IMPORTANT STAGES OF NEGOTIATION YOU MUST KNOW

Stages of negotiation present you with an opportunity to put your listening and questioning skills to test. These stages call for careful exchange of information and interpretation of signals from the other party, this way you increase your chances of getting a good deal.

The stages of negotiation can be summed up as, preparation, opening, testing, proposing, bargaining, agreement and closure.

Remember most negotiations are won at the preparation stage, and so it is essential to remember that preparation is key.

THE STAGES OF NEGOTIATION

As pointed out earlier the negotiation process comprises seven stages and here is a summary of how the process works.

Planning and preparation phase

This is arguably the most important part of negotiation. Without thorough preparation including information gathering, taking your stakeholders needs and fears into account, knowing your objectives, understanding the concessions and having a walk away position BATNA, the negotiation is unlikely to reach the optimum outcome.

The opening phase

This stage of negotiation covers the very first few minutes when the parties meet and greet each other and are seated in the negotiation room in preparation for the main event.

In the introductory stage it is important to set up the right atmosphere to ‘condition’ the other party’s future response.

The opening could depend on the type of approach you use in negotiation and the advantages you think the approach could have. In an integrative negotiation approach this could involve beginning with social interchange and continuing with a statement of matters on which agreement has already been reached. In a distributive approach, the tone might be set by:

• Dominating behaviour: Such as insisting that certain conditions are non-negotiable
• Shaping behaviour: For instance, showing personal willingness to accommodate the other party’s point of view, but making it clear that others in our organization (or negotiation team) take a sterner view.

The important aspect of this stage is that it allows both parties to explain what they want as a result from the negotiation.

The testing phase

This stage is where parties try and understand what is really important to each other and where concessions could be made. Effective communication is very important at this stage, ensuring that good listening skills are put into play to gather as much information as possible as well as reading body language from the other parties.

Some of the key tasks here will include;

• The testing and confirmation of assumptions made during the preparation and planning phase
• Testing the other party’s position, their willingness to collaborate or move or their intention to oppose or be inflexible
• Clarifying the stated issue, and the importance or value given to them by the other party
• Trying to ascertain whether there are any ‘surprises’ ahead, whether the other party will introduce new information not taken into account during planning.

The proposing phase

At this stage either side may start making tentative proposals regarding their offering. In case of negotiation where the other party has already submitted a tender or proposal, this stage may provide an opportunity for them to make proposals to improve on their initial offers in general or in areas highlighted by the buying side in advance.

In distributive negotiation, proposing may be largely absorbed into bargaining, in the form of offers and counter offers

In an integrative negotiation, it will take the form of a more complex process of generating and evaluating alternative solutions, which will be the main part of the negotiation.

The bargaining phase

This is one of the stages of negotiation that can be defined as the point when we convey the specific terms on which we would settle. An example here would be something like “if you reduce you price by 5% we will increase our order by 10%”

Bargaining then takes place where each party offers to give up something in return for something back i.e. tradeables. If one party has to give something up but receives nothing back in trade, this in known as a concession.

Bargaining happens more in distributive negotiations than it does in integrative negotiations. With integrative negotiation, having evaluated and selected a range of acceptable options, agreement will often be achieved by bundling together different issues so that all sides will have some issues on which they feel they have reached a good deal.

In distributive negotiations, purposeful persuasion and constructive compromise are mainly achieved through bargaining. Having stated an opening position, or induced an opening bid from the supplier, which is often exaggerated to allow for wiggling room, the process moves to offers of benefits, currencies, and the gaining and yielding of concessions.

As a negotiator you must prepare before you get to this stage. That would mean knowing how much leeway you are prepared to give on each of the issues to be debated, what concessions would be given cheaply to the other party and what concession made by the other party will be acceptable or valuable in return.

The agreement phase

It is worth noting that not all negotiations will get to the agreement phase. When negotiations get to this point, it is usually clear through explicit language, or strongly suggested through non-verbal signals, that the other party is ready to move to agreement.

It is not always easy to judge when its time to close the process, but experience, observation, practice and reflection will be the best ways to learn at this point.  

After all variables have been discussed you get to a point where you suspect further progress is impossible. In short, the supplier seems to have nothing more to offer. At this moment it really is time to make a decision.

If you haven’t met any of your objectives at this point then the decision may simply be to walk away. The ability to walk away from a deal is an important tool to a negotiator. If you are not in a position to walk away you risk being forced into an unacceptable agreement.

On the other hand, if the overall deal, having taken into account all the variables under discussion, meets your objectives, then it makes sense to shake hands and conclude the agreement.

Closure Phase

The final stage is closure. This stage includes the documentation of what has been agreed, whether that is a contract or minutes from a meeting. Closure is an important stage – without the documentation the agreement is open to interpretation.