4 Ways to Improve Your Business Negotiation Skills

Imagine any type of negotiation unfolding in front of you. What comes to mind? Most people think of a car sale, negotiating a contract at work, negotiating salary or compensation with an employer, or something simple. However, the reality of the situation is that most people negotiate every day on multiple occasions, but most of these negotiations go unnoticed because they aren’t formalized. They occur on an ad hoc basis, constantly.

If, like me, you have a toddler, then every day is a constant negotiation – get up, get dressed, eat breakfast, put your jacket on, stop colouring on the walls… the list goes on. While these negotiations are relatively low risk, and share the same key ‘rule sets’ as more formalized negotiations, the setting just might be a bit different.

But the mindset stays the same – each negotiating party wants the best possible outcome for themselves, their families, or their organizations. To achieve this outcome, both parties focus on maximizing the benefits for themselves, while minimizing the favourable outcomes the other party receives. With this cut-throat mentality, it’s easy to turn a negotiation into an adversarial situation where you are trying to beat your opponent.

While a common approach, competitive negotiation rarely leads to a favourable win-win outcome for both parties.

Shift Your Negotiation Mindset from Win-Lose to Win-Win

For many, walking into a formal negotiation setting naturally turns into an adversarial setting. Each party tries to play each opposite ends of the spectrum, getting their way at the expense of the other party’s success:

  1. A car salesperson wants me to pay the highest possible price and I want to pay the lowest possible price.
  2. I want a raise, my boss doesn’t want to give me a raise.
  3. I want the contract at full value and the client wants to nickel and dime me.

Sound familiar? Beware the repercussions; entering into a negotiation with this mindset can negatively impact the conversation (and potentially future conversations too).

Business leaders need to shift away from this mindset. Successfully negotiating terms that create goodwill and support future transactions/negotiations should be the main objective. Otherwise you’ll risk alienating potential customers and make sure they never come back to you again.

To develop a better negotiation strategy, focus on the following 4 principles:

1. Attempt to Understand the Perspectives of Others

In a formal negotiation it’s critical to understand the perspective of others:

  • Where are they coming from?
  • What are their motivations?
  • Why could they possibly want a specific outcome?; and
  • What knowledge do they have of the situation?

Many people falsely assume that the other party has the same (or better) knowledge of the situation as them. This is not always the case – in many situations the other party may not have the same background knowledge as you. They may have limited information (or worse: misinformation) about the situation.

To ultimately move a negotiation forward, in a direction that you want, you need to genuinely understand the other party’s perspective. This will help you uncover why they are pushing for a specific outcome. This will also, hopefully, help you avoid an impasse.

2. Ask the Right Questions to Guide Negotiations

In a negotiation you should focus on asking open-ended questions. This serves two main purposes:

  1. It allows the other party to talk more (which can give you more information about their perspective, motivations, pain points, etc.); and
  2. It helps you move the conversation forward in the direction you want.

By letting the other party speak more often you can still direct the conversation while allowing them to solve the problem on their own.

Teaching with Socratic Method the relies on aiding your audience towards an answer through open ended conversation and discussion. Similarly, in a negotiation if you allow the other party to talk more you can help move them towards a solution. Of course in something like a complex contract negotiation or a salary negotiation the other party will not likely come to your best desired outcome on their own, but you can move the conversation towards how you are uniquely able to solve their issues, fix their pain points, and help the company.

3. Use Silence to Your Advantage

One of the most common negotiation tactics is letting the other person talk and getting comfortable in silence. There’s a reason for this: it really works.

People are naturally uncomfortable with silence during a conversation. In a teaching environment, this is really effective for getting students to ask additional questions or offer another point.

In a negotiation, it allows the other party to move first. At first it may feel very awkward, but try to count 10 seconds in your head to allow the other party to respond. People will feel like they need to break the silence and will respond. They will almost always start to try to justify their position or, better yet, compromise with you.

4. Understand When to Accept a Beneficial Outcome

Very rarely will your most desired outcome be realized. Most negotiations end with a compromise between positions.

Academics call this the Zone of Possible Agreement (ZOPA)– the range between two parties’ positions in which a beneficial agreement can occur. While I wouldn’t recommend compromising on principled things, compromise in many situations makes sense.

Remember: the negotiation isn’t adversarial; the long-term goal is to maintain a positive working relationship with the other party. Hence why it’s always important to remain calm throughout a discussion, especially one that could get emotionally charged.

In most business negotiations you need to show a willingness to compromise with the other party to show good faith in your working relationship.

Negotiation Skills Can Improve All Business Communications

While my examples herein mostly focused on clear cut examples of negotiation, there are many informal settings to use these skills. In many situations you are informally negotiating with others without even knowing it. Some examples of this are when:

  • Having discussions with your coworkers;
  • Working with your direct reports or supervisors; or
  • Working with clients.

Trying to understand their perspective, asking open ended questions, and embracing silence can hopefully help you move complicated discussions forward.

Use Canadian Government Funding to Reduce Negotiation Training Costs

Canadian small business grants are available to improve the skillsets of employees, including those in management positions. In most cases, eligible businesses may qualify to offset up to 66% of expenses to a maximum $10,000 per trainee. Companies should consider using Canadian government funding programs to reduce the cost of all investments, including employee training.

To discover if your upcoming training program can be supported with Canadian government grants, please contact Mentor Works.

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Written by

Rob holds a Ph.D. in Political Science from Western University, and has published articles in international journals as well as given presentations throughout Canada and Portugal. His area of expertise lies in advanced manufacturing, international development, export market development, and automotive manufacturing. As a Program Manager at Mentor Works, Rob works with business owners to obtain funding to meet their growth strategies. Prior to joining Mentor Works, Rob worked extensively in various academic roles, software and ICT sales and development roles, and in quality control roles in the automotive industry.

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