Comfortable at the Bargaining Table

COLLECTING INFORMATION IS THE MOST DELICATE PHASE OF A NEGOTIATION. TO BE WELL PREPARED IN NEGOTIATIONS ALSO MEANS TO BE READY TO CHANGE APPROACH AND STRATEGY

by Leonardo Caporarello, Dept. of Management and Technology, Bocconi
Translated by Alex Foti

To negotiate or not negotiate? The answer is simple: negotiate in all cases when people
place different values on the same resource. Therefore it is easy to understand why there are so many situations where there is room for bargaining. So, the problem is not whether to do it or not to do it, but how to do it. One of the most important critical factors for success in negotiations is the ability of negotiators to be "well prepared".

Preparing for a negotiation means knowing how to collect and select information on the specific context of negotiations, the other party, the interests and the value that each party assigns to resource object of the negotiation process. Many negotiators typically take into account only the information they have easier and faster access to. But is this enough to be considered well prepared?

Often, it’s not. The negotiation process will be more successful if, during the preparation phase, the negotiator invests time in the search for new information, not the information already in his/her possession.

Focusing only on the information you have is one of the most common forms of behavior that adversely affect the effectiveness of the bargaining process. The greater the ability of negotiators to search and select information and the greater their preparation, the greater the likelihood that the negotiation will be successful.

Being well prepared also means being ready to change one’s approach or negotiation strategy. Negotiators should not at all costs follow the pattern which they set out at the start of the bargaining process. On the contrary, a well-prepared negotiator should be able to manage uncertainty and the unexpected, such as when, while dealing with the other party, he/she becomes aware of information that require him/her to change behavior at the bargaining table.

In short, successful negotiators must be able to manage information according to two dimensions: as-known and be-known.

Research & analysis must go arm in arm

In other words, information should be managed according to ExE, the expression for Exploring for Exploiting, which means that negotiators have to balance the search for new information on the bargaining process (exploring) with detailed analysis of the information already held by them and useful to the negotiation process (exploiting).

The ability to balance ExE is particularly relevant in the case when a negotiation is
characterized by high uncertainty and risk levels, rules are not clearly defined, and the relationship between the negotiators is still not well established.

So here are three tips to improve bargaining skills in the short term. The first suggestion is to establish the type of relationship existing between the negotiator and his/her principal. You can usually describe it as a principal-agent relationship. Negotiators must constantly keep in mind that they should pursue the interests and objectives as set by their mandate, which includes how much room for maneuver they have, without the final target being influenced by their own self-interest or goals.

Know the context and the actors

The second relates to the type of negotiation. Although there may be similarities across certain types of negotiations, there are in fact always differences. Several factors determine variations across negotiations. Among these, the two most significant are actors and context. Having a good knowledge of both helps negotiators define both the strategy and bargaining style that need to be adopted. Moreover, agents and settings are dynamic factors which can change during the course of the negotiation process and, consequently, also strategy and style may have to change in response.

The third refers to the effects of the deal being struck. Once the negotiating actors
have defined and formalized an agreement, they must implement it exactly as agreed. This helps build trust and credibility between the two negotiating parties.