The Preparation Phase for Negotiations

The Preparation Phase for Negotiations

Preparation is of paramount importance.

Even the great Abraham Lincoln once said, “If you give me 6 hours to chop down a tree, I will spend at least 4 hours sharpening the ax.”

This perfectly depicts the importance of preparation before indulging in any activity.

Time to take a look at some crucial elements involved in the preparation phase of a negotiation.

What Are the Three Key Areas for Which You Need Preparation?

What Are the Three Key Areas for Which You Need Preparation?

  • People: Negotiation takes place between people, so it’s important for one to identify and assess people’s issues.
  • Purpose: The final outcome of a negotiation is a mutually satisfying agreement between two or more parties. It is critical to state clearly the aims of the negotiation. You need also to assess issues such as the interests of each party and the critical points on which both parties will seek agreement.
  • Process: In order to ensure a smooth interaction between the negotiating parties, you will need to clarify and agree on specific steps.

How to Prepare for a Negotiation?

How to Prepare for a Negotiation?

 1. Assess the People Issues: 

You need to reflect upon the relationship with your superior, the negotiating parties involved and other stakeholders’ interest in the negotiation. It is obvious that a positive relationship with any of the parties mentioned above will only facilitate the process of negotiation.

Relationship With Superior

It is important to know about the leeway that you have in the negotiation. You will be complying with the instructions received from your superior. You need to know the limits within which you can make commitments on behalf of your organization.

Similarly, you need also to analyze the relationship of the other party with their superior. They will be working under the instructions of their superior. You need to identify the extent to which they have the authority to make commitments on behalf of their organization.

This will enable you to know the items on which agreement may be reached.

Relationship Between Negotiators

You will need to know about the relationship between your organization and that of the negotiating party. Is there a history? Did the two organizations work together before? Is there any issue that cropped up in the past: for example, has there been any complaint about the quality of service or product, delay in delivery or payment?

Relationship With Other Stakeholders

What is observed nowadays is that negotiation does not happen only between the parties directly involved in the process. There are many other institutions that have a stake in the negotiation, for example, the suppliers or the banks.

The other stakeholders will have an influence on the negotiation process. They have agreed to work with your organization on certain terms and conditions that exert a limit on the flexibility you may wish to have during negotiation. For example, an overdraft limit may be a constraint in placing an order even though at a competitive price.

These issues are similarly faced by the other side in the negotiation. So you need to explore any such issue and expectations of the other stakeholders. This will allow you to assess the potential impact it may have on the negotiation. The overarching objective will be to satisfy the requirements of other stakeholders so as to have the most conducive environment when executing on the agreement between you and your counterparty.

2. Assess the Purpose Issues:

Assess the Purpose Issues

It’s crucial to be crystal-clear about the objective of the negotiation. What is it that you want to achieve? Is the goal to sell your house? Or is it for the rental of a building?

Being clear about the purpose of the negotiation will enable you to identify your interests as well as those of the other side in the negotiation. This will help you in establishing your ‘wish-want-walk’ objectives.

Imagine the purpose is to sell your car. Your ‘wish’ objective is the reasonable highest price at which you would wish to sell your car. On the other extreme will be your ‘walk-away price, that is, the lowest price below which you will not sell your car. You will prefer to ‘walk away’ rather than accept a lower price. The ‘want’ price is the target price at which you will aim to sell your car. This is in between the ‘wish’ and ’walk-away price.

It is important for you to determine your ‘wish-want-walk’ price and estimate the ‘wish-want-walk’ price of the other side. This will enable you to negotiate with more leverage.

If you want to learn about the remaining stages involved in the preparation phase of a negotiation, wait for the second part of this series.