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Blog post 22 Apr 2021

Successful Project Manager VIII: The Art of Negotiation

Successful Project Manager VIII: The Art of Negotiation

In this series, we are taking a closer look at the role and responsibilities of the project manager. One of the key skills that a successful project manager has to possess is the skill of negotiation. Negotiation is a formal discussion between people who have different aims or intentions and are trying to reach an agreement. Negotiation is, above all, a form of communication. It is designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed. What are the most important elements of negotiation, and what are the most important steps to take when negotiating?

Important Elements of Negotiation

Negotiation with stakeholders, clients and executives is part of the project manager’s work portfolio. Before negotiation takes place, a project manager should take into consideration the following elements:

The form of communication

First of all, it is important to determine what form will the communication take. The communication process may take place in person, over the phone or online. There are different approaches to communication in negotiation, depending on the type and character of the negotiation.

Legitimacy and interests

They are believed to be the fundamental drivers of negotiations. Only legitimate and fair proposals can succeed and if one party is putting forth the proposals that lack legitimacy, they risk being rejected. Interests, on the other hand, guide what people do and say and it is crucial to understand the counterparts’ interests to lead successful negotiation.

Cultivating relationships

It is very important to manage well the relationships with the other party during the process of negotiation. Building rapport, altogether with adherence to the ethical standards will pay off in the long run and establish the base for future business dealings.

Options and commitments

In the world of negotiations, options are choices that the two involved parties take into consideration to satisfy their interests. Options include trades, contingencies and conditions and they create value in negotiation. Commitments are agreements, demands or promises made by one party to the other. It can be in a form of an offer or even a formal proposal or a signed contract.

BATNA

What if negotiations don’t go as planned? Every project manager has to keep in mind that the negotiation may fail to reach a desirable agreement. BATNA stands as the best alternative to a negotiated agreement. It is an analysis that should precede the negotiation itself to plan for alternatives in case the negotiation does not go as intended. Alternatives are important as they may be the only way forward with the project.

Five Steps of Negotiation

How to go about the negotiation process itself? One of the most common breakdowns of a negotiation process is called the Five Steps (or Stages) of the Negotiation Process. These five steps include Preparation, Definition of ground rules, Clarification, Bargaining and problem-solving and Conclusion and implementation.

Picture 1. Five Steps of Negotiation
(Source: Lumen Learning)

Preparation

The preparation phase of the negotiation is when the goals are clarified, and the conditions of the exchange are defined. It is also time to develop a working strategy for the upcoming negotiation. The more planning is done in the initial phase, the more likely it is to finish the negotiation with a desirable outcome.

Definition of ground rules

After thorough planning, the parties get together to work on the definition of both ground rules and procedures of the upcoming negotiation. They find agreement on who will do the negotiating, how the negotiation will be conducted (online, in-person) and where the negotiation will take place. Another important aspect is the time constraint and limits to the negotiation. Lastly, the two parties will agree on the post-negotiation process in case they fail to reach an agreement.

Clarification

At this point, the discussion between the negotiating parties continues by clarifying and justification all the information they shared in the previous stage. This is the opportunity to learn more about the other party and the issues before arriving at the initial demands.

Bargaining

The bargaining phase is the very core of the negotiation process. It starts with an initial offer, followed by counter-offers proposed by the negotiating parties. Making concessions is an integral part of their process while good communication skills are an absolute must. The ultimate goal of this stage is to find a solution that will prove to be a win-win one. That means a solution that both parties will readily accept.

Conclusion

After the parties reach an agreement, they outline the expectations of the way implementation of the agreement will take place. This may be in a form of a written contract. Politeness leading to a long-term relationship between the parties is desirable as well.

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