The Art of Negotiation in Business
Negotiation is a strategic discussion that seeks to reach an agreement between two parties on an issue. It has applications across many fields, such as negotiations between buyers and sellers, employers and potential employees, or governments of multiple countries.
Negotiation is often seen as a competitive exercise, in which one party seeks to gain advantage over the other. But taking a more collaborative approach could prove more fruitful in negotiations.
Identify Your Goals
Before beginning any negotiation, it’s essential to define your objectives. Setting specific, measurable, achievable, relevant and time-bound objectives (SMART goals) will help keep you focused on what truly matters as you negotiate.
It’s advantageous to understand your counterpart’s objectives. Doing so will enable you to decide what terms to accept in exchange for more favorable ones.
Set Your Price Target or Goal
A price target or goal is an elaborate way of measuring and benchmarking your company’s performance against its competition. They typically originate from one of many financial analysts working on your behalf and start by conducting a detailed review of competitors’ products, management practices and financials. Afterward they create a financial forecast which serves as the foundation for setting this target; oftentimes it changes quarterly. In reality though, price targets may serve more as long-term strategic plans rather than definitive endpoints.
Optimism can be a powerful asset during negotiations. It helps you see the positive aspects of a situation and work to resolve them, so that you get the outcomes desired.
Your optimism level can be affected by many factors, such as genetics, upbringing and environment. But most importantly, optimism stems from within–from your thoughts and attitudes.
Psychologist Suzanne Segerstrom PhD has observed that people who are optimistic tend to be more committed and successful in reaching their objectives. Additionally, these individuals tend to enjoy better mental and physical health overall.
Be a Good Listener
Listening is one of the most essential skills in effective negotiation. It helps diffuse any tensions, make the other party feel respected, absorb all information exchanged, comprehend objections and break through deadlock situations.
Active listening requires paying attention to nonverbal cues such as body language, tone, syntax, energy and context. It also involves reading between the lines, identifying pictures in someone else’s head and deciphering their emotions or fears.
Negotiation requires creativity. You must be able to identify your counterpart’s deeper needs and come up with solutions that benefit both parties.
Innovation is an indispensable business tool that will enable you to stay ahead of your competition. It also gives you the capacity to expand your structure, attract more customers and gain a larger market share.
Your business must innovate its products, services and business models in order to become more efficient and productive with fewer resources.
Be Emotionally Stable
Emotions play an important role in negotiations, yet they should be handled with caution. Allowing too much emotion into the room can cause friction and divert focus away from goals and needs.
Furthermore, excessive concessions may lead to people giving up on their own gains.
Alison Wood Brooks’ research suggests that channeling fear into excitement can increase confidence during negotiations, helping you better manage your opponent’s fears and foster trust.
Flexibility is a vital business skill that will enable you to remain stable during times of flux. It’s also an attribute that will boost your prospects for future success.
Flexibility means being open-minded to new situations and difficulties, as well as possessing a positive outlook and resilience.
Flexibility for employees means finding a balance between work and family responsibilities. This could involve working an alternate schedule, arriving early or staying late, or telecommuting.