BlogCommunication SkillsHow Do Negotiations Work – All You Need To Know

How Do Negotiations Work – All You Need To Know


Negotiations are an increasingly important part of the business world. Whether you work in sales, finance, or marketing, you’ll likely have to negotiate at some point during your career. This post will cover a few best practices and tactics for business negotiations, as well as how to use the negotiation process to your advantage. We’ll also take a look at some examples of successful negotiation from people who’ve been there before!

What is Negotiation?

Negotiating is an art form where two parties agree to a mutually beneficial deal.

Negotiation is a process that requires decision-making. Therefore, negotiation involves more than tackling individual goals and objectives, as they need joint decisions from two or more parties who have various preferences.

The definitions in this post define negotiations from both an interpersonal perspective and a more general context.

Negotiation is a skill that can be applied in many ways, whether between individuals looking to agree on the price of an object at a market or for large-scale projects like merging organizations. In your daily life, it may appear that tactics can also serve as tools for conflict management when you negotiate salary and negotiations.

Where Negotiation Take Place

Many people assume that prices are non-negotiable and final. But there is often a negotiation behind the scenes to increase satisfaction with both parties involved. In addition, negotiating can be a way to develop agreements in various areas: from reducing debts to lowering the sale price of your home or improving some contract conditions.

Negotiation is an important skill when accepting a new job. The employer’s first offer usually isn’t their best, and the employee can negotiate different terms such as higher pay, more vacation time, or other benefits like retirement. It’s imperative to deal with because all future offers will be based on the initial one, so asking for what you want always pays off.

Negotiations can occur in the workplace or outside of it, such as when you’re talking about wine with a friend at your favourite restaurant, and they offer to sell you their last bottle for $30 instead of $40 on our list price.

The Process

When negotiating, three stages need to be adhered to:

  1. There is a preparation where both parties must be clear and confident in their objectives before the negotiation begins.
  2. The negotiation should not be rushed, leading to a lack of understanding of the other party’s needs and desires.
  3. Once negotiations are finished, both parties need time for reflection to make sure all goals have been met.

It’s important to remember that the negotiation process is not linear, and it can take a while for an agreement to be reached. Sometimes parties need time apart to come back later with a fresh perspective on what was discussed before negotiations continue again. It’s also worth noting that one party may give up more than the other to reach an agreement in some cases.

The Negotiation Process: Preparation, Negotiation, and Reflection

Preparations Stage

  • Define objectives clearly (what is a deal-breaker?)
  • Identify your bottom line or walk-away point/ what would you be willing to give up? This may include time constraints on the negotiation.
  • Identify the other party’s objectives and bottom line.
  • Create a list of what you want to achieve from this negotiation and potential solutions if the talks fail. This is important because it will give you more confidence during discussions.

Negotiation Stage

  • Actively listen when conversing with your counterpart to know that you are listening and understanding their needs.
  • Don’t make assumptions about what the other party wants to achieve. Ask them first
  • Exchange information promptly so there are no delays or confusion, as this may lead to further issues down the line.
  • Avoid any hostile behavior by not interrupting while the other person speaks.
  • Use your negotiation skills to be persuasive and work with the other party to reach an agreement.

Reflection Stage

Once formal negotiations have been completed, give yourself some time away to reflect on what has happened. This is important because it enables you to process what’s taken place and develop a plan for the next steps if you need to negotiate again.

Evaluate the negotiation and identify what worked well, what didn’t work so well and how this can be improved next time.

It’s important to remember that while negotiations are a way of reaching agreements with both parties involved, they also include conflicts that may arise during discussions. Therefore, for negotiations to succeed, both parties must be willing to compromise and work together.

The Harvard Principles of Negotiations

Before starting negotiations you should also get to know the Harvard principles of negotiation explained by Dr. Thomas Henschel in an excellent presentation!

If you have a bit more time check out also a Google Talk about “Negotiating the Nonnegotiable” by Dan Shapiro

Tips for Negotiations

  • Prepare by being clear about objectives and how much you’re willing to give up.
  • Listen actively, so the other party knows you understand their desires.
  • Exchange information promptly so there are no delays or confusion.
  • Avoid hostile behaviour by not interrupting while the other person speaks and use persuasive negotiation skills to reach an agreement.

Negotiations can occur in the workplace or outside of it, such as when you’re talking about wine with a friend at your favourite restaurant, and they offer to sell you their last bottle for $30 instead of the $40 they originally wanted. In these situations, it’s important to remember that both parties are looking for something from the negotiation- one party wants more money, and the other would like less stress over their last bottle of wine!

Read also: How To Be Diplomatic and Tactful At Work: The Basics

Factors in Negotiations

When you negotiate, there are some factors that you need to keep in mind. If you do this, then success is more likely.

The Parties

In a negotiation, there are two people or more. They each have different interests. Think about what the people want and why they believe what they believe.

The Communication Between Parties

When negotiating with one another, parties may find themselves in disagreement about what the other party wants. To guarantee that both sides feel heard and valued, there must be a balance of communication.

Take turns speaking without interrupting and try not to misunderstand each other’s point of view until you have heard their whole explanation.

The Relationships

The relationship between the two parties and their respective intermediaries in negotiations influences the terms of negotiation.

The Options

Including a few possible solutions or concessions could be advisable, as going into negotiations without ideas of other options is usually not advised.

The Legitimate Claims

The parties arguing for legitimate requests should substantiate their claims and prove to the other party that they intend to follow through on any agreement.

The Alternatives

Could the people who disagree with each other find a solution that doesn’t involve either of their original ideas? They might need to look for another solution.

The Bottom Line for your negotiation

In some cases, negotiations can’t conclude all parties.

Whatever happens, don’t be angry or burn bridges; just part as friends. You never know when you will have to cross those rivers again, so be sure to keep them open!

Post that might also be useful:

Why is feedback needed in interpersonal communication

10 Tips to Make You a Better Communicator


We hope you have found this post on how negotiations work to be helpful. If so, please share it with your friends and colleagues! There are many more blog posts available for you to read that various cover topics related to business strategy. To get started, check out our article on the five essential skills needed in negotiation practices or find tips about what questions need answering before beginning any contract negotiation process. Happy negotiating!

Professional consultant and project manager in software houses. He has over 8 years of experience as a project manager for key clients. Currently mainly works on business consulting and communication with strategic clients. Privately a fan of good food, board games, and cycling. He loves to share his experience with new people!

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