TEN KEY POINTS OF INTEREST WHEN NEGOTIATING

The key to achieving mutually acceptable outcomes is to focus on reconciling underlying interests rather than irreconcilable negotiating positions.

To achieve this you need to:

• Determine the underlying interests behind your own position.
• Try to anticipate the position and underlying interests of the other party.
• Prepare mentally to negotiate on interests rather than positions.
• Introduce the issue to be negotiated by describing both your position and your underlying interests.
• Invite the other party to state their position and underlying interests.
• Use open questions to flesh out as many underlying interests as possible.
• Try to identify and raise additional underlying interests for the other party.
• Identify and agree points of common ground and points of difference.
• Invite the other party to consider alternative ways of reconciling points of difference. 
• Agree on the alternatives that best serve both party’s interests.
  

 
So what do we mean by positions and interests?

Let’s look at a simple example. Its budget time, and the business owner has told his managers that their expense budgets for the coming year can only increase by 3% - that is his position. The Sales Manager’s position is that she needs a 5% budget increase.

The best outcome of positional bargaining is most likely that the owner grants the Sales Manager a 4% increase, a compromise that makes neither of them particularly happy.

Now let’s look at each party’s underlying interests and see how this increases the scope to negotiate.
 The owner’s 3% position is based on the dividend he needs to pay shareholders. Based on the previous year he has estimated the next year’s revenue, and that to achieve the dividend he needs to generate a profit of $1.3m. To achieve this profit he has calculated that expenses can only increase by 3%. So his underlying interests relate to the interplay of revenue, expenses, profit and dividend income.

The Sales Manager’s position is based on her need to appoint a sales support person to relieve her Sales Reps of paperwork and allow them to spend more time on selling. She believes she could increase targeted revenue by 20%.

Once each party understands each other’s interests they can see where their interests coincide and where they differ. They can then explore options for reconciling their differences. A number of options now emerge which greatly enhance the chances of achieving a mutually acceptable outcome:

• Exploring what revenue increase would generate the profit required to pay the dividend and fund a 5% expense budget for the Sales Manager.
• Exploring changing the sales focus to more profitable products.
• Looking at other areas expenses could be saved, and so on.
  

Whenever you are negotiating in a business relationship, keep in mind the 10 Key Points of Interest, to optimise your chances of a mutually beneficial outcome.
 
Source:  www.developmentinpractice.com.au