Negotiation Meaning and Process

Negotiation is a strategic discussion that resolves an issue in a way that both parties find acceptable. In a negotiation, each party tries to persuade the other to agree with his or her point of view. By negotiating, all involved parties try to avoid arguing but agree to reach some form of compromise.

Negotiations involve some give and take, which means one party will always come out on top of the negotiation. The other, though, must concede—even if that concession is nominal.

Parties involved in negotiations can vary. They can include talks between buyers and sellers, an employer and prospective employee, or between the governments of two or more countries.

Key Factors in Negotiations

When it comes to negotiation, there are some key elements or factors that come into play if you’re going to be successful:

(i) The Parties Involved

Who are the parties in the negotiation, and what are their interests? What is the background of all involved, and how does that affect their position in the discussion?

(ii) Relationships

What is the relationship between the parties and their intermediaries in the negotiation? How are the parties connected and what role does that play in the terms of the negotiation process?

(iii) Communication

How will the needs of the parties involved be best communicated in order to secure their agreements through negotiation? What is the most effective way to convey the desired outcomes and needs? How can the parties be certain they are being heard?

(iv) Alternatives

Are there any alternatives to what either party initially wants? If a direct agreement is not possible, will the parties need to seek substitute outcomes?

(v) Realistic Options

What options may be possible to achieve an outcome? Have the parties expressed where there may be flexibility in their demands?

(vi) Legitimate Claims

Are what each party requests and promises legitimate? What evidence do the parties offer to substantiate their claims and show their demands are valid? How will they guarantee they will follow through on the results of the negotiation?

(vii) Level of Commitment

What is the amount of commitment required to deliver the outcome of the negotiations? What is at stake for each party, and do the negotiations consider the effort that will need to be made to achieve the negotiated results?

Important factors in Negotiating

Not everyone has the skills needed to negotiate successfully. But there are a few things you can do to better help you make your position known:

(i) Justify your Position

Don’t just walk into negotiations without being able to back up your position. Come armed with information to show that you’ve done your research and you’re committed to the deal.

(ii) Put Yourself in Their Shoes

There’s nothing wrong with sticking to your ground. But while you shouldn’t go over your limitations—such as spending more money if you’re buying a home or car—remember that the other party has its own restrictions as well. There’s nothing wrong with trying to see things from the other person’s perspective and why they may not accept your offer.

(iii) Remove the Emotion

It’s easy to get caught up and be swayed by your personal feelings, especially if you’re really vested in the outcome. The best thing to do is to keep your emotions in check before you start.

(iv) Know When to Stop

Before you begin the negotiating process, it’s a good idea to know when you’ll walk away. There is no use trying to get the other party to see where you stand if the talks aren’t moving forward.

Negotiation Process

Negotiation process permeates the interactions of almost everyone in groups and organizations.

In today’s loosely structured organizations, in which members work with colleagues over whom they have no direct authority and with whom they may not even share a common boss, negotiation skills become critical.

The 5 steps of the negotiation process are:

1. Preparation and Planning

Before the start of negations, one must be aware of the conflict, the history leading to the negotiation of the people involved and their perception of the conflict expectations from the negotiations etc.

Before starting the negotiation, it needs to do homework.

What’s the nature of the conflict? What’s the history leading up to this negotiation?

Who’s involved and what are their perceptions of the conflict? Moreover before any negotiation takes place; a decision needs to be taken as to when and where a meeting will take place to discuss the problem and who will attend.

Setting a limited time-scale can also be helpful to prevent disagreement from continuing. This stage involves ensuring all the pertinent facts of the situation are known in order to clarify own position.

It also needs to prepare an assessment of what the other parties’ negotiation’s goals are. What are they likely to ask for?

2. Definition of Ground Rules

Once the planning and strategy are developed, one has to begin defining the ground rules and procedures with the other party over the negotiation itself that will do the negotiation. Where will it take place?

What time constraints, if any will apply? To what issues will negotiations be limited? Will, there be a specific procedure to follow in an impasse is reached? During this phase, the parties will also exchange their initial proposals or demands.

3. Clarification and Justification

When initial positions have been exchanged both the parties will explain amplify, clarify, bolster and justify their original demands. This need not be confrontational.

Rather it is an opportunity for educating and informing each other on the issues why they are important and how each arrived at their initial demands.

This is the point where one party might want to provide the other party with any documentation that helps support its position.

4. Bargaining and Problem Solving

The essence of the negotiation process is the actual give and take in trying to hash out an agreement, a proper bargain. It is here where concessions will undoubtedly need to be made by both parties.

5. Closure and Implementation

The final step in the negotiation process is formalization the agreement that has been worked out and developing and procedures that are necessary for implementation and monitoring.

For major negotiations this will require hammering out the specifics in a formal contract.

Negotiation Process has five stages. In all steps of a negotiation process, the involved parties bargain at a systematic way to decide how to allocate scarce resources and maintain each other’s interest.