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|Understanding and Using Negotiation Approaches
The International Association of Contract and Commercial Managers (IACCM) is an international non-profit association whose goal is to raise the status, profile and professionalism of commercial contracting. The association has members in more than 80 countries and 500 corporations.
As a part of its work, the association conducts original research on topical issues that may provide benchmarks or be educational in nature. The IACCM undertakes regular on-line surveys on topics of interest to its members. Its recent study entitled Understanding and Using Negotiation Approaches is the subject of this article. Over 300 professional negotiators so far have taken part in the on-line test of negotiation style and its impacts on negotiated outcomes.
Our questionnaire asked participants to identify the indicators of negotiation style and the likely outcome of the style being used. For this purpose, we had selected the terms positional and principled, which are both products of the Harvard Negotiation Project and embedded in one of the leading works in the negotiations field, “Getting to Yes”.
The results of the questionnaire are interesting in several dimensions. First, it is important to note that a proportion of those who participated were not familiar with the terminology principled and positional. This was not because they are unaware of differing styles and their impacts (although in a few instances this was the case), but more because they do not know those particular terms.
In the book “Best Practice”, there is an interesting introduction by Rosabeth Moss Kanter, Professor of Business Administration at Harvard Business School. She discusses the characteristics of a profession and observes that a key attribute is a shared language and knowledge base. We expand on those thoughts in our web-based learning module on Best Practice, because they are clearly important to our effectiveness and efficiency.
So one take-away from this survey is that we do not have a shared language – and that is an issue IACCM is seeking to address in its development of an overall body of knowledge for our community.
What do we mean by principled and positional?
Well, positional negotiation is in essence when either party has decided it intends to set boundaries to the negotiation and applies relatively rigid or inflexible rules to what it will consider negotiable. It is typically associated with the competitive, win-lose mentality, where the negotiator perceives a limited cake and wants to obtain as much of it as possible, without great regard for the consequences to the other side. In general, positional negotiators take a risk-averse position and are aggressive in key areas like price. Principled negotiators, on the other hand, are open to the view that there may be bigger opportunities or better solutions and that collaborative negotiation allows an opportunity to explore mutual interests.
Of course, the two approaches are not mutually exclusive. Most major negotiations in the business environment will have elements of each. For example, negotiation of the business terms is often principled in nature, whereas areas of contract boilerplate – liabilities, intellectual property – may be entirely positional. Often a positional approach is dictated by internal rules and limits of authority and does not reflect the personality or preferences of the negotiator.
We asked participants to tell us “What type of negotiation style is MOST LIKELY being employed if you encounter or use the following?”. The words “most likely” are of course important here, since there are rarely any absolutes!
Let’s move to the correct answers and why we believe those answers to be correct
1. Extreme Opening Demands: Nearly 60% correctly identified that extreme demands are typically associated with a positional style. An extreme demand is generally calculated to put the other side on the defensive and to assert power, characteristics that are quite contrary to a principled, problem solving approach.
2. Brainstorming: Just under 48% rightly stated this to be more normally associated with principled negotiation. It would be relatively unusual for a positional negotiator to be interested in the use of brainstorming, since this implies a level of flexibility and readiness to explore a range of alternate solutions – neither of these characteristics being compatible with a positional, ‘win-lose’ style.
3. Mutually Agreed Agenda: 50% were correct in associating this with the principled approach. One of the classic signs of positional negotiation is an attempt to impose a unilateral agenda. Mutual agreement involves accepting the needs and interests of the other side and giving them some level of legitimacy.
4. Pressure to Reach Rapid Conclusion: This is a classic of the positional style. Think of car salesmen or other ‘negotiators’ who push you to close because otherwise the opportunity will be lost – either they will have sold to someone else, or another vendor will be selected. This is a clear attempt to stifle discussion and close on their terms. Just 55% got this right.
5. Focus on Past Experiences, Responsibility for Failure: While it makes sense to explore the past in an attempt to avoid previous mistakes, attempts to apportion blame are not productive or designed to produce creative solutions. Therefore a focus on these issues is typically positional and 37% were correct in identifying this.
6. Establishing and Building from Common Interests: Efforts to find common ground imply a readiness to compromise. 63% rightly identified that this is normally associated with a principled approach.
