Negotiation is a part of everyday life and is an important skill to hone especially if one is running a business. Construction business owners will engage in negotiations daily, for example, when employing a new employee, securing a new contract or client, negotiating prices with suppliers, hiring equipment, buying or selling equipment, property lease, sale agreements, wage negotiations, budget negotiations, loan negotiations, dispute resolution, etc.

It is important to understand the objectives of negotiation and identify some of the tactics used and how to respond to them. The process of negotiation is aimed at arriving at an agreement for mutual gain. No one negotiates for a loss.  Some negotiators incorrectly assume that they need to negotiate to gain everything at the other party’s expense. This often leads to distrust, an impasse, or a situation where everyone loses.

The objective of negotiations between parties should ideally be to find common ground and establish a win-win situation. This requires acting with informed judgment in a process that requires flexibility, transparency and trust. A practical example illustrating the contracting/negotiation zone is the simple purchase of machinery. The seller may have listed a piece of machinery for R100,000 but the buyer may want to pay R80,000. The contracting/negotiating zone may be between the R85,000 and R95,000 price range.

In instances of disputes, negotiations without prejudice are beneficial. If both parties are keen to reach an agreement, negotiation can provide a speedy resolution of disputes without the costly exercise of court actions.  In a negotiation, as opposed to a court action, the parties have some control over the outcome. At a court, the presiding officer decides a verdict after hearing the evidence.  Furthermore, resolving a dispute through a negotiation is beneficial if a continuous relationship is envisaged by the parties.

In negotiations, one may encounter hardball tactics. In dealing with these hardball tactics, you may want to consider the following:

• The common strategy in dealing with hardball tactics is not to be intimidated by an aggressive negotiator and to focus on what you are trying to achieve.
• If during a negotiation, a party indicates that they may not be able to make a commitment since they have limited authority or discretion, decide whether you need to negotiate with someone with greater authority.
• In “take-it-or-leave-it” scenarios, consider ignoring the tactic and make a focused counteroffer that meets both parties’ needs.
• If personal insults are made during a negotiation, let the other party know that you will not tolerate these insults and take a break if you need to.
• Be aware of promises that might seem too good to be true and ensure that you evaluate them properly.
• Remember the objective of the negotiation.

Negotiation is an art and once mastered can be enjoyable. Set aside time to think about your opening proposals during a negotiation, the use of persuasion, the tone of communication, the importance of the relationship, the information you want to share and that which you seek, the opinions you want to drive, etc. In some instances, you may want the other party to feel important, deflate a negative situation or ask for their opinions.

Once again, the objective of a negotiation is to achieve a win-win situation. It is not the objective to make concessions or to lose. It is a process that requires, in some instances, a delicate balancing act.

Bilaal Dawood

Head: Membership Services