In the previous chapter, we listed the basics to wisely undergoing a negotiating process and increase the probabilities of reaching an agreement which satisfies both parties’ needs; this is what we call an “effective negotiation”. In next chapters, we will detail those fundamentals while adding examples to better understand the basics.
The importance of exposing the arguments before showing off interests
A simple and true fact: not everybody feel the same degree of comfort in a negotiation process; even some people find some kind of tension before and during the process. This occur due to the fact that negotiations are seen as << zero-sum games >>; meaning that negotiators feel that they “win” the same amount of utility that the other party “losses” and vice versa. This leads to a stressful situation in which negotiators are more concerned about the output (“the win” or get as much as possible from the other party) than concentrating in the negotiation itself.
First recommendation: exposing the arguments behind our conditions (or interests) before showing the conditions prevents that situation. In other words, we must justify the WHY of our request before stating WHAT we request. By doing this we are facilitating the other party understand our interests. The most powerful tool to convince another person is to be able to “put her in our shoes”. Furthermore, by showing the reasoning underlying our interests, we are preparing the other person to understand what is coming next: the request. In the same way, we must also understand the other side’s interests so that all conditions are put on the table upfront.
In addition, the arguments must be objective and realist to support our justification in a trustworthy manner. They must be part of a logical reasoning that perfectly leads to our request. We are not just talking about telling the truth but about proving convincing arguments that can be measureable and tangible.
Illustrative situation: I have a meeting with one of our main suppliers with the aim of improving the payment conditions because my company need to improve cash-flows due to a recent decrease in sales. First, I should explain the situation and the measures the company is going to put in place – there is no need for details nor release confidential information. Second, I might want to show how our company has always met all payments in the past (except for a payment due in August 2011 as a result of an ERP change made in that period; but that we even inform them about this issue in advance). Third, I might say that we have better conditions than the ones hold in the current agreement with similar suppliers. In this line, I could expose any other argument that supports my request and puts in value the solid partnership between both companies. Afterwards, based on the relationship in last 10 years, I propose them that our company makes the payment in 60 days instead of current 30-days condition.
The supplier representative might argue that, after consulting the situation with the VP Sales, her company cannot meet our request since they have to pay out raw materials cost upfront. After some minutes, both parties might find a solution: our company will pay 30% in advance, so that the supplier can confront the raw material expenses, and the rest will be paid in 60 days as we have initially proposed.
Of course, the fact of exposing arguments and explaining the situation upfront does not guarantee the agreement but it increases the probabilities by making easier the understanding of mutual interests and needs.