The Psychology Of Negotiation

The Psychology of Negotiation

26/01/2016
The Psychology of Negotiation

In the intricate world of business, negotiation matters. And it matters for a number of different reasons. Negotiation plays a very important role in the way we communicate with one another: being a skilled negotiator can not only help you get a better deal or a job promotion, it can also reinforce your self-confidence and considerably improve your professional relationships.

When applied properly, the psychology of negotiation can generate values in every aspect of your social, professional and interpersonal aspect of life.

Negotiation is based on honesty and integrity

A natural and successful negotiating technique is only possible through honesty and integrity. In an ideal world, people do the right thing simply because it is right, but the truth is, morality is far more complex than that.

For example, if you want your suppliers to have a positive reaction to your offer, they need to understand you respect their valuable knowledge and put their needs above anything else. Integrity is a vital element in the form of any successful negotiating skill..

Bonus tip: Verify claims and assumptions before making commitments. This is where trust comes into play. When the buyer trusts your negotiating skills, he will trust your actions as well. In a business context, this translates into recognising and managing psychological biases and non-verbal cues to develop trust rapidly, even with the most difficult people.

Essential negotiating techniques that generate value

Understanding supplier concerns

You are only effective when you truly know and understand your supplier’s expectations. One way you can achieve this is by taking away the perception of risk when someone wants to purchase your product or service. In other words, make sure you have the best guarantees of satisfaction available.

You need to make sure you know exactly what the supplier’s needs and limitations are if you want to be ahead of the game and be able to predict their negotiation approach.

Highlighting key points of the deal

A strategic plan is always a good solution to any negotiation scenario. Applying the correct negotiating methods to secure internal and external business relationships is essential not only to emerging leaders, but to experienced negotiators and managers as well.

To make things easier, you can highlight your supplier’s top concerns by simply writing them down on paper. Identifying your top priorities is an effective psychology of negotiation strategy to successfully implement your negotiation technique.

Consider the supplier’s perspective

A proper definition to this would be to offer the other party the awaited satisfaction whilst staying faithful to your initial position. When all the offers are beneficial for the suppliers as well as for you, the chances of obtaining a favourable result are considerably higher.

Watch your body language

Masking how we feel or what we think is difficult, but in a negotiation, they can make the difference between a sale and a failure. When you negotiate a new contract or deal with a supplier or a partner, your body language needs to be in complete harmony with what you say.

Use body language to reinforce your honesty and integrity to the person you are addressing. Your posture should suggest self-trust and the belief that your negotiation terms are the best. Be careful not to come across as intimidating or demeaning.

For example, crossing your arms, slouching or looking down can have a strong, negative impact on the way the other party interprets your gestures. By contrast, a grasp hand shake, making eye contact and keeping a straight posture throughout your meeting with a supplier or partner are gestures that reinforce your position in regards to the negotiation terms.

What are the structures that lay behind a good negotiation technique?

Negotiations can be analysed by looking at structure, strategy, process and outcome.

The structure of any negotiating technique is formed by the multitude of constraints and opportunities that negotiators seek to advance their interests. Developing the right skills to promote positive relationships with diverse and critical stakeholders can reveal new, creative opportunities.

When you build the structure of your negotiation approach, you need to have a strategic plan and analyse your current situation in order to develop a strong sense of leadership. Competitive benchmarking analyses and studying the negotiation techniques used by suppliers are effective in allowing you to develop new insight, expertise, and a new confidence in your skills.

To conclude, good negotiation strategies are based on a thorough analysis of structure.

Tip: When negotiating, substitute the word “situations” for problems

The way you approach your negotiating views will have a major impact on the outcome of your success. When you develop a personalised approach for establishing your negotiating leadership skills and conducting your emotional factors in a positive way, you obtain favourable results.

Psychologically, by substituting the word “situations” for problems, you are more likely to get a positive response. Why? Because, as the suppliers see it, you deviate the focus from the problem to the solution.

What is the most important factor in purchasing and procurement negotiation?

Negotiations are critical in procurement.  According to Frank A.G. den Butter and Kees A. Linse, “you can motivate suppliers to offer their best price by starting the relationship as a conversation, not a competition.”

The way in which you prepare your negotiation approach is by far the most important element in obtaining a positive result for your NFP. Apart from having good skills as a negotiator, the most important factor is to prepare ahead.

The truth is you can’t really negotiate until you have a solid answer regarding suppliers’ price, cost, or service response time. When it comes to negotiations in NFP procurement you can win before you start the negotiation process is you know how to approach the supplier in a professional way.

As you can see, there is always a lot to learn about the psychology of negotiation and procurement! Becoming a good negotiator can boost your mission’s goals. Additionally, always remember that we are here to help. With so many years of experience in the field of negotiation, there is no better support for your NFP than CR: we have already negotiated customised deals for your NFP, and the contracts we can offer your organisation are usually only available for large corporate companies.

Want to reconsider your options? Give us a call!

If you would like to find out what Church Resources can do to support your mission, call us at 1300-248-724 and talk to our Members’ Service team today.

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