Latest revision as of 10:58, 4 March 2019

Developed by Maria Christina Prokou

[edit] Abstract

Back in the 17th century Negotiation is related to a dialogue between two or more people where a compromise or an agreement is reached avoiding argument dispute, aiming to achieve a beneficial outcome. Negotiation is one of the most important factors for a business success and this is why it is one of the main qualities employers look for when recruiting staff nowadays^[1]. People negotiate everyday in their life even when they do not realize it and project management is no different, for that reason this article will focus on the importance of negotiation skills for a Project Manager to achieve the best deals in the demanding business world that is changing constantly.

Improved supplier relationships, sustainable competitive advantage and managing conflicts effectively are all advantages of successful negotiations. Being able to negotiate opens the door to more supportive stakeholders, better relationships with your clients and a more positive working environment where everyone feels they are getting something out of the engagements ^[2]. Negotiation skills can be learned but in order to do that, it is essential that the Project Manager spends time, money and energy to learn about them and practice as much as possible to sharpen their skills and get more efficient in any situation.

[edit] Introduction

Negotiation is not merely the first step of a new project; a project manager’s job will require that they continue negotiating throughout the entire process. Furthermore, negotiations do not solely occur between a project manager and an external party, like a vendor or client; they frequently occur within a project team or involve other project stakeholders ^[3]. The process of negotiation eventuate at any time through a project, program or portfolio and can be formal of informal. A common example for formal negotiations is when providers need to agree on a contract. On the other hand informal negotiations arise when discussions are made in order to resolve conflicts or to obtain internal resources. Negotiation skills are used in many areas of P3 management such as conflict management, contract management, requirements management and stakeholder management ^[4].

• Project: negotiation skills should be applied from the project manager throughout the project life cycle. Even from the very first stages of a project, the project manager may need to balance the time, cost, quality and scope requirements of it and negotiate with the stakeholders. Following, the project manager will have to show again his negotiation skills to the potential recourse providers. When conflicts arise at the progress of the project, he will again show these skills in order to find appropriate solutions to them using formal or informal negotiations.

• Program: there is a big variety of negotiation scenarios within a program and this is why the program manager should know whether negotiations should take place in the project phase or in the program phase. A program includes project outputs that demand change on business-as-usual, this is when negotiation solutions are needed. Program managers and program sponsors are the visible leadership of the program and need to become personally involved to achieve a successful conclusion.

• Portfolio: this encompass the broadest range of negotiation scenarios.The only gradation from the portfolio is to the organisation’s managing board that must be fully committed to the portfolio’s strategic objectives and supportive in negotiations.

[edit] Types of negotiation

There are two main types of negotiation, the distributive negotiation and the integrative negotiation. The first one is also known as “win-lose” negotiations because each party's objective is to maximize its share of the resource being allocated. If the amount of resources is fixed, the only way one party can win is if the other party loses and it is not possible for both to “win” the distributive negotiation ^[5].

On the other hand, integrative negotiation is known as win-win negotiation because the expanded list of items being negotiated makes it possible for each side to claim items that have value. The expanded list of items that is being negotiated makes it possible for each side to claim items of value from that side's perspective. This type of negotiation is divided in two stages, beginning with the collaborative problem-solving activity where the people who are involved in the negotiation attempt to identify additional items that could be added to the overall mix of items that are being negotiated aiming to expand the total potential value of the negotiation. This step is vital because as the procedure continues, if the first step is successfully completed both sides will feel like winners also in the second stage. This final stage has some similarities to the distributive negotiations, as it is time for the allocation process where decisions need to be taken.

According to Lewicki, Barry, and Saunders there is also a third type of negotiation that is called accommodative negotiation^[6]. This is lose-win negotiations where the project manager has planed to lose on purpose, aiming to put the other party in a relationship to “win” in order to strengthen the long-term relationship and set the stage for future integrative negotiations.

[edit] Negotiation roles for a PM

A Project manager needs to fulfill the following three negotiation roles^[5]

• Negotiator: this is the first an obvious role for the project manager where he is one of the parties that are being involved in the negotiation process. All parties should be prepared on what attitude they will follow if a negotiation failure occurs and this should be done before the negotiation process begins. It is common for a negotiation to fail and there are two ways to deal with this deadlock process. The first option is that all negotiation parties walk off the negotiation and develop a contingency plan. Another alternative would be to ask for help from a third party to resolve the impasse. The are only two kinds of a third-party, the mediator and the arbitrator.

• Mediator: in this role the project manager pursues to accommodate the communication between the two parties so that they can conclude in a mutually agreed solution where communications is the most important factor that is being used for negotiation and as Fisher, Ury, and Patton (1991) declared “Without communication there is no negotiation”. Whenever a project manager is involved in a negotiation between two stakeholders he might become a mediator if the two parties ask for input or if he believes that he should attempt to resolve a conflict. In any case his goal is to facilitate the communication between the two parties and help them find common ground and a mutually acceptable solution. The mediator generates dialogue by making questions but if the negotiation still cannot be successful he is not responsible for making any decisions as he is just a facilitator for the two parties and in that case each negotiation party should fall back to the contingency plans identified prior to the negotiation.

