What is Negotiation? Definition, Benefits, Examples & FAQs
Negotiating is a critical aspect of business that cannot be ignored. Knowing “What is negotiation?” is crucial to your advancement regardless of where you fit on the totem pole...
Negotiating is a critical aspect of business that cannot be ignored. Knowing “What is negotiation?” is crucial to your advancement regardless of where you fit on the totem pole.
The art of negotiation requires delving into the negotiation definition and determining a strategy to confront every scenario. Unfortunately, the very act of negotiation is not fully understood by millions. According to the American Statistical Association, only 60% of respondents viewed negotiation as a chance to reach an agreement.
Anything is negotiable, and beginning with a firm understanding of the definition and meaning will help you to improve in this area. Here’s what you need to know.
What Does Negotiation Mean?
Define ‘negotiate’, and most people will assume the idea is to reach a mutually beneficial agreement. This couldn’t be further from the case. While many people enter negotiations hoping for a mutually beneficial outcome, there’s no requirement for both sides to get what they want or even that the final outcome is fair.
Understanding the negotiation definition begins with establishing that it is a process; no more, no less.
Negotiations can occur in practically any context, including business, international diplomacy, legal, and even your relationships. But with the meaning of negotiate in mind, what is the key to successful negotiation?
According to the Ivey Business Journal, 80% of negotiation success relies on preparation. If you can answer questions like:
· What is negotiable?
· What is a good negotiator?
· What is negotiating within the context of my field?
· What do I hope to achieve?
· Where are my strengths and weaknesses?
Then you can enter the room more prepared than the other party. With knowledge and a firm strategy, you have everything you need to increase your odds of getting what you want.
The Definition of Negotiation:
Understand the meaning of negotiation and the entire process can be broken down into distinct stages to help you chart your progress and pinpoint your weak points.
At first glance, a negotiation may appear to be nothing more than two parties having a discussion, but it’s so much more than that.
Typical negotiations will involve presenting proposals, exchanging information, compromising, persuading, and strategic maneuvering and may even involve additional parties entering the room to strengthen their side’s position.
While the definition of negotiation is little more than the process laid out by the traditional definition of ‘negotiate’, a particular skill set is required to become a formidable asset when acting alone or as part of something greater.
Examples of What Negotiation Can Be Used For:
Now that you know the basic negotiating meaning, where can it be helpful in the real world?
Although most people imagine negotiations taking place in intimidating boardrooms, acquiring negotiation skills can benefit you in every area of your life. For example, did you know that 85% of Americans who negotiated a job offer were successful?
Let’s define some of the ways your negotiation skills can come in handy.
Business & Contracts
What is the definition of negotiating within a business context?
Business negotiations are the most common scenarios where you’ll be asked to test your skills against someone else.
For example, your employer may ask you to negotiate a lower price for your organization’s raw materials. Alternatively, you may conduct business negotiations on behalf of yourself, such as if you’re trying to win a promotion or gain a higher salary.
Even if you’re not in a prominent position, improving your negotiation skills makes you a more significant asset to your employer. Yet only 58% of millennials said they would negotiate a higher salary for themselves.
If you find yourself in this position, you leave value on the table.
Everybody experiences conflict in their life. Whether you have experienced an argument with a significant other or a friendship is on the rocks, negotiation can support you in overcoming areas of disagreement.
For example, you may have experienced a disagreement with a coworker. Rather than allowing it to fester, you choose to negotiate with them. But what is negotiating in this context?
Your negotiations could have any number of outcomes, including:
· You agree to bury the hatchet and begin anew.
· You agree to help your coworker as repayment.
· You agree to keep things purely professional and avoid discussing personal issues.
Note that of the three options presented, some, all, or none may be the ideal outcome. It depends entirely on the situation. But these same skills can also be used in your personal and family life.
Your negotiation skills come in handy even outside of personal and professional circles. Remember, under the negotiations definition, this is a process and doesn’t pertain to any specific context.
So, what is a negotiation within an everyday scenario?
For example, consider purchasing a new vehicle. Unless the price is fixed, you can save thousands of dollars by negotiating the sales price down. Additionally, you may decide to negotiate for specific perks, such as an extended warranty.
