Your negotiation style should change depending on the situation. Learn four negotiation styles and when to use them.
You should be deliberate in choosing a specific style of negotiating. The way I encourage people to look at choosing a style is first, understand the importance of your relationship with the other party. The relationship can have low importance (somebody you’re just meeting for the first time and you won’t have an ongoing relationship with), or high importance (a strategic, long-term relationship).
The second thing you should consider is the importance of the outcome of that specific negotiation, from low importance (there’s not a lot of value on the table), to high importance (there is a lot of money for your organization or it’s a high-risk outcome). And what you end up with is a two-by-two matrix with four different negotiating strategies:
Split the Pie
In the lower left quadrant, the first strategy is “splitting the pie.” This style is effective when your relationship with the other party is unimportant. You’re not going to see this person in the future and the relationship doesn’t really matter. The outcome of the negotiation should also be unimportant when using this style. It’s not a big deal if you win the negotiation. For example: let’s say you’re a buying a souvenir from a street vendor when you’re on vacation. In this situation, you should consider the fact that you won’t see this person again, and it’s not a big deal if you get the best deal on your souvenir. So split the pie. Just find the middle point where both of you are happy and move on with your vacation. Haggling takes time, energy, and effort, so just split the pie.
Serve the Pie
In the lower right quadrant, you have a much higher importance of the relationship, but the outcome is still low in terms of its importance. We call this style “serving the pie.” You want to maintain the relationship. For example: let’s say you’re negotiating over payment terms. You want to get paid in 30 days and the customer wants to pay you in 60. This isn’t a big point economically and you could ruin the relationship if you fight over this disagreement. So in this situation, serve the pie. Give your negotiating partner what they want in the interest of maintaining or even strengthening your relationship.
Take the Pie
In the upper left quadrant, the style to use is “take the pie.” So the relationship has low value, but the importance of the outcome is high. In this situation, you want to extract as much value as you can and you’re not worried about the ongoing relationship. For example: let’s say you’re buying a car. That’s a high-dollar purchase and you’re probably not going to see the sales representative again in the future. So here, you should try to take the pie. Get as much value as you can out of that particular negotiation and don’t worry about the relationship.
Expand the Pie
The last quadrant in the upper right is “expand the pie.” The relationship is valuable, and you want to maintain and strengthen it. There’s value on the table and the importance of the outcome is high, so you should try to create new opportunities for both of you. This way, you can both get more value from the partnership. For example: if you’re purchasing a large IT system from a strategic vendor, you don’t want to ruin that long-term relationship since they’re going to give you ongoing support for the system. So find ways that you can add new features and give more value to your negotiating partner in exchange for them making more concessions for you. If you can put more revenue in their pocket, perhaps you’ll get a lower total price.
As you’re entering your next negotiation, think through the importance of the relationship and the importance of the outcome. Then, be deliberate about the negotiating style you choose. This could have huge implications for how much value you get out of that particular situation as well as how important and how strong those future relationships are going to be.
Want to learn more about strategic negotiation? How about taking an entire course on it? Check out the video below to learn more about the course and get started. Or you can go directly to the course and start learning how to assess and improve your strategic negotiation. The entire course is available at LinkedIn Learning. Enjoy!
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