Communications skills: Negotiation
Here is the question we are concerning ourselves with:
During a negotiation, how can we get the best results?
We can get the best results by developing our knowledge of the principles governing successful negotiation and, in addition, we can develop the associated advanced communication skills that are needed during a negotiation.
In order to develop our knowledge of the principles of successful negotiation, we must first ask and answer this question:
What is negotiation?
Negotiation is a specialised form of communication that involves two or more individuals or groups, each acting in their own self-interest, and each recognising that, to achieve their own self-interest, they need to trade with others, and therefore, must be able to create and sustain a long term, mutually beneficial agreement.
Negotiation is a transaction over which each of the parties has a veto over the final outcome.
In a business context, negotiation requires voluntary consent on all sides.
Negotiation is a process by which all parties should achieve a self-interested benefit.
What isn't negotiation?
Negotiation is not the act of appeasement and surrender: Negotiation is not the act of continuing to give multiple concessions to the other person until he-she is happy and has everything he wants.
Why not? Because to give too many concessions in return for nothing would create a losing situation for the giver.
Example: During 1939 Neville Chamberlain, British Prime Minister, gave repeated concession to Adolf Hitler at the Munich Conference. Chamberlain gave in to Hitler's demands to take an area of Czechoslovakia called, "Sudetenland". Chamberlain returned to Britain and claimed he had regained, "peace in our time".
Meanwhile, Hitler had no intentions of following through with the treaty. Five months later he invaded Czechoslovakia and annexed the rest of it, going back on his word.
Too late Chamberlain learned that his policy of appeasement had made Hitler stronger and himself weaker.
A few months later WWII was declared. These were the effects of appeasing Adolf Hitler at the Munich Conference.
Negotiation is about trading concessions, not giving them away. Negotiation is not the act of mental intransigence: Negotiation is not the act of saying "Take it or leave it".
Why not? Because negotiation is, to some degree, about finding a rational compromise that can satisfy the legitimate claims of all sides.
Why not? Negotiation is not the act of saying "Take it or leave it".
Because if I gain the reputation of being intransigent and difficult to deal with, then, over the long stretch, my reputation in the market place will suffer, and I will lose more than I will gain.
What is negotiation?
Negotiation is rational, tough minded, trading of values with intent to give a profit for both sides. Note on the use of the word "give".
There is a certain equivocation and ambiguity over the meaning of the words "give" and "gift".
A pure "gift" is given when nothing is expected in return.
For example: a birthday gift is a pure gift. You do not expect the person to give back to you the equivalent, in return.
You don't say to the receiver of the gift, "Happy birthday darling. I love you. Here is your birthday present. Now you owe me!"
In in a charitable context you don't give a donation of £5 to the street beggar and then say: "Now come with me and wash my car."
No. In this case you are giving the beggar a pure gift. One where nothing is expected in return.
But there is a second meaning of the word gift or give.
For example, in business things are different. Every month your employer "gives" you money.
Why? Not because you need it; and Not because your boss thinks you are a nice person.
The money you are "given" is not a gift. The money you are given is part of a transaction: it is a transaction based on the principle of "trade".
The gift is not a pure gift; it forms part of a trading relationship.
The nature of the trading relationship is "money in exchange for productive effort".
The nature of your relationship with your employer is this: "We will give you money, if and only if, you produce goods and services that are of value to the organisation".
And the organisation is saying in effect: "if you don't give us any productive effort, we won't continue to give you money".
And your relationship with your employer is similar:
"I will work for you, if and only if, you give me money."
And you would agree that if the organisation stopped paying you your wages, you would soon stop giving them your productive effort.
So, there are two fundamental relationships you can have with other people:
1. Altruistic relationships: where you give other people things without expecting anything in return.
2. Trading relationships where you give other people things, IF AND ONLY IF, they give you things in return.
This is the relationships you have with all the people with whom you do business.
The basic rule of relationships, business and negotiation is this:
You don't give concessions for free: instead you must trade concessions.
From the above statement, we can derive the following four immediate inferences:
1. If they don't give to you, then you don't give to them.
2. If you don't give to them, then they don't give to you.
3. If they do give to you, then you will give to them.
4. If you do give to them, then they must give to you.
A proper business relationship is based on "a mutual exchange of values".
A proper business relationship is based on "a trading relationship"; not altruism, kindness, love or need.
If either side defaults on their side of the trade, for an extended period of time, then the relationship begins to falter.
Quote from Adam Smith (1723-90)
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.
Adam Smith was a Scottish pioneer of political economy. He is best known for his book "The Wealth of Nations", which is considered to be foundation of economics. Smith is cited as the father of modern economics and he is still among the most influential thinkers in the field.
More on trading relationships
There are those who say that all successful, long term relationships are, in fact trading relationships. Even marriage.
What do you think of that? All long term successful relationships, even marriage, boils down to a trading relationship. That marriage is (or should be) a mutual exchange of values; if one person if doing all the giving and the other person is doing all the taking, then there is something wrong with the relationship.
- All proper relationships should be mutually beneficial.
- All proper relationships should benefit both sides.
Negotiation depends upon an understanding that concessions are not given. Concessions are traded.
There are key phases to remember. They are:
1. Trading relationship.
2. Mutual exchange.
3. If, and only if.
To return to the original question. During a negotiation, how can we get the best results?
- Don't fall into the trap of continuing to give multiple concessions to the other person until he is happy and has everything he wants.
- Don't fall into the trap of saying "Take it, or leave it".
1. Form a trading relationship.
2. Insist on a mutual exchange.
3. Use the magic phrase: If and only if.