How to Negotiate: The Basics of Negotiation
Summary
TLDRThis video discusses the essential negotiation skills for project managers, emphasizing its growing importance in the profession. It introduces a five-step negotiation process: preparation, opening, bargaining, closing, and follow-up. Viewers learn how to prepare thoroughly, make a strong first impression, build rapport, and ensure both parties achieve a satisfying outcome. The video highlights key tactics, such as defining ideal outcomes and recognizing authority, ensuring successful negotiations in project management. By following this structured approach, project managers can confidently navigate complex negotiations and achieve successful results.
Takeaways
- 😀 Project managers have always needed negotiation skills, and it's increasingly recognized by professional bodies like PMI.
- 💼 PMI now includes negotiation as part of the PMP exam, starting in January 2021, under domain one (People) and task 8 (Negotiating Project Agreements).
- 🔄 Negotiation is a process aimed at finding an agreement that satisfies all parties, ensuring integrity in the process.
- 📝 Proper preparation is key to a successful negotiation, including defining goals, outcomes, and knowing your BATNA (Best Alternative to a Negotiated Agreement).
- 🔍 Research is crucial—project managers should know the context, players, history, and facts surrounding the negotiation to be well-prepared.
- 🤝 Building rapport and making a strong first impression at the opening of negotiations are essential for success.
- 📜 Defining the scope and sequence of the negotiation early on, including setting ground rules and administrative details, ensures smooth proceedings.
- ⚖️ The bargaining phase includes multiple offers and counteroffers, with the goal of reaching a mutually acceptable outcome through concessions and agreements.
- ✅ Closing involves summarizing agreements, ensuring that all issues have been addressed, and making the formal offer for final acceptance.
- 📝 Follow-up is critical—both parties must adhere to agreed-upon actions, document the deal, and maintain professionalism through post-negotiation courtesy.
Q & A
Why is negotiation an important skill for project managers?
-Negotiation is an important skill for project managers because they need to negotiate with various stakeholders such as sponsors, bosses, clients, suppliers, contractors, and consultants. It is a crucial part of their role and is increasingly recognized by important bodies like the PMI.
When did the PMI decide to include negotiation in the PMP examination content?
-The PMI decided to include negotiation explicitly within its examination content outline for the PMP qualification starting from January 2021.
What are the two important parts of the definition of negotiation mentioned in the script?
-The two important parts of the definition of negotiation are that it is a process and that it involves searching for a solution that will satisfy all parties involved.
What are the five components of the negotiation process for project managers?
-The five components of the negotiation process are preparation, opening the negotiation, bargaining, closing the negotiation, and following up on the negotiation.
Why is preparation crucial before entering into a negotiation?
-Preparation is crucial because it helps to define the scope of the agreement, set goals and objectives, and determine the ideal, acceptable, and minimum outcomes. It also involves researching the context and players, and planning the negotiating strategy and tactics.
What are the three levels of outcomes one should consider before a negotiation?
-The three levels of outcomes are the ideal outcome, the acceptable outcome, and the bottom line. The ideal outcome is the best reasonable result one could achieve, the acceptable outcome is a satisfactory result, and the bottom line is the minimum outcome one is willing to accept.
What does BATNA stand for and why is it important in negotiations?
-BATNA stands for 'Best Alternative To a Negotiated Agreement.' It is important because it helps define one's bottom line and provides a fallback option if the negotiation fails.
What are the seven things that must be covered at the opening of a negotiation?
-The seven things to cover at the opening of a negotiation include making a good first impression, building rapport, checking the authority of the other party, agreeing on the basis for the meeting, setting admin and ground rules, discussing each party's ideal outcome, and potentially leading with the seller's outcome.
What are the phases that the bargaining stage of negotiation goes through?
-The bargaining stage goes through phases where parties put forward positions, exchange ideas, make offers and counteroffers, request and offer concessions, and sometimes get stuck or find ways to get unstuck.
