Establishing an effective negotiation strategy is crucial to high-stakes business negotiations, yet many negotiators make mistakes that compromise their results.
By engaging in discussions without properly assessing their circumstances, many discussions quickly turn hostile or into an impasse, potentially leading to conflict or impasse. With proper preparation, however, these errors can be avoided and prevented from becoming mistakes.
1. Know Your Position
Good negotiators tend to come to negotiations well-prepared. This involves researching issues at hand, understanding their goal and devising an approach towards reaching it. Prep also includes choosing an approach strategy.
High stakes negotiations can become emotionally charged quickly, so a negotiator must know how to keep their emotions under control in order to remain calm. One key is developing emotional intelligence tools such as active listening and empathy in order to control one’s emotions and maintain control.
An unfortunate negotiation trap lies in becoming too focused on specific positions rather than your underlying interests, leaving your opponents able to exploit this flaw by exploiting any minute details you might overlook and use them against you in order to get more concessions out of you.
In these situations, it’s crucial to distinguish between fact-based evidence and anecdotal experience. If someone presents examples from their personal life that seem relevant to yours, ask them for specific instances they can cite instead of generalizations that don’t pertain. Furthermore, make concessions that make it harder for the other side to extract more.
2. Know the Other Party’s Position
Avoid being surprised during negotiations by sudden outbursts from your counterpart; yet this often occurs if negotiators fail to spend sufficient time preparing for arguments and questions that their counterpart may raise.
Effective negotiators should undertake thorough preparations prior to negotiations in order to gain an in-depth understanding of the other party’s position, needs and objectives. Furthermore, they must asses their counterpart’s level of authority (i.e. whether they can commit directly at the table without first consulting their boss/approval group). Furthermore, effective negotiators must ascertain who will make final decisions both during and post negotiation sessions.
Understanding the interests of other parties can assist negotiators in devising an effective negotiation strategy, including offering concessions in one aspect of negotiations in order to win on another – an approach particularly useful when handling high stakes negotiations such as merger or acquisition agreements. In these instances, the stakes can often be even higher as successful negotiations could have far-reaching repercussions for an organization as a whole. Weiss, Donigian and Hughes provide some advice in Harvard Business Review for managing extreme negotiations: “Skilled extreme negotiators typically avoid playing hardball; instead they focus on building trust through gradual commitments and encouraging cooperation”. With such preparation in place, negotiators can avoid burning bridges with colleagues while maximizing potential benefits from any deals reached.
3. Know Yourself
Understanding yourself can be a lifelong journey. Your identity changes and evolves over time, taking time for you to fully grasp who you are as an individual. For instance, while one way you may describe yourself may be through your profession (“I’m a doctor”) that only tells part of the story; understanding your values and deciding what you want from life are also vital elements in developing self-awareness.
At the outset of negotiations, it’s essential to have an instilled sense of self-worth and deservingness that allows you to feel secure about yourself and avoid giving into pressure from the other party. Clarity about your goals and desires also assists greatly, as this allows you to recognize ways in which creating value can benefit both yourself and the other party – information you can then use when making decisions that will ultimately benefit both parties as opposed to making ones that may prove harmful in the long run.
4. Know Your Values
Understanding your core values will enable you to successfully navigate high-stakes negotiations. By clearly outlining your personal values, you can ensure every decision and action taken are in support of those values.
To identify your personal values, write out a list of things that are most significant to you in life and rank them according to importance. Once complete, consider what life would look like if these values became the cornerstones of your lifestyle – for instance if “order” were your number-one value and you had a highly structured corporate job, try visualizing how different it might feel if switching jobs to something less formal and structured would change things up considerably.
Regularly revisit your values and prioritization exercise if your personal values change over time, especially since this exercise can be used as a decision-making tool – it will make high-stakes business negotiations much simpler!
5. Know Your Options
Negotiation may seem intimidating, but it can be an effective means of reaching business goals. From brokering contracts with external suppliers to trying to negotiate prices with unsatisfied customers, there are various tactics you can employ in preparation for high-stakes negotiations.
At the conclusion of negotiations, it’s vitally important to think carefully about how best to build relationships, as an overly aggressive negotiator could cause irreparable damage that must later be repaired. Skilled negotiators should work to uncover hidden agendas and collaborate with their counterparts rather than playing hardball with concessions that might create resentment or lead to impasse.
High stakes business events like investor presentations, board of director meetings and global townhalls often place years of research, planning and millions in investment at stake. To ensure their success, preparation must start early – this means selecting how information will be presented and shaping data into digestible visuals – this process may often take 2-3 times longer than anticipated if multiple contributors and multiple presentations are involved.
