The Best 5 Business Negotiation Skills
Improve your business negotiating skills and learn what really interests people. Understand your negotiating style, and how to influence others who have differing styles.
At the start of our negotiation skills training seminars, we ask students what makes them feel uneasy about negotiating. Their answers often include:
“I’m afraid I won’t get the best deal.”
“I don’t enjoy working with certain types of people.”
“I’m not always sure what needs to be achieved in a particular negotiation and how to get there.”
“I can get lost in the process and bogged down in details. I lose track of what I really want to achieve.”
Here are some helpful tips to help you develop your negotiating skills:
Tip #1: Negotiating skills aren’t merely a series of compromises
Most people negotiate using a zero-sum process. First, they tend to determine what they want. Then, they raise it by 10 or 15%. They then engage in a series of compromises to obtain their result. Their focus is on their position and on claiming as much value as possible. Many people’s goal is not to get a satisfactory deal for both sides. Instead, their goal is to win.
The tendency is to negotiate from the viewpoint of positions. Most negotiators never stop to ask why they want what they want. Nor do they even consider why the other side is negotiating.
Fisher and Ury define skilled negotiating as “back and forth communication where some interests are shared and some are opposed.” The purpose of negotiating is seeing if you can get your interests achieved through an agreement. An interest is why you want something, not what you want. When negotiators start working from the standpoint of interests, they can begin to work with the other negotiating team to explore other solutions.
Many students find it uncomfortable telling the other side why they want something. Students often compare this to showing their cards. However, negotiating does not have to be about arguing over who gets the most. Skilled negotiating involves two teams working to resolve a problem. It’s important to remember that the problem usually can’t be solved to everyone’s satisfaction unless each side comprehends the problem. Why the negotiators want something is where the process of problem-solving begins.
Comprehending a negotiating process is important. However…
Tip #2: It is your people skills that can make the difference
- First, you need to know how your behavior affects others.
- Next, understand that everyone has their way of communicating. Understand that their way may not be your way.
- Skilled negotiators can change their communication style to meet the listener’s needs.
At Hautacam Consulting, we utilize Inscape Publishing’s DiSC© product. The DISC is not designed to assess negotiating skills. Rather, it is designed to describe a person’s behavior when their personality interacts with a selected environment. An example of such is an employee negotiating on behalf of their company.
Using this program, seminar students can identify their natural negotiating style. They can then start to understand how others may view them.
With this program, you will begin to see why you may be more comfortable with certain people than others. It is easier to talk to people who have similar negotiating styles. When teaching styles, we focus most of our time on explaining how to persuade people with less compatible styles.
The first step is to gain an understanding of the four DiSC© Dimensions of Behaviour attributes and how they interact. These attributes are:
People in the “dominant” bracket:
- Are good at making decisions.
- Want to control their environment. They achieve this by solving problems and meeting challenges.
- Are very direct and good at telling.
- Are self-confident. However, they can sometimes be seen as intimidating and arrogant.
Questioning and listening do not come naturally to dominants. They tend to move toward goals without considering multiple solutions or outcomes. For that reason, others often view dominants as impatient and uncaring. Dominants tend to use a bottom-line approach. They are good at stating why something will not work. As a result, they may be seen as negative. To dominants, results are much more important than how people feel.
People in the “influence” bracket:
- Are good at telling, like dominants. However, they use a less direct method. Influencers want to convince and motivate you. They do not want to coerce you to do something.
- Rather than being task-focused like a dominant, are focused on completing the task with people.
- See the possibilities in a plan or concept and don’t tend to see the pitfalls.
- At their best, can be viewed as visionaries.
The influencer may see the dominant as “negative.” The dominant may view the influencer as “unrealistic” or even “political.” Both want to make decisions and are leaders. Influencers like to make favorable impressions and want a relationship. Influencers can appear to be impulsive and disorganized. To them, attention to detail is not an asset; they prefer to look at the bigger picture. Influencers are social and usually know a lot of people. They want to get results. However, their focus is on motivating people to get results together.
People in the “steadiness” bracket:
- Like influencers, see the positive aspects of new ideas. However, unlike influencers, those in “steadiness” tend to not like change—even positive change.
- See themselves as less powerful than their environment. They feel that all will be well if everyone just works harder, together, on the status quo.
- Are superb listeners who tend to consider things before responding.
- Again, like the influencer, those in “steadiness” are focused on others. They are extremely dependable and solid team players.
