Tuesday, November 23, 2010

5 Points for Achieving Painless Negotiations

After 40 years in the flooring industry you can be sure that I’ve negotiated my way through plenty of deals - perhaps not always as effectively as I wanted to.  We’ve all have experience with business negotiations that were not pleasant or positive. Sometimes negotiations feel like a battle  -  a fight between two parties defending their positions, each one trying to avoid “loosing” to the other. With experience I’ve learned there are techniques that make negotiations less painful and more satisfying to both parties.

Whether the negotiations are about a contract, family-twist or peace talks between countries, people in general automatically tend to start in the mode of Positional Negotiation. Positional negotiation is essentially adversarial; each party sees the process as a “win-lose” situation, each using their necessary arguments to defend their position against attack.  A win on one side is a loss on the other and in the end concessions lead to compromise and neither party may be happy with the result. One defense university teaching strategic leadership and negotiating skills uses the example of buying a new car as classic positional negotiations – where the price you want depends upon the salesman giving up his commission and the commission he wants means you pay more. Each gains at the others' expense. These kinds of negotiations rarely end satisfactorily to either party.

Finding common ground

The key to more productive negotiations is finding common ground and thinking long-term. Negotiating for floor covering products from your distributor or manufacturer based upon price alone falls close to Positional Negotiation.  But thinking of alternative ways to achieve your long-term goal for that product opens up new discussion points (marketing support, displays, training, inventory management, delivery options, warranties, rebates), etc. More often than not, you can reach common ground this way but it takes recognizing that each party has a need and using thoughtful two-way communication.

5 points for better negotiating results.

Here are five points to consider in every negotiation - whether business or personal. Each point relates to a fundamental element of the negotiation.
1)    People: Separate the human being from the problem, leave emotions out of the talks.

2)    Communication: Without two-way communication no negotiation will be successful.

3)    Interest: Concentrate on your own interests, not on your position, and try to find out   what the other party’s interests are.

4)    Choices: Create and consider all options and possibilities before making a decision.

5)    Criteria: Insist that the outcome/result is based upon an objective norm.
It is crucial to look for openings and solutions that serve both parties. It is a costly to make decisions on the basis of using power by one of the parties. More often than not, if we can clear the emotion and see long-term, there is common ground – and ways to find benefit for both parties.

Getting the most productivity, profits or performance from your business is not something you achieve alone. Most companies can’t depend solely upon their own resources and need the help of third parties.  Usually this involves negotiating agreements for new products, service or expertise. Whether we like it or not, we are negotiating every day. Using these five points in your negotiating strategy will make the process less painful and more productive.

Ruud Steenvoorden

Ruud Steenvoorden is president of Steenvoorden Consultancy and a member of the Floor Covering Institute. 

2 comments:

  1. Ruud, great post. I would add a #6 Creativity to help each party achieve their objectives. My favorite story is about a group of international business executives planning a visit to Munich in March in the 1990’s. They desperately wanted to hear the famous Glockenspiel chime and petitioned the Mayor to have it play while they enjoyed cocktails in the town square. The Mayor explained that since 1908, the clock only played in the summer and had a tradition that must be upheld. The wise negotiator pleaded and was repeatedly turned down until he finally suggested, “You have a 100 year tradition of the clock chiming on the first day of summer every year. Would not it be a shame if the clock was not working and could not chime on that day, thus breaking the tradition?” The two agreed that to be safe and sure, the clock would need to be "tested" in March of that year. Luckily the test coincided with the visit of these international visitors.

    ReplyDelete
  2. Jim, many thanx for your comments and glad you like it. Wouldn’t it be nice and would our world look much better if we would be able to do it in a painless way!
    There would be less stress, heart attacks and negativism! Like the clock!

    Best regards,
    Ruud

    ReplyDelete