Much of what a company does – from buying from suppliers, selling to customers, striking deals and alliances, and resolving disputes – depends on effective negotiation. Done right, you’ll make better and more profitable deals; mess it up, and company margins will suffer. What’s more, you’ll be at risk of losing key customers and priority access to innovation and supply and miss out on crucial business relationships.
While it is true that not everyone is a born negotiator, these skills can be honed through practice until they are mastered, which means that everyone has the potential to be a star negotiator. Let’s take a closer look at what it takes to be a good negotiator, how to become one, and the benefits it holds for you and your business.
What research tells us about the value of negotiation
According to a 2021 McKinsey survey of companies with revenues topping $1 billion (R18 billion), 96% of the executives said that having world-class negotiators in their companies would add at least 3% to their EBIT performance (Earnings Before Income and Taxes).
Yet, only 22% strongly agreed that their organisations could capture this value, with one of the main reasons being that they needed to invest in skills building to impact complex negotiations.
While many companies set budgets aside for negotiation training of their sales teams, others – including those in customer-facing positions or who work in HR – are often left out. But that may be changing. McKinsey showed that 84% of CEOs and CFOs said they would be setting aside at least $100,000 (R1.8mil) for negotiation training, digital tools, infrastructure, and assets to improve corporate negotiation capability.
Skills you need to be a good negotiator
If you’re unsure about your ability to strike an effective deal, you have to invest time and energy into developing the soft skills that will prepare you to maximise the value you leave the bargaining table with. These soft skills that make you a good negotiator are:
- Ability to analyse problems while focusing on what the other party wants
- Effective communications skills so you use the right words at the right time
- Good decision-making skills (and the authority to make them)
- Emotional intelligence to read other parties’ emotions and pick up on what they’re implying rather than explicitly stating
Worried that you don’t have these skills? If you take our popular Power Skills Essentials course, you’ll learn these and more.
How good negotiation skills benefit a business
Negotiation is key to getting ahead in the workplace, resolving conflicts, and creating value in contracts. But that’s not all. See how it can directly improve your prospects and those of the company you work for:
It creates win-win situations
The best negotiators are the ones who can create an outcome where both parties walk away feeling they got a good deal. This is an essential part of building ongoing relationships.
It’s good for the bottom line
The best deal is one that benefits your company financially, whether that’s recruiting a top candidate at a fair price, or negotiating the purchase price of raw materials. Either way, negotiation skills are what help you land on a number that adds to your best interest.
It prevents and resolves disputes
Negotiation skills can help deal with disputes when they crop up, but they also help prevent them. A good negotiator can identify potential hurdles before they arise and create solutions that work for both parties.
It builds respect and boosts your reputation
Being known as a tough and effective (but not aggressive) negotiator builds respect both as a leader in your business and when dealing with external stakeholders. Being able to negotiate is a transferrable skill for a variety of disciplines and a plus for your CV.
Ten tips for successful negotiation
Negotiating is an art, but one that can be mastered. Start building your negotiation skills by following these tried and tested negotiation techniques:
- Prepare by finding out everything you can about your counterpart, research industry benchmarks, leverage data analytics, secure your internal mandate, define your goals, and implement an effective negotiation strategy and process.
- Look at the situation from all angles and try to understand what the other party hopes to gain from the deal. Ask them about their needs and key concerns if they aren’t clear.
- Avoid getting emotional, as this will cloud your judgement and give the other party an upper hand. Remain focused on the issues and not the personalities.
- Be an active listener; you should spend more time listening than talking. If you are an empathetic listener, you can pick up what elements of your proposal resonate most strongly with the other party and their potential concerns.
- Ask for what you want and what you’d like to see as an outcome, but don’t come across as rigid – this will make it challenging to be flexible when needed.
- Go first – this is a negotiation tactic known as ‘anchoring’. Research by negotiation gurus Grant and Galinsky shows that the party that makes the first offer gets better terms closer to their target price.
- Trust your instincts. Negotiation has no right or wrong, and every situation is unique to the people and issues involved. If you hit a wall, think outside the box and look for a way around the obstacles. If the discussion heads in the wrong direction, recommend returning to the bargaining table another day.
Tip: For a more in-depth dive into the psychology of winning a negotiation, read the World Economic Forum’s 9 Science-backed tactics for winning a negotiation.
Ready to seize the day and become a master negotiator?
Business negotiators are often portrayed as deal-strikers, argument-winners and client-getters, but the reality is all of us spend our days negotiating through social, professional and even family situations. A good negotiator can see the interaction for what it is: an attempt to get the best out of a situation for everybody involved.
MasterStart’s Negotiation Skills online short course will equip you with the knowledge and skills for effective negotiation that drives mutually beneficial outcomes. By playing to your strengths to build trust and long-term relationships, you will come away with increased confidence in your ability to negotiate, take the lead, and shape the outcomes in ways that bring others along willingly.
Download the brochure, hop on a chat, or contact us to learn how our groundbreaking course integrates traditional negotiation skills with state-of-the-art techniques you won’t find anywhere else.