Negotiation: Key to win-win situations
Does a truly win-win situation really exist? Often, the prevailing image of a leader is one who “gets ahead,” crushing the competition. Ruthless, relentless, and cunning. This is how we often imagine leaders to be. Being number one means all the others can’t share the top spot with you. But is this what gets real, meaningful work done? Is this how leaders find like-minded people to work with and tackle shared challenges with? The answer is apparently found in a word most associated with kidnapping for ransom and flea market bargains. It may seem like a skill for just a select group of people. But the reality is, everybody needs to learn how to negotiate. Nearly as soon as a child learns how to talk, he learns how to negotiate. As a leader, negotiation plays a significant role in cementing alliances and deepening collaborations as well as finding sustainable solutions that benefit all stakeholders.
The following is an excerpt from the article Leadership Matters, written by Dr. Gin Chee Tong, who has work experience in communications, public relations, and tertiary education. Dr. Tong, who has a doctorate philosophy degree from the University of Melbourne, Australia, zeroes in on how leadership is not about getting a bigger slice of the pie. It’s all about finding ways to make a “bigger pie” for everybody to enjoy. Negotiation is key and it involves “active listening.” Interestingly, a huge part of negotiation is listening on a deeper and more intuitive level to what motivates people and groups. While concrete factors like profit or ROI are easily quantifiable, many negotiations hinge on understanding psychological needs like individuals’ need for independence, personal agency, or recognition.
‘Writing the Other Party’s Victory Speech’
In his workshop, “The Practice of Negotiation,” Mr. Samuel Kim shared that negotiation skills are crucial for aspiring and current leaders, as we are constantly in the position of making transactions. It is human nature to want to win. However, if we choose a victory that benefits everyone—or, in negotiation terms, a victory that creates a “bigger pie”—we will be able to build a solid relationship in the long run with the other party. This is why it is important to begin negotiations by writing the other party’s victory speech; a good negotiation is not when you have secured a good deal for yourself but when both parties believe they have attained the best possible deal. While negotiating a win-win situation may seem simple on paper, challenges abounded when we attempted to put “give and take” into practice. My first challenge came in trying to understand the concepts of the “Best Alternative to a Negotiated Agreement” (BATNA) and the “Zone Of Possible Agreements” (ZOPA). As we practiced and debriefed after every case study, it became clearer that BATNAs could be understood as our reservation price—how much we are willing to yield to secure a beneficial outcome. ZOPA is best explained as the space between the negotiators’ reservation point. Most of the time, there is room for people to negotiate and come to an agreement. However, in instances where our BATNAs are not mutually agreeable, the best outcome may be to walk away. As leaders, we must figure out how to enlarge the common ground while lessening the opposing interests so that everyone can have a “bigger pie.”
The second challenge in negotiation is learning how to gain the trust of the other party, not only to achieve a good deal but also to secure a long-term relationship. This lesson was best exemplified by the third and final case study, in which the CEO of an oil company must “maximize the commercial value of, and profits from, the oil resources for the benefit of the people and the country.” By the end of the exercise, there were clear winners all around the room, demonstrating that many delegates had taken the mandate to heart. However, as Mr. Kim broke down what had just transpired, we saw that for one CEO to achieve substantial profits, other CEOs had to suffer massive losses. Moreover, the collective profit or “pie” had actually become smaller.
In contrast, although groups that had arranged for all the CEOs to “win,” attained lower individual profit in comparison to the frontrunners, their collective pie was significantly larger.
This exercise showed that short-term gains might actually lead to long-term losses. In a capitalist society, it is unlikely that we will always be able to get rich at the expense of others, as we may one day be excluded from the negotiation table by parties we have taken advantage of in the past. For long-term gains, mutual trust is important.
If one member breaks that trust, not only will other parties become wary of negotiating with him, but they may also become suspicious of every other party’s true intentions, which could lead to long-term losses for everyone. This was evident in one of the groups in which one member chose to break the trust. After that, the other members became apprehensive of his promises and deemed him “untrustworthy,” causing his reputation to suffer.
If we aspire to gain mutual trust as leaders, we should always seek to create value for the betterment of the community and to begin negotiations with the intention that everyone wins. Yet, how are we to know the needs of the other party? This is the third challenge in negotiation. As Mr. Kim explained, information asymmetry is present in every negotiation. While we may know our own constraints and the value we place on the task at hand, we cannot presume that the other party thinks the same way nor do we know what his alternatives are.
To balance the negotiation and move towards a win-win situation, Mr. Kim brought up two words to remember—active listening.
In negotiation, active listening means going beyond just understanding and making assumptions about what has been said. Instead, we should take the discussion deeper by anticipating the interests of the other side. When we listen, we should strive to understand their BATNAs and how we can achieve ZOPA. As in Stephen Covey’s 7 Habits of Highly Effective People, active listening connotes listening with the intention to understand instead of to respond. Asking a lot of probing questions is one way we can achieve a better understanding of the other party’s reservations, another is research. When we ask probing questions, we are able to make concessions gradually and come to a creative agreement.
All too often, leaders struggle to gain consensus. Mr. Malaty-Uhr’s lesson on extrinsic and intrinsic motivators proved useful during the negotiation exercise, arming me with the knowledge of people’s motivations, which include their desire to fulfill their psychosocial needs —to be independent, to belong, to gain competency, or to attain comprehensive knowledge.
Indeed, to practice good leadership, we must have consideration for the individual and attend to each person involved in a given issue, be it as a mentor or coach. When we understand what motivates people, and when we are considerate of what the other party needs, not only do we become more effective negotiators, we also become better leaders.
By Dr. Gin Chee Tong