During a negotiation seminar for top business leaders, David Finkel, respected business thinker and coauthor of Scale: Seven Proven Principles to Grow Your Business and Get Your Life Back, asked the 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% 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. Leaders are not always confident in the art of business negotiation, 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 explained. “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 Executive MBA degree can provide the resources, background, and skills necessary for successful negotiation, positioning those interested in becoming a business executive to negotiate any type of interaction, even international negotiation.
What Is Business Negotiation?
At its most basic level, negotiation is the process of reaching an agreement between two or more people or organizations. If all of the entities involved are 100% in accord, no negotiation is necessary. If their 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 scenario. In other words, for one party to get what they want, the other party has to make concessions. However, according to 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 claims that a good negotiation results in a satisfactory outcome for all, defined by six 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.
Although both parties might not get exactly what they want, they should both walk away from the negotiation in a better spot than when they entered it. A successful business negotiation should be a win-win scenario.
Preparing for Negotiation
A negotiation that results in a successful outcome does not just happen by luck. It tends to spring from careful preparation by all parties. Shapiro identifies three areas where preparing for a negotiation 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 develop 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’s often best to start with some casual, pleasant chitchat. 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 is 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.
Finkel adds two other items 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.
- 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 become aggressive when the conversation turns toward price and terms. Understanding their signature before the negotiation begins, Finkel says, helps leaders control the situation.
During a Business Negotiation
During the actual business negotiation, other techniques may come into play. According to Martin E. Latz, chairman and CEO of the Latz Negotiation Institute 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 five 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 two additional techniques that can stoke 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’ll be reminded of what’s in it for them—and they’ll 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.
International Negotiation Styles
Leaders engaged in international business negotiation need to consider differences in business customs, culture, and process. The language barrier can also play a role; certain words or phrases in English might not have the same meaning in another country.
Marketing consultancy Small Business Rainmaker notes that professionals doing business abroad should be familiar with the five following styles of negotiation:
- Competing. A party pursues their own interests and is focused only on the end result.
- Avoiding. A party navigates the negotiation with caution to avoid conflict and tension.
- Accommodating. A party aims to satisfy the other party’s needs to maintain a healthy relationship.
- Compromising. A party aims to find a middle ground quickly.
- Collaborating. A party puts in the time to work together and problem-solve with the other party to find a win-win solution.
From a cultural standpoint, the most common negotiation style of any country can be grouped into one of these five. For instance, Small Business Rainmaker cites the United States, United Kingdom, and Mexico as countries that prioritize competing, whereas India and Canada are more likely to rely on accommodating. For American business professionals who plan on negotiating in Canada, this tells them that they may not have to push as hard to get what they want out of the negotiation.
A country’s specific business customs and attributes may also influence negotiations. For instance, those involved in business negotiations in Japan should introduce themselves formally and humbly; being brash or overconfident may not go over well. In France, negotiations are often highly formal affairs in which both parties should display proper etiquette; breaking the formal tone or making jokes may cause the other party to take offense.
Negotiation can be a challenge; international negotiation adds a degree of difficulty due to cultural differences and variations in tone and process. Those who plan on negotiating internationally should research how business is conducted in other countries to show respect and ensure a positive outcome.
Learn How to Become an Expert Negotiator
These suggestions scratch the surface of the art of negotiation and are no substitute for practice. Becoming a master negotiator takes years of experience and exposure. One way to help build the skills to become an expert in business negotiation is through education.
The WSU 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, and skills used by today’s high-profile business leaders. For more information, visit WSU’s Online Executive MBA program page and discover how it can help set you on the path to professional success.
Recommended Readings
How MBA Programs Demonstrate the Importance of Diversity
The Importance of Networking for Post-Military MBA Students
When Is the Right Time in Your Career to Earn an MBA?
Sources:
Asana, “10 Negotiation Skills to Close Deals With Confidence”
Business News Daily, “10 Negotiating Tips to Sharpen Your Skills”
Economist Education, “Negotiation Skills: Why You Need Them In Your Toolkit”
Inc., “The 5 Most Important Negotiation Skills You Must Master”
SCORE, “11 Small Business Negotiation Strategies and Tips for Business Owners”
Small Business Rainmaker, “International Negotiation Strategies: Going Global with Your Business”