“In business, you don’t get what you deserve; you get what you negotiate.” – Chester Karrass.
Negotiating successfully is an essential skill for any business owner, as it is integral in working out mutually beneficial agreements or resolutions with partners, suppliers, vendors, employees, and customers. There are several negotiation styles, understanding when to use each one will help you ensure your business relationships are managed prudently. This blog looks at the five negotiation styles that will assist in managing your partnerships and discuss what situations each one is best suited for.
What is negotiation in the workplace?
Workplace negotiation is the formal or informal process of bargaining for terms or concessions between two or more parties for personal, professional, or organizational benefit. For instance, negotiating terms of employment, asking for a raise, making a case for a project budget increase, a policy change, solving a dispute, buying and selling assets or equipment, or finalizing terms of a sale with a client; are a few common examples of workplace agreements that require negotiation.
Basic Stages of Negotiation
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- An issue presents itself (problem, disagreement, need, want)
- Information exchange
- Bargain
- Conclusion
- Execution
Why negotiating is vital in business?
Negotiating is a critical tool in the workplace for resolving disagreements and creating various types of value through agreements. It is how people settle differences while remaining civilized or influencing decision-makers with conflicting views. Negotiating is a way of achieving personal and organizational objectives even though those interests conflict with coworkers, peers, decision-makers, or stakeholders.
People are Always Negotiating
“You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.” – J. Paul Getty.
Negotiation is the process we use to deal with our differences. Even so, when people hear the word “negotiation,” it is usually thought of as a formal process that requires a team of lawyers, professionals, and elite stakeholders. Moreover, negotiating is something that occurs throughout an individual’s typical workday. For example, when working in teams, teammates negotiate the division of tasks; when shift workers swap shifts, they negotiate; or when booking off holidays at work, employees often have to negotiate. These smaller, everyday negotiations serve as practice for when more significant negotiations arise. Negotiations of all sizes use the same skills, tactics, and styles.
What does negotiating in good faith mean?
Good faith negotiating means both parties are sincerely attempting to reach an agreement. This does not mean both parties are aiming for the same objective or even a fair deal. The process should still be viewed as a competitive process with the possibility of advantageous, fair, or unfair outcomes.
What does negotiating in bad faith mean?
Negotiating in bad faith occurs when a party enters a bargaining situation with no intention of reaching an agreement. This process is referred to as a “false negotiation,” where the opposing person, party, or organization is negotiating under false pretenses.
Note: You should be ready to walk away if the opposing party is not negotiating in good faith
The Five Fundamental Negotiation Styles
l) Accommodating style (I lose-you win)
Accommodating negotiators prioritize maintaining the relationship between the negotiating parties. Those who exhibit the accommodating style seek to satisfy the other party’s needs while minimizing the level of conflict involved in the negotiation. This is usually accomplished by giving up something of value in exchange for cooperation.
Pro: Accommodation preserves relationships and demonstrates good faith.
Con: When the accommodation style is used too often, it takes away from an individual or organization’s focus and can be perceived as a sign of weakness.
ll) Avoiding style (I lose-you lose):
People who use the avoidance negotiation style do so because they dislike confrontation. Avoidance style usually manifests itself as indecision, inaction, or ambiguous ideas about managing an issue, person, decision, or external party.
Pros: The avoidance style is appropriate when time is required to consider how to approach a situation or problem.
Cons: Avoidance can create the perception that one party is not concerned about the issue, situation, or decision. This can cause frustration among managers, customers, and employees.
lll) Collaborating style (I win-you win)
Collaborative negotiation is perceived as constructive or interest-based negotiating. Collaboration treats relationships as a vital component of the overall objective of achieving a win-win agreement.
Pros: The collaborative style increases trust among negotiating parties and can lead to stakeholder buy-in once an agreement is reached.
Cons: Collaborative approach can be expensive and time-consuming, resulting in a complex agreement and a loss of autonomy.
lV) Competing style (I win-you lose)
Competitive style negotiators pursue self-interest above all. This style occurs when one party is narrowly focused on outcomes and is only concerned with short-term gains. As a result, they may not consider the repercussions of their actions, ruined relationships, or damaged organizational reputation.
Pros: The competing style is effective during difficult situations, such as crises, when decisions must be made quickly.
Cons: A competitive style can be perceived as aggressive, confrontational, and uncooperative. This style can destroy relationships and a company’s reputation.
V) Compromising style (I lose/win some-you lose/win some)
Compromising is how many people view the negotiation process. Compromising includes formal and informal discussions, concessions, and bartering over terms and details. Compromise usually results in negotiating parties getting something they want in exchange for things they do not want.
Pros: Compromise is viewed as an upbeat negotiating style because it demonstrates concern for the opposing party. Additionally, compromise tends to achieve a quick resolution.
Cons: Compromise can limit the number of options or solutions proposed or considered.
Tips to Remember When Entering a Negotiation
“Power is based on perception. If you think you got it, you got it, even if you don’t get it.” – Herb Cohen
- Have an objective or optimal outcome to aim for
- Know what the opposing party wants
- Information is power
- Don’t assume anything (you may have better information)
- Don’t make it personal
- Know when to walk away
- Show strong objections to bad-faith negotiation
- Know the levers that you control
- Get the terms of the agreement in writing.
- Be 100% transparent, clear, and honest.
As a business owner, it is up to you to ensure that your company maintains solid and healthy relationships with its partners. In order to do so, you must be an effective negotiator. By familiarizing yourself with the five negotiation styles we discussed in this blog post, you will be able to equip yourself with the tools necessary to succeed in any negotiation situation. Remember that each style should be used judiciously, as employing the wrong one can result in missed opportunities or damaged relationships. What are some of the key takeaways that you will use next time you sit down at the negotiating table?
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