If we want to admit it or not, we have to negotiate at all times in our lives, in almost every aspect or environment: at work when trying to get funding for a great project that you’ve been working very hard lately, in a business environment when closing a deal, at shopping trying to get a better offer for the products you need, we need to negotiate everywhere. But the question is do you do it right? Do you have sometimes the feeling that someone took advantage of you? Do you seem to have to fight your corner aggressively? Well the negotiation skills are like any other communication skills, some things that we can learn and develop through practice and commitment.
Picture the following: it’s time to buy a new car, and you’re in the showroom at a local dealer.
You’re interested in a car priced at £9,000, with an initial payment of 20 percent, and the rest as an interest-free loan over three years. You think you can get a better price, but the sales-person isn’t prepared to lower it.
So, how can you get a better overall price for yourself while also making your offer more attractive to the dealer?
You think of another option and say to the sales-person, “I like the car, but I want to change the deal to something that’s more beneficial to both of us. For your price of £9,000, I’d like you to include three years of free servicing. If you do that, I’ll pay you 50 percent of the price up front, and the rest over just two years.”
This is an example of integrative negotiation. The situation has changed from a “win-lose” (a pound you win is a pound they lose, and vice versa) to a “win-win” (a better pounds deal for both parties).
In effect, you move toward a deal that makes the “negotiating pie” bigger, rather than continue to fight over how to cut up the existing “pie.” The car dealer makes a sale with better cash flow, which outweighs the cost of servicing. And you get your car with a lower total cost of ownership because three years of servicing, which you’ll need anyway, will be free.
What is Integrative Negotiation?
An easy way to define integrative negotiation is to compare it with its counterpart, distributive negotiation (what we know mostly that negotiation means). Distributive negotiation is what people traditionally consider negotiation to be: both sides fight over the price of a fixed package of goods or services, and they try to hide their real positions and objectives in order to gain an advantage.
In contrast, integrative negotiation uses more creative thinking. Instead of assuming that someone has to lose, you find ways for everyone to win. Integrative negotiation emphasizes building a good relationship in order to increase the chances of everyone getting what they want, rather than playing games and trying to fool the other side to win at their expense.
When is recommended this type of negotiation?
Well, every time when your relevant “currency” is relationship, anytime when you think that you will deal with this partner again in the future.
In order to perfect this skills for the future, we have some techniques that we recommend you to use when negotiating.
Integrative Negotiation Techniques
There are several ways to go about the “creating” part of a deal, before you move on to the “claiming” phase that involves distributive bargaining. You can use more than one in any specific negotiation.
- Expand the pie – Add to the package of goods and services, or restructure the payment, so that all parties can achieve their objectives. This happened in our car purchase example.
- Find new solutions – Restate the problem to invent new options that meet each party’s needs. In terms of car sales, this is what dealers are doing when they offer financing packages as an alternative to full payment up front.
- Trade favors – Split the primary issue to achieve a “highly preferred solution” on one issue for one party, and another “highly preferred solution” on another issue for the other party. For example, your partner and you need to buy one car, but you each have different selection criteria. You settle on advantageous purchase terms (you really like to get a bargain), with top safety ratings (your partner’s key issue), and you both accept more modest performance and more limited luggage space.
- Match compensation – One party can compensate the other for accepting the first party’s preferences, according to the perceived value of the inconvenience or disadvantage. Let’s look at our car example. In return for the dealer accepting your request for free servicing (a small cost to the dealer), you compensate the dealer by paying more money up front and improving the dealer’s cash flow.
- Lower the cost of compliance – Minimize the costs and inconvenience to one party. For example, the dealer could offer to buy your old car to save you the trouble of trying to sell it.
If you decided to brush up your negotiation skills, we would like to offer our support.
This Friday morning, we will explore more the world of negotiations in the workplace. if you’d like to come along, buy your tickets now, just click here: http://evisioncoaching.co.uk/programmes/
We will meet up in City Centre, @City Business Hub, 10 a.m.
Have an amazing week!
Elite Vision Coaching
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