Do you often walk away from negotiations feeling like you got the short end of the stick? Does negotiating stress you out so much that you actively avoid it? Are you uncomfortable taking a tough stance to defend your position?
As a leader, you are probably involved in negotiations on a daily basis, even if you don't realize it. Any time you attempt to reach an agreement with another party through dialogue, you are negotiating. If you negotiate well and achieve an outcome that benefits both parties, you will build trust and improve your relationship with the other party. But if you push to come out of the negotiation as the winner at the other party's expense, you will harm the relationship.
Although negotiation skills are important for every leader, they are especially important when your goal is to build strategic alliances with suppliers, vendors, or partners. You need strong negotiating skills to establish mutually beneficial relationships with other firms and entities to pursue common business goals.
Fundamentally, negotiating well means engaging in bargaining discussions that achieve win-win agreements. Sometimes your negotiations are formal, like negotiating a contract with a client or a new company policy. Other times, your negotiations are informal, such as resolving a conflict with a team or a coworker. Regardless, all negotiations are interpersonal interactions, which means they are fundamentally about relationships. Depending on how you handle the situation, a negotiation can either harm the underlying relationship or strengthen it.
In our research and testing of nearly 800 executives for my book The Leader Habit, my team and I discovered that there are four behaviors that effective leaders practice when they negotiate. They:
Communicate their intention to find a win-win solution and focus on understanding the other party's main concerns.
Engage in collaborative problem solving; deliberately incorporate goals, ideas, and information from both parties into the discussion.
Explain how the preferred solution adds value and describe its positive impact.
Specify next steps and explicitly ask for agreement on those steps.
Once you understand that these four behaviors are key to negotiating well, you will need to internalize them for yourself, turning them into habits. Based on our finding that it takes 66 days to turn a behavior into a habit, we have created four simple exercises that will help you develop this skill. They are:
Exercise #1: Shoot for a win-win solution
You can establish a positive tone for your negotiations by explicitly communicating up front your intention to find a win-win solution. Practice this exercise: After realizing that a discussion has transitioned into negotiation, state that you want to find a win-win solution and ask about the other party's main concerns by saying, "It's important to me that we find a solution we are both happy with. Help me understand -- what are your main concerns?"
Exercise #2: Solve problems together
People are more likely to come to agreement in negotiations when they feel they are working together to solve a problem. Practice changing negotiations into collaborative problem-solving discussions using this exercise: After hearing someone voice an idea, incorporate the idea into the discussion as an opportunity for collaborative problem-solving by saying, "How can we can use your idea to [summarize the idea] as we solve this problem together and find our ideal solution?" For example, you could incorporate the other party's idea to sell branded products into your negotiation about the company's marketing strategy.
Exercise #3: Highlight the benefits of your preferred solution
By definition, win-win negotiations result in benefits for both parties. Practice explaining how your preferred solution creates a win-win scenario using this exercise: After looking at your calendar and anticipating that a particular meeting will involve negotiation, write down in one sentence your preferred solution and what benefits it brings to both parties. For example, if forming a strategic partnership with a reseller is your preferred solution, the benefits would come from access to new customer groups who can generate additional revenues for both you and the reseller while reducing the cost of sale, as you and the reseller would be splitting those costs.
Exercise #4: Ask for agreement on next steps
Negotiations can't lead to the desired outcomes unless both parties understand the next steps and agree upon them. Make it a habit to seek confirmation before leaving a discussion by practicing this exercise: After realizing that the discussion is coming to an end, state your understanding of the next steps and ask for agreement by saying, "I understand our next steps to be ... Do you agree?"
By practicing these exercises, you will enhance your ability to negotiate, thereby strengthening both your organization's strategic position, as well as its, and your, relationships with suppliers, vendors, and partners. This is how skilled leaders negotiate the best deal.
Martin Lanik, Ph.D., is author of The Leader Habit: Master the Skills You Need to Lead in Just Minutes a Day (Amacom), from which this excerpt is adapted. Lanik is the CEO of Pinsight, a global leadership development firm. His leadership solutions have been implemented by more than 100 companies, including AIG and CenturyLink, and have received awards from Chief Learning Officer and Brandon Hall. Lanik holds a Ph.D. in industrial/organizational psychology from Colorado State University. You can learn more at pinsight.com