STYLE is everything
The single most influential determinant in any type of negotiation is YOU! Your behavior (and that of the other party) determines the style of negotiation. The law of reciprocity dictates as you become aggressive the other party is more likely to respond with an escalation of aggression or worse yet become more defensive. Your behavior has a huge impact on the overall negotiation. It is a classic mistake I witness over and over again, even in professional negotiations, when the actions and behaviors of one of the negotiators is not aligned with their strategy. Here are a couple of examples:
- A retailer and their vendor working together to create a unique advertising program involving multiple media sources, mistake and misalignment happens when one party begins shooting down proposals by saying “no”, “that won’t work”, or “that’s a deal breaker” etc.
- A person negotiating the purchase of a collector’s item (stamp, baseball card, painting, whatever), meets the broker for lunch to create a more relaxed atmosphere. While dining the buyer offers up personal information in an effort to create trust with the broker. The buyer discusses their admiration for the object, their immediate plans for showcasing the item, how long they have searched for something similar etc.
In the 1st example a Win Win style of negotiation is desired to identify priorities, cost parameters, and trade effectively to create value for both parties. Aggressive behavior and rejecting proposals may be appropriate when dealing in one-off transactions or Hard Bargaining situations, however, the effect on a collaborative negotiation is absolutely stifling. When working collaboratively you must manage the climate as well as take responsibility for how the other side is feeling (that’s right YOU are responsible for their feelings). Aggressive behavior limits the amount and quality of information shared and gathered. By acting aggressive you effectively move the negotiation backwards into a more distributive style of negotiation like Hard Bargaining. You need to develop other methods for saying no to proposals without actually using words like “no”, “don’t”, “can’t” or “won’t”.
The 2nd example illustrates a basic one-off transaction. There is no need to create or maintain trust. Information is used to create leverage and power. Attempting to establish a relationship through information sharing only results in undermining your negotiating position. Information is power. In a Hard Bargaining situation it is appropriate to expect negotiators to utilize any and all information to get the best price. Anything you say, can and will be used against you! Silence is golden in a distributive negotiation.
The Wheel of Negotiation is a useful model depicting the relationship between the different negotiation styles. The styles are characterized by certain external factors like deal complexity, relationship, trust, term horizon, value focus, precedents, etc. Click on the link for additional information on the Wheel of Negotiation. Below are links providing additional information on each style of negotiation.
Auction / Bartering – When it’s all about price with several close substitutes (RFPs, online auctions, one-off transactions, etc.)
Hard Bargaining – When it’s mainly price focused with a couple of substitutes, deals are slightly more complex (lease, asset purchase, one-off opportunity, etc.)
Concession Trading – Deals are more complex, relationship and trust play an important role, focus shifts from price to profit, outlook extends beyond short term (typical commercial transactions, economies of scale trade-offs, etc.)
Win Win – Creativity generates additional value, changing the way you do business, information is shared, long term focus, relationship and trust are paramount (your strategic partners, key customers/suppliers, trusted partners, etc.)
High Dependency – The same as Win Win except now the parties involved are dependent upon each other. Neither is able to walk away from the deal without significant impact, trust is a primary driver, information is fully disclosed (joint ventures, strategic alliances, trade unions, partnerships, etc.)