Business Negotiation Principles and Techniques

When we think of negotiations, we may associate them with resolving a conflict. This is because the term 'conflict negotiation' appears frequently in the media. Before we continue, let us briefly discuss the intersect between 'conflict' and 'negotiation'.

Conflict often occurs when individuals in an organisation have different ideas, beliefs or theories regarding business operations. Conflict may also be experienced by business owners and managers when they are bargaining or negotiating with individuals or other organisations. Negotiation is the process of discussing each individual’s position about a topic and attempting to reach a solution that benefits both parties. Conflict and negotiation are usually more prevalent in larger business organisations since more individuals are involved in the company’s operations¹. You can see from this description that conflict is not necessarily a negative experience but can point to a situation where problem-solving techniques may be required to negotiate a solution to an identified situation, problem or issue.

Negotiations can occur at different levels of complexity in an organisation.

Business negotiations

Business negotiations refer to a process or dialogue between two or more ‘parties’ representing an organisation or organisations. For example, when one business negotiates a sale of their business to another entity. They will have their own needs, interests, objectives, and views and are seeking to find a common ground and mutual understanding about a matter of mutual concern or interest. In a business context, and at its most basic, business negotiations are generally negotiations between ‘corporate entities, their vendors or their employees.

Workplace negotiations

As humans, we negotiate on a daily basis, at home and at work. There are three main business contacts with whom you will regularly negotiate.

You may also negotiate with a network contact to provide a product or service to your organisation. Negotiation and problem-solving can occur as the result of a conflict situation or may just be a standard interaction to establish a business relationship or negotiate a contract/service level agreement. In this topic, we focus on negotiating as it relates to networking, routine situations that occur in the workplace, and with your business contacts. To do this successfully requires:

• understanding what is meant by establishing rapport to establish, maintain, build and improve business relationships.
• using communication techniques to establish rapport with business contacts.
• using problem-solving techniques to negotiate solutions to identified situations.
• communicating issues regarding relationships in writing and verbally
• using the RIPPLE model to develop longstanding networking relationships.

Let's start with a brief discussion on the importance of rapport.

Creating rapport is essential to establishing and maintaining good relationships with suppliers, clients and colleagues (and others in your networks).

What is rapport?

Establishing rapport with business contacts is an important way to maintain business relationships within your networks. So, what is rapport? Rapport is the ability to relate to others in a way that creates a level of trust and understanding. Establishing rapport with business contacts is an important ingredient of successful business relationships and required at all stages of the business relationship.

Rapport is also needed to establish connections and build genuine understanding with a diverse range of people both at work and within your networks. It also aids in cultivating relationships with people who have the knowledge, skills and influence to get things done or provide support. It is important to build rapport not only with your work colleagues to ensure a harmonious and productive work environment but also with your clients, customers, service providers and others in your business networks. The way in which you communicate or engage with people will help or hinder the rapport you develop with others.

Let's revisit the three key groups that will form the basis of most of your networks and business contacts and with whom you need to establish rapport at all stages of the business relationship.

Suppliers

Suppliers are an important business contact since the quality of the products and services the organisation provides depends upon the supplier's product quality and/or their ability to deliver on time.

Establishing the relationship

Establishing good business relationships with suppliers involves doing the following:

• Get to know the supplier: Meet with them and find out about their processes, the extended supply chain and how this may affect the organisation's schedule.
• Update the supplier: If key aspects of the organisation change that may have an impact on external stakeholders (for example, a change in management or internal processes such as how accounts are processed) it is a good idea to keep suppliers up to date.
• Refer them to other contacts: The act of referring business network contacts to other businesses or services that may benefit them is known as providing a referral. It is an important aspect of networking and building effective business relationships.

Maintaining, building and improving the relationship

Once a relationship between the organisation and the supplier has been established, you can use the following strategies to maintain, build and improve the relationship:

• Avoid rush orders: These place stress on the relationship as sufficient time for the manufacturer and/or supply of goods is often not possible, and products may not be of high quality.
• Release payments on time: Late payments create bad impressions on the supplier and may gravely affect their cash-flow. Timely payments and communicated delays help build trust and enable better deals to be negotiated with the supplier.
• Keep in touch regularly: Meeting face-to-face with the supplier allows for the supply of information about organisational changes as well as finding out about the supplier's plans for development and expansion.
• Address any issues promptly: Issues that are left unresolved can damage the long-term relationship and need to be dealt with promptly.

Clients and customers

Clients and customers are how organisations obtain and increase their revenue, so after the relationship has been established the organisation needs to continue its focus on building and maintaining relationships with them.

