Negotiation skills: definition, importance, types, and tips

A negotiation involves two or more parties entering into a dialogue to reach an acceptable solution. It is a give-and-take process that usually requires compromise from each party. A negotiation may result in a contract, verbal agreement, or other forms of understanding.

In today's competitive Malaysian job market, strong soft skills can help you stand out from other job seekers. For example, a salesperson, account executive, real estate agent, or lawyer requires great negotiation skills.

As a job seeker, learning how to negotiate salary and benefits is crucial. It can result in a more favourable employment package for you. Similarly, negotiating with stakeholders, like clients or team members, is important. It can lead to more successful project outcomes. Additionally, negotiating your job scope with your employer is key. It ensures your responsibilities align with your career goals and strengths.

By enhancing your negotiation skills, you can navigate the complexities of the job market more effectively, securing better opportunities and achieving professional growth.

We explore negotiation skills in this guide and explain how to improve them. Here is what we will cover:

• What are negotiation skills?
• Why are negotiation skills important?
• Negotiation vs influence: What is the difference?
• What are the qualities of an effective negotiator?
• Tips for improving your negotiation skills
• Conclusion
• FAQs

What are negotiation skills? 

Negotiation skills are a toolkit for reaching mutually beneficial agreements. They are essential because they allow you to communicate effectively, understand different perspectives, and find common ground. These skills enable you to navigate complex interactions and build stronger relationships.

The key skills involved are:

• Communication: Clearly expressing your needs and understanding others
• Listening: Paying attention to what others are saying
• Problem-solving: Finding solutions that work for everyone
• Compromise: Being willing to give up something to reach an agreement

Negotiations can occur between departments, managers, and colleagues in the workplace or between company representatives and clients. Effective negotiation skills can help you achieve an outcome that benefits you.

Project managers may negotiate project specifications and deliverables with stakeholders, while employees may request flexible work arrangements. Even before you start working for a company, you might negotiate your job scope or salary with the hiring manager.

Below are a few situations where you might need to use your negotiation skills in the workplace:

• Negotiating a project timeline with your team leader or manager
• Negotiating a pay rise after a promotion
• Negotiating with your manager for a few days off to deal with family matters
• Negotiating contract terms with a client

Why are negotiation skills important? 

Negotiation skills can help companies achieve their business objectives. Let us look at a few reasons why negotiation skills are important in the workplace:

• Building relationships: People may have different perspectives. Negotiation skills can help you reach a mutually agreeable solution. These skills seek to create value and goodwill and build long-term relationships.
• Resolving conflicts: During a negotiation, the parties make concessions to arrive at a solution that respects their opinions and interests. This allows them to minimise the negative impact of a disagreement to achieve conflict resolution.
• Achieving goals: Good negotiation skills enable businesses to overcome problems that may prevent them from reaching their goals. They contribute to an environment of business success and increase the chances of future transactions.

The importance of negotiation extends beyond the confines of the workplace. Negotiating skills also provide practical advantages that can have a positive impact on your personal life. They can help you solve relationship problems, manage conflicts, and even get a salary increase or a better job.

Negotiation vs influence: What is the difference? 

People sometimes use the negotiation skills definition to explain influencing skills. But the two terms do not mean the same thing.

A negotiation seeks a two-way compromise. Influencing on the other hand, is one–way. It means to persuade someone to do something. Although you can use influence tactics within a negotiation, negotiating is not only about influencing the other party.

To understand the differences between negotiation and influencing skills, let us look at an example. Suppose you are attending a performance review where there is usually a discussion about salary. Since you have been doing your job well, your manager offers you a salary increase. You then make a counteroffer and reach a compromise. Here, you are using your negotiation skills to get a better offer.

Now, let us say you receive a poor performance review instead. Your manager does not think you deserve a higher salary, but you ask for it anyway. In this case, you need to influence or persuade them to give you a raise. You would have to present strong arguments, highlight your potential, and convince them of your worth despite the negative review.

What are the qualities of an effective negotiator? 

Here are several key skills that can make you a great negotiator:

Communication

Clear, concise, and persuasive communication is a vital skill during a negotiation. It enables you to eliminate misunderstandings and doubts that can prevent you from reaching a mutually agreeable solution. Also, make sure you use the right negotiation style for the specific situation. The five main negotiation methods are collaborating, compromising, competing, accommodating, and avoiding.

Emotional intelligence

Emotional intelligence is the ability to recognise another person's feelings and control your own. Understanding the emotional dynamics during a negotiation helps you maintain composure, build rapport, and focus on the core issues. Emotional intelligence is a critical tool for building trust and navigating challenging conversations.

Planning

It is essential to think ahead and devise a plan before a negotiation. You need to research the subject matter, determine your desired outcome, and anticipate counteroffers to prepare yourself well. You should also have at least one backup plan if you and the other party fail to reach an agreement.

Value creation

An effective negotiator focuses on creating value. This involves identifying shared interests and potential solutions that satisfy all parties involved. Try to come up with alternatives that cost you nothing and benefit the other party.

For example, a company could negotiate for 3 smaller weekly shipments instead of 2 larger ones to reduce warehousing costs. This could also benefit the supplier by providing a consistent workflow.

To create value, use negotiation templates and frameworks. These tools help identify mutual gains and guide the process to meet both parties' interests. You can find these templates in negotiation books, online resources, and professional training programs.

Expectation management

Expectation management involves finding the right balance between steadfastness and collaboration. During a negotiation, making sure that both sides have a clear understanding of each other's goals and expectations is important. If you cannot reach an agreement with the other party, you can try adjusting your expectations.