In short, you need the confidence and the ability to negotiate to avoid losing out, which could amount to hundreds of thousands of dollars over a lifetime.
In fact, evidence suggests that something as simple as never negotiating your salary could cost you $1 million over your career.
The Benefits of Negotiation
Should you begin your journey to becoming a master negotiator?
Strong negotiation skills don’t just make you a better entrepreneur or employee. They also allow you to confront any scenario you may encounter. Discussing negotiation explained should show that these are not business skills but life skills.
So, what is negotiation, and why is it beneficial to you?
Creating Win-Win Solutions
Most negotiations aim to achieve win-win solutions for everybody. Granted, there are some types of negotiations where this isn’t the objective, but in most cases, win-win solutions build and preserve relationships.
Learning what is the meaning of negotiating will help you to get what you want without trampling over everyone you meet or creating conflict.
Personal and professional relationships are the key to success within any area. Failure to create, maintain, and strengthen those relationships will ultimately lead to lesser outcomes in whatever you want to pursue.
While the negotiated definition refers strictly to a process, one of its purposes is to reinforce those vital relationships. After all, if you treat people fairly and work to accommodate their needs, they’re likelier to do business with you again.
Achieving Optimal Results
Negotiation for meaning is the name of the game. Mostly, you can expect to be in negotiations because you want to achieve something.
It could be something as significant as landing a major contract with a multinational corporation or something as insignificant as discussing vacation plans with your significant other.
Either way, working on your negotiation skill will help you to achieve the best possible results while also aiding others to achieve their desired results.
Key Elements of Negotiation
What does negotiate mean for you if you don’t know where to start?
Too many assume that the negotiated meaning implies that you must be the loudest person in the room or ride roughshod over the other party. This couldn’t be further from the truth.
In this section, we will break down the definition of negotiating into its individual parts to help you understand each phase of the negotiating process.
The first step is to ascertain who will likely be involved in negotiations. At this stage, you may have nothing more than a name. On the other hand, you may be facing off against an old friend or adversary.
Knowing which parties are involved can support you in tailoring your strategy accordingly. For example, you may begin by gathering intel on the type of negotiator and personality they are.
These negotiating types include:
· Competitive – Competitive negotiators are assertive and often deploy aggressive tactics to crush the competition, including bluffing and manipulating power dynamics.
· Cooperative – These negotiators aim to build relationships and find mutually beneficial solutions.
· Compromisers – Compromisers seek the middle ground and are among the likeliest negotiating types to seek concessions.
· Avoidant – Avoidant negotiators actively try to avoid conflict. They find pressure-filled situations uncomfortable and will go out of their way to end the matter quickly. These are among the weakest negotiating types.
· Accommodators – Accommodators are focused on maintaining harmony. They will often prioritize the other party's needs before focusing on their own.
· Problem-Solvers – Problem-solvers emphasize finding creative solutions to complex problems. They are determined to ensure everyone is satisfied, meaning they excel in fostering a collaborative atmosphere.
Now that you know about the different types of negotiators and who’s involved in the process, you can begin to dissect the interests of each party.
Focus on the various sticking points that could cause negotiations to come to a standstill. Discovering what is a non-negotiable for the other party can help you uncover those hidden red lines. You can prepare proposals to overcome competing interests by pinpointing these issues early.
Remember, you may have to get creative to conclude successful negotiations. Furthermore, be prepared to walk away. Sometimes, conflicting interests are too significant to overcome.
Communication & Compromise
Simply put, communication defines negotiation. How you communicate will bring you one step closer to getting what you want or create difficult situations for all.
Active listening is pivotal to your success in any negotiation. This is the difference between hearing, listening, and genuinely understanding.
Strengthening your active listening skills will enable you to listen attentively, understand the other side’s perspectives, and gather information that could prove helpful to you. It also has the advantage of building trust and restricting negotiations to constructive dialogue.
Think your listening skills are already on point? According to Psychology Today, 96% of people believe they are excellent listeners, but we only retain half of what we hear on average.
How to Negotiate in Four Simple Steps
Now that you know what is the meaning of negotiating and some of the core skills required to excel in this area, what is negotiation in stages?
Here are the four simple steps to enable you to get started on actively boosting your negotiation skills explained.
