Hello readers and welcome back to our project management series. In our article today, we will focus on how to develop effective negotiation skills as a project manager.
Do you feel like others are continuously taking advantage of you? Do you feel like you always cut the bad deals for your organization? Do you feel insecure or require the help of others before you can get the resources you need? Do you always struggle before you can get others to help you when you need them? If you have answered yes to any of the questions above, then you need to brush up on your negotiation skills.
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According to Investopedia, negotiation is a strategic discussion that resolves an issue in a way that both parties find acceptable. In a negotiation, each party tries to persuade the other to agree with his or her point of view. While we often think that while negotiating, we should work towards a win-win situation, not all negotiation will end that way.
When properly understood, negotiation is an effective management tool that could land you a lot of goodies for your organization. Specialists refer to it as a game (game of negotiation) and good managers are learning the techniques of the game. We will continue by looking at the stages of negotiation.
Stages Of Negotiations
Richard Shell in his book “Bargaining for Advantage” described the four phases involved in negotiation. He explained them and how the phases relate with each other in a linear series.
Four stages of Negotiation. Source: Bargaining for Advantage: Negotiation strategies for reasonable people
1. Preparation – At this stage you are faced with getting all the relevant data, fact and information that you require to discuss with the other parties during negotiation. For example, a project manager negotiating a contract with a contractor should be familiar with the project deadlines, milestones, key stakeholders, project objectives and so on. You do not want to be caught off guard in an area that you should have covered.
Preparation also involves identifying your own weaknesses, developing your strengths and researching about the other party as well determining the best way of communicating. During the preparation stage, a back-up plan is also prepared in case an agreement is not reached. For example:
- Best alternative to a negotiated agreement
- Worst alternative to a negotiated agreement
- Walk away price or point
- Zone of possible agreement
2. Information exchange and disclosure of necessary details
At this phase, information is shared among all parties involved in the negotiation. The aim is to make the same information available to all parties in order to prevent frustration and allow every party to have a proper analysis of the information before bargaining. At this phase also, you should feel free to ask any question or request any information that gives you better clarification about the project. The best way of understanding a negotiator is to look at the deal from the negotiator’s point of view.
This is what most people often refer to as negotiation. Bargaining is a part of negotiation but is not equal to negotiation. The bargaining stage is mostly referred to as the most important stage of negotiation as most of the work is carried out in this stage. Here, the deal begins to take shape, parties make compromises and all parties try to convince each other to agree to their own terms.
To bargain successfully, it is important to focus on common interests and understand your triggers. Triggers are what others can say or do to make you react in a negative or hostile manner. When faced with a trigger, we should be rational, professional and objective so as not to undermine the whole negotiation process.
Bargaining is more successful when we have the mindset that everyone is a problem solver and not an adversary trying to take advantage of us. However we must stay smart enough to identify when someone is an adversary.
4. Closing and commitment
Closing a deal is when the parties involved place their trust in each other with the hope that all parties would fulfill their end of the deal. The phase formally seals and binds the parties to abide with the agreement.
How To Prepare For A Successful Negotiation
Preparation for negotiation is directly proportional to the scale of the project or argument. For a small argument or discount, extensive preparation can be counterproductive. The following should however be considered at various levels depending on the scale of project or disagreement that needs to be resolved.
- Goals – Why are you going into this negotiation? What do you hope to achieve and what do you think the other parties hope to achieve as well? Never analyze from your own perspective alone.
- Available alternatives – In a situation where you are unable to reach an agreement, what alternatives are available to you? What are the advantages and set backs of the alternatives? And what are the implications of not reaching an agreement to the project and the organization as a whole?
- Trade Advantage – What do both of you have that gives you an advantage over the other? What are you willing to sacrifice for the agreement?
- Relationships – What kind of relationship do you have or hope to establish with the other parties involved in the negotiation? Is it a one off relationship or a continuous relationship? What is the implication of a failed agreement on the relationship involved?
- Power – Who has the upper hand in the relationship? Who controls more resources and who stands to gain more or loose more if an agreement is reached or not reached?
- Consequences – For every action there is a consequence. What are the consequences of you wining or losing the negotiation? When is it considered to have lost the negotiation and what are the quantified implications on the project and project organization?
Preparation for negotiation is a complex part of the negotiation process and you can sometimes determine the success of negotiation from the level of preparation involved. A project manager should effectively analyze all the areas listed above and more before embarking on any project related negotiation.
How To Negotiate Effectively
Communication skills, listening skills and influencing skills are some of the most important skills required when negotiating. The negotiation process is not a linear process and requires a lot of complex thinking. The following should be considered when negotiating:
- Be an excellent listener – The more information you get from the other party, the better for you. Adequate information makes you understand the requirement of the other party and makes it easier for you to meet them or plan a suitable response.
- Ask questions – Questions are used in clearing doubts that might arise during negotiation. Assumption is very wrong and can lead to misunderstanding. Always ask questions when in doubt.
- Paraphrase to ensure understanding – After listing to the other party speak, restate what they have said in your own words and let them agree with it. This prevents any room for ambiguity and ensures that your understanding of what he/she has said is he/she they had in mind.
- Avoid Rigidity – Always remember, the aim as much as possible when negotiating is to ensure that all parties go home happy. Never be too rigid. Be willing to sacrifice some things of lesser values in order to ensure a successful negotiation.
- Focus on values – It is very common for negotiators to focus on cost and prices during negotiation forgetting the value the organization has to offer. Always emphasize your values, remind the other parties of what values you expect from them and what you would be bringing to the table as well.
- Postpone where necessary – Time is a major constraint when managing a project, but all negotiations do not need to be concluded in particular. Never be in a rush to conclude. Take time to consider the offers and feel free to postpone the meeting in order to consult more with your team. While we try to make all parties happy during the negotiation progress, we should not do it to the detriment of your organization.
Negotiation is a great project management tool and very essential in order to get the best bargain for your projects. Negotiation goes beyond getting reduced or higher prices when bidding. It is a necessary tool in the day-to-day activities of the project manager such as during employment, when dealing with other resources, when convincing the management, when asking for an additional resource, etc.
This article explored the four stages of negotiation (preparation, information exchange, bargaining and closing) and focused on the activities required in each stage. It also explained the activities involved in preparing for a good negotiation and steps to negotiating effectively. A successful negotiation is more than luck, as it requires conscious effort, dedicated preparation and consistent practice.
That’s all we have for today and once again thank you for reading. Do not forget to drop your thoughts and questions in the comments section.
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