This article provides an introduction to negotiation skills, focusing on their importance and offering practical advice for leaders seeking to master the art of negotiation.
Negotiation is an essential skill for leaders and managers. In fact, employers often regard it as one of the top competencies for driving organisational success.
Surprisingly, however, negotiation is not taught enough in many foundational management education programmes.
What is negotiation?
Negotiation is the process by which two or more parties attempt to resolve their differing interests or perspectives to reach an agreement.
It's a form of decision-making where individuals or groups communicate with the goal of addressing opposing viewpoints. Conflicts arise from differences in views, values, and interests - but these conflicts also present opportunities for finding mutually beneficial solutions.
Types of conflicts in the workplace
In the workplace, conflicts can manifest in many ways. According to The Program on Negotiation, conflicts fall into three categories:
- Task-related
- Relationship-related
- Value-related.
Understanding these different types of conflict is essential for effective negotiation. Conflicts should not be seen as inherently negative.
In fact, they can lead to new insights, stronger connections, and growth - as is explained in the paper 'Individual and Organizational Factors Promoting Successful Responses to Workplace Conflict'. The objective is not to eliminate conflicts but to transform them into collaborative problem-solving opportunities.
The role of a conflict-intelligent leader
Leaders who manage conflicts effectively are often referred to as 'conflict-intelligent' leaders (Navigating Firestorms: The Imperative of Conflict-Intelligent Leadership in a Turbulent World). These leaders develop the skills needed to navigate complex interpersonal and organisational relationships.
Successful conflict management involves:
- Cognitive flexibility
- Emotional regulation
- The ability to balance self-interest with the needs of others.
These skills can be developed through training and practice, and they are crucial for effective leadership.
Negotiation vs. other ways to resolve conflict
While negotiation is a powerful tool for resolving conflicts, it's not the only approach available. According to the book 'Advanced Negotiation Techniques', alternatives to negotiation include:
- Coercion
- Surrendering
- Litigation
- Arbitration
- Management problem-solving.
Each method has its pros and cons, and it's important for leaders to understand when and how to use them effectively.
Negotiation strategies and frameworks
Negotiating is not always easy, but there are tools and frameworks available to guide the process. Learning to negotiate effectively involves:
- Practice
- Observation
- Simulations
- Feedback
- Reflection.
These elements mirror the development process of leadership skills.
One useful tool is Shell's negotiation matrix. This helps negotiators assess the relationship and the level of conflict involved in a particular negotiation.
Shell's matrix on negotiation strategies
Once you understand the context using Shell's matrix, you can decide on the most appropriate negotiation approach.
For example, if the issue at hand is a one-off transactional matter, it's likely not worth jeopardising the long-term relationship with the other party.
On the other hand, if the relationship is critical to your organisation's success, a more collaborative and integrative approach may be necessary.
Types of negotiations
Negotiation approaches can generally be categorised into two types:
- Distributive
- Integrative.
Distributive negotiation
This type focuses on dividing a fixed amount of value between the parties. This might involve either:
- Tangible items - for example, money or goods
- Intangible items - for example, power, time, or positions.
Integrative negotiation
In this type of negotiation, both parties work together to create value that neither side initially knew existed. Integrative negotiations focus on collaboration and creating more value than what was originally on the table.
The five steps of negotiation
The negotiation process involves five key steps:
- Preparation
- Information exchange
- Bargaining or deal-making
- Closure and commitment
- Review and learning.
Each of these steps plays a critical role in achieving a successful outcome. Preparation (1), information exchange (2), and review (5) are particularly vital.
Dedicating time and effort to preparation ensures you enter negotiations with a clear strategy and understanding.
The importance of information exchange
One common mistake made by inexperienced negotiators is rushing into the bargaining phase too quickly. Instead, you should take the time to exchange information and understand your counterpart's motivations and interests.
Asking open-ended questions can:
- Help reveal valuable insights
- Reduce the asymmetry of information between the parties.
Only after this information exchange should you begin to 'cut the pie' and divide the value. Sometimes, by sharing information and exploring the situation fully, you might find that there is more value to be shared than initially expected.
Review and learning: the key to improvement
The final step in the negotiation process involves:
- Reviewing the outcomes
- Learning from the experience.
A thorough review is essential for improving your negotiation skills. Craver's checklist is one tool to guide this review, ensuring that each stage of the negotiation is critically assessed.
Lessons learned should be integrated into your organisation's learning systems, helping to improve future negotiations.
Final thoughts
Effective negotiation is a vital skill for leaders and managers. You can improve your ability to negotiate successfully by:
- Learning how to handle conflicts
- Preparing strategically
- Engaging in information exchange
- Reviewing each negotiation process.
Mastering negotiation is not just about achieving favourable outcomes for your side - it's about building long-term, mutually beneficial relationships.
As with leadership development, becoming a master negotiator requires practice, reflection, and continuous learning.
