How to Prepare for Negotiation Deals

Good negotiation requires preparation, and an understanding of the underlying assumptions and needs to be satisfied on both sides.

It also requires a basic knowledge of human behavior and mastery of a range of negotiating techniques, strategies, and tactics. In his book, Fundamentals of Negotiation, Gerard I. Nierenberg outlined several steps toward adequately preparing for a negotiation.

Uncover underlying motivations

The first step is to “do your homework” about the other side. In nearly every negotiation, this will entail research to uncover their underlying motivations. In negotiating a business property lease, for example, it may be useful to find out the cost to the landlord of keeping the building vacant.

The next step is to assess your own needs and establish objectives for the negotiation. The objectives must remain relatively fluid, however, so as not to hinder the negotiation.

Making the right decision

Another element of preparing for a negotiation involves deciding whether to use an individual or a team as your representative. This decision needs to be considered separately for every negotiation and will always depend, to some extent, on what the other side is doing.

A negotiating team offers several strategies. For example, it enables a small business to involve people with different areas of expertise to avoid misstatements of fact.

Teams can also play into negotiating strategies and help gain concessions through consultation among team members.

What to Note

However, it is important to note that bringing extra people can be harmful to a negotiation when they do not have a distinct function. Using a single negotiator also offers some advantages.

It prevents the weakening of positions that often occurs through differences of opinion within a team and it also may help gain concessions through the negotiator’s ability to make on-the-spot decisions.

Choosing a chief negotiator

The step in preparing for a negotiation involves choosing a chief negotiator. Ideally, this person should have experience and training in negotiations, as well as a strong background in the area of the problem to be negotiated.

Selection of the meeting sites

Another important element of negotiation is selecting the meeting site. For a small business, holding the meeting on its premises may provide a psychological advantage, plus will save on travel time and expense.

It may also help enable the negotiators to obtain approval from managers or use their facilities to check facts and find additional information as needed.

What to note

Holding a negotiation at the other party’s offices, however, may help the negotiators to devote their full attention to the task at hand without distractions.

It may also play into negotiating strategy by enabling the negotiators to temporarily withhold information by claiming a need to speak to higher-level people or gather more information. A third alternative for a meeting site is a neutral location.

Whatever site is chosen, it should be large enough to accommodate all parties and feature a telephone, comfortable chairs, visual aids, and, available refreshments.

Separating people from the problem

Separate the people from the problem. The idea should be for both sides to work together to attack a problem, rather than attacking each other. To achieve this goal, it is necessary to overcome emotional responses and set aside egos.

Focusing on interests rather than positions

Focus on interests rather than positions. The natural tendency in many negotiations is for both sides to a position and then move toward a middle ground, for example, dickering over the price to be paid for an antique.

Fisher and Ury warn against confusing people’s stated positions with their underlying interests and claim that positions often tend to obscure what people truly hope to gain through negotiation.

Generating a variety of options before deciding what to do

Generate a variety of options before you decide what to do. The pressure involved in any type of negotiation tends to narrow people’s vision and inhibit their creativity, making it difficult to find optimal solutions to problems.

Instead, Fisher and Ury suggest developing a wide range of possible solutions as part of the negotiating process. These possible solutions should attempt to advance shared interests and reconcile differences.

Basing the result on objective criteria

Base the result on objective criteria. No one will be happy with the result of the negotiation if they feel that they have been taken advantage of.

The solution is to find and apply some fair standard to the problem to guarantee a mutually beneficial result.

Fisher and Ury’s principles

Fisher and Ury’s principles provide a good overall guide for the actual negotiation process. In his book, Nierenberg offered several other tips and strategies that may be effective in promoting successful negotiations.

For example, it may be helpful to ask questions to form a better understanding of the needs and interests of the other parties.

The questions must be phrased diplomatically

The questions must be phrased diplomatically and timed correctly to avoid an antagonistic response. The idea is to gain information and uncover basic assumptions without immediately taking positions.

Nierenberg stressed the Importance of listening carefully to the other party’s responses, as well as studying their facial expressions and body language, to gain quality information.

Small business owners should be aware of some common strategies

Nierenberg noted that good negotiators will employ a variety of means to accomplish their objectives. Small business owners should be aware of some of the more common strategies and techniques that they may see others apply or may wish to apply themselves.

One common strategy is forbearance or “patience pays” which covers any sort of “wait or delay” in negotiations. If one side wishes to confer in private or adjourn briefly, they are employing a strategy of forbearance.

Presenting a fait accomplishment

Another common strategy is to present a fair accomplishment, or come to a final offer and leave it up to the other party to decide whether to accept it.

In a simple example, a small business owner may scratch out one provision in a contract that he or she finds unacceptable, sign it and then send it back.

The other party to the contract then must decide whether to accept the revised agreement. Nierenberg warns that this strategy can be risky and encourages those who employ it to carefully appraise the consequences first.

Taking a position that seems opposed to the original one

Another possible negotiating strategy is a reversal, which involves taking a position that seems opposed to the original one. Similarly, feigning involves moving in one direction to divert attention from the true goal. For example, a negotiator may give in on a point that is not very important to make the real objective more attainable.

Setting limits on the negotiation

Another strategy involves setting limits on the negotiation with regards to time, the people involved, or other factors. It is also possible to change the participation in the negotiation if it seems to be at an impasse.

For example, a neutral third party may be enlisted to help, and one or two people from each side may be sent off to continue the negotiation separately. It may also be helpful to break down the problem into small pieces and tackle them one by one.