Establishing the relationship

Establishing the relationship is done through providing a product or service desired by the client or customer. Simple tips to developing rapport when establishing the relationship include the following:

• Ensure appointments are kept and attendance is punctual.
• Smile and be courteous and friendly at all times.
• Use the customer's name where appropriate.
• Ask questions to identify the customer's needs.
• Explain how the business can benefit them.
• Always follow-up as promised.
• Keep people informed of any delays or difficulties.

Maintaining, building and improving the relationship

Customers are how organisations get and increase their revenue, so effort should also be focused on building and maintaining relationships with them. The following strategies for establishing good relationships with customers are recommended:

• Promotional activities: Creating social media channels establish customer relations by having the organisation actively interact with the customers and encourage them to try the products and services offered.
• Respond to enquiries: Timely responses to enquiries through emails and online chat services help develop a reputation for client care and fosters customer loyalty. Customers will then be quicker to take advantage of services and reward programs.
• Address any issues promptly: Issues that are left unresolved can damage the long-term relationship and need to be dealt with promptly.

Having loyal customers boosts revenue simply because they enjoy the products and services that your organisation provides. They also boost revenue because they may refer your organisation to others. That is why, once you have established a relationship with customers, you must strive to maintain it:

• Ask for feedback through polls and surveys: Polls and surveys allow customers to let the organisation know what they like and dislike about the products and services being offered. This provides the organisation with valuable insight to help them improve its operations and retain customers.
• Offer rewards such as loyalty programmes: Loyalty programmes keep customers happy and serve as encouragement for them to return to the business.

Colleagues

Establishing and maintaining relationships with colleagues is known as 'internal networking'. Having a good relationship with colleagues is essential. Support can be offered to assist people with difficult tasks and problems/challenges can be solved through collaboration.

Establishing the relationship

To establish a relationship with your colleagues, you can try the following strategies:

• Be friendly: Try to smile and be attentive to them. When you look welcoming, your colleagues will feel more inclined to talk to you and share information. Like all interactions, you should speak to your colleagues politely, but do not be too formal. Try to keep your tone relaxed and aim for a casual yet respectful interaction.
• Invite them out for lunch: Interacting with your colleagues should not be limited to professional settings only. Try asking them out to eat lunch with you every now and then so you can chat about topics that are not strictly work-related. If you have any common hobbies, you can also invite them to events that cater to both of your interests.
• Welcome new colleagues: Greet newcomers and offer them help if they need it. Colleagues who are new to the organisation, to the department, or even to the job typically need guidance not only on their work tasks but also to the company culture in general. You can give them useful tips about the workplace to ease their nerves.

Maintaining, building and improving the relationship

Maintaining a good relationship with colleagues is not that difficult if you are already friendly with them. To further develop your relationships, you can:

• Seek and offer help: Utilise your network by asking for help on tasks you find too challenging to complete on your own. Your colleagues can give you their insight and experience, which will make your workload easier to handle. However, remember that networking is for mutual benefit. Assess your skills and experience and, if a colleague seems to be having trouble with their tasks, you can offer your help.
• Socialise online: If permitted by organisational policies, you can chat with your colleagues outside of work hours through social networking sites. This means your interactions are not limited to just inside the workplace, and you can develop genuine friendships with them by updating them and getting updates about your personal lives.

Scenario

Robert is meeting with the accounting team and the business development officer to have an informal discussion about establishing business relationships. Robert explains that when he was first starting up Ace Finance, he only had a small number of clients. He joined networking groups which introduced him to a lot of people and quickly grew his database of clients. After 12 months he had enough to justify recruiting two junior accountants. He thought carefully about what he had learned about establishing business relationships and realised that being able to establish rapport quickly and genuinely was key to his success. To continue growing the business he needed others, who like him were 'people' people. His job advertisements listed rapport and interpersonal and communication skills as key requisites for succeeding at Ace Finance. Candidates were asked to cite examples of where they demonstrated rapport in their interviews. He believed these as much as the technical skills would be required to establish business relationships and then to maintain, build and improve the relationships (if and when problems arose).

Complete the following short quiz on client relationships (1 question)

Effective communication can help develop rapport, keep negotiations on track, help cement relationships, build trust between all parties to the negotiation and ensure everyone fully understands their rights and responsibilities. Effective, honest, and transparent communication will also help avoid conflict and assist in the resolution process if a conflict occurs.

General Communication Techniques

There are general communication techniques you can apply to build rapport when networking. Rapport refers to establishing a connection or emotional bond. Doing this allows you to improve your professional relationships. You may already be familiar with some of the following techniques, however, it important they are reinforced due to their importance in establishing rapport at every stage of building and maintaining business relationships.

