Key learning outcomes:

  • Recognise that we engage in negotiation in our day-to-day lives, in both a professional and personal context.
  • Distinguish between win–win and loss–loss outcomes in negotiations.
  • Learn about the five styles of negotiation and the typical situations when each is used.
  • Explain how the desire to maintain a relationship or to achieve a particular outcome will determine the style of negotiation you adopt.

Article:

Our negotiation skills are put to the test every single day, whether we are negotiating with our family or partner while we finalise the list of invitees for an event, or with our kids as we try to get them into bed, or with a potential customer as we attempt to close a large deal. Negotiating is part of life, and it is important to understand that the style of negotiation that you use should vary depending on the circumstances. This learning article will give you an outline of each style, along with a guide to when it is appropriate to use each style.

ARE ALL NEGOTIATIONS WIN–WIN?

You will read a lot about striving to achieve a win–win in negotiations. The reality is that in many cases, a win–win is not possible. Think for example about when you last bought a new car. The dealer might have offered you a car they bought at a wholesale price of $9,000 for a sale price of $10,000. When you go to buy the car, you will aim for the lowest price and the dealer will try to sell it at the highest price. In effect, you are negotiating over a “fixed pie”. In a successful negotiation you will settle on a price that you both feel comfortable with. It might be considered a win–win negotiation: the dealer has sold the car and you have bought it. However, in effect, anything less than $10,000 will mean a loss of profit potential for the dealer, and anything less than $9,000 would be a loss. The key is that it is a loss that they are willing to sustain to successfully negotiate the deal. You will see as we go through each negotiation style in detail that there are times when a win–loss or even a loss–loss negotiation is an appropriate tactic.[wlm_ismember]

NEGOTIATION STYLES

There are five styles that you can use when entering into a negotiation. Before choosing a style, it is essential to consider these two key criteria. Firstly, you need to think about how important it is to maintain the relationship with the other party, and secondly you need to decide how important a successful outcome is to you. Remember that the answers to these questions will not necessarily be the same for the other party you are negotiating with. It is worthwhile thinking about how the other party might answer these questions before you commence the negotiation. This will allow you to predict the negotiation style the other party is likely to use. This preparation can assist you in negotiating a successful outcome.

The diagram below shows how each style fits into a grid, depending on how important the relationship is and how important the outcome is.

NegotiationDiagram

ACCOMMODATING (LOSE TO WIN)

The accommodating negotiation style can be used when the relationship has high importance, but the outcome of the negotiation isn’t as important. Consider the following:

AVOIDING (POSTPONE TO WIN)

The avoiding style should be used in situations where the outcome and the relationship are both low priority. It may be a situation that does not warrant conflict or entering into negotiations; and it may be best if the negotiations are postponed either temporarily or permanently. Consider the following:

COMPETING (WIN–LOSE)

You can use a competing negotiation style when the outcome is important, but preserving the relationship may not be as important. Consider the following:

COLLABORATING (WIN–WIN)

Use a collaborative negotiation strategy when both preserving the relationship and negotiating a successful outcome are important. In this situation both parties need to achieve their goals in some way. Consider the following:

COMPROMISE (SPLIT THE DIFFERENCE)

The compromising style is located in the centre of the matrix. Compromise is often used when parties can’t find ways to collaborate fully, but still want to meet their goals and preserve the relationship. Consider the following:

SUMMARY

When preparing for any negotiation, think about what negotiation style will be the most appropriate for the situation. Take some time to think about your long-term goals with regards to the other party. Do you want to be dealing with this person for years to come or are you happy just to focus on getting the best possible outcome for yourself in the short term? It is also worthwhile thinking back to some of your more recent negotiations to identify where you might have used the wrong style, and to learn from these experiences. Do you tend to use a one-size-fits-all negotiation approach out of habit, when a different style might have produced a better outcome? For example, you may find that you have used the competing style too often, or that you have compromised too quickly in some situations.[/wlm_ismember]

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