Which strategy is my best option?
There are two basic methods for negotiation; negotiation is a distributive process where the winner takes more gain than the loser, or negotiation is a collaborative process where the parties work together to craft solutions that work for all.
Each method has its strengths and applications.
Distributive process negotiations are ideal if the issue involves a one-off deal, where no relationship is needed between the parties after the conclusion of the negotiation. Distributive negotiations usually focus on the area in the middle of two anchored positions for settlement.
For example, the seller wants to sell their goods for $400,000 but the buyer only wants to pay $350,000. In this case, the area in the middle which is called the Zone of Possible Agreement, (or Zopa) is between $400,000 and $300,000. Usually a settlement is made in the middle of the Zopa and we all believe that’s fair because the concession is roughly the same for both parties.
Collaborative negotiation works best where the on-going relationship between the parties is important for their future work together or to uphold the deals that are agreed.
In the collaborative process we focus on each parties needs (tangible items) and concerns (intangible items) and the parties work towards making agreements on options that satisfy both sets of needs and concerns so everyone gains. The options are whole options not compromised ones.
Not only do we tend to get better outcomes for all parties using this method in business, but we also grow the relationship for next time and invest goodwill into the way we do business together.
I often tell my workshop groups that I know it sounds like ‘fairy time’ but if they trust me for a couple of days I can show them just how effective collaborative negotiation can be - and they can measure the results themselves in the bottom line.
Written by Alana Billingham, Managing Director, Senior Trainer & Consultant at Skillset