Are Negotiation Skills the Key to Success in Business?
The First Art Newspaper on the Net    Established in 1996 Sunday, July 21, 2024

Are Negotiation Skills the Key to Success in Business?

Business leaders know the importance of learning negotiation strategies to leverage during sales or contract negotiations. However, some leaders don’t take into account the ways in which their negotiation skills underpin their business and career success. The best negotiation skills classes on emphasize the importance of these skills for the health of your business overall, not just during a negotiation. The Negotiation Experts recommend the following techniques for building a solid foundation for your business.

Listen Often, Listen Well
Negotiations can be stressful, high-pressure situations. Negotiators at the bargaining table are often anxious to make sure they get a chance to express all of their points, which can lead to them searching the conversation for opportunities to pipe up, and planning what they’re going to say while others are talking. Not only is this disrespectful to the other parties at the table, it also sacrifices the opportunity to receive valuable new information. By listening carefully to what the other parties are looking for, you may find opportunities to create value for their side at little or no cost to your side. Train yourself in the skill of active listening by carefully taking in what your counterpart is saying, then repeating it back to them to ensure you understood the main points before moving on to respond. Fortunately, there are experts such as Shapiro Negotiations consulting who can provide valuable guidance on how to navigate high-stakes negotiations effectively.

Even in a less amicable situation, such as in a distributive negotiation, in which negotiators are flexing their shrewdest negotiation tactics, listening can prove to be a valuable tool. The more you listen, the more your counterpart will talk, and the more your counterpart talks, the more information you receive. Your negotiation opposite may even leave the table thinking they dominated the exchange since they got to do all the talking, when in reality, your side got the upper hand by taking away insights.

Identify Each Party’s Key Leverage Points
One negotiation strategy that is crucial to a business negotiation is understanding which parties in the negotiation have the most leverage, and why. Conducting a full analysis of leverage points before and during the negotiation process will greatly impact the approach you take during the negotiation.

For example, in a negotiation with an investor, it is important to understand that they will have significant leverage in knowing they can walk away with their money at any time. Train your team to frame your negotiation in terms of their opportunity cost by tying their return to your success - if you can convince them that your company will take off, they will realize they actually have a lot to lose by not getting in on the ground floor.

Meanwhile, in a negotiation with a vendor or supplier, your company has the upper-hand given that you can always take your business elsewhere. Demonstrate the leverage you have by establishing to the supplier how much they have to gain from your rapidly growing business.

Tip: To understand the power dynamics within the negotiation, make a list of the leverage points that each party has over the other and assign them point values to represent weight. Then, swap sides to understand the possible counterpoints. If you are going up against a skilled negotiator who possesses significant leverage, you can ensure that you have enough counterweight to neutralize their advantage. If you are the party with leverage, you’ll be better prepared to both anticipate and respond in your meeting.

Build A Contingency Plan
Contract negotiations can be undermined by suppliers making claims that seem impossible to fulfill. Rather than going back and forth on deadlines and promises, build contingency clauses into the contract that penalize the supplier for not making good on their commitment. For example, if a project manager offers to deliver on a contract in 3 months but you think it will take them longer, build in a penalty clause that docks their fee for every week that they deliver late. Not only will this negotiation skill protect your business from any false claims, it will also keep even the most realistic timelines on track and give a motivation for the other side to deliver.

In addition to penalty clauses, you could consider negotiating bonus clauses into the contract for delivering above and beyond expectations. If you are the contractor or project manager negotiating, training yourself to negotiate bonuses is a great skill. For example, if the project typically takes 3 months but it would be of value to your client to have it in less time, offer your client a 3-month contract with a bonus incentive if you complete early. Setting the expectation at 3 months protects you from penalties or angry clients if that’s how long the project indeed takes, but leaves opportunity for both financial and reputational games if you manage to finish it sooner.

No company functions independently; there will come a time for every firm in which negotiation skills are critical to continuing the success of the business. Investing in negotiation training will pay dividends for your business over the long run, so consider signing your whole team up for a negotiating workshop sooner rather than later.

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