How can a deal be concluded in a successful and profitable manner?
This is the critical question that dominates most conversations related to being successful in winning major projects.
The purpose of negotiation is to reach an agreement not to achieve some abstract level of fairness.
However, unless each party concludes that the offer on the table at least meets its minimum conditions for settlement, that offer is unlikely to appear attractive.
Thus, while fairness in some absolute sense is not the goal, negotiations must be conducted realistically to have any hope of success.
Although it is neither necessary nor advisable to make repeated unilateral concessions, it is wise to consider the risk of undermining the other side’s negotiator by staking out unrealistic demands or by refusing all overtures that the other side makes.
The signals that each side sends to the other are likely to influence the progress of the negotiation.
The appearance of an aggressive, harsh or punitive approach on one side will often result in a similar response from the other.
The psychological element of negotiations should never be forgotten. It is critical for all parties to think about their own behaviour and messages that they are sending.
If that behaviour and those messages are not compatible with the successful outcome, then such an outcome is unlikely to occur.
There is a tie between the things that are said and the way they are expressed. The terms that are used all tend to influence heavily the probability of a successful outcome.
In general, negotiators tend to be affected in predictable ways by the frame or form in which ideas and information are presented during negotiation.
If ideas are presented and explained in terms of opportunity for mutual gain, they are more likely to appear attractive than if those same ideas are presented as mutual concessions.
There is a natural tendency upon the part of negotiators to avoid what is perceived as the appearance of a loss.
Therefore, it is necessary for negotiators to anticipate how people will behave in response to the way in which a given idea is presented.
Further concerns relate to the willingness of each party to the negotiation to assume risk and the extent to which each party views particular issues as a matter of principle.
In a sense, the concessions each party is called upon to make are the investment that each makes respectively to secure the benefit of an eventual agreement resolving the dispute.
A person who acts as a negotiator must have a proper understanding of the interests and strategic objectives of the organization that he or she represents to be able to place any offer made into its proper context.
He must understand the relative priority of the organization’s objectives so as to be able to assess the importance of any concession brought forward.
The negotiator must have a realistic understanding of the strengths and weakness of both parties and of the merits and realism of their respective positions.
Until recently, people could acquire negotiation skills only through experience. With the evolution of skills training in universities and professional schools and the consequent adoption of a more scientific approach to the subject, it is now possible to provide formal training in negotiation methods to make people more effective negotiators.
In negotiation, it is necessary to compete and co-operate at the same time. Negotiation does not necessarily involve confrontation.
It takes place quite frequently, however, in situations in which elements of conflict and resulting confrontation exist. Therefore, an understanding of conflict is essential for any mediator or negotiator.
One job of a negotiator is to manage conflict in a creative manner so as to reduce the adversarial tension arising from a dispute.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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