• Arbitrator: is the role for a project manager who has to be a decision maker. At the beginning he listens both sides and asks questions similar to the ones that the mediator asks and after having received the needed information he acts like a judge who comes with a final decision which might be mandatory or optional. If the arbitrator's decision is optional, the parties may choose to accept the decision or return to their contingency plans for a failed negotiation. The project manager may also transition to an arbitrator role, after being asked, or because he feels that the conflict will not be resolved otherwise. The project manager may also use the threat of arbitration as a mediation toolbar threatening for example the two parties to find a solution otherwise he will find a solution that no-one would like.

[edit] Stages of negotiation

In order to achieve a successful negotiation, a structured approach is demanded. There are three main stages in this structure : planning ,engagement and closure. Each one of these stages also contains more steps that need to be done. All of the stages are clearly explained below:

[edit] Planning

• Preparation : before any negotiation starts, all parties should agree on when and where the meeting is going to take place and who is going to be present at it. It is also very important that the parties agree on a time-scale that they should follow to prevent the disagreement continuing. Undertaking preparation before discussing the disagreement will help to avoid further conflict and unnecessarily wasting time during the meeting.

[edit] Engagement

• Discussion : at this early stage of engagement all parties should state their understanding of the situation through questioning, listening and clarification. At this point listening is very important as when disagreement takes place it is easy to make the mistake of saying too much and listening too little. Each side should have an equal opportunity to present their case.

• Clarification of goals: when the discussion comes to an end goals, interests and viewpoints of both sides should be understood and clarified in order to establish common ground and conclude in an agreement. Clarification is an essential part of the negotiation process, without it misunderstandings are likely to occur which may cause problems and barriers to reaching a beneficial outcome.

• Negotiate towards a Win-Win outcome: this final phase of the engagement focuses on a result that would be beneficial for both sides where everyone's perspective would have been taken into consideration. Although a win-win outcome may not always be possible through negotiation, it should be the ultimate goal as it is usually the best result. Suggestions of alternative strategies and compromises need to be considered at this point. Compromises are often positive alternatives which can often achieve greater benefit for all concerned compared to holding to the original positions.

[edit] Closure

• Agreement: it is essential to for everybody involved to keep an open mind in order to achieve an acceptable solution. Any agreement needs to be made perfectly clear so that both sides know what has been decided. Only after all parties have understood all aspects, the final agreement can be achieved

• Implementation of a course of action: is the process of turning your strategy and goals into action, while also taking your ideas and planning how to make them reality. From the agreement, a course of action has to be implemented to carry through the decision.

[edit] Negotiation Skills

As it was mentioned above negotiation skills can be developed. The best negotiators are not born with these skills but they have evolved them through practice.

In order to become a successful negotiator, one manager should deploy several skills from distinct fields and use them in multiple contexts.

Project managers who want to perfect their skills should pursue the three following vital elements that are responsible for successful outcomes in any negotiation^[1].

[edit] Attitudes

The negotiation process is extremely dependent on the underlying attitudes to the process itself. If one of the parties adopt an aggressive behavior, in a negotiation process, the other party will probably act defensively. A skilled negotiator espouses a plain behavior without letting his emotions affect this procedure. At the same time this person knows whether he needs to change his addressing and be more determinative or concessive.

[edit] Knowledge

Good preparation is essential for a successful negotiation as if one manager captures enough knowledge for an issue his participation in the negotiation process is going to be great. Preparation is responsible for the 90% of the negotiating success. The more prepared you are preceding a negotiation, the more likely it is that the result of the negotiation will be acceptable for all parties involved. The two most important things to do during preparation are: Firstly, make sure to have all the information that you can about the forthcoming negotiation. Secondly, think about the negotiation process from the beginning to the end and be fully prepared for any eventuality ^[7].

[edit] Interpersonal Skills

• Active Listening: instead of spending most of the time in negotiation defending his perspective, a skilled manager will spend most of the time listening to the other party to find areas for compromise during the meeting or to find clues for further debate. Active listening is the ability to listen carefully to the other party while at the same time it is the ability to read body language and verbal communication.

• Effective Verbal Communication: skilled negotiators must be able to communicate clearly and effectively to all the other parties through a negotiation. This can be achieved by choosing the appropriate words according to whom they are referring to. Shorter sentences and simple words are also easier to process and understand. In addition, the sound of someone's voice can reveal a lot about his personality and emotional state. For instance, if self-esteem is low, it may be reflected by hesitancy in the voice. A shy person may speak quietly, but someone who is confident in themselves will be more likely to have command of their voice and clarity of speech. It is worth for a negotiator taking time to improve his command over his voice, especially if he finds it hard to speak in public, while it can even help to boost his confidence. Eye contact, the way he uses his hands to emphasise his speech, facial expressions and posture are also very important as body language affects the overall communication a lot.

