Negotiation and communication for business success

In business and in life, situations where negotiation is required are commonplace. At its core, negotiation involves discussion between two or more parties to reach agreements and settle disputes. While immediate scenarios spring to mind – striking business deals, resolving conflicts, ensuring projects remain on track, discussing salary expectations – successful negotiation tactics also lend themselves to tasks and activities on an everyday, micro level. They have the potential to smooth business operations, facilitate communication processes, build partnerships, strive for greater outcomes and work towards shared goals.

Negotiation is a key competency in a business leader’s toolkit, and one that requires awareness, finesse and good communication. What do skilled negotiators have in common? The answer is simple: highly developed social acumen and an understanding of both the right approaches to use and when to use them. Usually, they also have plenty of real-life negotiation experience behind them – making them excellent people to learn from.

How to improve negotiation skills

Negotiation skills encompass analysis, communication, strategy, persuasion and collaboration. Skilful negotiating can be developed, and there are some fundamental aspects to consider before heading into a negotiation.

1. Identify the goal or goals. What do you want from an outcome? How much are you willing to compromise? Take the common example of a salary negotiation following a job offer: while the objective may be to secure a salary of £70,000, settling for £65,000 may be acceptable. It’s useful to weigh up minimum terms, how realistic the goal is – for example, taking into account industry benchmarks – and where the boundaries are. BATNA is an acronym standing for Best Alternative To a Negotiated Agreement; it pays to consider what your BATNA is before entering discussions.
2. Consider the perspectives of others. While the most effective negotiators are, typically, decisive and driven, their ability to understand and account for the needs and motivations of others plays a significant role in influencing overall outcomes. Seeking to understand others’ points of view and motives not only helps to reach a compromise, but demonstrates empathy, fairness, and can create value for all involved. It can also be a useful problem-solving exercise, identifying solutions and new ways to proceed.
3. Examine strengths and weaknesses. What style of negotiation and communication best suits your talents and personality? If you are a keen strategist, investing time beforehand in outlining a clear approach may work best. For others, using charisma and communication skills to improvise may better suit their skillset. Reflect on previous negotiations to determine what lessons can be learned. Perhaps you need to work on your active listening skills or reading non-verbal cues, or need to enter future discussions with more data and evidence.
4. Work on confidence. Negotiations can be fraught, challenging and high-stakes situations. Good negotiators are self-assured and exude confidence – even if they do not feel it. One of the best ways to enter a negotiation with confidence is to be adequately prepared. Another key aspect of conveying confidence is to use both verbal and non-verbal communication to your advantage. As well as controlling voice tone, pitch and speed, it helps to practise open, assertive body language, including maintaining eye contact and mirroring facial expressions. For the most part, negotiations are not personal, so remove emotions from the equation.
5. Practise and learn from experience. It’s a rare person who excels at negotiation the first time around – or who achieves a win-win situation, or another desired outcome, every time. Experiment with different tactics to see what works. Remember that, above all, effective communication facilitates effective negotiation.

What are the approaches to negotiation?

Typically, the outcome of a negotiation will fall into one of two categories: win-win or win-lose. There are different negotiation strategies, and the most suitable course of action depends on both the desired outcome and the nature of the situation.

Indeed outline the three most common forms of negotiation:

• Distributive negotiation (also known as distributive bargaining): a win-lose variant, negotiation of this type means that any gain for one party creates a loss for the other. It generally occurs when the negotiation involves a limited amount of resources – such as money – which need to be distributed between the parties, and where the products or services do not have a fixed price. For example, a house is on the market for £350,000. A buyer who wishes to pay £340,000 for the property may feel they are paying too much if the seller doesn’t accept the lower bid. Likewise, if the buyer is successful in achieving the lower price, the seller may feel they are losing money. This approach often involves counter offers.
• Integrative negotiation: this is a win-win negotiation situation, where all parties benefit in some way from the outcome. There may be several issues requiring discussion, and the process is focused on finding mutually agreeable solutions and may feature trade-offs. For example, an artist wants to sell a painting for £1000, a buyer only wishes to pay £800, and so they agree on a common ground of £900 – each ‘winning’ £100 that they otherwise would have lost.
• Management negotiation: this negotiation process involves an employee raising an aspect of their role or position with a line manager or someone in a senior position. These situations can arise frequently throughout a career, spanning aspects such as job responsibilities, benefits and salary.

There is also bad faith negotiation, where one or both parties have no intention of reaching an agreement or following through on negotiated commitments. At best, this type of negotiation is inconsiderate and unethical; at worst, illegal.

The Corporate Finance Institute highlight common negotiation tactics, including: making the first offer – which can give you the upper hand and start proceedings closer to your target outcome; mirroring words selectively – to create rapport, build trust and buy time; knowing both your target and ‘walk-away’ prices – this establishes boundaries and ensures you won’t be left disadvantaged; and creating the illusion of control – asking “how..?” and “what..? questions forces the other party to expend mental energy on answering your queries and can take focus from their intended outcome.

Handle complex business negotiations with confidence

With the University of Lincoln’s online MSc Management programme, you’ll have the opportunity to develop the skills and attributes needed to effectively handle a variety of management situations and decisions – including negotiations.

Our experts have tailored your learning to meet the needs of employers, aiming to give you an in-depth, holistic understanding of business, leadership and management. The tools and expertise you could gain will prepare you to thrive in complex and fast-paced environments. The programme spans organisational strategy and decision making, project management, entrepreneurship, marketing, people management, finance and much more.