Principles of Sucessfull Negotiations

Negocjacje w biznesie. Definicja, rodzaje, strategie, zasady, etapy  PL

Negotiations in business. Definition, types, strategies, rules, stages

Negotiations in business

Negotiations are a sequence of reciprocal moves through which the parties strive to achieve the most favorable solution to a partial conflict of interest, while they must be aware of the partial commonality of interests. Situations where the advantage is only obtained by one party can be called quasi-negotiation, manipulation or persuasion with the aim of coercion. Negotiations in business follow the same rules.

The aspiration of every person joining the negotiations should be to achieve such a state of affairs, which would not be possible to achieve without negotiations and mutual concessions. In other words, negotiation is a process in which two parties with partly diverging and partly converging interests strive to reach an agreement.

Types of negotiations

We distinguish three basic types of negotiations, i.e.:

Ordinary negotiations – concern internal problems and relations at work between employees, e.g.: determination of the terms of remuneration and employee benefits, determination of tasks for given positions and duties, increase in efficiency due to e.g. overtime work.
Commercial negotiations – usually take place between the given organization and an external party; their main factor is a financial benefit, e.g. winning a contract or a client, developing a schedule for the supply of goods and services, agreeing on the quality and price of the product.
Legal negotiations – are usually official and legally binding; disputes over precedent can become as important as major issues, e.g.: complying with local laws and state planning policies, dealing with legislators (e.g., the antitrust office.)
It should be remembered that real economic transactions do not consist of one-off meetings during which certain arrangements are made that end the arrangement. The negotiation process consists of long-term sequences of mutual behavior.

Sometimes these behaviors last for decades, contributing to the stability of both parties involved in the arrangement. Sustainability allows for much greater tolerance towards possible short-term losses, as partners balance the results in a broader time perspective.

Negotiation evaluation criteria

Each negotiation in business can be assessed from different points of view – the achieved effect and the subjective sense of satisfaction are most often mentioned. Fisher and Ury (2004) propose three evaluation criteria: reason, efficiency, and constructiveness.

Reason – negotiators often make unreasonable, wishful demands, guided more by emotions than rational thinking. The solution is reasonable when:

both parties (and not just one) obtain reasonable benefits,
is fair both in the sense of compliance with applicable regulations and customs. It is necessary to take into account the unwritten laws, observe moral principles, treat the partner honestly and honestly make commitments and statements,
is relatively permanent, and therefore independent of temporary and variable environmental factors, takes into account the interests of the wider community; negotiators operate in a specific geographical, biological and social environment, the results of their agreement are not solely their private affair.

The efficiency of negotiations should be understood not only as a result caused by their conduct, but also as “efficiency”, the effectiveness of conducting talks at a specific moment. The effect can be satisfactory, but achieved at too great a cost or too late and basically unnecessary.

Constructiveness concerns the impact of negotiations on the overall state of contacts between the parties. The current profit is important, but future interests should also be taken into account – it is necessary to pay attention to whether there is an improvement in relations between the parties, or whether there are tensions and ruptures. A positively assessed contact should at least not harm the existing arrangements.


Negotiation strategies

There are five types of negotiation strategies: avoidance, appeasement, compromise, dominance, and cooperation. They are defined as follows:

avoidance – conduct aimed at preventing a negotiation situation,
appeasement – far-reaching concessions to the negotiating party at the expense of one’s own interests,
compromise – partial concessions and partial implementation of the interests of the contracting parties,
dominance – far-reaching demands at the expense of the interests of the negotiating party,
cooperation – maximization of the interests of both contracting parties.

When planning the adoption of a negotiation strategy, one should take into account the possibility of modifying it depending on the course of events occurring during the negotiations. One can also immediately assume the use of a sequence of successive strategies, where their order depends on the development of the situation during the negotiations (the so-called portfolio approach).


Small or temporary importance of the subject of negotiations
The potential agreement does not ensure the implementation of interests at a satisfactory level
Searching for information verifying the credibility of the website
Extinction of emotions
Increasing your own strength, weakening your partner
Low probability of interaction in the long term.    RECOMMENDED STRATEGY –   Avoidance

The moral reasons are clearly on the partner’s side
A stronger partner position
Keeping in touch
The prospect of better deals in the future    RECOMMENDED STRATEGY –  Mitigation

Balance of power
Interaction perspective
Time pressure and the need for immediate cooperation
High level of interdependence between the parties and sharp polarization of positions held  RECOMMENDED STRATEGY – Compromise

A definite advantage over your partner
No prospects for contacts in the future    RECOMMENDED STRATEGY  – Domination

High probability of contacts in the long term
Relative balance of power
Integration of parties in the face of superior and common reasons  RECOMMENDED STRATEGY –  Cooperation

The effective use of a given negotiation style is associated with consistent adherence to its rules. Due to the clarity of the argument, it is worth taking a closer look at the three most distinct strategies, i.e. appeasement, domination and cooperation.