High-dominant and influence styles negotiating with people in the steadiness style have to be cautious. These two styles like immediate responses, whereas the steadiness style likes to think before responding. They are very methodical and reserved. They are opposites of dominants and influencers.
People in the “conscientious” bracket:
- Like steadiness styles, are introverted and reserved.
- However, like the dominant, are task and control focused.
- Expect statements must be factual and have a point.
- Are perfectionists.
- Have an approach that is indirect, reserved, business-like, and diplomatic.
- Tend to not readily accept change, unless you can provide them with reasons supported by facts.
- Believe that following processes and procedures solves many problems. Change, therefore, becomes unnecessary to them.
- Believe facts and processes are most important. People are a secondary consideration.
An influencer negotiating with a conscientious style should have accurate facts. Influencers will likely also need to give supporting information.
Dominants will likely need to to have patience with the conscientious style negotiator. This is because dominants want to make decisions and get on with things. A limitation of the conscientious style lies in their zeal to get all the facts. With this approach, conscientious styles can appear indecisive.
The Classic Profile
Regardless of the intensity of one or two of the attributes, everyone likely possesses some or all of them. The below attributes are identified through the Classic Profile. This profile examines the intensity of each attribute in relation to the others. The negotiator gets a complete picture of how they tend to behave. Negotiators also learn how to effectively communicate with different kinds of people. The Classic Profile includes an evaluation of how your style tends to behave. It considers the following:
- Judging others
- Influencing others
- Value to an organization
- Tendencies that can be overused
- Behavior under pressure
- How to increase effectiveness
You may use one or several attributes. Learning how to use these attributes when needed is an important part of developing effective negotiation skills.
When people of different styles interact, it can be negative. In one example, an influencer is negotiating with a conscientious style. The influencer makes a remark with a minor statistic about the quality of a product. The conscientious style questions the remark and finds it cannot be supported.
In another example, a steadiness style is negotiating with a dominant style and wants to ponder answers to questions. While the steadiness style is thinking, the dominant style begins to talk and starts pushing for an answer or decision.
When negotiating with a dominant style, an influencer will likely answer questions with a story or anecdote rather than using a shorter, more direct approach. These seemingly small things can become huge in the hands of a skilled negotiator.
To maximize your negotiating skills, gain practice in recognizing the style of others. In addition, understand your own tendencies and be flexible when necessary.
Being an effective communicator starts with being an outstanding listener.
Tip #3: The most potent negotiating skill is listening
Listening helps you learn the interests of the other side. Some styles are better at listening than others. However, many of us are usually not being effective listeners. Most people listen to reply, not to understand.
To illustrate this, consider the study by Dr Albert Mehrabian, of UCLA, on the ways we communicate when there is an incongruency/mismatch in communication:
- Words: 7%
- The tone of Voice: 38%
- Body Language: 55%
A skill that good listeners employ is that of asking questions and listening carefully to the words. However, when there’s an incongruency, words only comprise 7% of how we communicate. Communication is 93% non-verbal. So, it’s no wonder that so much is lost between the speaker’s lips and the listener’s ears. Non-verbal communication is also important in determining the speaker’s style.
Use skilful questioning as the first step in learning the interests of the other side. In order to be effective at asking questions, it’s ideal to:
- Understand where your questions are going. Most people find randomly asked questions to be unnerving and can make people distrust you.
- Ask the other side if it’s okay for you to ask questions.
- Then, ask for the information you want to know.
Use the three levels of skilful listening to find out information:
- Selective: We hear things that we believe are relevant.
- Responsive: Being responsive lets the other side know you are paying attention. This involves verbal and physical feedback. It can be nodding, or asking: “Tell me more about that.”
- Playback: Restating what you think you heard and asking for confirmation. It is also beneficial to follow up with a confirming question. An example would be: “Have I got everything, or might there be something I missed?”
As you work through issues in the negotiation, you can use playback as a “mini-close.” This makes it more difficult for an issue to resurface later: “I missed that. When we talked earlier, we agreed on this. What did I miss? Do we need to talk about this some more so I can better appreciate its importance to you?”
Effective questioning and listening skills can provide solutions to the negotiation problem. By getting the other side to talk and by listening, you send a positive message. This greatly enhances trust and keeps tension low. People are then more likely to engage in business negotiations with you because you are perceived as:
- An adequate problem solver
- Adding value to the relationship
Effectively seeking information through questioning skills and listening skills helps build these perceptions.
