How to Prepare for a Negotiation

First, know yourself. Think about what you need, want, aspire to. Consider what will happen to you if no deal is struck. Search diligently for competing and substitute alternatives. Analyze (or at least think about) your other alternatives, and, all things considered, assign a certainty-equivalent value to your best alternative to a negotiated agreement; this is your subjective evaluation of the no-agreement state. Assess your reservation price for each round of negotiations. Your reservation price-which is based on the value you have placed on the no-agreement state-is the absolute minimum value that you would be willing to settle for. Any lesser value would be worse than the no-agreement state; you would walk away from the bargaining rather than settle for a value less than this minimum. Amass your arguments for the negotiations: facts, data, arguments, and rationalizations, including arguments about what is fair and how an arbitrator might settle the dispute.

Second, know your adversaries. Consider what will happen to them (or he or she, as the case may be) if no deal is struck. Speculate about their alternatives. Examine your perceptions of their reservation price; think about the uncertainties in these perceptions (and, if it is natural to you, encode them into probabilistic assessments).

Investigate their credentials, their legitimacy, and integrity. Investigate how they have negotiated in the past.

Third, give thought to the negotiating conventions in each context. How open should you be? Can you believe what your adversaries will say? Is it customary to withhold unfavorable information? What number of iterations in the negotiation dance is respectable or customary? Can negotiations be done in stages? If so, what is your reservation value for each upcoming stage? How will each stage of the negotiations affect your continuing relations with your adversaries?

Fourth, consider the logistics of the situation. Who should negotiate? Should roles be assigned to the negotiators on your side? Do you need professional assistance, such as representation by a skilled negotiator? Where should negotiations take place, and when? If they will be of an international nature, in what language should the negotiations be conducted, and who should supply the translators?

Fifth, remember that simulated role-playing can be of value in preparing your strategy. Try to find someone to play the role of your adversaries and give careful thought to what their tactics might be. Arrange for simulated negotiations.

Sixth, iterate and set your aspiration levels. Giving consideration to all the above points, what contract value should you strive for? It’s easy to say “the more the better,” but it’s helpful to have some target level that is a reasonable distance from your bottom-line, walkaway price. Your aspiration level might well shift during negotiations, but your reservation price should remain firmer; it too could shift, however, if the other side provides information enabling you to reassess your other opportunities or the value you place on an agreement.

Source:

Raiffa, H. 1982. The art and science of negotiation. Cambridge, Mass.: Belknap Press of Harvard University Press.