How is the Negotiation Process?

Negotiation skills aren't just for entrepreneurs. Negotiation training is useful in a variety of real-world situationsEither at work (like negotiating a job offer) or at home. The first step in being a skilled negotiator, and ultimately "getting to the yes," is understanding the five basic stages of the negotiation process.

Negotiation is a process whereby two or more people (or groups) solve a problem or arrive at a better result through compromise. Negotiation is a way to avoid arguments and reach an agreement with which both parties feel satisfied.

Negotiation can be used by a variety of groups in a variety of situations. For example, between individuals in a market looking to get the best price on an item, between startups that seek to merge organizations through trade negotiations or between governments that wish to participate in an agreement of peace.

In your daily life, you may find yourself working on salary negotiations or sales negotiations. Negotiation strategies are also a great tool for conflict management and resolution, even in personal life.

What does it take to negotiate?

The negotiation process it is an integral part of any business, and you can't escape it, no matter what kind of business we talk about.

You will always have to negotiate if you want to win a sale with better conditions or make purchases of raw materials with better terms. Note that in both cases we say the word "better" which is the objective of the negotiation process.

For the negotiation to be a process we must have:

• Minimum of two parties involved in the negotiation process.
• A subject for negotiation between both parties.
• Existence of different purposes between the two sides.

Trading types

There are two possible types of negotiation, depending on the point of view and leadership styles of each negotiating party:

1. Distributive negotiation: Also sometimes called 'hard bargaining', distributive bargaining is when both parties adopt a extreme position and it is believed that the victory of one party is the loss of the other (a solution of win-lose).
2. Integrative negotiation: the parties that participate in the inclusive negotiation do not believe in a fixed pie, but affirm that both parties can create mutual value or gain by offering trade-offs and reframing the problem so everyone can come up with a solution where everyone win.

Who are part of it?

Entrepreneurs must negotiate with suppliers, potential customers, and employees. It is said that it must because entrepreneurs are not always aware that they must negotiate. This means that, in many situations, they do not use the power of negotiation to secure better conditions for their own business. For example, in many cases they are not exploiting the possibility of negotiating with suppliers to ensure lower prices, provide a better payment period or better business relationships ...

As the last requirement to be able to negotiate is to have different objectives between the two parties. For example, consider the 3 most common entities that an entrepreneur can negotiate with:

• Providers: the entrepreneur wants to get a lower purchase price, while the supplier wants to get a higher price.
• Buyers: in this part, the entrepreneur wants to get a higher price, while the buyer wants to get a lower cost.
• Employees: the entrepreneur wants to pay based on performance, while the employees want to have a higher salary.

These are simple examples of different objectives. However, in reality the objectives are much more complex and are affected by many more factors depending on the conditions and types of negotiation.

The 5 stages of the negotiation process

While there are many approaches to negotiation tactics, there are five common steps that the most effective negotiations follow to achieve a successful outcome:

1.- Prepare

Negotiation preparation is easy to ignore, but it is a vital first stage in the negotiation process. To prepare, research both sides of the discussion, identify potential trade-offs, and determine the most desired and least desired possible outcomes.

Then, make a list of the concessions that you are willing to put on the negotiation table, understand who in your organization has the power to make decisions, know the relationship you want to build or maintain with the other party and prepare your best alternative to an agreement negotiated. Preparation can also include defining ground rules: determining where, when, with whom, and under what time constraints the negotiations will take place.

2.- Exchange of information

This is the part of the negotiation in which both parties exchange their initial positions. Each party should be allowed to share their underlying interests and concerns on an uninterrupted basis, including what they intend to receive at the end of the negotiation and why they feel that way.

3.- Clarify

During the clarification step, both parties continue the discussion that they started when they exchanged information by justifying and reinforcing their claims. If one of the parties disagrees with something the other says, they should discuss that disagreement in calm terms to reach a point of understanding.

4.- Negotiate and solve problems

This step is the negotiation process, during which both parties begin a give and take. After the initial initial offer, each negotiating party must come up with different counter offers to the problem, while making and managing their concessions.

During the negotiation process, keep your emotions in check; the best negotiators use strong verbal communication skills (active listening and calm feedback; in face-to-face negotiation, this also includes body language). The goal of this step is to emerge with a win-win outcome: a positive course of action.

5.- Conclude and implement

Once an acceptable solution has been agreed, both parties should thank each other for the discussion, regardless of the outcome of the negotiation; Successful negotiations are all about creating and maintaining good long-term relationships. Then, they must outline the expectations of each party and ensure that the engagement is implemented effectively.

This step often includes a written contract and follow-up to confirm that the implementation is going smoothly.