Closing The Deal: Why Are Negotiation Skills Important in Business?
You’ve probably heard that negotiation is important because it’s basically everything we do in life. In the business world, this bears more truth than you can imagine.
And it does not apply to colossal business outcomes only. Even if you’re trying to get a slight salary increase for your department or just convince your stakeholders that employees need a 5 minutes longer lunch break – you’ll have more success if you approach the issues as a true diplomat.
Deploying negotiation skills such as analysis, communication, and empathy may come naturally to established managers and leaders. Still, it’s artistry (or science) that one can master through learning.
Here are the most important reasons why you should start upskilling your negotiation immediately. That is if you want to advance your career.
Proving The Point: 4 Major Benefits of Business Negotiation
The importance of negotiation skills in business ultimately comes down to numerous benefits both individuals and organizations can extract. In what follows, we’ll try to precisely depict these advantages and how they relate to specific skill sets.
So, negotiation is essential because:
It Means Profit
In today’s capitalistic environment all businesses operate in, this is perhaps one of the crucial reasons to turn to mediation and communication.
And the profitability of negotiation skills is not just a good and far-reaching goal. Instead, it’s a fact backed up by hard evidence. Research has shown, for example, that the UK loses approximately £9 million from poor negotiating – per hour! The Centre for Economics and Business Research that conducted the estimate also noted that the average company could increase its profits by 7% just by being better at negotiating.
In other words, the stakes are high.
Failing to anchor your business interactions in communication, problem resolution, and bargaining equals losing money. And whether you are managing a department, leading a company team, or running a business of your own – you know that this is as close to an economically unforgivable sin as it can get.
Other Favorable Business Outcomes
Aside from this measurable benefit of business negotiation, there’s a related set of advantages that negotiation brings daily. In essence, whenever you work to achieve a business goal while avoiding conflict and friction, you’re turning to negotiation strategies.
So, the next time you’re on a board meeting trying to convince members of your strategic proposal, or even if you just need to persuade Jane from the accounting department to stop being late – negotiate. Or, put differently, embrace the same mindset as if you were mediating an international conflict.
Although it sounds complicated, embracing a negotiation mindset actually means following predefined steps and clear guidelines. In a nutshell, try to do the following:
Abraham Lincoln famously said that If he only had an hour to chop down a tree, he would spend the first 45 minutes sharpening his ax. The same goes for negotiating – you need to take a deep dive into the problem, break it down into small chunks of issues, and observe what could be potential solution-finding perspectives.
If we remain at our tree-chopping metaphor, the preparation stage should consume the next 10 minutes of your time. It would be best if you had the arguments ready, knew exactly what you would say, and backed your claims up by firm evidence. Also, you must anticipate the opposing views and see things through your opponent’s eyes.
Once you start speaking, do it with your ears. Good negotiators know that the secret in negotiations is spending more time listening. On top of being succinct with your words, of course. This will not only unveil the opposing side’s potential “weaknesses,” but it will also show that you’re ready to resolve. In some cases, you won’t need anything else.
The bargaining stage is what we all imagine negotiation looks like – two parties trading and trying to get as much as possible. Experts agree that the best way to prepare for bargaining has multiple backup plans, ready to implement in case a negotiating transaction gets stuck.
Provide Solutions to Conflicts
Conflict resolution and negotiation are so intertwined they are almost synonymous. Aside from dealing with disputes in business when they arise, negotiation can help in their prevention too. A leader or manager who is oriented towards negotiation will anticipate the potential problems and create win-win situations that will satisfy all.
Instead of using authoritative means to subordinate others, true negotiators can find a way to create a flourishing working environment. That way, they can circumvent a significant loss in time, resources, and working hours.
Because, at the end of the day, the business is the one suffering the damage of individual misunderstandings.
Establish Reputation And Relationships
The somewhat more personal benefit of using negotiation skills in business is its potential to build reputation and relationships. Leaders who embrace a solution-oriented approach are more likely to be perceived as benevolent, trustworthy, and reliable. These characteristics can help build a solid authoritative presence and turn employees into followers when properly combined with other leadership traits.
In Sum: Why do Company Managers And Leaders Require Negotiation Training?
Since negotiation skills are an essential part of doing business, people in charge of running it are often expected to be “born” with the relevant expertise. Of course, most of them really are. But, in most cases, this raw talent requires additional shaping through getting more robust in the craftsmanship of negotiation.
Useful upskilling tools are:
Examples of a good practice
Getting to know the types of conflict resolution strategies
Developing leadership skills
There are numerous ways to acquire this knowledge: reading books, learning from experience, or practicing in front of a mirror. However, the fast pace of our times has proven that taking a specialized training course is the most effective way to gain expertise in negotiating.
Here at AILIT, we take raw talents and turn them into professional negotiators. Download our brochure today to learn how you can advance your career this way. If you have any questions, we’re here to help.