BLOG CATEGORY November 26, 2019

The Key Elements of Principled Negotiation

When people hear the term “negotiation,” one of the first thoughts they have is of a sales rep who never seems to lose. It may be effective to boost numbers and commissions, but it's not often the most powerful when it comes to conflict resolution or building long-term relationships. That belongs to a style known as “principled negotiation."

While KARRASS uses the term “Both-Win®,” the term “principled negotiation” was originally coined in Robert Fisher and William Ury’s book, Getting to Yes, published in 1981. At its core, Principled Negotiation is about conflict resolution—a necessary skill for every facet of life.

How does Principled Negotiation differ from Positional Bargaining?

What many people understand as negotiation is actually positional bargaining, or distributive bargaining.

This is a winner-take-all style of negotiation that is focused on one specific goal: winning. In this mode of negotiation there is little room for consideration of the other party’s needs and requirements, or the long-term effects of the deal.

As such, there is a much greater risk of injured relationships, wounded egos, and frustrated parties who may have little or no desire to continue the professional relationship moving forward.

In Dr. Karrass’s book In Business as In Life You Don’t Get What You Deserve, You Get What You Negotiate, he discusses the strategy of taking on a firm price [see Chapter 8]. He encourages his readers to take a quiz to help them determine their “Timidity Quotient.” The chapter goes on to provide strategies to help the reader overcome the distributive bargaining model and move the needle of the negotiation toward a principled negotiation.

Principled negotiation is about finding a deal that will benefit all parties involved, no matter if it is a negotiation between two people or a multi-billion-dollar project finance agreement with a non-recourse finance structure.

Principled negotiation is interest based. Each party is concerned about the other(s) based on a vested interest in maintaining a relationship once the deal is completed.

What impact does Principled Negotiation have on Project Management?

As any project manager knows, a project’s numerous components must work together for the project to be completed on time, on budget, and without damaging long-term business and/or personal relationships. The more complex a project is, the more opportunity exists for competing needs to arise, and more the more important principled negotiation becomes.

For example, a buyer for a large multi-national hospitality chain is ready to upgrade their guest internet services. The Project Managers from both the Buyer and Supplier have complex logistical, legal, regulatory, and budgetary challenges. By working together, they can discover multiple avenues within the project scope that enable them to decrease costs, increase revenue, and provide a better service to the Buyer’s guests.

In a Both-Win®/principled negotiation, the project managers work to find common ground between their different teams to determine the best way for the project to move forward and meet the goals of their respective organizations.

The Four Basic Tenets of Principled Negotiation.

1. Separate the person from the problem.

When people feel they are at a disadvantage in a negotiation, they will often take a defensive approach. This can cause miscommunication which opens the door to hostility, resentment, and a breakdown of the negotiation. Dr. Karrass recommends handling high emotions or defensiveness by resisting intimidation. Remaining rational, refusing to take abuse, dealing with the facts, and acting with quiet dignity and firmness can lead to a positive outcome

2. Focus on common interests.

One of the key challenges of positional bargaining when it comes to building long-term relationships, is that each party tends to focus on their interests first and foremost. Instead, each party should consider what interests they share. By focusing on common interests, a relationship can be built upon a both-win outcome. During a magazine interview many years ago, Dr. Karrass compared building long-term business relationships to the partnership needed to create a successful marriage, emphasizing that the conduct of each corporation is of great importance to the success of their negotiations.

3. Generate ample options.

When two parties work to generate numerous options, a negotiation no longer feels like a win-lose or lose-lose scenario, but rather a win-win. Whether one party gains an advantage over another is not relevant so long as both parties feel that the result was reached in good faith and with minimal pressure.

4. Rely on objective criteria.

Whenever there is direct opposition in a negotiation and the parties cannot agree on terms, objective criteria need to be employed. Scientific research, studies, legal precedent, and even industry statistics can all be helpful tools in highlighting objective criteria. If both parties agree that the given information is valid, a level of objectivity can be brought to the negotiation. For example, in a salary negotiation a new recruit might be expecting $80,000 for her services while the employer is offering $60,000, but industry averages show that this position with her experience warrants $68,000. As long as both parties accept the independent information, they will both be satisfied with the deal.

How to put Principled Negotiation to work.

The most important focus of principled negotiation is building strong long-term relationships and possess a willingness to get involved with the other party and their organization—that is, to understand all the various personal and business issues that could affect the desired outcome. Coming to a negotiation with an open mind, a willingness to compromise, and an understanding the other party’s inherent value (monetary and otherwise) are the most effective ways to create a both-win.

When is Positional Bargaining effective?

When a party is only interested in negotiating for a one-time opportunity, has no interest or desire for a long-term relationship with the other, and if they have something of inherent value (determined by desire, necessity, or other driving factor) and can impose their will on the other party, positional bargaining can result in the desired outcome. In more complex negotiations—especially ones where conflict resolution and a long-term relationship are part of the overall goals—Both-Win®/principled negotiation is the most effective strategy.