Patience

A negotiation can sometimes take a long time. This is especially so if it involves counteroffers and renegotiation. Avoid rushing into an agreement that could lead to a bad deal. A skilled negotiator practises patience and properly assesses the situation to find ways to achieve the best possible outcome.

Active listening

Active listening means focusing on the other party's opinions and expectations while waiting for your turn to speak. Understanding the perspectives of others enables you to stay engaged in the discussion and not miss important information. You can use techniques to recall details and concerns from a negotiation, such as clarifying questions and summarising.

Problem-solving

Problem-solving is identifying a problem, devising possible solutions, and taking the best course of action. Different problems may require different approaches. So, be open to compromise and find a solution that is agreeable to all parties.

Decision-making

A good negotiator is adept at evaluating options quickly and acting decisively. Being confident and assertive removes uncertainty and stress, which the other side of the negotiation can use to their advantage. For example, if you experience analysis paralysis or decision fatigue in a negotiation, you might accept unfavourable terms to escape the stressful situation.

Tips for improving your negotiation skills 

So, what do successful negotiators do to hone their skills? Check out these helpful tips on how to improve negotiation skills:

Create a system to keep track of your negotiation skills

To become a good negotiator, take advantage of every opportunity to practise your negotiation skills. After each negotiation, reflect on what went well and what did not. Analyse your performance and identify areas for improvement, such as communication and emotional control.

Also, consider other approaches you could have taken and their possible outcomes. To keep track of your negotiation skills, maintain a detailed record of successful and failed negotiations.

Master value creation

In negotiations, a fixed pie means that one side wins and the other loses. Adopt a collaborative approach rather than a fixed-pie mentality. This will help you improve your value-creation skills. Learn how to identify the underlying interests of both parties involved and frame concessions to move towards a mutually agreeable outcome.

Manage your emotions and understand others

An effective negotiator can regulate their emotions and stay composed under pressure. Practise self-awareness to recognise your emotions and try to keep them under control. It is also important to develop empathy to help you understand the other party's emotions and respond constructively.

Build confidence

Thorough preparation makes you feel ready and confident. You can prepare for a negotiation by doing research, setting clear goals, and anticipating potential challenges. Celebrating little and big negotiation wins can also help bolster your confidence.

Sharpen your skills

There are many things you can do to sharpen your negotiation skills. Practise negotiation in low-stakes, role-play situations with your family and friends. Participate in debates and discussions to improve your communication and persuasion skills. Articles, books, online courses, and other educational resources also help in honing the skill.

Conclusion 

Good negotiation skills can be beneficial for most roles within an organisation. They are especially important if your job requires you to regularly negotiate with suppliers, clients, or stakeholders.

As an effective negotiator, you can help your company secure favourable terms in contracts while maintaining long-term relationships with clients or vendors. This can increase your value to your employer and benefit your career.

To become a great negotiator, you need to develop soft skills such as communication, active listening, problem-solving, planning, emotional intelligence, and decision-making. Additionally, you can improve your negotiation skills by controlling your emotions, mastering value creation, practising negotiation, reading books and articles, attending an online course, and keeping track of your progress. Start building your negotiation skills now to open doors to your desired goals.

FAQs 

1. What are the key skills for successful negotiation?
   The key skills you need to become a successful negotiator are:
   Communication
   Planning
   Problem-solving
   Emotional intelligence
   Active listening
   Decision-making
   Patience
   Expectation management
   Value creation
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2. How can I prepare effectively for a negotiation?
   To prepare effectively for a negotiation, research thoroughly, set clear goals, anticipate counteroffers, and devise one or more backup plans
   ⁠
3. What are some common negotiation mistakes to avoid?Making a conscious effort to avoid negotiation mistakes can increase your chances of success. According to Harvard Law School, common negotiation mistakes include:
   Failing to prepare thoroughly
   Focusing on competing instead of collaborating
   Relying too much on cognitive shortcuts
   Letting your emotions get the better of you
   Taking ethical shortcuts
   ⁠
4. How can I deal with difficult personalities during negotiations?Sometimes, you may find yourself negotiating with domineering, aggressive, or unreasonable people who cannot control their emotions.
   Here are some tips for dealing with challenging personalities:
   Know your boundaries
   Prepare solutions beforehand
   Hold the meeting in a private setting
   Stay calm before the meeting
   Make sure the other party is aware of the consequences
   Be assertive
   ⁠
5. What tactics can I use to create value for both parties?Using collaborative negotiation rather than a fixed-pie approach is essential for creating value for both sides. Understand the interests of both parties deeply and develop a well-planned concession strategy that leads to mutually beneficial solutions.
   ⁠
6. How can I improve my active listening skills for negotiation?
   Follow these tips to become a good listener in negotiations:
   Focus on the intent of the discussion
   Avoid making judgements
   Pay attention to body language
   Give encouraging verbal cues
   Clarify and paraphrase information
   Share a summary of what the speaker has said
   ⁠
7. What are some tips for managing emotions during negotiations?Be mindful of your emotions to keep them under control during a negotiation. When your emotional temperature gets too high, calm yourself down by taking a deep breath, thinking positive thoughts, diverting your focus, or taking a break.
   ⁠
8. How can I build confidence in my negotiation abilities?To become a confident negotiator, learn how to plan before a negotiation. Study the subject matter in detail, determine the outcome you want, and consider any potential obstacles that may come up. Doing your homework beforehand can help calm your nerves. You can also build confidence by rehearsing your talking points in front of the mirror or with a friend or mentor.
   ⁠
9. What resources can help me learn more about negotiation skills?There are plenty of resources to help you with your negotiation training, such as books, articles, videos, podcasts, and online courses.