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How to do effective negotiation

Get to grips with how to negotiate effectively and to make it a success

Effective negotiation

Negotiation is the process of communication, whereby you reach a mutual agreement. An effective negotiation is one that accomplishes mutual agreement. Whether that’s to secure supplies, materials and services of the right quality, quantity and at the right time or negotiate the right terms on engagement. Negotiation has changed over the years. Shifting from price-orientated to now with a focus on economical, sustainable and reputation aspect

 

Steps to successful negotiation

The key to success is preparation. When going into negotiation, it’s important to set goals, alternatives and exit strategies. To master your negotiation skills, you could practice in low-risk situations. Practicing different scenarios, will make sure you’re prepared for different situations that may come your way and is an opportunity to reflect, learn and adapt your behaviour before getting into a discussion where stakes are very high. Here are a few steps below to help make negotiating a success:

  • Invest time in planning
  • Understand stakeholder needs
  • Set objectives for the negotiation: ideal outcomes, realistic outcomes, fall back strategies and tradeables
  • Accurately analyse buyer expectations and their tradeables
  • Assess the bargaining powers of all parties
  • Decide on the negotiation strategy and think about your approach, style of communication, concessions, and venue
 

Advantages of negotiation

Negotiation is an important activity of procurement and spans the initial communication with a potential supplier, right through to the finalising a contract. As organisations look to increase value, it’s important to understand the benefits negotiation has.

  • Negotiations can work fast, particularly if you have done enough planning and research before the negotiation takes place
  • Negotiations provide a good value for money option when working out a deal
  • Negotiations provides both parties more scope to interact and to share significant pre-contract information
  • Suppliers will often have valuable information about the market that you can benefit from, so negotiation can help to leverage that advantage
  • Negotiation helps to reduce costs, as you look to achieve a lower price
  • If you’re looking to reduce lead or cycle times, negotiations can play an important role
 

Challenges of negotiation

Negotiations don’t always go as planned or how you may want them to go. Take a look below at some of the challenges you may face when going negotiating.

  • Lack of information and proper planning when going into negotiating.
  • Time is a major challenge of negotiation. Make sure you allow yourself enough time to overcome any difficult situations or questions that may come from negotiating.
  • Avoid any last-minute changes so it doesn’t result in confusion.
  • Lack of confidence can lead to an unreached mutual agreement. Ensure that you can communicate well and know the facts.

7 rules of negotiation

For organisations to grow, negotiation skills need to be possessed by management and key employees. Take a look at our seven rules of negotiation. Explore the Seven Rules of Negotiation.

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