How do you know when to close a negotiation?
-You know it's time to close a negotiation when both parties feel close to an agreement, most matters have been discussed, and there are agreements around all the details.
What are the two things you should discuss after closing a deal in a negotiation?
-After closing a deal, the two things to discuss are the logistics of what comes next and pleasantries to maintain good relationships.
Outlines
🤝 The Growing Importance of Negotiation in Project Management
Project managers have always negotiated with various stakeholders like clients, sponsors, and suppliers. The importance of negotiation in project management is being emphasized more by institutions like PMI, which has included it in the PMP exam starting in 2021. The negotiation process is about finding a solution that satisfies all parties and follows a clear process. The key takeaway is that if you follow the process, even if you're unsure about your negotiating skills, you will likely achieve a good outcome.
🔍 Understanding the Negotiation Process
Negotiation is a structured process involving five key stages: preparation, opening, bargaining, closing, and follow-up. Preparation is essential, where you outline your goals and objectives, identifying three levels of outcomes—ideal, acceptable, and bottom-line. You also need to know your BATNA (Best Alternative to a Negotiated Agreement) to set your minimum acceptable outcome. Additionally, research and strategy are crucial elements of preparation, involving gathering facts and planning concessions and tactics.
🚪 The Opening Stage of Negotiation
The opening stage involves making a strong first impression, building rapport, and ensuring the other party has the authority to make a deal. Setting the ground rules, defining the scope of the negotiation, and sharing ideal outcomes are crucial steps. It’s best to let the other party share their ideal outcome first if possible, especially if they’re in the seller’s role. The opening sets the tone for the entire negotiation.
💬 The Bargaining and Closing Stages of Negotiation
The bargaining stage involves both parties presenting their positions, making offers and counteroffers, and potentially making concessions. It can involve moments of stagnation but ends when both sides reach near-agreement. The closing stage involves reviewing all points of the agreement and making a final offer. A 'trial close' is used to gauge readiness, and if positive signals are received, the formal offer is made. Avoid introducing new information after closing the deal to prevent doubt.
📝 Following Up After the Deal
After closing the deal, follow-up is crucial. You need to document the agreement, share it with both parties and internally with relevant teams. Showing appreciation to colleagues and the other party is a professional courtesy. The key is to complete all agreed-upon actions promptly and avoid bringing up new negotiation points after the deal to maintain trust and avoid reopening the discussion.
Mindmap
Keywords
💡Negotiation
💡Preparation
💡BATNA
💡Bargaining
💡Concessions
💡Closing
💡Follow-up
💡Authority
💡Rapport
💡Ideal Outcome
Highlights
Negotiation is an essential skill for project managers.
PMI now includes negotiation in its PMP qualification exam from January 2021.
Negotiation is defined as a process to find an agreement that satisfies all parties.
The negotiation process consists of five components: preparation, opening, bargaining, closing, and follow-up.
Preparation is critical and involves defining ideal, acceptable, and bottom-line outcomes.
Understanding your BATNA (Best Alternative To a Negotiated Agreement) is key to defining your bottom line.
Research and strategy are important parts of preparation for successful negotiation.
The opening phase of negotiation should cover seven key points, including making a good impression and building rapport.
Checking the authority of the other party is crucial during the opening phase.
Agreement on the basis for the meeting is necessary to set the stage for negotiation.
The bargaining stage involves exchanging positions, offers, counteroffers, and concessions.
The close stage involves summarizing progress, checking all issues are covered, and making a formal offer.
A trial close can be used to gauge readiness to agree the whole package.
Once the deal is closed, it's important to confirm and record the decision without introducing new information.
Follow-up after closing the deal includes logistics, documentation, and thanking involved parties.
Negotiation is a straightforward process, though individual situations can introduce complexity.
The video aims to make viewers feel confident about managing negotiations for successful outcomes.
Transcripts
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
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of it and I look forward to seeing you
in the next video
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