Objectives of Negotiation

Negotiation is the process by which two or more parties meet to discuss an arrangement that ideally, would benefit all parties involved. Negotiations can occur among individuals, such as between a supervisor and employee, or among larger groups, as well as between companies or nations. Purchasing negotiations are a familiar and are also major aspect of business negotiations, but the process also applies to many forms of partnership building, such as establishing terms for collaborative projects. No matter which type of negotiation you undertake, establishing your objectives in advance will help bring about a favorable outcome.

The time to start developing your objectives is before you even sit down at the negotiating table. You and your team should carefully think through what you want to get from the negotiation process. Some objectives may straightforward, such as leasing an office under a standard contract. In this case, you might simply want to sign the contract at the agreed-upon price. Complex projects, however, require deeper thinking as you explore the short and long term implications of your negotiation. For example, your objectives for a major new machinery or software development purchase might cover, in addition to basic factors like price, delivery, warranty and payment terms, such advanced considerations as installation time frames, service contracts, operator training and replacement costs.

Once you’ve developed your list of objectives, you should review each of them to develop the maximum desired and minimum acceptable levels. For example, when making a major purchase you would likely have a desired price point along with an higher price point that is still acceptable. You would begin the negotiation by offering a price that is somewhat lower than your desired price point, while keeping in mind the higher level to which you might ultimately agree.

Note where it’s possible trade off your objectives. If you’re acquiring an essential manufacturing component that’s needed right away, you may be willing to go to the higher price point in exchange for expedited delivery. On the other hand, you’re more likely to negotiate a more attractive price If you can accept a longer time frame for the delivery because the item isn’t immediately needed.

Knowing and understanding the other person or company involved in your negotiation will help you refine your objectives so that both of you reach a favorable outcome. For example, imagine you are negotiating with a valued employee who pushes for a raise exceeding your company’s current financial limitations. You don’t want to lose this employee, and you do want to provide reasonable recognition for the employee’s contributions to the company. You also know that the employee is a parent of young children, and would welcome the opportunity to be closer to them while working. You might offer a modest raise along with a more flexible work schedule that includes work from home options. This offer may satisfy the employee’s need to feel rewarded for good work, along with the extra incentive of serving family needs.

External circumstances can affect your negotiation process and should be reflected in your development of objectives. Major influences include the state of the economy, or even simply the market position of your negotiating partner. In real estate, the concept of a “buyers’ market” versus a “sellers’ market” succinctly describes this idea. Tough economic times or slow-moving markets enhance a supplier’s willingness to negotiate on price and other parameters of the deal. In strong economic times, suppliers and contractors often have enough demand for their offerings that they don’t need to negotiate on price, although they might respond in your favor to other points of negotiation, such as extending a service contract at no additional cost.

Having a Best Alternative to a Negotiated Agreement,also known by its acronym, BATNA, gives you an out when your objectives cannot reasonably be met. The BATNA term and concept was developed by the originators of the WIN-WIN negotiating method, Roger Fisher and William Ury, and presented in their book Getting to Yes. Your BATNA is your Plan B, an acceptable option that allows you to amicably cease negotiations and walk away from the table. For example, suppose you're seeking a contractor to work on a project that must be completed in a very specific and limited time frame. You have identified several contractors that would be suitable, but one of them is preferred. You begin negotiations with your preferred contractor, who explains that under the current workload, that they would not be able to meet your deadline. You offer incentives, but the best the contractor could do in the time allotted would be to complete only the first stage of the project. At this point, you and the contractor agree to cease negotiations, while keeping the door open for work on future projects. This outcome was possible because of your BATNA, which is to offer your project request to the other contractors under consideration.