Most of the time spent negotiating will be spent at this stage. According to Business News Daily, one of the most essential principles of good preparation is avoiding making assumptions. This includes the other party’s sticking points, what type of negotiator they are, and how they might react to a proposal.
Always begin with a clean slate and begin systematically answering the following questions:
· What are my objectives?
· What do we know about the other party’s objectives?
· Where are our red lines?
· Where are their red lines?
· What’s the best way to identify our interests?
· What’s the best way to figure out the other party’s interests?
You should also find out who you will be negotiating with and whether anyone on your team has experience with them. It’s all part of the intel-gathering process that will make you more effective at the negotiating table.
The second step of the what is negotiation definition is the actual dialog you will engage in. Typically, this is a “feeling-out” process for both parties.
During this phase, you will discuss your position, interests, and concerns with the other party doing the same. This is less about negotiation and more about optimal listening skills.
It’s essential to deploy active listening. Plus, you shouldn’t be afraid to ask any clarifying questions. The goal of stage two is to understand where the other person is coming from.
It’s also an excellent time to highlight areas of agreement to build rapport and set the stage for the actual negotiation stage.
Bargaining is the actual negotiation stage. It’s where both parties begin to discuss concessions and compromise.
Even though not every negotiation will involve trying to achieve a win-win position for all, this is the most common stance. For this reason, you should enter negotiations assuming that you will be negotiating for a compromised solution.
Expect to engage in activities like:
· Making offers.
· Making counteroffers.
· Creative problem-solving.
The purpose is to find common ground that leaves both parties feeling satisfied. Don’t be afraid to walk away during heated negotiations if no progress is made. Finding a breakthrough could take the form of taking the heat out of the situation and resuming discussions another time.
Finally, there is the closing stage. This is where both parties reach agreement and formalize their terms.
This may involve drafting a contract or another form of agreement that carves out the results of your negotiation in stone.
Learn More About Negotiation in Our Effective Negotiating Training!
Are you ready to take your negotiation skills to the next level? With a thorough understanding of negotiating, you can begin laying the groundwork to become a master negotiator.
However, pick up the business world’s most prestigious negotiating training program rather than engaging in a trial-and-error process. Join millions of businesspeople who have already signed up for KARRASS’s Effective Negotiating: Two-Day Seminar today.
Frequently Asked Questions (FAQs) About Common Negotiation Terms
What is BATNA in negotiation?
BATNA stands for Best Alternative to a Negotiation Agreement. In other words, it’s the best course of action if an agreement cannot be reached.
So, what is BATNA negotiation? It’s a strategy that offers leverage and a point of reference for evaluating an agreement. If the proposal from the negotiation is not better than the BATNA, it may be better to step away from negotiations entirely.
What is principled negotiation?
Also known as interest-based negotiation, principled negotiation focuses on reaching a mutually beneficial arrangement.
It espouses separating problems from people, focusing on interests, and generating different options for mutual gain.
What is distributive negotiation?
Distributive negotiations turn the act of negotiating into a zero-sum game. This is why it’s also known as win-lose or positional negotiation.
In this case, your goal is to maximize your gains at the other party's expense.
What is logrolling in negotiation?
Logrolling is a strategy where both parties exchange concessions and make trade-offs on different issues to reach an agreement.
The term comes from the logging industry, where loggers would work together to move logs to where they need to be.
What is integrative negotiation?
Integrative negotiation is also known as collaborative or interest-based negotiation. It’s an approach that seeks to manufacture value by focusing on all parties' needs, interests, and goals.
Integrative negotiation goes beyond compromise in finding solutions to satisfy competing interests.
What is anchoring in negotiation?
In this context, anchoring refers to the natural cognitive bias you automatically have when presenting an initial piece of information or first offer. It’s known as the “anchor” because subsequent negotiations are typically based on the first offer.
What is a gambit in negotiation?
Gambits are strategic moves designed to influence the negotiation or gain an advantage. Like chess, a gambit is a calculated risk designed to improve your position or achieve a favorable outcome.
What is a concession in negotiation?
Concessions can be viewed as voluntary sacrifices. By giving and gaining concessions, you can submit to a small demand to use a concession as leverage for a greater demand.
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