Negotiation Skills: Definitions, Benefits And Examples

Updated 13 December 2022

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Negotiation is a dialogue between two parties to resolve conflicts or issues so that both parties find the solution acceptable. Usually, it is a compromise involving give and take. Negotiation results when each party compromises to resolve a conflict for everyone's benefits. In the workplace, negotiations may take place between managers, departments, colleagues or between a team member and a manager. Even before you join the workplace, you may negotiate the job offer with the interviewer or HR manager.

In this article, we will discuss what negotiation skills are, its benefits, examples and tips for improving your negotiation skills.

What Are Negotiation Skills?

Negotiation skills are inherent qualities that help two or more parties agree to a common logical solution. In the workplace, you may have to display your negotiating skills in various situations such as:

Negotiating a salary hike with the HR manager after promotion
Negotiating a project deadline with your team lead or manager
Negotiating few days off for a family holiday with your manager
Negotiating contract terms with a potential customer

Lack of negotiation skills affects the business bottom line and could ruin customer relationship. Negotiation skills are soft skills and essential to become a negotiator and resolve workplace conflicts.

However, this skill set depends on the work environment, the parties involved and outcome desired. Often, when one party is ready for reaching a compromise, the other party may be resistant. This makes negotiation difficult and you are likely to encounter such situations in the workplace. That is why you need to master your negotiation skills.

Benefits Of Negotiation Skills

Negotiation is a coveted leadership skill which helps businesses reach their business objective. Here are a few reasons negotiation skills are essential in the workplace:

Builds a relationship: Despite the difference in opinion, negotiation skills help strike a solution and focus more on creating goodwill and value. This builds a long-term relationship.
Delivers excellent solutions: Good negotiation skills ensure that solutions to the conflicts are not short-term. It focuses on creating long-lasting solutions because both parties make a concession only when the solution is satisfactory.
Avoids future conflicts: As both parties agree to a common solution, the chances of future conflicts reduce to a great extent.
Create an environment of business success: Good negotiation skills ensure the accomplishment of business goals, which creates an environment of business success. This also increases the chances of future business transaction.

Examples Of Negotiation Skills

Here are a few examples of negotiation skills that can make you an excellent negotiator at the workplace:

Communication

Communication is the backbone of negotiation. The way you communicate decides the fate of the negotiation. It involves identifying the nonverbal cues, using the right words and expressing your thoughts in a compelling and engaging way. Without being verbose, you need to communicate the right message to the party. Often, negotiators are active listeners that help them understand the other party's message. A healthy conversation ensures a mutually beneficial deal and avoids misunderstanding that could prevent the parties from reaching a compromise.

Strategising

There may be instances where the other party disagree with the solution you provide. Good negotiators often come with one or more backup plans. Consider all solutions to the problem before entering a negotiation. For example, when negotiating your salary, the HR manager may refuse to increase your dearness allowance (DA). Instead of focusing on the DA, you could ask for better retirement or gratuity benefits.

Planning

Proper planning before the negotiation ensures you know the long-term consequences of the negotiation terms. Planning comes in handy during the negotiation process and ensures the successful execution of the decision.

Persuasion

Successful negotiators can influence other parties. Unless you possess the persuasion skills, it becomes difficult to justify how your solution will benefit both parties. Your persuasion skills decide whether the other party agrees to your solution.

Listening

Active listening is the key to a successful negotiation as it ensures that you listen to the other party and understand what they are trying to say. Also, with active listening, you do not miss out on crucial information, which builds trust and helps reach a consensus faster.

Problem-solving

Most negotiations occur to find a solution to an issue. With excellent problem-solving skills, you propose viable and intelligent solutions that are beneficial for both parties.

Emotional intelligence

The ability to control and manage your emotions and deal with the other party's emotions differentiates a successful negotiator from an unsuccessful one. People high on emotional intelligence (EI) can accurately perceive and express their emotion, recognise others' emotions and use these emotions to facilitate solutions.

Types Of Negotiation Strategies

The negotiation strategies or approaches to negotiation you use depends on your situation. Most workplace negotiation are "win-lose" or "win-win". Here are 4 types of negotiation strategies:

Distributive negotiation

It is also sometimes called "hard bargaining" because both parties argue over a single conflict. Distributive negotiation is a win-lose strategy because each party considers that their loss would benefit the counterparty. For example, when purchasing a SaaS tool, you may not want to lower the price as it would cause financial loss, whereas your customer feels you are overcharging them for your product by not giving discounts.

Integrative negotiation

It is also sometimes called "interest-based bargaining" because it asserts that both parties can gain something and create value by offering trade-offs. This is a win-win strategy because the negotiation creates mutual gains for both parties. For example, when purchasing a SaaS tool, you quote the price as ₹ 2,000 per month, but the customer is adamant about paying only ₹1,600 per month. Both you may negotiate ₹1,800 per month price. It is a win-win situation because both parties win ₹ 200 per month.

Negotiation with coworkers

Your job may require working closely with different departments and without strong negotiation skills, it might be difficult for you to reach your goals. For example, when working as a software developer, a test automation engineer may flag a part of your code as a critical error. When you negotiate with the automation engineer, you both agree that the error is no longer valid because of the product's changed functionality. As a result, you develop a plan to ensure such instances do not happen again.

Negotiation with management

One of the most challenging types of negotiation is with your manager or senior management. Often, you negotiate with such senior-level people for your job duties and salary benefits. This is a crucial workplace negotiation because your job satisfaction depends on it. Therefore, when negotiating about your salary and other perks, be clear and polite with what you expect.

Tips To Improve Your Negotiation Skills

As negotiations skills are paramount in every business, you need to hone these skills continually. Here are a few important tips to improve your negotiation skills:

Prepare for the negotiation

Enter a negotiation only after you know what you want and how willing you are to compromise to resolve the conflict.

Be ready to compromise

Without compromise, it is impossible to reach a common consensus that is beneficial for both parties. Leave your ego behind when negotiating at the workplace and be ready to compromise on best fit terms.

Set a timeline

Without setting a timeline, a negotiation may go on for months or years. Setting a deadline or timeline motivates the parties to reach a compromise before the deadline.

Offer multiple solutions

If a conflict is solvable in more than one way, it makes sense to present all the possible solutions at the beginning of a negotiation. This saves time and increases the probability of both parties choosing one solution of their preferred outcome.

Speak with confidence

Negotiation is not about what you say, it is more about how you say. Therefore, it is imperative to speak confidently to make the other party believe that your solution is beneficial. Lack of confidence and self-assurance could result in negotiation terms that are more beneficial for the other party.

Learn to accept failures

Often, when both parties' requirements are a world apart, reaching a compromise becomes difficult. You may fail at negotiation but never take this failure personally. Instead, accept it and revisit the entire negotiation to understand ways to improve your efforts.

Work on your weakness

Your planning, communication, persuasion, problem-solving and listening skills will always complement your negotiation skills. So, it becomes essential to sharpen these skills. If you lack the power of persuasion or find it difficult to listen to others, you should work on these weaknesses to improve your negotiation skills.

Practise negotiation

One of the best ways to improve your negotiation skills is by practising. Create a mock negotiation scenario and practise it with your family or friends. The more you practise, the better negotiator you will become.