10 reasons why negotiation is not the same as bargaining

Negotiating is less about confrontation and aggression than it is about flexibility and innovative thinking.

Where as bargaining can lead to lots of problems which may not result in a win-win outcome.

article by Diane Shawe M.ED AVPT Ltd

Although people often think that negotiating is the same as bargaining, it is not. Negotiating is a process, and bargaining is one stage of that process. There are three other stages of negotiating, and even those are tempered by timing, intuition, and flexibility to the process. We are going to set out some of the real nuggets you should put in place to establish a firm ground for all considerations.

(Adapted from Shell, Richard: Bargaining for Advantage: Negotiation Strategies for Reasonable People, Penguin, 1999)

1. Do your Research

When doing research and preparing for negotiations, there are three important considerations:

Collecting facts
Knowing priorities
Knowing principles

The facts that you collect are all the direct and indirect information that you will need to back you up during negotiations. With access to information today, it is a much simpler task than ever to accumulate all kinds of data and statistics. For example, if you are preparing to purchase a vehicle or a house, plenty of information is available, such as comparable properties and prices. If you are preparing to negotiate a raise, or are negotiating salary increases at work, then comparable wage statistics, the history of the organisation and its mission and values, previous experiences in the collective bargaining process, and strategic plans are all important concepts to understand.

2. Focus on your priority

Knowing priorities means having a good understanding of what you want from the negotiation. You also need to know what the other party wants. Understanding your principles, both as a negotiator and as an individual, will help you to form and present a case that is compelling and believable.

Understanding the principles of the other party can also be very helpful to you. A little more research can help you to understand what the organization’s beliefs are, how they have approached previous negotiations, what terms seem to be more important to them than others, and what terms they could be willing to be flexible with.

3. Identifying Your Walk Away Position (WAP)

When you establish your priorities, make sure you have a clear understanding of your Walk Away Position (WAP). What is the least that you will accept (or the highest price that you are willing to pay)? Establish your WAP value in your mind and keep it clearly available so that you do not get caught up in the heat of negotiating, either ending up with something you never wanted, or turning down a deal that was better than your WAP. If you are negotiating on someone else’s behalf, make sure that you know their WAP so that you do not make any mistakes in negotiating for them.

4. Identifying Your Best Alternative to a Negotiated Agreement (BATNA)

In addition to your WAP, you also need a Best Alternative to a Negotiated Agreement (BATNA) in your plan. Sometimes an issue can be settled before the bargaining phase begins if it meets your criteria as a BATNA. For example, if you are planning to purchase a home – which is often a very emotional decision – and the realtor comes to you with an offer that you can live with, and you get the home you want without having to participate in any heavy bargaining or entering into a price war, then you may have reached your BATNA. Not all negotiations have to be bargained; sometimes, when you negotiate, you can lose the opportunity to get what might have been a BATNA if you had not been after such a bargain.

5. Working Within the Zone of Possible Agreement (ZOPA)

The Zone of Possible Agreement (ZOPA) is an area of overlap where the desired outcomes of both parties reside, and where both parties can live with the outcome. Once you reach a ZOPA, the finer details need to be worked out within the scope of what both parties have already found is potentially working for them. For example, if your business forecasting allows for a 2% salary increase each year for the next three years, and similar companies in your industry are offering the same, and the union is asking for 7% over four years, then you may be within the ZOPA.

In general, there are three possible outcomes to a negotiation.

Lose-Lose
Win-Lose
Win-Win

6. Getting Everyone’s Perspective

Gathering perspective is something that can take place throughout the negotiation process. It begins in the research phase, where the negotiator considers the needs of the members of an organization in conjunction with the strategic vision and mission of the negotiation. This does not mean that everyone will get what they want in an agreement; rather, it means that all points of view are considered. There is no point in entering negotiations and reaching an agreement that ignores a section of stakeholders or breaks the law.

Gathering perspective can be a considerable undertaking, depending on the size and scope of the operation. This is one area where outside resources can be utilized (an outside firm conducting employee satisfaction surveys, for example).

7. Developing a Sustainable Agreement?

In this age of complex life and work arrangements, a sustainable agreement can be said to reflect the reality of the business. An agreement cannot be a rigid reflection of ineffective negotiations; rather, it must reflect the reality of business and economic cycles, industries, and real issues that people face. It must also reflect the multiple aspects of the stakeholders who both provide input, and are affected by the results. An agreement also cannot focus on one aspect of the business when the business impacts other industries, cultures, or linguistic groups.

In developing a sustainable agreement, the partners must ensure that, first of all, the organizations that they negotiate on behalf of are interested in having an agreement. Partners must also ensure that negotiating organizations will enforce and take part in the terms of that agreement. If the agreement cannot stand on its own, and the parties who sign it refuse to use it, then the paper it is printed on is useless.

A sustainable agreement really does incorporate feedback from all stakeholders. Although we will never always agree with other people, and although we can write an agreement much more quickly than we can negotiate the terms of one, an agreement is just that, an agreement.

8. Resolving Power Struggles

Negotiating has a lot to do with power. You may find yourself drawn into a compelling conversation that becomes a struggle for power between you and your counterpart. You will have to remind yourself that the negotiation is a process and what your priorities are. The outcome is not personal, and you needn’t get drawn into a power struggle. If you notice that the tone of conversation changes and a power struggle is taking place, one very fast way to disarm it is to take responsibility for it.

You can try a statement like the following:

“Do you mind if we pause for a few moments? I can feel myself taking your last few statements personally and I can feel my heels digging in. Please accept my apologies. Do you mind if we take a short break, and then we can go over this point again once I have had a chance to clear my mind. Perhaps we can try to approach it from a different angle?”

You do not have to mention that you feel the conversation becoming a power struggle. Simply acknowledge the change in tone within the meeting, and then take a moment to collect yourself and regain composure as you move forward. In most cases, the break you put into the conversation may be enough for your partner to also review their approach and consider an alternative.

9. Detach yourself from the outcome

The outcome of this negotiation is not about you personally. If your side wins or loses, you do not become a winner or loser. Very few negotiations actually involve life or death issues. Keep your feet squarely on the ground by realizing that, as a negotiator, your job is to lead people through a process, not to win. Try to think of it in terms of four potential outcomes.

The two of you do not reach an agreement, and the negotiation ends.
Your counterpart will agree to your terms.
You will agree to your counterpart’s terms.
The two of you will compromise on some point in between your positions, perhaps closer to your terms and perhaps not.

In some situations, you have the potential to reach the agreement that you wanted. In other outcomes, both parties may leave unsatisfied. Sometimes not reaching an agreement is the best outcome. (You walk away from a deal with your bank account or integrity intact.) At other times, it is the worst arrangement. (Now, how will you get someone out to fix the service elevator by Friday?)

10. Know your Role and Value

Creating and claiming value are at the heart of the negotiating process. Creating value means that we can develop effective and creative solutions that meet the needs of everyone involved in the negotiation. In negotiation terms, this is commonly known as “expanding the pie.” Claiming value refers to the size of the piece of the pie we receive as a result of negotiation. Many negotiators can do a good job at either creating or claiming value, but not both. Master negotiators do an excellent job of striking this balance by having a good understanding of the interests of both parties, and by identifying common ground, rather than simply aiming for a target and not allowing for any flexibility.

When you are negotiating, check your personal baggage at the door. Think of the things that might be on your mind as you prepare for negotiations.