How to Negotiate: The Basics of Negotiation

project managers have always needed to be able to negotiate it's part of our job we're negotiating with stakeholders with ago she ating with our sponsor our boss our clients we're negotiating with suppliers and contractors and consultants and nine years it always been a part of our role but it is increasingly being recognized by important bodies like the PMI the PMI has now included explicitly within its examination content outline for the PMP qualification negotiation which will become part of the examination from January 2021 it sits within domain one people and it's task 8 negotiate projects agreements so in this video I want to talk you through the basics of negotiation for project managers [Music] negotiation is a process of searching for an agreement that satisfies all parties and there are two important parts of that definitional I want to highlight firstly it's a process which means no matter how concerns you are that you may not be able to negotiate if you follow the process you will get a decent result you can't predict what that result will be but the process will get you there and secondly it's a process of searching for a solution that will satisfy all parties this means that a negotiation is a process that has integrity you're not trying to get more one over on the other party that's cheating you're looking to satisfy all parties so if you're worried that negotiation feels somewhat uncomfortable you don't need to because your goal in negotiation is to produce an agreement that everyone will find acceptable so what is the negotiation process the negotiation process has five components to it first there's preparation then there's opening the negotiation then at the heart there is bargaining then we close the negotiation and finally step five is to follow up on the negotiation preparation going into a negotiation unprepared is setting yourself up to fail so think about the scope for the agreement you want and what are your goals and objectives for the negotiation what do you want to achieve what does a good outcome look like in fact you need to think about three levels of outcome to have in your mind going into the negotiation the first is your ideal the best reasonable outcome you could achieve the second is an acceptable outcome the sort of outcome you think you might achieve that would be acceptable and finally there's your bottom line the minimum outcome will prepare to achieve any outcome below that minimum outcome is worse than not negotiating at all which means you have to know what your best alternative to a negotiated outcome is your Batna without knowing what you would do if the negotiation failed you can't define your bottom line and remember any negotiation below that bottom line is just a negotiation about how much you're prepared to lose there are two more things that you need to build into your preparation and the first of those is research you need to research the context you need to research the players the people the history or organization has had with their organization you need to find all of the facts make sure you've got them assembled and in good order so that you can access them as soon as you need them and the second thing is to think about your negotiating strategy and tactics how are you going to move from the start of the negotiation to a close in an orderly fashion what concessions you prepare to make and what concessions are you likely to ask for what are you going to focus on first and what are the little details that you'll wrap up the negotiation with at the end and how will the members of your team if you're not negotiating as an individual but working with colleagues how will they work together to make sure that the negotiation runs smoothly and you get the best you possibly can from it step 2 is opening and there are seven things you must cover at the opening of a negotiation and whilst the order I'm going to present them in isn't absolutely fixed it's a good order and it's one that will often make a lot of sense firstly you have to make a good impression when you first meet the other negotiators from the other side you must make a good first impression you must come across as well-prepared and professional secondly you need to build rapport with them because negotiation is a human to human activity it's harder to cheat somebody you know and it's easier to come to a satisfactory agreement when you know somebody well so take time over the pleasantries over the niceties of building a relationship third you need to check the authority that the other person has to make an agreement because if they don't have full authority then chances are you need to reserve some concessions before getting to the final agreement with them knowing that they may refer the draft agreement up to somebody with more authority who may then ask for further concessions next you need to agree the basis for the meeting are we negotiating the whole transaction or a part of it are we looking for a draft agreement or a final agreement what is the process by which we're going to confirm the agreement and after that you need to think about admin and ground rules how are we going to conduct this negotiation one of the Arrangements around timing and timeouts what's our agenda what's our sequence who's going to sit where and then we get to the nub the two most important parts of the opening stage are what their ideal outcome is and what your ideal outcome is and if possible you should get them to share their ideal outcome first and that way if necessary you can mold your outcome having heard what theirs is but both parties will want to hear the other party's outcome first don't get yourself into a standoff to the extent that any negotiation usually has someone who is more in the role of a seller and someone who is more in a role of a buyer the usual default is that their seller will lead with their outcome first when you've opened the next step in the negotiation is the bargaining stage and the bargaining stage moves through a number of phases the parties will put their positions they will explain them and you will exchange ideas this will lead to a number of offers in response to those offers will be counteroffers there will be requests and offers of concessions sometimes you'll get stuck and sometimes you'll find a way to get unstuck but the bargaining stage will end when both parties feel they are close to an agreement it's evident that most of the matters have been discussed and there are offers and concessions and agreements around all of the different details now it comes to the closed stage at the close stage we summarize where we've got to and we check that all of the issues have been covered if they have which at one by one each component of the offer and all of the concessions are agreed by both parties if it's evident that there is nothing more or likely that there is nothing more you can go for a trial close if we've agreed all of this are you ready to agree the whole package or I believe we've agreed everything on the basis of what we've just said I'm happy to agree the package you then make the formal offer are you prepared to agree this package if when you make your trial close you get the wrong body language or the wrong signals then you know you need to go back and find out what the issues are if you get right signals then you can make your offer with a high degree of confidence and it's going to be accepted and when the offer is accepted confirm it and record the decision at this point there is nothing more you need to do to close the deal anything else you say can do nothing but poison the deal so the only two things you miss talk about after closing the deal are firstly the logistics of what comes next what's going to be in the follow-up and secondly pleasantries it's been nice doing business with you if you mention anything else from the whole sphere of the negotiation best case is the other parts you go yes know that worst case is you will introduce a new fact which will introduce doubt in their minds so keep quiet it's sometimes called by sales people buying back the deal you mentioned something else that you didn't mention it turns out that that's not appealing to them once you close the deal you must do all of your follow-up you must do everything you committed to doing during a negotiation and you must do it when you committed to do it document in the agreement share it with both parties share it internally with people within your organization who need know as a courtesy thank any of your colleagues who have been involved in a process and as a courtesy thank your counterparties as well so there you have it a simple five-step process for negotiation there's nothing mysterious there's nothing complex about negotiation it's the individual situations that create the complexity but I hope now you'll feel confident going to your next negotiation knowing what the stages are and how to manage it for a successful outcome if you've enjoyed this video please do give us a like please subscribe to our channel for loads more content and hit a notification bell so you don't miss any of it and I look forward to seeing you in the next video

Channel: Online PM Courses - Mike Clayton

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Keywords: negotiation, how to negotiate, basics of negotiation, negotiating, batna, bottom line, negotiation skills, negotiation for project managers, negotiation skills for project managers, negotiation for project management, project management, bargaining, deal, the art of the deal

Id: OXCdAPBpE9g

Length: 11min 28sec (688 seconds)

Published: Wed Jul 08 2020