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MORPH: The art of negotiation

MORPH: The art of negotiation

Ever thought of how much traditional negotiations resemble a mobilisation for war? The whole process seems to entail identifying differences, honing and strategically positioning weapons, and engaging in pre-battle dance and war paint rituals. When they finally face each other, negotiating parties tend to do so in full battle dress with diplomatic suits unwisely left behind in the rush to join the conflict. They often resemble two sides on the battlefield, pushing each other's trench lines back and forth by a few miles, counting casualties and becoming yet more aggravated after each encounter. Negotiation, arguably their most valuable tool, becomes an instrument of conflict, with the parties focusing on competing interests, rather than defining common ground.

It is a commonly accepted truth - and there are no two ways about saying it - regardless of gender, it takes balls to break balls in a negotiation game.

The part of the human anatomy that is commonly accepted as a fitting description of a tough, inspiring and ultimately successful negotiator is the part of the anatomy that most mere mortals metaphorically lack in situations requiring good negotiation skills. And that's not simply because sitting at the negotiating table is a testosterone-driven affair.

Despite the fact that some of the best methods you can use to get ahead in a negotiation clearly come from the right (and supposedly more ‘feminine') side of the brain, communication and intuition are far from being enough to ensure a positive negotiation outcome. The rest, good negotiators agree, comes from being able to research, deduce, strategise, manipulate and, if necessary, walk away from a negotiating process.

Like ERG chief executive officer Peter Fogarty - the man whose reputation as a structured negotiator is to "blame" for much of ERG's (pre-trouble) success in winning a number of contracts in cultures as varied as that of the US and China - good negotiators do their research. Fogarty's skill in researching his opponents (Rule #1: negotiation parties are opponents, not allies) is legendary. A story has it that when Fogarty's ERG tendered for a particular contract, one of his sergeants came across a lower ranked decision maker at the target company, learning of the man's desire to relocate to Western Australia. The manager in question also happened to be one of the technical people evaluating tender proposals.

ERG immediately rewrote the contract to include a clause that required one of the customer's personnel to be stationed in Perth. Needless to say, they won the tender.

But Fogarty's negotiation skills as demonstrated in winning ERG's early deals have been undermined by the lack of long-term planning. As long as the smart-card specialist remains unable prove it can link its technological capital with a positive cash flow and as long as financial analysts continue to batter its reputation with merciless efficiency, the company's fortunes, as well as its negotiating power, will remain on a downward spiral. It's a leaf that is often missing from an entrepreneurial negotiation book and it's Rule #2 for successful business negotiation : failure to protect the main sources of your negotiating power - the ability to deliver - can land your body parts on the opponent's side of the bargaining table.

Literature on negotiation is notorious for being laden with theory and light on empirical analysis. Most research information about negotiation comes from the field of industrial relations and international politics. Information on the commercial realities of negotiation, on the other hand, is rarely accessible and even then only through informal communication networks when it is no longer considered to be a kernel of a company's competitive advantage. But this grapevine example confirms the unwritten rule that good research paves the way for successful exploration and expectation structuring in a negotiation process, and ultimately determines its outcome.

The simple truth is that the more planning you put into your negotiation, the better your chances of succeeding, for it is from an information base that negotiators work out their strategy. Everything else is about following some simple rules of negotiation.

1. NEGOTIATION IS A METHOD OF CONFLICT RESOLUTION, NOT AN INSTRUMENT OF CONFLICT.

In any negotiation process, two or more parties find that they have diverging and conflicting goals and objectives. The trick is to remember that negotiation is about ‘conferring with another with a view to compromise or agree', not about waging a war. While negotiators remain opponents throughout the process, their encounter should be based on purposeful persuasion and constructive compromise, and not on forcing the other side to accommodate your wishes using unilateral coercive action.

2. INTEGRATIVE NEGOTIATION IS BETTER THAN DISTRIBUTIVE NEGOTIATION.

Distributive negotiation is a zero-sum game where the end result is about clearly identifiable winners and losers. It usually occurs when the parties have fixed mandates, little flexibility and willingness to define common ground between their positions. Integrative negotiation, on the other hand, is possible when parties are given more flexible mandates that allow them to define common ground with the opponent and expand the ‘negotiation cake' to allow for a win-win situation to be achieved.

3. DON'T WALK IN UNPREPARED.

Knowing what your negotiation objectives and expectations are is the first rule of any negotiation process. While it helps to know the facts of the situation, relating those facts to your desired objectives and clearly defining expectations is an essential element of a negotiation process. Lack of preparation leads to power imbalance in a negotiation process (and ultimately to conflict) as the unprepared party has no information base to draw from and is forced to respond to the other party's arguments ad hoc.

4. KNOW THE NATURE OF YOUR BARGAINING POWER.

An assessment of bargaining power is crucial to determining both your bargaining objectives and the strategy you need to adopt. There are three types of power in any negotiations process:

Personal Power

Personal power is a party's skill in handling negotiations - the credibility of their bargaining style, willingness to listen and compromise, and the honesty of their approach. Since negotiation is a collaborative relationship of mutual cooperation and interdependence, it needs to embrace the goodwill, trust and credibility between the two sides. A view of bargaining power needs to incorporate this perspective as the parties will probably need to work together for a long time in the future.

Persuasive Power

This is the perspective of power that looks at the proposals of each party, their strengths and weaknesses, and the facts of the case. The key to persuasive power is to learn the facts as perspective power relies on information to support its case. An unwillingness of either party to reveal the facts that support their proposals will not give proposals credibility and will hence have little persuasive power.

Coercive Power

Bargaining should avoid the use of threats and sanctions, but if bargaining has failed to make realities clear, sanctions may be the only means of changing the perceptions of the parties so that they can accommodate each other's goals. Coercive power is probably more useful as a potential tool, rather than the actual application.

5. ESTABLISH YOUR BARGAINING PARAMETERS.

Since bargaining is based on movement in the search for a solution acceptable to both sides, it is useful to plan in advance how much you're prepared to give. There are three main bargaining positions:

The ideal settlement usually represents your initial offer or demand and is generally an ideal position.

The realistic settlement represents a better offer to the other side than your initial position, but is in fact your bargaining objective; that is, the position you ultimately wish to achieve.

The fallback position represents the worst position of settlement for your side or your ultimate concession.

Some negotiators believe that movement must be equal on both sides, but this can lead to excessive claims, generating derisory offers that are support neither by argument, nor by logic. The best way to negotiate is to consider your realistic settlement position and focus on achieving it, regardless of what the other party's outcome will be.

- Source: APEC Consultants.


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