the discussion also puts you on a better foot to achieve this outcome. Negotiators can also highlight the benefits of their desired outcomes. Don't just say that you want to achieve something, but explain why this may add value. By highlighting and explaining the benefits of your negotiation terms, you may find yourself in a better standing to convince the other party.
Negotiations are types of discussions where two or more parties come to an agreement. When we look at negotiations in business, three main areas are usually covered. These are:
Salary negotiations: Where employers try to get the salary and benefits they want.
Vendor negotiations: Where employers negotiate with vendors for the best prices and services.
Conflict-resolution negotiations: Where different parties in the workplace come up with an agreement.
The 2 types of negotiation approaches
Any strategies for negotiation you use can fall under one of two possible categories. These are:
Distributive negotiation is when one party achieves the outcome they want while the other party does not. This is a win-lose negotiation. These types of strategies for negotiation often apply when the two parties negotiate a single issue. There are many different ways that a distributive negotiation can unfold. To win at one of these negotiations three classic tactics are commonly used :
being persistent on your terms throughout the negotiation and not settling for anything less
aiming high and not mentioning your lowest possible term. This lets the opposing party know that you might settle for less than what you're asking for.
making the first offer in the bargain, which usually puts negotiators on a stronger hand
Integrative negotiations focus on achieving a mutually beneficial outcome. This occurs when both parties involved negotiate their terms until they achieve a win-win situation. Trust and honesty are essential for integrative negotiations. Both parties are clear about what their needs and interests are to maintain transparency. If you wish to come to a conclusion bargaining between both parties is a sound tactic. Integrative negotiations work best when there is more than one issue involved in the negotiation. When you want to maintain a good relationship with the party you're negotiating with, an integrative approach is best.
4 types of negotiations
Negotiations play an important role in business and in life. Understanding the different types of negotiations and the most effective strategies for negotiation help you achieve the best outcomes and success. Negotiating is one of the most useful skills to master in the business world, regardless of your position or industry.
To apply the right strategies for negotiation, it's important to have an understanding of the different types of negotiations that exist. These types consist of four categories:
Principled negotiation is mainly used for conflict resolution. This negotiation strategy uses the principles and interests of the parties involved to come to a conclusion. All parties can benefit from an integrative approach. A principled negotiation includes four main elements. Firstly, these negotiations usually focus on a mutually beneficial outcome for all parties involved. Nobody wins and nobody loses.
Second, principled negotiations are based on the interests and motivations of the parties involved. Everyone needs to be open about what they want to achieve. Third, principled negotiations do not include any emotions. Emotional elements and negotiation issues are to kept separate to achieve the best possible outcome. And fourth, the baseline for these negotiations needs to be completely objective from both parties.
Team negotiation strategies involve discussions between two groups. This often plays out in businesses and group meetings. For team negotiations to run smoothly and achieve a good outcome, the team negotiation can involve different roles and responsibilities. These include:
a leader to lead the negotiation and make the end decision
an observer to listen to both parties and discuss this with the leader
a relater to develop relationships with members of the opposing negotiation team
a recorder to record notes on the negotiation discussion
a critic to help highlight and understand all negative possibilities of an outcome
a builder to create the deal for the bargaining team
Multiparty strategies for negotiation involve more than two groups trying to find an agreement. A good example of this would be when various department leaders in a company negotiate for an agreement. A challenge in multiparty negotiations is the possibility of two or more parties forming coalitions. This makes bargaining more difficult. It can also be very difficult to properly manage and control these negotiations as there are many extra elements at play.
This is an example of distributive negotiation strategies when one party gets the outcome they want due to aggressive negotiating. Adversarial negotiations often involve hard bargaining, the creation of future promises or the event of one party losing interest and giving in during the negotiations. Adversarial negotiations are a competitive game where there is typically a winner and a loser.
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