Rules in negotiations
In order to increase your chances of success in business negotiations, when using a soft strategy, when we have to make concessions, the following rules should be followed:

Yield first on trivial matters, then on critical ones – don’t show your weakness.
Concessions should be small – what counts is not so much the size (scope) of the concessions made as the fact of concessions (showing good will).
Make concessions slowly and with obvious difficulty – easy concessions are no concessions.
Concessions should be gradually decreasing – show that you also have a limit of possible goodwill, then there is only the area of stupidity.
Be the first to give in on the most important matters – then you will show yourself as the weaker party, the one who is more interested in reaching an agreement.
Beware of escalating concessions at the end of the negotiation – whether you want it or not, you encourage reviewing the arrangements already made and renegotiating them.

Domination in negotiations
When trying to dominate, you need to realize that threatening is also a skill. It is determined by the following rules:

Do not start negotiating with threats – you will be accused of primitive use of your power and position.
Present threats in a weaker form, e.g. in the form of persuasion or warnings – they are easier for the negotiating party to accept (they do not cause loss of face).
If you openly make a threat, rationalize it – show that it is not your strength, but the situation that compels you to do this type of action.
Even when threatening, be credible; for this purpose, you can ostentatiously prepare for its implementation (expression of strength) or publicly commit to its implementation (failure to fulfill it is a loss of face) – you reveal your determination and the seriousness of the announced actions.

Cooperation negotiations
They consist of several specific actions:

Clearly signal the intention to conduct cooperative negotiations, the pursuit of a settlement; check that the other party is also cooperative.
Try to adopt the attitude of solving the problem, defining the issue, and not a rigid assessment of one contract.
Create an atmosphere of trust and respect; avoid exaltation.
Keep an honest exchange of information – if the other party does not reciprocate, do not block immediately; continue your activities for some time; only when you see stubbornness can you gently stop them.
Reward the positive actions of the other party – if they made a concession, offer your concessions as well; They don’t have to be big, but they should be.
Avoid defensive, defensive, rigid postures; be flexible and willing to make concessions as long as there is a favorable interpersonal climate.
Avoid, if possible, references to law, regulations, force; if you don’t have to, don’t object.

Stages of negotiation in business

Negotiations should proceed according to the course established or accepted by the negotiators. Most negotiations follow typical stages and phases, namely:

    1. Preparation for negotiations. Skilful preparation for negotiations is a prerequisite for success. Prepare for negotiations both formally and substantively. As part of the formal preparation, we appoint the participants of the negotiations, specify the place and time of the negotiations, etc. As part of the substantive preparation, you should specify the minimum and optimal negotiation goals for both your and the other party, analyze possible alternative solutions in the event of an agreement or break-up of talks, as well as determine the issues to be negotiated, objective criteria for their assessment and proposed solutions.
    2. Commencement of negotiations and presentation of initial views. Negotiations begin with introducing the participants and determining how they will conduct the talks. Then, the subject and scope of the negotiations are presented and the competence of the participants to establish such negotiations is checked. Once the initial views have been given, this step should be considered complete. The stage of proper negotiations consists in presenting further proposals and arguments justifying them. The advantage is usually the side that presents new proposals and modifies them. If you reject one proposal, make another. Conditional proposals are very good, i.e. those that require one party to make concessions on a specific issue and require the other party to make concessions on other issues. Each proposal should be treated in many aspects. For example, when negotiating a purchase and sale transaction, one should take into account, apart from the price, the size, frequency and delivery dates, method of payment, transport, packaging size, insurance, damage coverage, complaints, warranty penalties, etc. Negotiators should have several variants of solutions in each issue : from most preferred to acceptable.
    3. Proper negotiations in business, i.e. presenting further proposals. As a rule, the first proposal in negotiations is unacceptable because it covers the variant most preferred by one of the parties. The following proposals are concessions that should be reciprocal. Failure to make concessions results in a waste of time and an inability to reach an agreement. If there is no progress in the discussions, methods such as discussion and brainstorming may be suggested.
    4. End of negotiations. Negotiations may be terminated when views are agreed or negotiations are terminated. Negotiations are coming to an end as the parties have agreed on their positions. In this situation, you should carefully establish in writing what has been achieved, i.e. record the arrangements and the conditions for their implementation. In the case of a business transaction, an agreement is most often concluded, in which all negotiated elements should be included. In other cases, a final report is drawn up. Negotiations are terminated when it is impossible to agree on positions. There is then neither conclusion of the contract nor resolution of the conflict.