Category: Negotiation Skills

What is Negotiation and Why is Negotiation Important in Business

People engage in negotiations regularly in fact multiple times a day without even realizing that the conversation they are engaged in is in fact a negotiation. It is something used all the time in the workplace as well as in personal life. Whether it is deciding on which cuisine to have in dinner or coming to an agreement about room rent with the landlady both are examples of negotiation.
However the above stated fact about the frequency of entering into negotiation does not ensure good negotiation skills. One reason for this is because people many times confuse negotiation with bargaining. They miss out on the fact that bargaining is a one-time event, negotiation on the other hand is a long term association.
Dictionary definition of negotiation is “a discussion to reach an agreement.” Though the definition appears to be simple but actual negotiations are far from it. Humans are complex and it becomes extremely difficult to reach an agreement when they have conflicting point of views.
Negotiation is commonly mistaken as same for convincing. Many believe that they are good at convincing others and thus good negotiators however convincing is not a synonym of negotiating.
In reality, negotiation is a complex process involving multiple angles. The best negotiations are not those who get all they want rather those who achieve a win-win outcome. In such outcomes all the parties are benefited and none are at loss.
Unlike the commonly held belief about negotiation being like arguments, a way to achieve your objective without considering others needs by hook or by crook.
Negotiation is a discussion in order to understand the objectives of the parties involved in the negotiation process and then come up with an alternative in order to achieve maximum satisfaction possible for both the parties.It is about achieving your objectives but while building, maintaining as well as improving relationships during the process. It is not about proving one right and the other wrong, rather about trying to gain maximum for both the parties.
Negotiation skills are important in everyday life as it increases one’s effectiveness not only by helping one achieve the objectives but also by helping one in getting along better with people.
Negotiation is used right from the start of joining an organisation. For example, at the time of joining an organization, one negotiates on salary etc. The individual tries to maximize the salary received whereas HR on the other hand tries to reduce cost for the organization. Another example of using negotiation skills in the workplace is at the time of making a deal with external stakeholders like vendors etc.
Again the goals are contradictory, as one party wants to pay minimum and other wants to earn maximum. In such distributive scenarios, where the pie is to be shared, effective negotiation helps in increasing the size of the pie. The challenge is to reach an optimal solution where both parties are satisfied with the outcome. Thus negotiation skills play a crucial role in achieving such outcomes.
Filed under: Negotiation Skills