The Negotiation Process

The negotiations process is made up of five steps: (1) preparation and planning (2) definition of ground rules (3) clarification and justification (4) Bargaining and problems and (5) closure and implementation.

Preparation and planning: Before you start negotiating you need to do your homework. What’s the nature of the conflict? What’s the history leading up to this negotiation? Who’s involved and what are their perceptions of the conflict?

What do you want from the negotiation? What are your goals? If you are a supply manager at Dell Computer, for instance, and your goal is to get a significant reduction from your supplier of keyboards, make sure that this goal stays paramount in your discussions and does not get over shadowed by other issues. It often helps to put goals in writing and develop a range of outcomes from most hopeful to minimally acceptable – to keep your attention focused.

You also want to prepare an assessment of what you think the other party’s goals are. What are they likely to ask for? How entrenched are they likely to be in their position? What intangible or hidden interest may be important to them? What might they be willing to settle on? When you can anticipate your opponent’s position, you are better equipped to counter arguments with the facts and figures that support your positions.

The importance of sizing up the other party is illustrated by the experience of Keith Rosenbaum, a partner in a major Los Angeles law firm. Once when we were negotiating to buy a business, we found that the owner was going through a nasty divorce. We were on good terms with the wife’s attorney and we learned the seller’s net worth. California is a community property law state, so we knew he had to pay her half of everything. We knew his time frame. We knew what he was willing to part with and what he was not. We knew a lot more about him than he would have wanted us to know. We were able to twist him a little bit, and get a better price.

Once you have gathered your information use it to develop a strategy. For example, expert chess players have a strategy. They know ahead of time how they will respond to any given situation. As part of your strategy, you should determine yours and the other side’s Best Alternative to a Negotiated Agreement (BATNA). Your BATNA determines the lowest value acceptable to you for a negotiated agreement. Any offer you receive that is higher than your BATNA is better than an impasse. Conversely you shouldn’t expect success in your negotiation effort unless you’re able to make the other side an offer they find more attractive than their BATNA. If you go into your negotiation having a good idea of what the other party’s BATNA is, even if you are not able to meet theirs, you might be able to get them to change it.

Definition of Ground rules: Once you have done your planning and developed strategy you are ready to begin defining the ground rules and procedures with the other party over the negotiation itself. Who will do the negotiating? Where will it take place? What time constraints, if any will apply? To what issues will negotiation be limited? Will there be a specific procedure to follow if an impasse is reached? During this phase, the parties will also exchange their initial proposals or demands.

Clarification and Justification: When initial positions have been exchanged both you and the other party will explain amplify, clarify, bolster and justify your original demands. This needn’t be confrontational. Rather, it’s an opportunity for educating and informing each other on the issues, why they are important and how each arrived their initial demands. This is the point at which you might want to provide the other party with any documentation that helps support your position.

Bargaining and problem Solving: The essence of the negotiations process is the actual give and take in trying to hash out an agreement. It is here where concessions will undoubtedly need to be made by both parties.

Closure and implementation: The final step in the negotiation process is formalizing the agreement that has been worked out and developing any procedures that are necessary for implementing and monitoring.