Nagotiation-Basic Skils

  1. Introduction

Scenario:
Globus Inc. Is a leading IT giant. Peter Looney is a Project Manager in Globus Inc. He is responsible for meeting the clients for every new software development project that comes to Globus.
Maxwell Telecommunications, a leading Telecom Service company recently came to Globus to have new SAP based database software to be developed for them.
Peter carefully reviewed and analyzed Maxwell’s requirements and came up with a Project Plan. Now, the only thing that Peter needed to go ahead with starting the project and develop the software was the client’s approval of the Project Plan.
Peter held a meeting with the clients to discuss the Project Plan and gain overall approval for the terms and conditions of the Project.
The client was in a hurry to get the software. Peter tried to negotiate upon broader deadlines but due to client’s pressure, he ultimately agreed to finish the project as per their requested deadlines.
When the project was under progress, Peter and his team realized that the deadlines that he had agreed upon are nearly impossible to meet.
Peter and his team were not able to complete the project as was promised to the client due to which Globus had to pay some penalty for late delivery. Also, the client added new requirements that had to be incorporated in the software. However, Peter had not negotiated about the terms with the client for any further enhancements or features being added to the software. Hence, Globus had to incur a loss on the project because the scope of work had increased, but the terms of the project had not been negotiated well. Also, Peter’s team was forced to work 7-days, even from home to try to complete the project.

  • QUESTION -Why do you think Peter’s team had to suffer? Why did Globus have to incur a loss in this Project?
  • ANSWER-Yes, all this happened because Peter had not initially negotiated well with the client about the deadlines and the scope of work. If Peter had clearly negotiated the terms of the project with the client and negotiated realistic deadlines, Globus would not have needed to pay any penalty. Also, if Peter had negotiated the scope of work in detail with the client, then Globus would not have to incur any loss in this project.
  • CONCLUSION- We can see that ‘negotiation skills’ are a must for anyone to succeed when dealing with people.

2.What is Negotiation?

Negotiation is a discussion between two parties to find out the solution and for the purpose of reaching a joint agreement about differing needs or opinions. It involves using the art of ‘persuasion’ to get others to understand and agree with your viewpoint. It works best when an individual has a win-win attitude.
The key skills that are involved in a successful negotiation are that of good communication skills, sales and marketing skills, good psychological analytical skills, sociology skills, assertiveness and conflict resolution skills. Therefore, negotiations may take place between various kinds of different people such as between a customer and seller, a boss and employee, two business partners, a diplomat or a civil servant and a foreign diplomat, between spouses, between friends and between parents and children.

  • Need for Negotiation

No two people are exactly same. Therefore, each and every individual thinks and behaves differently in different situations and has different needs, wants, beliefs and aims. It is this basic difference between people that gives rise to disagreement and conflict from time-to-time. Moreover, to mutually co-exist with each other at personal, professional as well as business level, it is important that these conflicts and disagreements should be resolved.
This is because conflicts may lead to argument and resentment which may result in one or all of the involved parties feeling unhappy. Therefore, negotiation helps everyone involved to seek a common ground of agreement between the disagreements and also meet their individual objectives.

3. Basic Principles of Negotiation
There are a few common basic principles that apply to all types of negotiations and in all situations. Some of the basic principles of negotiation are as follows:
• There are always at least ‘two parties’ involved any negotiation process.
• In any negotiation, the two parties share at least some common interest, either in the subject matter or in the negotiating context that brings both the parties together in a negotiation.
• The initiation of any negotiation always results due to different opinions and objectives of the two parties which hinders the outcome in general.
• It is a general belief, that parties do consider negotiation as a better way of trying to solve their differences.
• Each and every party enters into a negotiation with a firm belief that they do have a chance of persuading the other party to modify their original stance.
• Each and every party enters into a negotiation with a firm belief that they shall maintain their initial stance and persuade the other party to change.
• Every negotiation process involves compromise or change of opinion of one or both parties in order to reach an acceptable final agreement.
• It is important that in every negotiation, adequate time is at hand in order to debate the various viewpoints of both the parties and reach an agreement.
• The negotiation process is always a process of direct and verbal interchange which involves interaction between parties.
• Each party has some influence or power, whether it may be real or assumed, over the other’s ability to act and think.

  • The Art of Negotiation

Negotiation is an art; you can get better and better with it .If you feel that you don’t have an innate talent for negotiations, don’t be disappointed because these skills can be honed and developed with the proper training and practice. People who always speak good things may feel that they are good negotiators, but that is not always the case. Negotiation is all about understanding what you want and what the other person wants, and then coming up with a win-win scenario.
Negotiation happens everywhere – it’s omnipresent. You may have to negotiate over anything – right from the deadlines of a project to which person will do what chores at home. In the real world, it is sometimes difficult to ascertain whether your negotiation is good or bad. You may think that you are a good negotiator, but in reality, it may be just the opposite. Even before you negotiate, you will have to know what can be negotiated and what cannot be negotiated.

