Mutually Acceptable Agreements - Negotiation Guide (Part 1)

by Dr David Venter

Discover how to gain a better mutual negotiation outcome by understanding the positions of both negotiating parties. 5 general guidelines on how to enhance your agreements.

If you could rapidly discover the 20% that would reward you with 80% of the results you want to achieve in any negotiation, would you take 15 minutes of your time to learn how? In this article I focus on the Pareto principle to provide you with my 10 top secrets to help your negotiation success.

Many managers advise us that time pressures prevent them from participating in a quality negotiation course. They canot not find those quiet moments to fully delve into the complexities covered in many negotiation books. Other busy business people who are under great pressure crave a "crib-sheet" that they refer to prior to the crunch of that all important negotiation. While it's certainly true that a negotiator who has trained properly and who is fully prepared will inevitably gain an edge over those who merely skim the issues, it would be nonethless helpful to have a top 10 guidance sheet. These lessons are not to be considered as a panacea 'cure all', so please contact us directly should your negotiation challenges not be adequately addressed in this article.

Having been involved in negotiations for many years, I have had the opportunity to repeatedly experience the most important factors of a successful negotiation. Without suggesting that these ten lessons constitutes a fail-safe recipe, I do believe that they will, if used correctly, significantly enhance the negotiation performance of a manager.

Lesson 1 - Know your Aspiration Base

Regretably, many managers commence a negotiation without clearly defining the optimal goal they wish to achieve in that negotiation, or else they aspire to a goal which is much too low. This invariably results in an ineffectual outcome that is significantly less than what could have been achieved. The reason is due to their low aspiration target and is will very likely be diminished by the concessions they will need to make to advance the negotiation. The psychological consequences and and lack of expectation often results in little more than a split-the-difference exercise.

Negotiators need to comprehend that the primary target they set is actually the outer limit of what they might otherwise achieve. It is unlikely that this outcome will reach beyond this target. It will in fact only move the opposite direction. Furthermore, a negotiator needs to appreciate that their aspiration base will determine the other party's minimum expectation.

  • Negotiators who have high aspirations consistently outperform those with low aspirations. They begin as ambitiously as possible, staying just clear of losing credibility.
  • By adopting a high aspiration base, negotiators create adequate room to give and ask for the necessary concessions needed to achieve a win more-win more outcome.
  • High aspirations promote positive psychological energy and dissuade a negotiator from becoming rigid and defensive.
  • A high aspiration communicates confidence to your counterparty and generally negates irrational negotiation behaviour.
  • High aspirations pressure the other negotiating party to use more energy trying to lower these aspirations, and not concentrating on promoting their own aspiration.
  • By presenting the first offer negotiators can "anchor" the negotiation and thus push the negotiation in that direction.

Lesson 2 - Know your Real Base

As crucial as it is to establish a high aspiration base, negotiators must also know when it's best to walk away from the negotiations. If you do not clearly definine this point beforehand, then you will likely have a tendency to stay in the negotiation beyond the point where it is reasonable. Trying to determine this point as the negotiation progresses is very dangerous because it may then be psychologically very difficult to act against the flow.

Know what you must achieve if the negotiation is not to be an exercise in self-destruction.

  • By not fully understanding beforehand how far you are prepared to go in a negotiation will most likely result in a negotiator pursuing the negotiation where a mutually beneficial outcome is not possible.
  • Not being fully aware of the point where you should withdraw from a negotiation will very soon be obvious to even a relatively inexperienced negotiator and is likely to be exploited.
  • Not knowing your real base makes it impossible to establish the contracting zone, as this rests between the real bases of the negotiating parties.

Lesson 3 - Know your Best Alternative to a Negotiated Agreement

Before commencing a negotiation it is vital that a negotiator establishes what their BATNA would be should an agreement not materialize. Where would the walk-away point leave a negotiator in terms of satisfying their interests? What alternative option exists that would satisfy their interests? Unless a negotiator is very clear on whether they can walk away from the negotiation table and the options available to them if they should, they will find themselves to be very pressed to reach an agreement. In turn, they will then become pessimistic about the consequences should the negotiation collapse. A strong BATNA permits a negotiator to be firm when negotiating, and gives them the power and confidence they need to step back from a negotiation when a mutually beneficial agreement is not possible.

