Magazine article The CPA Journal

Negotiation Strategy: Planning Is Critical

Magazine article The CPA Journal

Negotiation Strategy: Planning Is Critical

Article excerpt

In the past quarter century, a great deal of effort and scholarship has been devoted to developing negotiation theory and practice to move beyond competitive negotiation and toward real problem solving. With problem solving, or interest-based bargaining, parties look at their underlying interests rather than merely asserting positions and demands. Together they search for solutions to meet those underlying interests while making concessions consistent with their own needs and concerns.

To do this, negotiators must recognize that needs and interests frequently differ, and reflect different values, concerns, and motives. These differences allow the negotiation to become an inquiry to find differing needs and the solutions that will satisfy them. While problem-solving negotiation often deals with money, as most negotiations do, it can become one element of a solution that has many other aspects. Negotiation is a side-by-side dialogue where parties can trade on their differences, rather than a battle over a limited resource.

It's usually a mistake to approach negotiation as a casual encounter without much forethought. Such sessions are likely to become reactive and meandering meetings rather than being proactive with specific goals in mind. Lack of planning often appeal's at the negotiating table as too much reliance on demands and ineffective attempts to persuade the opponent. Good planning, based on the five strategies below, can provide a negotiator with the direction needed to do effective problem solving at the negotiation table.

Decide on Priority Interests and Rank Them

To make the most of the negotiating sessions, each party should initially decide upon its goals for the session. What interests underlie the current demands that have been made? Is it only money? Is it a continuing relationship or an enhanced business relationship with the other side? Is it a resolution of this matter, which may be disrupting other business? Is it recognition of the validity of one's claims or status? Or is it the harm caused by the other side? After identifying its goals, each party should determine the priorities of these items. Negotiation is, after all, a matter of both parties conceding and reaching a solution. The key to interest-based concessions is to trade items of less importance in order to secure items of more importance.

Assess the Other Side's Priorities

Each party to a negotiation should spend some time in the other party's shoes, imagining what the other side might really want to achieve. The more one can understand the values, needs, and issues from the other side's perspective, the better the chance of guessing at what they might want as their priority needs.

It is beneficial to make such guesses, because human imagination, when considering the reality of the other side's position, can lead to creative thinking about possible solutions outside of purely monetary exchanges. Educated guessing can lead to ways to meet both parties' most important needs in a way that both sides win. For example, consider a client who is upset with an actual mistake made by a firm's junior accountant that cost the client $5,000. What does this client really want? Most likely it wants to be made whole, and that typically assumes a present outlay of $5,000. But what might be equally important to this client is an explanation and an apology. One solution option might be an explanation of how the mistake occurred, coupled with a promise that only a senior associate will treat the client's affairs in the future, as well as a year of free service worth $2,500, plus a present payment of $2,500. This solution can salvage the business relationship, shows good faith in acknowledging the mistake of a junior associate, and limits monetary outlays in the long ran.

Guessing may not always lead to the right answers. Even so, this analysis can identify potential nonmonetary solutions and get the ball rolling during the negotiations. …

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