What is Negotiation?

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What is Negotiation

For a word used so commonly in the alternative dispute resolution sphere, exactly what negotiation is can be a mystery for many people as they encounter dispute resolution.  Negotiation often brings to mind a situation where a person is asking their boss to pay them more, or some see it as a role in an action movie where an officer tries to convince a person to release their hostages.  However, people use negotiation more often than they may realize.  We negotiate when we try and get a group to eat at the restaurant we like or when we are trying to decide who controls the music on a road trip.  Negotiation, in simple terms, is the act of speaking and bargaining with another to try and reach an agreement.  Any time people are sharing options and discussing the best solution, they are negotiating.

Negotiation can also be a more formal process where two parties to a dispute or two sides of a decision come together to try and work toward an agreement.  This can happen on its own or as a part of a larger process of dispute resolution.  This can also take place with a neutral leading the parties through the discussion, or the parties can work directly with each other.  Negotiation is a fluid and constant process and requires skills and understanding of the process to effectively negotiate and come away with a winning deal.

Defining Negotiation:

Negotiation is, at its most basic, a conversation about the distribution of interests or money among the parties.  The parties will go back and forth with different proposals for how the dispute should be resolved. Some interests will be the same between the parties, while others will be at odds.  The best deals will happen as the parties work through the portions that are at odds and come to an agreement that can benefit both parties.  Any time two people need to make decisions that cannot be made unilaterally because it affects the interests of another, they are negotiating.  This can feel overwhelming and difficult if someone is not a practiced negotiator, but by learning the appropriate skills and practices, a person can become a skilled negotiator in no time.  It just requires education, preparation, and practice.

Education:

Education requires understanding the aspects of negotiation that make it unique and understanding the process and how they fit together.  The Harvard Negotiation Project has developed a list of seven elements of negotiation that are useful to understand the process of negotiation and the lingo that surrounds it.  These seven elements are:

  • Interests: Interests are the driving force behind what each party wants out of the negotiation.  They can often be unconscious drivers and are usually not shared with the group.  This can include something like the need for an apology from the other party because of harm caused.  These underlying interests can often be more important to a party than the money or other issues on the table.  This is why it is important to understand one’s own interests before negotiating.  Otherwise, a negotiator might make a costly mistake based on an interest they were unaware of.  It is also important to understand the interests driving the other party.
  • Relationships: Another element of a negotiation is the relationships between the parties.  The degree of attention that the parties pay to this element depends on the need for continuing relationship or connection in the future after the negotiation.  If the parties are entering into a contractual or business relationship, they will be balancing their needs with the desire to keep the relationship amicable even after the negotiation.   This may mean toning down their demands to appease the other party.
  • Alternatives: A party should also know what the best alternative to a negotiated agreement will be.  This allows the parties to understand what will happen without an agreement during the negotiation.  This can help them decide if they will make an offer that is less than they would like to avoid the alternatives or if they will walk away when the other side is not cooperating.
  • Communication: Negotiations will often be successful or fall apart based on the communication that the parties bring to the table.  Keeping communication open and fun will help the parties move toward agreement.  This requires staying away from communication that could hurt a position, such as silent assumptions or brash demands.
  • Options: Options are the actual offers that the parties will trade back and forth.  This can include dollar amounts, but will also often include things like conditions, contingencies, nonmonetary offers, and trades.  Finding ways to add value to options is the best skill a negotiator can have to help the other party see that giving up in one aspect can actually bring them more on another.
  • Legitimacy: Legitimacy is the quest to bring fairness and legitimate offers to the table with the other party.  This helps the parties know that they are both there to come to an agreement and that they will do what they can to reach one.  This also includes refraining from offers that are so outrageous that they would signal to the other party that this is not a legitimate negotiation.  Finally, it includes an attempt to ensure that the parties do not see unreasonable offers as an offense and shut down in their negotiation.
  • Commitments: Commitments mean that the parties are committed totally to the agreement that they sign together.  Approaching an agreement with full commitment will ensure that the parties can move forward without fear that all their work would go to waste.

Once a person understands these principles, they are will on their way to becoming a good negotiator.  Mastery of these subjects, along with proper preparation and an understanding and practice of the procedure will help make a more skillful negotiator.

