Negotiations can be improved with sound principles, regardless of the importance of the relationship. When transforming an organization from traditional adversarial relationships with suppliers to constructive partnerships, it’s crucial to dedicate time and energy to negotiations according to the level of importance.
Traditional negotiating tactics include the following forms, which are called position-based tactics:
1. Some negotiators adopt a harsh approach, treating the other parties as opponents to be defeated. They make demands and refuse to make any concessions themselves. They may use tactics such as threats, deception, or coercion. However, this approach can put the long-term success of the negotiation at risk.
2. Individuals who are soft negotiators place a high importance on reaching an agreement, sometimes to the extent that they reveal their minimum acceptable terms, modify their stance, or agree to one-sided deals that require only concessions from them. While they may be successful in securing contracts, they often feel taken advantage of and may be exposed to financial risks.
There are various types of positions in negotiations, such as win/lose or lose/win. However, Fisher and Ury from the Harvard Negotiation Project introduced a new approach called principled negotiations, which focuses on achieving win/win outcomes. In contrast to traditional negotiations where each party gives and takes positions, principled negotiations begin by establishing criteria for long-term benefits. These criteria are not commonly found in win/lose or lose/win strategies.
1. Negotiations should efficiently solve the underlying issues.
2. Negotiations should preserve or increase positive relationships.
3. When coming to an agreement, it is important that it lasts and satisfies the needs of both parties as much as possible. Conflicts of interest should be resolved fairly and the agreement should benefit the community.
Principled negotiation is a four-step interest-based bargaining style:
Step 1: It’s important to separate the people from the problem when negotiating. Instead of viewing each other as adversaries or friends, principled negotiators focus on the long-term gain and use the criteria listed above. They direct their energy towards solving the problem rather than attacking the other party.
Step 2: To achieve successful negotiations, it’s important to focus on interests rather than positions. When people take positions, they tend to become defensive, which can hinder progress. Instead, a principled negotiation approach involves refraining from taking positions or setting a bottom line. Negotiators should instead focus on communicating what they hope to achieve and understanding the other party’s interests.
Step 3: When negotiating, it is important to come up with solutions that benefit both parties. A principled negotiator will prioritize taking the time to study the problem and avoid feeling pressured by time constraints. By doing so, they can create alternative options that meet the interests of everyone involved.
Step 4: It is recommended to use objective criteria when negotiating. Instead of bargaining, principled negotiators steer the conversation towards determining a reasonable standard that both parties can accept as the basis for their decision. This standard may be determined by factors such as market value, expert opinions, analysis results, legal considerations, and ethical standards.
By using principled negotiations or other similar negotiation tactics, both parties can establish profitable and indispensable relationships. This leads to a situation where the buyer doesn’t need to continually search for a new supplier, and vice versa.
Before entering into a negotiation, both parties should consider their best alternative plan in case the negotiation fails. This could involve options such as producing the product internally or collaborating with a current supplier to increase their capabilities. By understanding the potential costs and benefits of these alternatives in advance, negotiators can make informed decisions about whether to accept or reject offers that may be presented during the negotiation process.