Strategic Approaches to Contract Negotiation
The goal of contract negotiation is to come away with a deal that both sides can agree upon and to that end negotiators utilize various approaches or strategies. Negotiators may employ several strategies throughout one negotiation process. Negotiating strategies are intended to facilitate specific outcomes but may backfire, therefore, negotiators carefully consider the approaches they want to use during the planning phase and adjust as needed during negotiations.
A key thing to consider when choosing a negotiation approach is how it will impact the value of the contract in the long term as well as in the short term. Rather than focusing on claiming as much short-term value from the deal as possible, look for ways to create long-term value by collaborating with the other party.
3 Common Negotiation Strategies
There are a wide variety of negotiation strategies that are popular and frequently used because they are often successful and, while some seem counterintuitive, others just sound like plain old common sense. Here are three common examples:
The “I'm only asking for what's fair” approach. This method stresses to the other party that the desired terms are in line with industry standards, market prices, or best practices. It's then up to the other party to offer concessions for any exemptions that are made to the standard terms.
The “getting to yes” approach. This approach clears away all the clutter that can get in the way of an agreement by removing emotion from the problem-solving process, inventing multiple options that benefit everyone, requiring objective criteria, and knowing the best alternative to a negotiated agreement.
The “offer-concession” strategy. This strategy leaves room for negotiation in the initial offer to make the other party feel they've won something and to avoid revealing their bottom line.
Although many negotiations are competitive, finding collaborative solutions in negotiations can optimize the long-term value of an agreement. Creating value in negotiation requires a problem-solving mindset and knowledge of the other party's underlying interests. Negotiators can set a collaborative tone by demonstrating to the other party how they can assist them in meeting their long-term goals. By aligning their interests with the interests of the other party, negotiators create value for both sides.
Presenting a clear and comprehensive contract is a great way to showcase the value of a deal and can impact the outcome of the negotiation and the fulfillment of the agreement. Contracts should be detailed and polished to make a great impression. For the most professional-looking contracts and presentation materials, be sure to use a PDF file merger.
Choosing negotiation strategies that integrate the interests of both parties promotes collaboration and facilitates positive outcomes for both sides. Negotiation strategies that focus on claiming the most value from an agreement at the expense of the other party may have unforeseen consequences.
For assistance from experienced business professionals, join your local chamber of commerce.