• Problem Solving: a good negotiator does not concentrate on his individual goals for the negotiation, but he is devoting himself to finding a variety of solutions to problems that will benefit both parties. A lot of the work in problem solving involves understanding what the underlying issues of the problem really are.

• Emotional Control: it is important that a negotiator has the ability to keep his emotions under control during the negotiation. Negotiating on sensitive issues can be frustrating and allowing emotions to take control can worsen the situation during the meeting and lead to negative results. The project manager should remember to stay calm during the negotiation process.

• Patience: good negotiators are often very patient and they mainly focus on getting agreement on all the parts of the contract that the two parties have in common. They should prepare good questions to ask to clarify and understand each point to avoid any confusion later.

• Decision Making: successful negotiators do not hesitate to make decisions on their own. They find it easy to choose between two or more possible solutions to a problem and they do not ask others for their opinion. Decisions can be made through either an intuitive or reasoned process, or a combination of the two.

• Dealing with difficult situations: instead of trying to avoid conflicts and stressful situations like most of the people, a skilled negotiator is ready face bravely any difficult situation.

• Ethics and Reliability: ethical standards and reliability in a skilled negotiator stimulate a trust for effective negotiation to take place. Both parties in a negotiation must trust that the other side will keep up with promises and agreements. A negotiator must have the skills to implement his promises after bargaining ends.

[edit] Conclusion

Negotiation skills are essential for successful agreements in the demanding business world that changes rapidly. In order for a project manager to succeed in negotiation, he must follow some steps throughout the whole lifecycle of the project. First, the negotiator should decide witch type of negotiation he is going to follow, while the distributive type of negotiation is recommended. Even if the negotiation begins with an integrative approach, ultimately the resources have to be allocated in a distributive manner. Following, the project manager should change his role according to the needs of each situation. Project management provides an excellent framework or approach for negotiation that consists of three phases which are planning, engagement, and closing. Finally, the success of the project depends on the manager's negotiation skills in distinct fields.

[edit] Annotated Bibliography

1.Skills You Need (no date) What is Negotiation? [online] available at https://www.skillsyouneed.com/ips/negotiation.html"

Summary: This website explores the stages and types of negotiation.

2. Strategy Execution (2018) Negotiation Skills for Project Managers [online] available at https://www.strategyex.co.uk/blog/pmoperspectives/how-to-improve-your-negotiation-skills-project-managers/"

Summary: This website explains the importance of the interpersonal negotiation skills for a project managers and describes each one of them.

3.Project Management (2018) 5 Negotiation Skills Project Managers Need to Master [online] available at https://project-management.com/5-negotiation-skills-project-managers-need-to-master/"

Summary: This website offers a five step guide to managers succeed in negotiation.

4. Association for project management (no date) Negotiation [online] available at https://www.apm.org.uk/body-of-knowledge/people/interpersonal-skills/negotiation/"

Summary:bThis website develops useful information about negotiation in project, program and portfolio management.

5.Craddock, W. T. (2010). Five things every project manager should know about negotiation. Paper presented at PMI® Global Congress 2010—North America, Washington, DC. Newtown Square, PA: Project Management Institute."

Summary: This article describes negotiation and five main factors that every successful project manager should follow during this process.

6.Lewicki, R.J., Barry, B., & Saunders, D.M. (2010). Negotiation (6th ed.). New York: McGraw-Hill/Irwin"

Summary: This book develops negotiation from many different perspectives in depth.

7.https://www.procurement-academy.com/7-key-skills-successful-negotiation/"

Summary: This article emphasizes in seven interpersonal skills that all managers should perfect.

[edit] References

1. ↑ ^{1.0 1.1} Skills You Need (no date) What is Negotiation? [online] available at https://www.skillsyouneed.com/ips/negotiation.html (Accessed February 2019)
2. ↑ Strategy Execution (2018) Negotiation Skills for Project Managers [online] available at https://www.strategyex.co.uk/blog/pmoperspectives/how-to-improve-your-negotiation-skills-project-managers/ (Accessed February 2019)
3. ↑ Project Management (2018) 5 Negotiation Skills Project Managers Need to Master [online] available at https://project-management.com/5-negotiation-skills-project-managers-need-to-master/ (Accessed February 2019)
4. ↑ Association for project management (no date) Negotiation [online] available at https://www.apm.org.uk/body-of-knowledge/people/interpersonal-skills/negotiation/ (Accessed February 2019)
5. ↑ ^{5.0 5.1} Craddock, W. T. (2010). Five things every project manager should know about negotiation. Paper presented at PMI® Global Congress 2010—North America, Washington, DC. Newtown Square, PA: Project Management Institute.
6. ↑ Lewicki, R.J., Barry, B., & Saunders, D.M. (2010). Negotiation (6th ed.). New York: McGraw-Hill/Irwin
7. ↑ Procurement Academy (2017) 7 Key Skills for successful negotiation [online] available at https://www.procurement-academy.com/7-key-skills-successful-negotiation/ (Accessed February 2019)