What is negotiation?
Negotiation is a method to resolve a conflict. In this method, conflicting parties use a give-and-take process to resolve their differences. When all parties are satisfied with the deal they get, the conflict is resolved. Negotiation creates a win-win situation for all parties. It is an important tool which helps people cooperate with each other in spite of their differences.
Need for strategy in negotiations
Negotiations are all pervasive in your life. They range from mundane negotiations like negotiating with your spouse to walk your dog to life-changing negotiations like negotiating the terms of your divorce. Most people do not have a strategy for negotiations. This leads to them getting bad deals. So it will be useful for you to have a strategy for handling negotiations.
Types of negotiations
The selfish nature of the party you are negotiating with determines the type of negotiation. In unselfish negotiation, the other party is unselfish. He intends to give you a fair deal.
In selfish negotiation the other party is selfish. He has no intention to give you a fair deal.
How to approach unselfish negotiations?
When the other party is unselfish it is a good strategy for you to be unselfish as well. Since you and the other party both intend to give a fair deal to each other you can quickly resolve the conflict by conceding equally. By being unselfish to each other you gain the trust of each other. That trust will help you resolve future negotiations quickly. You will both gain a reputation for being fair. That reputation will encourage others to be fair to both of you.
How to approach a selfish negotiations?
Unfortunately, most real-world negotiations are selfish, including ones with your friends and family. In such negotiations, there is a winner and a loser. The winner gets a good deal and the loser gets a bad deal. If you act unselfishly in such negotiations you will lose. Thus, you need a strategy to win selfish negotiations.
Who wins a selfish negotiation?
The party who concedes less wins a selfish negotiation. The party who concedes less is the one with more bargaining power.
What is bargaining power?
Bargaining power is the ability to walk away from a negotiation. You can walk away from a negotiation if you can afford to not gain anything from it. The difference in the ability to walk away between you and the other party determines who has more bargaining power. If you have more bargaining power you will win the negotiation. If the other party has more bargaining power he will win the negotiation. For example, if you are a company hiring an employee from 100 candidates, you have more bargaining power than each of the candidates. This is because you can easily walk away from the negotiation with any selected candidate if he doesn’t agree to your terms. You can reject that candidate and choose another one. The candidates will have more bargaining power if they form a trade union. This is because you will not be able to walk away from a selected candidate as other candidates will refuse to negotiate with you as they are part of a trade union.
What is the best negotiation strategy to win a negotiation?
The best strategy to win a negotiation is to maximise your bargaining power. When you maximise your bargaining power, you maximise the probability of you having more bargaining power than the other party. Consequently, you maximise your probability winning the negotiation.
How to maximise bargaining power?
Your bargaining power is set the moment you enter a negotiation. You cannot increase it after entering a negotiation. This is because your ability to walk away is only dependent on you. It doesn’t depend on the other party. So it will remain the same from the beginning of the negotiation until the end. The same applies to the bargaining power of the other party. This means that the difference in bargaining power between you and the other party is also set at the beginning of the negotiation. This means that the winner of the negotiation is also set at the beginning of the negotiation. So to win a negotiation you need to maximise your bargaining power before entering it. This is the key to winning negotiations. For example, If you want to increase your salary in your job, you should maximise your bargaining power by getting other job offers before starting a negotiation with your employer. You should quit your job and take up another offer if your employer refuses to increase your salary.
How to maximise bargaining power in any negotiation? #
It is possible to maximise your bargaining power in any negotiation. One way to do it is by having backup options for everything in your life. When you have backup options for everything in your life you can walk away from any negotiation. You need to have back up job, house, friends, spouse, car, money etc. This strategy is not realistic because you will be wasting tremendous energy in having a backup option for everything in your life. A better strategy will be to have the ability to walk away from any negotiation without having a backup. For example, be ready to quit your job if your employer doesn’t give you a fair salary, even without a backup job. Be ready to walk away from a friend who is selfish. Be ready to file for divorce if your spouse stops respecting you. Most people will not be able to walk away from a job, friend or spouse as they fear to lose them. This fear stops them from getting a salary they deserve, a friend who is unselfish and a spouse who is respectful. The ability to walk away from any negotiation is the ability to handle the fear of losing anything. When you can handle the fear of losing anything, you are ready to lose anything. When you are ready to lose anything you maximise your bargaining power in any negotiation. Consequently, you maximise the probability of winning any negotiation. When you are ready to lose anything you can refuse to negotiate for anything. Thus, you maximise the probability of winning any negotiation by refusing to negotiate. This is the best strategy to win any negotiation. Never negotiate.
What are the long-term benefits of refusing to negotiate?
The biggest benefit of having this strategy is that it will encourage people to treat you fairly. You will get a fair deal without even negotiating. Even selfish people will be forced to give you a fair deal as you are always ready to walk away. Most conflicts will be prevented even before they occur. Since people will be forced to treat you fairly and you, in turn, treat them fairly there is no possibility of conflicts. In the long run, you will lose some negotiations with this strategy as the other party can walk away as well. But you will still be unscathed as you were ready to lose anything. So you actually didn’t lose anything. The net result of this strategy for negotiations is that you will never lose a negotiation. You either win or it doesn’t matter.
What about negotiation tricks?
Most negotiation tricks work by making you pretend that have more bargaining power than reality. It will not always work. It will be difficult to fake bargaining power as the fear of losing the negotiation will overpower you. Some negotiations tricks work by making you manipulate the other party to concede. This is not a good strategy as it is manipulation. You will lose trust. You will earn a reputation for being unfair. It will encourage others to be unfair to you.
Why is this strategy difficult to pull off?
You might find it difficult to have a ‘ready to lose anything’ attitude due to a lack of self-confidence. If you build self-confidence, you will automatically have a ‘nothing to lose’ attitude. To build self-confidence start by not giving bargaining power by others by getting attached to things. For example, don’t be too dependent on a job, friend or spouse. Then, try to have backups for big negotiations like negotiating the price of a new house. Then, try to be prepared to lose some small negotiations without a backup like walking away from an unfriendly restaurant even if it means you remain hungry. Try your best to not succumb to fear. Slowly you will gain confidence. You will realize that it is not difficult to live without the things or people you think you need. You will realize that you overestimate the suffering from life’s misfortunes. You will realize that you have an innate resilience to overcome incredible adversities.