3. Benefits of Negotiation

  • Good negotiations help you to gain better control in business as well as personal situations
  • They help you to identify and understand you’re as well as the other parties’ interests and also understand the differences between both.
  • It helps to reach a ‘Win-Win’ Solution, which is mutually beneficial to all the parties involved in a negotiation.
  • Good negotiations also help to improve interpersonal relationships.
  • They help to develop and maintain an overall harmonious and thriving interpersonal environment.
  • It is one of the easiest and quickest ways to solve conflicts and disagreements.
  • Negotiations help to reduce stress and frustration among two conflicting individuals.
  • Negotiations help to reach an agreement in cases where a dead-end may be reached if a consensus is not established between two differing needs, wants or opinions

4. Stages of Negotiation

  • Distributive Negotiation

Distributive Negotiation’ is also known as ‘Positional’ or ‘Competitive’ or ‘Fixed Pie’ or ‘Win-Lose’ Negotiation. It is a type or style of negotiation in which the parties compete for the distribution of a fixed amount of value. The involved parties in a ‘distributive negotiation’ have a ‘win-lose’ attitude towards reaching the goal and is based on an attempt to divide up a fixed pie or amount of resources for oneself. Distributive Negotiation’ involves holding on to a fixed idea, or position, of what you want and arguing for it and it alone, regardless of any underlying interests.
The main focus in such a type of negotiation strategy is on achieving immediate goals, with little or no regard for building future relationships. Generally, no new creative solution is reached in such negotiations as the parties spend least possible time and energy in resolving the conflict. The outcome of the negotiation is reached by presentation of fixed solutions and a decision or choice is made quickly.

  • Integrative Negotiation

Integrative Negotiation’ is also known as ‘Interest-based’ or ‘Cooperative’ or ‘Win-Win’ or ‘Non-zero Sum’ Negotiation. It is a type or style of negotiation in which the parties cooperate to achieve a satisfactory result for both. The involved parties in an ‘integrative negotiation’ have a ‘win-win’ attitude towards reaching the goal and attempt to strive not just for their own outcomes, but for favorable outcomes for both sides. ‘Integrative Negotiation’ involves reaching an agreement keeping into consideration both the parties’ interests which include the needs, desires, concerns, and fears important to each side.

The main focus in such a type of negotiation strategy is on developing mutually beneficial agreements based on the interests of the disputants. Generally, new creative solutions are reached in such negotiations as the parties spend maximum possible time and energy in resolving the conflict. The outcome of the negotiation is reached by collaboration between the parties to find a “win-win” solution to their dispute.
The following are the most crucial skills that can help you to become a great negotiator:
• Be open and flexible
• Always be ethical
• Always empathize
• Develop good social skills
• Follow your intuitions
• Be assertive

5. Stages of the Negotiation Process
Meeting:

  • The first stage of the negotiation process is the negotiation meeting.
  • The meeting can be in an informal or formal setting.
  • When there are two parties meeting, the venue, date and time are decided first.
  • The meeting begins with introductions.

Inquiry:

  • The second stage of the negotiation process is the stage of inquiry.
  • During the inquiry stage, both parties exchange information and discuss their concerns.
  • The main objective of this stage is to ascertain the strengths and weaknesses, needs, wants, desires and issues.

Bargaining:

  • The third stage of the negotiation process is that of bargaining.
  • During the bargaining stage, both parties make offers and tradeoffs.
  • At this stage, both the parties consider all the possible options available to find a middle path between their differences.

Closure:

  • This stage occurs after both the parties have looked at all the options closely.
  • During the closure stage, both parties restate their positions and confirm their tradeoffs they are willing to negotiate.

Acceptance:

  • The final stage of the negotiation process is acceptance,
  • During the acceptance stage, both parties would either decide to suspend negotiations or they may reach an agreement

 
Back to scenario and put it to “real situation”;
You have seen in the introduction scenario, how Peter Looney, a Project Manager at Globus Inc. Failed to negotiate well with the Maxwell client due to which Peter’s team had to suffer and also his company had to incur a loss in the Project. Yes, all this happened because Peter had not initially negotiated well with the client about the deadlines and the scope of work.
Stage 1: Meeting
To negotiate well with the client, the first thing that Peter should do is to prepare well for the meeting. Peter could go through the Project Plans of similar projects that Globus had handled in the past, talk to and seek guidance from his superiors and put all the data and information that he gets related to the project at one place.
Peter should also make a list of all the queries that he has to clear with the client, things that he can agree to and cannot agree to with the client etc. Also, at the meeting Peter should come across to the client as a cool, confident and professional person.
 Stage 2: Inquiry
During the inquiry stage, Peter should exchange information with the client and discuss their concerns, scope of work, deadlines, future enhancements etc. At this stage, Peter should find out the client’s requirements, how, which and when can he fulfill these requirements and any other terms and conditions that may not be agreeable to Globus.
Stage 3: Bargaining
At this stage, Peter should now agree to terms that are completely acceptable and offer options and tradeoffs for things that are unacceptable as is stated by the client. Peter should make sure that he ascertains his position and takes a stand in agreeing to only possible and acceptable deadlines, current scope, terms regarding future enhancements etc.
Stage 4: Closure
At this stage, it is important that both the client and Peter restate their positions and confirm their tradeoffs they are willing to negotiate. So, agreement should be achieved on the agreed deadlines, current scope, terms regarding future enhancements etc. It should be agreed upon by both the parties that the discussed and agreed upon terms would now be drafted into a legal and binding contract between the two parties.
 Stage 5: Acceptance

At this final stage of the negotiation process, Peter should make sure that both the parties agree to sign off the deal and reach an agreement on the terms of the Project.
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