Negotiation is part of daily life—whether buying a car, leasing property, aiming for higher compensation, raising capital for a startup, or making difficult decisions as an organizational leader.
“Enhancing your negotiation skills has an enormous payoff,” says Harvard Business School Professor Michael Wheeler in the online course Negotiation Mastery. “It allows you to reach agreements that might otherwise slip through your fingers. It allows you to expand the pie [and] create value, so you get more benefits from the agreements that you do reach. It also—in some cases—allows you to resolve small differences before they escalate into big conflicts.”
Here's an overview of the negotiation process’s four steps and how to gain the skills you need to negotiate successfully.
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DOWNLOAD NOW4 Steps of the Negotiation Process
1. Preparation
Before entering a negotiation, you need to prepare. There are several things to define, including your:
- Zone of possible agreement (ZOPA): The range in which you and other parties can find common ground. To establish the ZOPA, think about your perspective and your counterpart’s. What do you each want and need? Where might you be willing to compromise?
- Best alternative to a negotiated agreement (BATNA): Your ideal course of action if an agreement isn’t possible. To determine your BATNA, consider alternatives that provide some of the value you aim to gain from the negotiation. In Negotiation Mastery, Wheeler gives the example that if you can't negotiate down a new car’s price, your BATNA may be to have your old car repaired.
- Walkaway: The line where ending negotiations is better than making a bad deal. Use your BATNA to determine your walkaway. At what point would the BATNA provide more value than a possible negotiated outcome? That’s your walkaway.
- Stretch goal: The best-case scenario for the negotiation’s outcome. It’s critical to give the negotiation a potential ceiling to gauge offers. In Negotiation Mastery, Wheeler recommends choosing a scenario that’s unlikely but not impossible; something that has a 10 percent chance of occurring.
Preparing in advance can improve your confidence, give you clear goals to work toward, and provide a strategy to base your approach on.
2. Bargaining
The second step, bargaining, is what most often comes to mind when thinking about negotiation. Yet, before discussions even begin, there are three levers that determine how the bargaining stage will play out:
- Engaging (the “who”): How do you engage with each other? Is this a friendly conversation, or do you fall into enemy territory?
- Framing (the “what”): How do you define the negotiation? For instance, is it a battle, partnership, or problem to be solved together?
- Norming (the “how”): How do you relate to one another? What behaviors are established that characterize the negotiation?
You typically define these levers in a negotiation’s first few minutes simultaneously. You negotiate the “who,” “what,” and “how” implicitly as the broader negotiation happens explicitly.
How do you and other parties enter the room? Do you greet each other warmly and make small talk, or is there immediate tension? How do you first mention the negotiation? What norms do you imply during the conversation?
Through these levers, you can establish the negotiation’s tone, which is vital as you head into it with someone who may greatly differ from you.
Your counterpart may have different preferences, expectations, risk tolerance, and time horizons. The bargaining stage is about creating value for both you and other parties despite your differences. It requires finding the ZOPA and working within that space to claim the value needed to make the negotiation worthwhile.
“There’s a fundamental tension between creating and claiming value,” Wheeler says in Negotiation Mastery. “Negotiation isn’t one or the other—it’s both at the same time.”
Related: 7 Negotiation Tactics That Actually Work
3. Closing
The third step in the negotiation process is closing—either coming to an agreement or ending the negotiation without reaching one.
How a negotiation closes depends on each party’s walkaway, BATNA, and ZOPA. It also relies on how you use engaging, framing, and norming to create a relationship with the other parties.
If you can’t reach a solution in the ZOPA, perhaps one or more parties decide to go for their BATNA instead. If you and the other parties create and claim value, you may strike a deal.
4. Learning from Your Experience
The final step of the negotiation process is possible to overlook but critical to your ongoing growth: Reflect on your experience. What went well? What went poorly, and why? How do you feel about the outcome?
No two negotiations are the same. The foundational elements can vary (such as the scenarios and people involved), as well as the finer details (for instance, people’s demeanors, emotions, walkaways, and BATNAs).
Reflecting on the process enables you to get to know yourself better as a negotiator and integrate your learnings into your next negotiation.
What Skills Do You Need for Successful Negotiation?
Even after learning about the negotiation process, negotiations can still feel intimidating. To gain confidence, it can help to understand the skills that great negotiators possess.
The best negotiators are strong communicators with high emotional intelligence. Developing your skills in those areas can help you form connections with counterparts and communicate goals. They can also enable you to craft a strategy and remain agile as a negotiation progresses.
“Great negotiators have keen analytical skills,” Wheeler says in Negotiation Mastery. “They assess the matter at hand and craft strategy that best fits those particular circumstances. They know that with negotiation strategy, one size doesn’t fit all.”
Finally, you must create value. As Wheeler puts it in the course: You know how to “expand the pie” rather than argue for a bigger slice—creating value for everyone involved while still achieving your goals.
To learn more about the skills needed for successful negotiation, check out the video below and subscribe to our YouTube channel for more explainer content!
How to Become a Better Negotiator
Familiarizing yourself with the negotiation process and what each step entails can demystify it and help you feel more comfortable.
The best way to improve your negotiation skills is through practice. This can take place in real life through interactions like determining a lease’s terms or asking for your desired salary in job interviews.
If you’d prefer to practice in a supportive learning environment, consider enrolling in an online negotiation course featuring virtual simulations.
In Negotiation Mastery, Wheeler leads you through negotiation practice by pairing you with other learners for mock negotiations. He then debriefs each scenario so you can reflect on it and integrate the insights into future negotiations.
Through thoughtful preparation and dedicated practice, you can strengthen your skills and create value in any negotiation.
Do you want to deepen your understanding of negotiation dynamics? Explore our eight-week online course Negotiation Mastery, one of our online leadership and management certificate programs. Not sure which course is right for you? Download our free flowchart.
