The Art of Agreeing

In the first part of a sub-series on negotiation, Devashish Chakravarty suggests ways to reach a mutually beneficial agreement with clients or vendors outside the organisation.

Devashish Chakravarty        Print Edition: November 2010

In an office, as in a war, negotiation is won much before the first battle is ever fought. But unlike in a war, successful negotiation has both parties walking away as winners. What is negotiation at work? It's the skill of reaching an agreement, be it with the boss and colleagues in office, or clients and vendors outside the organisation. In the first part of this sub-series on negotiation, we deal with the latter.

Like any other skill, negotiation requires learning and practice. The key issues often boil down to reaching an agreement that is mutually beneficial and seeking a working relationship that permits the benefits to flow. This process can be made profitable and enjoyable for all concerned if some basic steps are followed. The first step is the same as for any other process-preparation. The better prepared you are with factual data before heading into a negotiation, the more effective you will be.

Thereafter, the most important requirement is to honestly, logically and accurately identify the real needs and goals. Though the most obviously stated need is money, it can be a proxy for other physical or more refined needs (shelter, reputation, self-esteem). In the case of a vendor/client, people are often simply seeking understanding and attention rather than money.

NEGOTIATION NUANCES
  • ACBD
    Always Consult Before Deciding.
    While the three cornerstones of successful negotiation are homework, homework and homework, the last stage of pre-negotiation homework is to consult and get inputs/criticism from others. This includes role-playing.
  • Work on Real Benefits
    Think about the real needs, priorities and interests of each person. Almost always ignore the stance, position or words used to describe the demands. If you ignore this attitude, both parties will lose. So, if a union leader has been posturing aggressively in public, he may be seeking popularity, not solution. Or if an employee is asking for Rs 10,000 more, he might be happier with free medical cover.
  • Hard on Problem, Soft on People
    The other party is a person first and brings to the table his relationship with you. Recognise it as separate from the primary problem and work with both independently. Solve the problem and look after the relationship. Don't let your personal feelings affect the agreement.
  • Multiple Solutions
    Think out of the box. Most problems have more solutions than you can count, so come up with several nuanced ones. Thereafter, take a decision based on what is fair, mutually profitable, scientific and socially acceptable.
Once you prioritise the needs of both parties, you can plan towards a mutually advantageous solution, wherein you can give away low-ranked needs in return for high-priority ones. Also, identify the stakeholders whose interests or needs are affected by the outcome of the agreement or negotiation. If you can -list out multiple stakeholders and their various interests, you are probably analysing well. Use the matching needs to come up with multiple solutions that may work.

Carry your analysis into the communication with the negotiating party. The communication process is the second critical step in arriving at an agreement. It is important to realise that the words used, emotions, as well as the non-verbal attitude, will have an impact on people, and, hence, on the outcome. Listen with an open mind, focus on receiving and communicating with maximum clarity, and maintain sufficient emotional distance in order to be successful. Simultaneously, you can continue to receive factual data, with both parties following the give-and-take principle, and building trust gradually. It is important to have persistence and respect for the other person in order to be successful.

Finally, remember that you should care for the outcome, but not too much. You can negotiate well only if you have the ability to walk away from an unfavourable agreement. To build this strength, create a credible alternative to failure. So, a successful salesperson, for instance, can negotiate the best deals on his products if he has a potential back-up customer. You should also factor in the fall-back options for the other side. If you do this, it will be clear that the final agreement will necessarily fall between the back-up options of the parties concerned. However, do not exercise your option to walk away; make your final offer and let the other person go first-if need be.

While negotiating with a client/vendor, enter the discussion with a win-win mindset. Understand that both the parties need to walk away with gains. So, if you are looking for a higher price, perhaps your client wants the peace of mind that comes with an extended warranty. If you think of it as a win-lose deal, you stand to lose both the deal and the working relationship. Irrespective of the outcome, do not take words, requests or denials personally.

A lost deal does not mean that you have failed. It simply implies that at that moment, the client could not afford to accept your offer. Do, however, take time to help the client understand what he stands to gain from your offer. Listen carefully to make sure you understand what he really wants.

Also remember never to lose your cool or emotions. Your friends may accept you as you are, but your clients could run scared. Try and be the first to make an offer. It will help anchor the client to your view and the final agreement is more likely to end closer to your proposal. Do not compromise on your ethical standards. Most clients/vendors would be happy to work where they perceive the other person to be fair. While the client has the right to ask and know before paying, both parties are entitled to take time to think through their reactions.

At the end of the day, every interaction with a client/vendor teaches us something new that adds to our negotiation experience. It is a skill that takes years to master. Know that negotiation with clients is often focused on money. Add to it the amorphous nature of relationships and negotiations can become very complex. The situation at workplace with your boss, peers or subordinates is essentially the same-with some variations. Find out how to tackle these in the next issue.

The writer is CEO, Quetzal, a human resource solutions company started by four IIM-A graduates.

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