Negotiation Skills for Business Leaders

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Business leaders can learn strategies and techniques to improve their negotiation skills.

In a recent article, David Finkel, respected business thinker and co-author of Scale: Seven Proven Principles to Grow Your Business and Get Your Life Back, recalls running a negotiation seminar for 35 top business leaders. At the beginning of the seminar he asked his audience, “How many of you feel like you aren’t strong or confident negotiators? How many of you find yourselves avoiding negotiating even when that avoidance works to your detriment?” He was astonished when more than 60 percent of the audience raised their hands. “That floored me…considering the business success that these people have had,” he says.

Although Finkel was surprised, his audience was probably typical. Business leaders are not always confident negotiators despite the fact that this activity is part of their daily lives—to a degree that people do not always realize. Daniel Shapiro, founder and director of the Harvard International Negotiation Program and author of Negotiating the Nonnegotiable, explains that negotiation is much more than striking business deals.

“Senior leaders negotiate everything from strategy to corporate restructuring, and mid-level leaders must manage projects, tasks, and people,” he explains. “All of these activities require negotiation, and the better the leaders are at it, the more value they can reap for their company and for themselves.”

Luckily for leaders, business negotiation skills are not innate. They involve strategies and techniques that anyone can learn through programs such as Washington State University’s Online Executive Master of Business Administration. An online Executive MBA degree can provide the resources, background, and skills necessary for this function, positioning people interested in becoming a business executive to successfully negotiate any type of interaction.

What Is Negotiation?

At its most basic level, negotiation is the process of reaching an agreement between 2 or more people or organizations. If all of the entities involved are 100 percent in accord, no negotiation is necessary. If the entities’ goals vary in any way, no matter how minor, negotiation is required to reach a consensus.

The word “negotiation” can have negative connotations because people see the process as a win/lose situation. In other words, for one party to get what they want, the other party has to make concessions. But according to Daniel Shapiro, this is not the case at all. “A successful negotiation tends to result when the parties collaboratively problem-solve their differences,” he says. “Leaders will arrive at better outcomes if they work together, side-by-side, and jointly seek to satisfy their shared and differing interests.”

Shapiro says that a good negotiation results in a satisfactory outcome for all, defined by 6 characteristics:

  • It meets both parties’ interests.
  • It is better than either party’s walk-away alternatives.
  • It is the best of all possible options.
  • It feels fair and legitimate.
  • It includes clear, realistic, operational commitments.
  • It addresses each side’s emotional concerns for appreciation, autonomy, status, and affiliation.

Preparing to Negotiate

A negotiation that results in a successful outcome does not just happen. It tends to spring from careful preparation by all parties. Shapiro identifies 3 areas where preparation is key:

  • Before walking into a negotiation, Shapiro recommends that leaders analyze what their interests are and what the interests of the other side might be. Understanding the other side will help leaders to create mutually acceptable options. At the same time, leaders should be prepared to walk away from a negotiation if necessary. To do so, they must first understand their bottom line—which concessions they will accept and which ones they absolutely will not.
  • A good negotiator plans the flow of conversation. Shapiro suggests that it is often best to start with some casual, pleasant chit-chat. Both sides can then discuss each other’s interests and motivations for working together. Then, and only then, is it productive to brainstorm options that satisfy both parties’ interests—the meat of the negotiation process.
  • In any negotiation, having a good relationship with the other side can be helpful. Shapiro says that before any negotiation, leaders should consciously consider how to foster connection through techniques such as appreciating the other side’s perspective, allowing autonomy for the other side to make decisions, building affiliation, respecting the other side’s status, and inviting the other side to play a fulfilling role in the negotiation.

“Countless negotiations have gone awry in the business and political realm because people have not realized or addressed these core concerns,” Shapiro says.

David Finkel adds 2 other tasks to the preparation list:

  • Strategy. Every good negotiator has a core negotiation strategy—the “doorway” that they will use to frame their comments. With a little forethought and research, negotiators can usually guess which issues or arguments will be most influential with a certain person or organization. Figure these things out in advance—then stick to them.
  • Understand yourself. Finkel points out that every negotiator has a “signature”—a habitual way of approaching negotiations. Some people are tough and aggressive. Others are easily intimidated and reticent. Still others are great at building rapport but turn bloodthirsty the moment the conversation turns toward price and terms. Understanding their signature before the negotiation begins, Finkel says, helps leaders to control the situation.

During Negotiation

During the actual negotiation, other techniques come into play. According to Martin E. Latz, chairman and CEO of the Latz Negotiation Institute (LNI), Inc., and author of Gain the Edge! Negotiating to Get What You Want, the most important thing leaders can do is simply listen. “Your genuine presence in various interactions will heighten your awareness and your ability to achieve your desired results,” Latz says.

Latz identifies 5 aspects of good listening:

  • Decide why you want to listen: what is the goal of the conversation?
  • Try not to interrupt when other people are talking.
  • Eliminate distractions: don’t check your phone or email during the interaction.
  • Pay attention.
  • Try to avoid making judgments, and simply gather facts and make observations with an open mind.

Beyond listening, Finkel recommends 2 additional techniques that build the other party’s desire to make a deal. The first is to ask questions about why the other party wants to work with you. When they answer these questions, they will be powerfully reminded of what’s in it for them—and they will be more motivated to reach a satisfactory agreement.

The second technique is what Finkel calls “playing the reluctant party.”

“It’s human nature that in any negotiation, one party will be eager and the other will be reluctant,” he says. Good negotiators make sure that they always come across as the reluctant party through a combination of body language, voice pitch and speed, and qualified language (words such as “if,” “maybe,” and the like). The other party is then forced into the role of persuader, which automatically and unconsciously boosts their motivation.

The Bottom Line

All of these suggestions barely scratch the surface of the art of negotiation. All leaders will engage in this activity from their first day on the job, but becoming a true master of negotiation will take a lifetime of exposure and experience. Whatever a leader is looking to accomplish, whether it is internal, external, or purely personal, business negotiating skills are the key to success.

About WSU’s Executive Master of Business Administration Online Program

Washington State University’s Carson College of Business delivers one of the top-ranked Executive MBA programs in the nation. WSU offers an Executive MBA curriculum designed to equip students with the tactics, knowledge, skills, strategies, and other MBA resources utilized by today’s high-profile business leaders. For more information, visit WSU’s Executive MBA Online website.

 

Recommended Reading:

How to Perfect Your Sales Pitch to Prospective Clients

How to Craft a Compelling Interoffice Business Presentation

Choosing Your Words Wisely: Speaking the Language of Business Leadership

 

Sources:

Negotiation seminar – Inc.

Negotiation as daily life – The Economist

What is negotiation – The Economist

Preparing to negotiate, Shapiro – The Economist

Preparing to negotiate, Finkel – Inc.

Good listening – The Economist

Building desire to make a deal – Inc.