Tip #4: Develop a plan prior to negotiating
I often ask sellers and contract management training seminar attendees about how they prepare. From their answers, I find that few negotiators do any in-depth planning. I am not referring to thinking about how much to spend, how long to complete a project, or what a walk-away number might be. I am talking about detailed planning that attempts to find out what the other side may want and why.
Your plan should also include the following:
- Try to establish the negotiating style of the other side (e.g. using a DiSC style). This helps you see how best to communicate. Then, go through the process of confirming if you were right. If you don’t know the other side at all, make educated guesses and adjust as you go.
- What are our/my interests? This is not what you want, but why. Make sure you scrutinize all of your interests, as there may be more than one.
- What are the interests of the other side? A major part of the negotiation process is determining the other side’s interests. This goes back to Fisher and Ury’s definition of negotiations. In this negotiation definition, some interests are shared and some are in opposition. Opposing interests are what you negotiate.
- What do I have that I can trade that is of lesser value to me and of higher value to the other side? Considering these options ahead of time can make negotiations less stressful. Those with lesser negotiating skills may not consider this in advance. Unskilled negotiators may choose to go through a series of positional compromises.
- What are three options to move the negotiation from compromising to joint problem-solving? These can be: “What if we tried…?” or “What if we did this…?”
- What is the very least that is considered acceptable?
You must establish:
What is our Best Alternative to a Negotiated Agreement? (BATNA)
A BATNA is a vital part of negotiating skills development. This negotiation essential is taught in all our sales negotiation skills training seminars. A BATNA is crucial to avoid accepting an outcome that is worse than what you may have done otherwise.
Your BATNA is what you can or might do if an agreement cannot be reached.
What you can accept has to be better than your BATNA. Otherwise, why negotiate?
Ask yourself what the other side’s BATNA may be. Why are they negotiating with you? What is preventing them from finding the solution with someone else, or on their own?
In the fall of 2004, Negotiator Magazine conducted a reader poll. One of the questions was about planning. The results showed that as much as 40% of time spent negotiating is internal. Sometimes, the most difficult part of planning and negotiating can be with your own team.
If you think and plan in advance, you can check where the negotiation is going compared to your plan. You are also less likely to agree to an unacceptable outcome. If you find yourself getting lost, you can take a time-out and rethink where you are.
Tip #5: Top 10 Factors for Successful Negotiating Skills
A professional acquaintance, Tony Nagle of A.G. Nagle Company, Inc., shared this list with me:
- Know what you want: The clearer you are on your interests and goals, your chances of negotiation success increase.
- Know the other side: Learn as much as you can about the other side. Determine their negotiating style (DiSC©) and skills. Also, research their backgrounds, hopes, fears, aspirations, and interests. These little things can mean everything.
- Consider the timing and method of negotiations: Use interests, not positions. This can lead to win-win problem-solving through skilfull negotiating.
- Prepare point by point: Negotiators who prepare usually outperform those who don’t.
- Offer benefits for accepting your offer: You are much more likely to close if you present the benefits. Perform the “What’s in it for them?” test.
- Frame your negotiation around one or two key points: Keep things as simple as possible. Framing and reframing can keep things on track. It helps reach agreements more efficiently.
- Know your BATNA: Effective negotiators know when to walk away. They also know how to walk away leaving the relationship intact.
- Prepare options for mutual gain: Be creative. Find unique ways to meet each other’s interests. “What if we tried this?”
- Listening is the most powerful negotiation skill: Listening helps you learn where your interests are shared and where they are in opposition. Knowing where interests lie helps you achieve a satisfactory outcome.
- Use the power of the draft: Always put your negotiated agreements in writing.
Changing the way you think about negotiating is the first step to better results. This can be achieved through joint problem-solving instead of a series of compromises for both teams. Recognizing the reasons why people act the way they do, and having the ability to communicate with a broad range of behavioral styles, offers the skilled negotiator the ability to reach satisfactory outcomes more consistently. Following a process or strategy is fine. However, understanding the styles of the people with whom you’re negotiating and changing your approach accordingly can be the key to success.
Lastly, developing a plan in advance of the actual negotiation gives the negotiator more confidence. Having a plan can also lead to better and more consistent results.
David A. Wachtel is the president of Hautacam Consulting, Inc.