Approaches to negotiation

March 19, 2023

This Article has been written by Ms. Sejal Dhakad, 1^st year BBA LLB Student at Indian Institute of Management Rohtak.

Introduction

Negotiation is a conversation between two or more parties in order to resolve one or more contentious issues. It involves interactions between entities that aim to reach consensus on issues of shared interest. The deal may be advantageous to all or some of the participants. Given that there is some give and take during negotiations, one party will always prevail. Yet even a small concession must be made by the other.

Buyers and sellers, an employer and a potential employee, a government of two or more countries, or other parties can all be negotiating parties. A problem can be resolved through negotiation in a fashion that is agreeable to both sides. Negotiation usually starts with a compromise. Leigh Thompson describes negotiation as an interpersonal decision-making process that is important if we are unable to accomplish our goals on our own in her negotiation textbook The Mind and Heart of the Negotiation.

The ability to negotiate is crucial in a variety of contexts, including international relations, legal systems, government, labor issues, and more. There are many different activities where general negotiation abilities can be employed. Preparation, debate, goal clarification, pursuit of a win-win solution, agreement, and execution of a plan of action are all parts of the negotiation process.

There are four different negotiation approaches:

Win-Lose or distributive approaches to negotiation

This is also known as a zero-sum, competitive, or claiming value strategy. This strategy is predicated on the idea that one party can only triumph at the expense of the other. It features the following things:

A side wins and a side loses, respectively.
Fixed resources must be allocated such that the more one receives, the less the other receives.
When two people have conflicting interests.
The maximization of one’s own interests is typically the primary concern in this form of negotiating.
In this paradigm, information withholding, coercion, and manipulation are the most common tactics.

The approach to take in this mode is to try to obtain an advantage by hiding information, being deceptive, or acting manipulatively. Of course, there is a very real chance that these techniques will have detrimental effects. But, even in this kind of negotiation, all parties must believe that the result was the best they could come up with and that it is worthwhile to accept and support.

With this type of strategy, the negotiator has access to the following fundamental techniques.

Make the other person think differently about what’s possible.
Find out as much as you can about the other person’s viewpoint, especially with regard to potential places of resistance.
Attempt to persuade the other to reconsider their belief in their own capacity to succeed.
Sell your own goals as ethical, desirable, and even inevitable.

Loose – Loose Approach

When one negotiating partner perceives that his own interests are at danger, he will take all reasonable steps to ensure that the conclusion of the negotiation does not also serve the interests of the opposing party. Both parties lose out on the deal in the end. This kind of circumstance occurs when the parties to a negotiation disregard one another’s needs and prioritise hurting one another over coming to an amicable agreement. As this is the most unwanted conclusion, it is better to steer clear of this negotiation strategy.

Compromise Approach

This technique yields results that are marginally superior to those of the lose-lose strategy. Both parties compromise and accept less than what they had first demanded in order to avoid a lose-lose outcome. When it is hard for both parties to persuade one another or when the resources at issue are scarce, a compromise is the wisest course of action.

Integrative Negotiation or Win-Win Approach

This strategy for negotiations is also known as the collaborative or adding value strategy. It outperforms all other negotiation strategies. Both sides feel as though they have achieved their goals as a result. Both sides are satisfied as a result. The following qualities apply to it.

Both sides can “win” since there are enough resources to split between them.
Maximizing joint results is the main concern here.
The most common problem-solving tactics are cooperation and information exchange. This style of negotiation is also known as “creating value” because the objective is for both parties to feel more valuable after the negotiation.

Since the integrative strategy is the most ideal, the following are some recommendations for integrative bargaining:

Consider adopting a win-win strategy. The way you approach the negotiation will have a big impact on how it turns out.
Make a plan and a specific strategy. Be clear about your priorities and the reasons they matter to you.
Understand your ideal counter-proposal to a negotiated alternative (BATNA).
Keep people away from the issue.
Consider the other party’s condition; concentrate on interests, not positions.
Make decisions that benefit all parties.
Consider a range of options before making a decision.
Aim for a result based on an impartial criterion.
Pay close attention to how the negotiation is progressing.
Be attentive when communicating and take into account intangibles.
Ask questions, rephrase them, practice active listening, and then ask some more questions.

Bargaining Approach

This strategy is founded on the idea that one person can only succeed at the expense of the other and that any success of one party must be offset by a failure of the other. This method is also known as the win-lose strategy for this reason. When the other party is determined to take advantage of you or when your interests actually collide with those of the other party and compromising is not an acceptable choice, this method, which is competitive and may foster animosity, is occasionally the best one.

Conclusion

it’s not always obvious which approach is best. You may need to be more clear about your plan to spend time upfront exchanging information and considering mutually beneficial options if you prefer an interest-based strategy that focuses on adding value for everyone involved. A completely different process, such as the exchange of best offers or in-depth drafting, may be anticipated by your rival.

Drawing from various disciplines and sources is one of the negotiation strategies that has the best success rates. Many value-creation ideas can be clarified using concepts from economics and game theory. Students studying negotiation might improve their real-time listening and adapting abilities by participating in the performing arts, such as improvisational theatre.

Nonetheless, keep in mind that your opponent can take a more hostile stance. One method to anticipate what will happen during negotiations is to have strategies prepared before sitting down to bargain, but skilled negotiators are aware that even the best-laid plans will be affected, either positively or negatively, by the manner their adversary bargains.

High-stakes discussions frequently result in high levels of anxiety. Dealmakers become preoccupied with (perceived) dangers as a result, rather than identifying all potential sources of leverage and considering all available solutions. Negotiators are more prone to make poor tactical decisions in those circumstances, either caving to pressure from the other side or unintentionally bringing about their own worst fears.

Selecting a cooperative or competitive stance is only one part of a strategic negotiating technique, and thinking in such absolutes is nearly always fruitless. Dealmakers will be able to unlock much more value by analyzing connections between one negotiation and others with the same party over time (and even with other parties), examining carefully whether they are negotiating about the right issues, and concentrating on when and how to engage with the other side most effectively.

References

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March 19, 2023