Tuesday, December 8

Negotiation Skills

“effective negotiation is 90% attitude and 10% technique"

Five Elements of Negotiations
1. PERCEPTION : Perception is the process by which man ascribes meaning to information.
2. POWER : Power can be defined as ability to influence the negotiating results. Power in the negotiation process is influenced by basic elements such as manipulators, power builders.
3 CREDIBILITY : Credibility can be defined as image of source in any communicative situation.
4. PERSONALITY : Negotiation is the face to face interaction between 2 or more persons with aim to reach an agreement. The parties are not representatives but people with emotions and values and who live in real world.
5 ACTIVE LISTENING : Mutual understanding is a result of maximal communication through mutual empathy. Without understanding each other case negotiation is not possible. If every party is concerned about his own gain then chances to reach an agreement is minimal.

All negotiations share four common characteristics:

  • The parties involved are somehow interdependent
  • The parties are each looking to achieve the best possible result in the interaction for themselves
  • The parties are motivated and capable of influencing one another
  • The parties believe they can reach an agreement

Mistakes in Negotiation

Preparation and planning are key in avoiding common negotiation mistakes, but even the most experienced negotiator can still make them. Perceptual bias and poor decisions account for most of them. Let’s look at a couple:

  • Winner’s curse. This is when a negotiator makes a high offer quickly and it’s accepted just as quickly, making the negotiator feel as though he is being cheated. Lack of information and expertise are chief among the issues that cause this mistake.
  • Mythical fixed pie. The negotiator assumes that what’s good for the other side is bad for his side. For instance, imagine that two parties that want an orange. If a negotiator makes the mythical-fixed-pie mistake, he divides that orange in half and gives each party a piece. He’s let competitiveness get in the way of coming up with a creative solution, and if he’d listened, he’d have understood that one party wanted the meat of the orange and the other wanted the rind.
  • Overconfidence. The negotiator puts too much stock in his ability to be correct, and thus uses high anchors for his initial offers and adjustments. His lack of information and distorted self-perception will cost him a fairly negotiated deal.
  • Irrational escalation of commitment. This is when the negotiator continues a course of action long after it’s been proven to be the wrong choice. Causes of this include an insatiable need to win and ego, and it shows a lack of commitment to actually arriving at a fair deal.

Again, preparation and planning can help a negotiator avoid these issues, but practice is another way to get better at avoiding mistakes!