Negotiation Styles

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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.

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:

• You’re not too worried about “losing” in order to preserve the relationship.
• You can accommodate a short-term loss in exchange for a long-term gain. For example, the car dealer may accept a loss on selling a car because they know that you will buy another car from them in the future.
• Before accommodating, it is important to confirm that the relationship is substantially more important than the outcome.
• Build trust by making your intentions clear. Make sure that the other person understands that you’re giving up your interests to accommodate theirs – accommodation won’t build relationships unless the other person understands what you’re doing.
• Show respect for the other person’s position or abilities with sincere praise or compliments. Remember, your goal is to enhance and preserve this relationship, so be positive and forthcoming.

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:

• You can use the avoiding style when the other person is angry or emotional.
• Be careful to control your own emotions if the other person is upset or angry. Try and focus on being empathetic.
• Use active listening skills.
• Keep in mind that avoiding negotiation is a useful tactic in the first instance; the situation or issue may still need to be addressed at a later date.
• The avoiding style can also be used when you have a viable alternative to consider, or if you can meet your needs without any negotiation.

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:

• This strategy should only be used when you need to win, even at the expense of the relationship. For a good example of the competitive strategy, let’s go back to the car purchase situation. You want the best possible deal, but maintaining a friendly, lasting relationship with the salesperson isn’t important.
• You can use this strategy successfully when you’re negotiating with a representative or when both parties have only short-term goals.
• Competing negotiation doesn’t mean that a relationship cannot still be maintained. As long as you both stay fair and honest during the negotiations, it likely that a level of mutual respect will be developed.
• It is essential to have a clear understanding of what you need to get out of the situation prior to entering into any competing negotiation. Write down what you want to achieve, as well as other offers or concessions that you might be willing to give up to get what you want. This preparation will help you develop a better understanding of what you can exchange with the other person.
• If you’re negotiating with an unfamiliar party, it is appropriate and smart to start off the negotiation with questions. Do your best to get to know the other side; for example, it can be helpful to ask the person what their objectives are.

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:

• Start collaborating negotiations by displaying trust and building rapport.
• Be open with the other party about what you intend to do and what your goals are. This way you’ll build trust and create a bond.
• Your reputation also plays a part in how successful your collaborative efforts are. If you have a reputation built on fairness, honesty and integrity, then it will be easier for the other party to trust you during the process.
• Creative problem-solving is an important part of collaboration. In order for both parties to win, you might need to find new, creative ways to look at the problem.
• Collaboration is often the best approach when there are undesirable outcomes, such as two parties fighting over a very small reward. With collaboration, you can work together to achieve a larger reward, instead of settling for even smaller pieces. An example is the car dealer who only has a small profit margin for the car. Rather than negotiating on the price, they might include an extended warranty or other benefit to make the deal more attractive, while still making a profit.

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:

• To compromise you will often use strategies from the other four negotiation styles. In some situations you might need to use the give and take of collaboration, while in other situations, you might require a more competitive negotiation style.
• It’s important to stay flexible during negotiations. In this situation you will both gain and lose, so it is important to properly prepare and ensure that you fully understand your goals and objectives. You need to be clear on what is most important so that you know what you can and cannot afford to lose or compromise on.
• A good tactic is to let the other person take the lead, as often the person who speaks first in this type of negotiation loses the most. By allowing the other person to make the first offer, you may be in a stronger position. It will also give you a clearer picture of the other party’s priorities and goals.
• Show that you want to negotiate by addressing the other party’s key interests or concerns. This will demonstrate your fairness and empathy, and show that you’re willing to work to achieve a win for everyone.
• Understand in this style of negotiation there may be several offers back and forth before an agreement is reached. Therefore, being calm and patient is essential.

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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