7. Reassuring Statements About Company Practices: Nearly 40% considered this most likely associated with a principled approach. Only 22% correctly linked it with a positional style. In general, reassuring statements are made in lieu of formal concessions – “trust us – our normal practice is not what we say in the contract”. How many buyers have heard that from IT or software vendors? Irrespective of the truth, this style is clearly designed to limit actual risk and eliminate negotiated concessions.
8. Difficulty Reaching or Involving Decision Makers: Just over 53% were correct in linking this to a positional negotiation; just 7.5% felt it was principled, with nearly 40% stating it could be either. Again, this is a classic technique of the positional style. It is an obstacle designed to minimize concessions. Often the negotiators will run out of time or energy and discussions will have been limited to the positional negotiator’s agenda.
What are the Results?
In the next part of the survey, we moved to explore the probable consequences of the different negotiation styles.
9. Quicker to Reach Conclusion: Participants were evenly divided on this question, with approximately one third going for each option. Positional negotiations are likely to reach faster resolution – which may of course be agreement or breakdown. A cooperative and exploratory approach will in general take more time than the pressured, less compromising attitudes of the positional negotiator.
10. Risks are Identified and Managed by Both Parties: The positional approach is usually associated with risk avoidance and the desire to push risks onto the other side. So while both sides may have identified the risks, it is not likely that they will be openly discussed or that the positional side is prepared to share responsibility for their management.
11. Makes the Negotiator More Respected Within Their Corporation: Of course, any negotiator who returns with results that consistently mirror company policy will win respect. But those who achieve deals that exceed expectations, that build relationships and generate added-value solutions are likely to win the greatest accolades over time. Overall, a principled style is fundamental to this level of success. Nearly 48% were correct.
12. Cuts Preparation and Planning Time: A similar percentage correctly linked this result to the positional style. It takes significantly less effort to be positional – that’s why it is linked so strongly to lower value deals or commodity purchases, where the buyer has extensive choice, the risks are low and there is little interest in exploring added value opportunities.
13. More Likely to Create a Deal that Realizes or Exceeds Expectations: While more than 56% correctly identified that this statement links to principled negotiation, that left a surprising 44% who felt it could apply to positional. A positional style may frequently result in a deal that satisfies the side using it, but it is of course very unlikely to exceed expectations and also unlikely to meet even the basic aspirations of the other side. Therefore a principled approach is proportionately more likely to realize or exceed expectations.
14. Involves Less Resource: As previously stated, the positional style will typically reach a more rapid result and also reduce preparation and planning time. Of course, it is possible that the positional style may lead to prolonged debate on issues that could have been resolved faster and to mutual advantage. But on average, a positional approach involves substantially less resource – and that is one of the reasons it is selected. Just under 40% got this one right.
15. Confrontation: Our best result – over 73% rightly associated this with a positional style. It is interesting that 10% felt it was linked with a principled approach – I wonder what results they typically achieve!
16. Trust, Commitment to Execution of the Deal: 61% identified that this is a more likely result of positional negotiation. Such an approach limits the relationship and the commitment of the ‘losing’ party. If you feel you have emerged with a bad deal, it is not surprising that many times it results in relative failure. So the positional approach is really not appropriate if you want to establish strong, cooperative relationships.
Why Does This Matter?
In this rapid overview, we have touched upon some key issues and characteristics of differing negotiation styles. Our purpose has been to highlight the significant impact they have upon results and the importance of planning their use effectively. This creates substantive questions and options – for example, at what phases of a negotiation should I be positional and at what phases principled? What is the optimum style make-up of my team? How do I control and leverage the actual styles represented in the team – and in the other side’s team? What evidence do I see of the approaches and preferences of the other side and how should this affect my strategy?
In our research and training, we have found that few negotiators in our community make effective use of the opportunity that style planning and analysis represents. It is an area that can be used to great effect during internal planning and strategy development, as well as the external negotiation. For anyone interested in learning more, this subject is covered as one aspect of our web-based class for experienced negotiators, which includes a self-assessment of preferred styles and an overview of the impacts when differing styles encounter each other.
If you have questions or comments, please do not hesitate to contact me – [email protected]
This survey was undertaken in December 2003 and attracted input from more than 300 professionals and managers at major corporations worldwide.
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|Copyright © 2004, Tim Cummins|
|Copyright © 2004, The Negotiator Magazine|