Jul 8, 2020 | Blog
Ever wonder why contract negotiations are so hard? Overcomplicated legal language is partly to blame, but an unclear grasp of the negotiation process certainly doesn’t help matters. Contrary to what some might believe, negotiation is a science just as much as an art. And as with any science, there are a few steps you need to take in order to be successful. Here’s the entire negotiation process briefly explained.
Step 1: Planning
At the risk of stating the obvious, a certain amount of planning must happen before negotiations get rolling or contracts can be drafted. It’s at this stage you need to decide what you want to accomplish and how you want to go about it.
What do you want to walk away with following negotiations? What terms do you require, and what are you willing to compromise on? How will you present your terms? How will you build trust? What’s the plan should negotiations fall through?
These are just a few considerations to make before meeting with stakeholders and other involved parties, but they’re essential for success down the line.
Step 2: Discussing
In negotiation process management, the discussion phase is perhaps the most critical. Through sharing information, you’ll make four critical assessments about the other party:
Dependability – Are they trustworthy and honest?
Flexibility – Will they be willing to work with you, and will you be willing to work with them?
Competency – Are they credible?
Interests – Do your interests align with theirs?
The assessments you make will then determine (or at least guide) how the rest of the negotiation process will play out.
If you establish that your interests are not aligned, you can decide whether to halt talks or implement your BATNA (or Best Alternative to Negotiated Agreement). If positive values have been seen, you can confidently move forward with a proposal that will benefit you both.
Step 3: Proposing/Bargaining
Once you’ve met with the other party and have articulated your agenda, you can make your initial offer. Fully expect that it will be rejected. After all, they know you’ll likely reject their first proposals, too.
If these sound more like business pleasantries than anything, you’re not too far off the mark, but they’re important for establishing both the tone of the negotiations and the starting point.
Revised offers will follow – and this is where the real work begins. Negotiation process management takes time and concentration. Agreements require a lot of stakeholders to agree on both sides of the negotiation table. It could take anywhere up to a few months to get everyone on the same page, so buckle up.
You can help this process along, though, by:
Clearly stating your objectives
Finding spaces to seek and offer concessions
Truly listening to the other party’s suggestions
Paraphrasing to clarify proposals
Being open to giving and taking
Step 4: Reviewing
Negotiating management’s last step is all about closing and reviewing negotiations. Take a second to revisit your initial objectives. If the current offer on the table fits, now is the time to wrap it all up.
Of course, this requires tact like everything else in the process. Look for closing signals like fading counterarguments and converging positions, then review all the agreements and concessions that have been made. This will give all parties one more chance to ensure they’re happy with the outcome. You can then offer a quick closing statement, put everything down in writing, and be on your way.
Still unable to come to an agreement on contracts? Keep to these general guidelines and don’t forget to thank the other party for negotiating.
About Intellext™
Intellext is an AI startup that is revolutionizing the way contracts are negotiated, accelerating time to close, and improving deal terms. Intellext’s Intelligent Negotiation Platform™ eliminates the complexities of contract redlines and stakeholder collaboration and optimizes deal terms by applying machine learning during the negotiation process.