Effective Negotiation Practices

We are all negotiators

We are negotiating when we discuss where to go to dinner, when our kids should do their homework, and how much salary we should earn. Negotiating can be painful especially if we don’t get what we want, at times even negatively impacting our relationships. What if there was a way to work together to figure out a solution where we don’t compromise, we meet everyone’s needs, and everyone feels good about it? We can achieve effective negotiation using Principle Based Negotiation with the intent to achieve a win-win solution.

Effective Negotiation with a Win-Win Approach

In my quest to learn about effective negotiation strategies and tactics I started reading a wonderful book called “Getting To Yes”, by Roger Fisher, William Ury, et al. The book discusses how our natural instincts and the examples we typically see in negotiating are actually counter productive. The book is based on the principle that establishing Win-Win solutions will result in mutually beneficial long term relationships. The basic concept is that we don’t need to compromise our needs or the other person’s needs. We can work together to figure out a solution where we don’t compromise and meet everyone’s needs by using principle based negotiation with the intent to achieve a win-win solution.

Positional Negotiation

John is trying to buy a house. The seller lists the house for $300K, John doesn’t want to pay more than $220K because he doesn’t feel like he wants to spend more than that. He offers the seller $200K (assuming the seller will haggle). The seller thinks this offer is ridiculous and wants $300K for the house. Reluctantly the seller lowers the price to $290K with strong words on how John is getting a great deal and that is the final price. John increases the offer to $210 and says that is generous. The seller capitulates and lowers the price again. This kind of back and forth goes on for a while until the two parties more or less meet in the middle at $250K. Both the seller and the buyer did not get what they wanted. Both “compromised” and are unsatisfied.

This is the typical way with most positional based negotiation. Usually one side has more leverage on the other due to urgency, or having some power that the other person does not.

Principle Based Negotiation

Principle based negotiation is based on—you guessed it—principles, and focuses on meeting the interests of both sides. This is key to achieving effective negotiation.

With the above scenario in mind, John can offer $220K, and instead of the seller lowering their price, they can tell John that they would like to find a fair price and ask John what criteria he used when coming up with his offer. John could then explain his reasoning which could be that it is what he is willing to pay but more likely will be that other comparable houses in the area sold for similar amounts. The seller can then agree that this is an objective criteria for deciding on a fair price and can then find other comparable houses that sold for more in order to convince John that a higher price is fair. Other such objective criteria, which both sides agree are reasonable, are principle-based tactics for negotiation.

The above is one way to try to find a fair price when the seller wants as much as they can get for it and John wants to pay the least. That are many other ways to do principle based negotiation. One more example below.

Framers and oil fields

Farmers settled on some land and planted their crops. The oil company, which owns the mineral rights to the land, gave the farmers notice to vacate so they can extract oil from the land. Outraged, the farmers refused to leave. The farmer’s position was that they will not leave. The oil company held the position that the farmers must leave at the mineral rights belonged to them.

Thankfully a negotiator who just learned about principle based negotiation was there to help. He asked the farmers why they didn’t want to leave and learned that the harvest was coming and if they left now, they would loose everything. He talked to the oil company and asked, “Do you need the use of the land right now?” The oil company said, “No.T hey just need to do some surveying and testing.”

After discussing the interests of both sides, they reached a better deal than they had envisioned. The farmers could stay and work the land as long as the oil company could do its work. In addition, when the oil company was pumping oil, the farmers could still use the land between the oil derricks since the oil company did not need that land. The farmers could also be additional laborers for the oil company which helps the oil company and gave additional money to the farmers.

Instead of a showdown between the two sides, or the alternative options of kicking the farmers out, or not being able to use the land, both sides benefited more than either could have imagined by themselves.

Coming up…

In the next few blog articles we will dive into more details on how to do Principle Based Negotiation and how to deal with a negotiating partner who wants to do positional negotiating or wants to play dirty. There are lots of lessons to be learned.

All these lessons are important because wether we realize it or not, we are all negotiators in our daily lives and improving these skills can help us and our negotiating partners to reach better outcomes than we could alone.

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