A BATNA is the best outcome a negotiator can hope for if the negotiation ends in an stalemate. As Fisher and Ury (1981: 104, 111) explain it, "the standard against which any proposed agreement should be measured" as it "determines what a minimally acceptable agreement is" . In the case of an employment offer, their BATNA could represent an alternative employment offer.

  • The more readily a negotiator can walk away from a negotiation, if necessary, the greater the negotiator's ability to influence the negotiation.
  • The more a negotiator understands the alternatives available to the other side, the better they can prepare for a negotiation.
  • The decision to reveal or not reveal a BATNA must be based on the strength of the BATNA and whether disclosing it is likely to weaken the negotiation stance of the counterparty.
  • The stronger the BATNA the greater the negotiating power.
  • A BATNA is the gauge against which a proposed agreement should be measured.
  • A BATNA dissuades a negotiator from accepting an agreement that is unfavourable or rejecting an agreement that is in the counterparty's best interests .

Lesson 4 - Focus on Interests not Positions

Negotiators usualy start a negotiation with predetermined positions underscored by one or more interests - basic needs, fears, desires, hopes, expectations, etc.Whereas positions represent an approach they have decided to adopt, interests are that which gave rise to their decision to adopt certain positions. Merely therefore focusing on positions in a negotiation invariably causes a protracted I vs. I tug of war, where the parties try to drag each other towards their positions. The result is usually an impasse or a win-lose outcome.

The challenge for negotiators is to look beyond the positions initially communicated and to uncover and explore the interests that gave rise to these positions. Once the parties have explored their respective interests, they very often are able to agree an outcome not initially contemplated by either, but which satisfies their respective interests far better than a long drawn-out test of strength.

When parties are aware of each other's interests they more often than not discover that the interests they share considerably outweigh their conflicting interests and that it is possible to mould their common interests into a Win More! mutually acceptable agreement by working together.

  • Even when positions are strongly opposed, there are likely to be many more interests that are compatible than there are interests that are opposed.
  • Whereas positions relate to past grievances , interests are about future concerns.
  • Merely approaching negotiation from a positional stance creates a competitive frame, whereas an interest-based approach fosters cooperation.
  • By standing in the shoes of the other party and asking why that party adopted a certain position or did not adopt a different position, is a very effective way of ascertaining the interests of that party.
  • Focusing on interests rather than positions makes it much easier to concentrate on the real problem at hand and not to become person focused.
  • To succeed in a negotiation it is often necessary for a negotiating party to make itself vulnerable by first sharing its interests and reasoning before proposing a solution, thereby creating the trust needed for the other party to feel sufficiently secure to share its interests.
  • That the interests of the negotiators do not necessarily coincide with those of the constituency they represent .

Lesson 5 - Check your Assumptions - They tend to be Wrong

One of the greatest dangers negotiators face is their tendency to assume certain things without checking that these assumptions are correct. This very often not only leads to the other party being framed in a particular way, but also results in inappropriate attitudes and behaviour that prevent a mutually beneficial agreement from being concluded. Where two parties, a developer and an environmentalist, are for example negotiating an industrial development near a very sensitive wetland, and the developer believes the environmentalist is, as are all environmentalists, part of a lunatic fringe that is hell-bent on preventing all development, this will strongly influence how the developer approaches the environmentalist. Although the developer's assumption may be totally unfounded, it unfortunately could, as all too often happens, become a self-fulfilling prophecy, as it is likely to compel the environmentalist to act accordingly.

  • Our assumptions about other parties in a negotiation are usually incorrect.
  • Assumptions lead to premature thought closure that prevents the possibility of the parties working together to jointly explore creative options in their quest to develop a mutually acceptable agreement.
  • Assumptions often become self-fulfilling prophecies.
  • Assumptions prevent an empathic interaction between the parties

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About the first picture - Contracting Zone. - 2008 Jun 22
Commentator: Alberto Kligerman (Brazil - Rio de Janeiro)

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