Preparation:

Preparation is one of the most important aspects of a negotiation.  A party who is properly prepared is better situated to achieve the outcome that they want from the negotiation and to create value from their position and for the other party.  They will be able to preserve relationships and see interests that are driving the conversations.  Knowing the discussion from every angle will help a negotiator close the deal and move forward.  Some key considerations include:

  • Understanding the Options: It is important to consider as many options and alternatives as possible to be able to approach all the different scenarios that could come up as the negotiation moves along.  This will also help a party feel as if they are in control of the negotiations because they will always have another option.
  • Knowing Your Interests: When a party understands their own interests, they can be mindful of how those interests influence the behavior and how a party will react to certain offers.
  • Knowing the Other Party’s Interests: It will be important to understand the other side’s interests.  Doing so will give a party deeper insight into what they may find as an acceptable offer and how the negotiation may play out.  It will also be helpful to ask the other party about their interests during the negotiation so that assumptions are not ruling in the negotiation.
  • Relationships: It is important to understand the relationship the parties will need at the end of a negotiation.  Are the parties entering into a contract or business relationship? Do they have other interests that are intertwined and need to be cared for together?  Or is this the only time these two parties are likely to interact? My work involves a lot of negotiations between landlords and tenants, and this is always an important consideration—if the client is looking to stay in the home they are currently in but needs the landlord to do something, they may look more at preserving the relationship.  If my client is leaving, they will likely put less weight on the preservation of the relationship.
  • Setting Up Negotiations: Finally, the parties will need to establish where, when, and with whom the actual negotiation may take place.  This will set an end date for preparation and force the parties into the room.

Once the parties are prepared and ready to meet to discuss the outcome of the disagreement, they will enter into negotiations.

Practice:

The best way to practice negotiations is to move through the process in simulations and group activities that familiarize people with the process and how negotiation feels.  While practicing, it is important to follow the process of an actual negotiation to ensure that the parties are adequately aware of how each step moves and works.   This process includes:

  1. Exchanging Information: At the first stage of a negotiation, the parties will share whatever information they feel is necessary to begin the discussion.  This can be their side of the story, any evidence or proof of why they believe this is what is owed to them, and their understanding of the situation.  Both sides will have a turn during this time and it will be important to listen, ask questions, and clarify anything that needs to be clarified.  Listening will ensure that the parties have a full understanding of the other side’s point of view and can stop working from assumptions.
  2. Clarification: The second step in the process is the clarification process.  This is where the parties present more proof to bolster their claims and identify each area of disagreement.  The areas of disagreement will serve as the different aspects of the negotiation moving forward and will need to be remedied before the parties can agree.  The parties may then agree to move through the different factors or areas of disagreement in a certain order to address the most important issues first.
  3. Bargaining and Problem-Solving: This is where the majority of the process will take place.  Here, the parties will offer solutions and options back and forth and will discuss the possible outcomes that may be agreed upon.  This begins with the initial offer, which can be from either party.  Then the other side will counteroffer and the discussion will move back and forth.  It is important to keep emotions in check during this process.  The offers will often start far apart and slowly start to move toward one another.  The goal of this bargaining process is to achieve a win-win scenario where both parties can leave feeling as they won. The parties will discuss alternative strategies and compromises that add positive value to the negotiation.
  4. Agreement: An agreement will be reached once both sides of the discussion have come to the same conclusion.  This may mean that the parties agree that they are too far away from each other and would like to walk away without a negotiated agreement, or it may mean that the parties have been able to resolve the disagreement and work out a solution.  When the parties have open minds and seek to achieve the best possible outcome, they will craft a winning solution for everyone that includes the interest of each party.
  5. The course of Action: The parties will need to develop a course of action moving on from the negotiation.  If they did not agree and that has some impact on the relationship between them, they will need to plan of action on how to deal with that.  If they did agree, they will need to plan how to implement the plan and execute the agreement.

Conclusion:

Negotiation may seem like a scary and large task, but when the parties are educated about the process, prepared for the negotiation, and practiced in the process, a negotiation may end in a win-win solution that benefits everyone involved.  Finding a negotiation style that fits with one’s personality and using that to their advantage can only come with practice and negotiations that allow them to explore their style.  It is also important to remember that negotiation is just a conversation about differences that need to be rectified for an agreement to be reached.  It can happen in a formal setting, but it is also present in every aspect of our lives.  We are all already negotiators.

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