Listen actively

Similar to when you first contacted them, you should listen actively to the other person. Paying attention to them during conversations allows you to be fully aware of what they are saying. If your focus is somewhere else, you may be missing important updates from your supplier, valuable feedback from the customer, or good advice from a colleague. Maintain eye contact with the other person and ask them to clarify their statements when necessary. Asking relevant questions and summarising what they have said lets them know that you care about what they say and want to understand them more clearly.

Use humour appropriately

Laughing with someone can make you feel closer to that person, so adding humour into your interactions is one of the fastest ways to build rapport. Before doing so, assess the situation to check if using humour is appropriate. Is it okay to make a joke based on the context? For example, if a customer has a complaint about a product, humour must be avoided. Humour also varies depending on people’s cultural backgrounds. You may find certain jokes funny, but a colleague from a different country may find it offensive. As a general rule, do not make jokes at other people’s expense. You can also wait and see what type of jokes the other person makes before you include humour into your conversation.

Be aware of your body language

Nonverbal communication is a major part of any conversation. It conveys emotions and provides people with cues to reinforce what you are saying. Nonverbal communication can be unconscious, so without realising it, you may be giving cues that portray the opposite of what you mean. Therefore, you must be aware of how to convey the appropriate body language. Remember to control your body movements like hand gestures and nodding, posture, eye contact, and facial expressions. Generally, you should keep your posture open to convey your interest and attentiveness.

You can also use body language to emphasise certain points. If you are saying something you want the other person to remember or agree with, you can have them associate you nodding your head or gesturing your hand with your message. Later, when they remember your movements, they can also easily recall what you said. You may also try mirroring to establish rapport. This is when you subtly copy some of your contact’s gestures while talking to them. Make sure to remember not to replicate any gestures or traits that are unique to them, as copying them obviously can be misinterpreted as mocking them. You also need to be aware of personal space. Everyone has a personal space ‘bubble’ around them, and if you enter this bubble, the person can feel uncomfortable. The sizes of these bubbles vary on a cultural basis, and even on an individual basis, but there are four zones you should be aware of, as theorised by Hall shown below.

1. Intimate distance. This zone ranges 15-45cm away from you or even closer. It includes physical touching and is reserved for persons who are very close.
2. Personal distance. This zone ranges 45-120cm away from you. This is the space in which you interact with your closest friends and family.
3. Social distance. This zone ranges 1.2-3.5m away from you. This is the space in which you have most conversations with friends and acquaintances.
4. Public distance. This zone ranges 3.5-7.5m away from you. This is the distance strangers maintain between each other.

If you have colleagues you are close to, you can stay within their personal distance. However, when interacting with your business contacts, maintaining social distance is the best option to prevent making anyone feel uncomfortable.

Creating rapport in written communications

It is important to establish rapport in your written communications. You will need to balance formality and friendliness. Ways to create rapport with a network contact via email (for example) include:

• responding to all communications, even if only to say you are busy but will get back to them.
• following through on anything you offer or agree to do.
• maintaining a friendly yet respectful manner
• asking for opinions and input
• offering your support and assistance
• showing you understand their needs by only providing relevant information.
• communicating regularly (staying in touch)
• ensuring written communication is error-free. Free apps such as Grammarly can help by providing digital writing assistance, including spelling, punctuation and other common errors in the text (for example, misused commas).

Just as with face-to-face communications, rapport can be built by mirroring the contact’s writing style.

Communication styles

Communication styles are the ways people interact with each other. It is important to learn about these to be able to identify your business contacts’ communication styles. Knowing their communication styles allow you to adjust your own style and interact with them more effectively. The following are the main communication styles⁵:

COMMUNICATION STYLE	CHARACTERISTICS
Passive	Does not express their feelings. Agrees to others’ decisions without sharing their own opinions. Has difficulty saying ‘no.’
Aggressive	Often blames, criticises, and threatens others. Dominates the conversation to make everyone agree with them. Issues commands without listening to others.
Passive-Aggressive	Mutters instead of speaking directly. Appears cooperative but may sabotage others. Acts out in indirect ways.
Assertive	Considers everyone’s needs and opinions. Expresses themselves directly and openly. Avoids blaming others.

People do not necessarily fit into just one communication style. A person’s communication style can also change depending on the situation they are in or who they are talking to. The most effective communication style is assertive, but other communication styles can be useful in certain contexts, too.

Being passive can be useful in tense situations. For example, if a customer is getting angry, being sympathetic and just acknowledging their feelings can help defuse the situation. Being aggressive also has its merits, too. In workplace crises, being aggressive and taking charge can help your colleagues come to a decision as quickly as possible. Regardless of the communication style you choose, remember to speak clearly and politely, without unnecessarily criticising other people.

Complete the following short quiz on communication styles (1 question)

You’ve come to the end of this topic, well done! Before moving on to the next section be sure to complete all the exercises and go back over any linked videos and articles if you need to.