The negotiation process


The points below provide a simplified model of the negotiation process.

The Negotiation steps >>

1. Preparation and planning

2. Definition of ground rules

3. Clarification and justification

4. Bargaining and problem solving

5. Closure and implementation

You should also have an assessment of the other party’s reaction or negotiation points to your negotiation’s goals. What are they likely to ask for? How entrenched are they likely to be in their position? What intangible or hidden interests 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 hits or her arguments with the facts and figures that support your position.

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 has 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’ve gathered your information, use it to develop a strategy. For example, expert chess players have 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 that your BATNA is better than an impasse.

Conversely, you shouldn’t expect success in your negotiation effort unless you’re unless you’re able to make the other side an offer they find more attractive than their BATNA. If you go into negotiation having a good idea of what the other party’s BATNA is, even if you’re not able to meet theirs, you might be able to get them to change it.

Definition of Ground Rules

Once you’ve done your planning and developed a strategy, you’re 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.

The essence of the negotiation process is the actual give and take in trying to hash out an agreement.

Bargaining and Problems Solving

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 procedures that are necessary for implementation and monitoring. For major negotiation which would include everything from labor-management negotiations to bargaining over lease terms to buying a piece of real estate to negotiating a job offer for a senior-management position—this will require hammering out the specific in a formal contract. For most cases however, closure of the negotiation process is nothing more formal than a handshake.