Negotiation features in many aspects of our lives – whether negotiating to buy a car or with an employer to increase salary. Sometimes, we’re unsuccessful. However, you may be able to strengthen your position by identifying what’s important to the other person.
Roger Fisher founded the Program on Negotiation (PON) at Harvard Law School. The PON stated that every negotiation has seven key elements which are distinguishable but interconnected. Their presence means you can better understand the dynamics and flow of a negotiation. We provide a breakdown of each element so as to help you formulate a game plan for your next negotiation.
How Will You Approach the Negotiation?
How you approach the negotiation will determine how each element applies. For example, do you plan to ‘win’ the negotiation or do you want the best outcome for all parties?
The first approach is called distributive or zero-sum negotiation, where one side ‘wins’ and the other ‘loses’. Parties put their personal positions and differences before their counter-party. For example, negotiating with a car sales associate.
The second approach is called integrative or interest-based negotiation. This style focuses on win-win situations for both parties. Unlike distributive bargaining, the driving question is, ‘how can we create the most value together?’. Parties use this approach when the issues at hand are complex, negotiations are ongoing or are looking to maintain their relationship. For example, when your boss agreed that you could take time in lieu in exchange for completing a project outside work hours, you participated in an interest-based negotiation.
Each negotiation approach shares similar components. The first is interests. Critically, interests differ to positions – a position is what a party wants whereas an interest is why. For example, let’s revisit our earlier example where you completed a project outside work hours so you could take time in lieu. Your position is straightforward – take time in lieu. But your interest might be for a number of reasons. Maybe you wish to take leave to go on a holiday you booked earlier in the year. Understanding a party’s interests are key to integrative negotiation. When fixated on positions, it’s easy for parties to attack and defend positions. Asking ‘why’ opens up a collaborative environment and increases the chance of a mutually beneficial outcome. Interests can also play a role in distributive negotiations. They enable you to generate arguments or counter offers depending on the other party’s response. Understanding the other party’s interests can then be a powerful negotiation tool.
Interests allow you to measure your alternatives to the agreement and paint a picture of your best alternative to a negotiated agreement (BATNA) and worst alternative to a negotiated agreement (WATNA). Ideally, you should not negotiate for anything south of your BATNA. This isn’t always possible and understanding your alternatives – as well as the other party’s – will be determinative in a successful negotiation.
In a negotiation, relationships can help determine the following:
- how fixed your stance on certain positions
- how aggressive you can be on certain issues, and
- what negotiation approach you can take.
Before engaging in a negotiation, you should always ask:
- How important is the relationship with the other party to me?
- Will I ever see the other party again?
- Is my reputation important?
You may choose to negotiate harder if you don’t care what the other party thinks. Further, even if you don’t interact with this party again, you may consider your reputation if they are part of a particular industry or market in which you work or operate.
Options are the different combination of outcomes possible. They differ from alternatives, which explore what happens if you cannot reach an agreement. For example, when you were negotiating to buy your first car, an alternative might be to buy from another dealer or buy a second-hand car online. An option might be that you pay a little extra for aluminium tyres and roadside warranty.
When you have reached this element of a negotiation, it means you are progressing towards reaching an outcome. However, be mindful that discussing options is intended as a brainstorming exercise. It’s not a signal for taking offers or making concessions. The idea is that you create options first, and evaluate them second.
Discussing options can empower both parties as they have a say in resolving the issues. So take care to avoid expressing judgment or drawing conclusions.
How do you substantiate the fairness of your offer? How do prove that your counter-party’s offer is unfair? You need some objective standard of fairness for the claims made and not just something that you have discussed at the negotiating table.
For example, if the car dealer offered to let you finance the vehicle, how do you know the interest they are charging is reasonable? A legitimate offer would be comparable to a market rate. Legitimacy not only solidifies your offers, but it can weaken the other party.
Communication is an obvious element that is part of all negotiations. It goes beyond voicing your position and your offer. It also involves listening, the tone of your voice and even body gestures and movements.
Some easy communication tips to remember are:
- Ask open-ended questions to gather as much information
- Listen actively (this means putting your phone away from sight), and
- Be relaxed – stiff body postures can send the wrong message to the other party.
Remember, you want to know more than just what the other party is offering or their positions. An effective negotiator will be able to communicate and speak about interests.
The final element of negotiations is ensuring that there is a commitment by both parties. Commitment is two-pronged. Firstly, you want to ensure that the outcome that you have agreed to is realistic. Secondly, both parties must be able to uphold their end of the bargain. Where these outcomes are non-existent, it is likely that the parties will have to negotiate their deals again.
To ensure that there is the requisite commitment, some key questions to consider at the beginning of the negotiation might be:
- What kind of commitment can I expect at any future negotiations?
- What is the other party’s level of authority?
- How authorised is the other party?
For example, if the car dealer was only an associate and had to get the paperwork signed off by the principal salesman, then it is likely that they cannot fulfil all their promises. Asking these questions before you negotiate can save you the time and hassle of having to renegotiate with the person with actual authority and commitment responsibilities.
Negotiations can be difficult when you don’t know what you should be considering. Harvard’s PON outlines seven elements that exist in all negotiations. Harvard has not designed these elements to act like a checklist, where meeting each requirement will mean a successful negotiation. Rather, what they represent are components to a negotiation. It helps you to understand how negotiations work. Like many things in life, preparation will still be the deciding factor between getting what you want and falling short of your goals.
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