These days, almost every type of business requires employees who possess bargaining and negotiation skills.
But, here’s the problem:
Bargaining is not the same as negotiation. They’re quite different and should be treated as such in business.
In this post, we’ll uncover:
- The distinct differences between bargaining and negotiation skills
- Why bargaining may hurt your organization over time; and
- How investing in negotiation skills training can improve every aspect of your business.
Table of Contents
- What’s the Difference Between Bargaining and Negotiation Skills?
- What Are Basic Bargaining Skills?
- The 3 Main Problems With Bargaining
- What Are Basic Negotiation Skills?
- 5 Reasons Why Negotiation Skills Are Far More Valuable Than Bargaining Skills Alone
- Bargaining and Negotiation Skills: The Bottom Line
- The Maker Group Offers Negotiation Skills Training for Professionals at Every Level
What’s the Difference Between Bargaining and Negotiation Skills?
So, what’s the big difference between bargaining and negotiation skills?
Bargaining focuses on one party being right. It creates a competitive, win-lose situation.
Negotiation focuses on finding what’s right for both parties. The process is usually more involved, but the outcome is typically win-win.
Finding common ground and achieving a true win-win scenario requires all parties to have trust and open communication throughout the process. Otherwise, one party will walk away feeling unsatisfied with the negotiation.
What Is an Example of Bargaining?
Imagine this scenario. You’re in the market for a used car so you visit a local dealer who is advertising low prices and great interest rates.
You find a car you’re interested in and sit down with the salesperson to discuss numbers. You’re already happy with the price and payments, and the salesperson isn’t offering much wiggle room as they know their prices are competitive.
As a buyer, you may ask the salesperson to include an extended warranty or a new set of tires or threaten to walk away from the deal.
This is bargaining.
What Is an Example of Negotiating?
If you’ve ever been involved in a real estate purchase, you know it’s more complex than simply asking the agent to “throw something in” to sweeten the deal.
There are multiple layers in this type of transaction and you might be competing with multiple offers.
You might negotiate:
- The asking price
- The closing date
- What’s included (ie: fixtures, office equipment, appliances, etc.)
- How many times you can inspect the property before closing
- Who pays the legal fees and closing costs
- Repairs or improvements to the property
- Real estate fees
- And more
Most often, your first offer is not accepted unless you are willing to meet the seller’s every expectation.
Negotiations are always more involved and require all parties to compromise.
What Are Basic Bargaining Skills?
Unlike negotiation skills, bargaining skills require less effort. They’re generally one-sided, self-serving, and ultimately produce a losing situation for one party involved.
Most often, bargaining is focused on price only, whereas negotiation skills come in handy when dealing with more complex purchases.
Bargaining skills only get you so far.
If your business is based on haggling prices only, bargaining skills come in handy. However, if you’re negotiating deals in the thousands and millions of dollars, bargaining simply won’t cut it.
The Maker Group focuses on negotiation training skills for professionals in every industry and at every level of their careers.
By improving your team’s negotiation skills, you’re giving them:
- The power of confidence, and
- the ability to act on your behalf in a way that promises a better outcome for you and your clientele.
If you’re ready to take your employees to the next level with customizable and effective negotiation training, call The Maker Group.
The 3 Main Problems With Bargaining
#1: It’s Only About Winning
One of the biggest issues with bargaining is that it’s geared toward winning or coming out on top.
For example, when one or both parties in a negotiation focus on one aspect of a deal without considering others, it becomes bargaining.
This is most common when commodities are involved, and when the parties within a negotiation don’t understand the concept of value.
#2: It’s Hyper-Focused on Price
Bargaining often becomes about nickel and diming, rather than focusing on the outcome.
When there’s more involved than trading a commodity or service for a price, it’s important to open communication and listen to what each party has to offer.
Imagine your company is hiring a professional contractor to renovate your commercial buildings. You have an employee on your negotiation team who is so hyper-focused on price, the scope of work suffers and you end up dissatisfied with the final product.
At the end of the day, no employee wants to be responsible for a sub-par outcome.
Taking the narrowmindedness out of bargaining can lead to true negotiation and ultimately a win-win for everyone.
#3: It’s Intended for Low Complexity Deals
Remember we mentioned the local flea market? Bargaining makes sense in a scenario such as this:
- You see a product you’re interested in.
- You lowball an offer.
- The vendor comes back with a higher price.
- You stand your ground.
- The vendor refuses.
- You walk away.
- The vendor calls you back and brings his price down a little.
- You agree and walk away with what you want.
This simply doesn’t work when you’re trying to negotiate a high-complexity deal with a major corporation, wholesaler, retailer, or other.
What Are Basic Negotiation Skills?
More and more companies require their employees to possess good negotiation skills.
But, it’s not as simple as it used to be.
The new economy is making negotiations more difficult than ever, so many organizations are looking for employees who excel at negotiation skills, such as:
- Communication and active listening
- Rapport building
- Emotional intelligence
- Decision making
- Influencing skills
- And more
The good news is that negotiation skills can be learned.
The Maker Group focuses on bringing bespoke negotiation training and workshops to organizations across the U.S.
Our courses are designed for everyone in a negotiation role, whether your employees are in the beginning stages of their career, or they’re veteran negotiators who could use a refresher.
For more information, or to schedule your workshop or training today, contact The Maker Group.
5 Reasons Why Negotiation Skills Are Far More Valuable Than Bargaining Skills Alone
Negotiations are an everyday practice in some businesses, making negotiation competency among employees extremely valuable.
For most organizations dealing with high-level and complex negotiations, bargaining is only one step of the process.
#1: Negotiations Are Focused On a Win-Win Outcome
When a settlement has been reached the negotiation is complete. However, if one party walks away feeling like the loser, you have not reached a win-win outcome.
How do you get there?
By only agreeing to a settlement that benefits all parties involved and cannot be improved by further discussions.
In a negotiation, there should be little to no value left on the table that’s worth arguing for or losing the deal over. When all creative options have been explored, and everyone feels confident in the agreement, you have succeeded in a win-win negotiation.
#2: Negotiations Help Build Relationships and Inspire Trust
Negotiations require a high level of communication. Each party must be willing to actively listen to the other party’s wants and needs and be willing to compromise their own.
Most high-level negotiations start with discussions. The focus is on building rapport and forming trust. The contract won’t happen until much later in the deal.
Consider the agreement made when Lucasfilms sold the Star Wars empire to Disney.
The amount of trust needed for George Lucas to hand over his creative legacy to Disney didn’t happen in a day.
Discussions began in early 2011, but the deal wasn’t formalized until October of 2013 — more than two years later.
In the end, thanks to the rapport and trust built over time, both parties reached an agreement that satisfied each of their needs.
#3: Negotiating Helps Manage Expectations
Communication, rapport building, and trust are all imperative to managing expectations.
Oftentimes, two parties enter a negotiation with very different ideas of a perfect outcome. Without preliminary discussions and effective communication, it’s nearly impossible to understand the other party’s expectations.
In bargaining, you’re only focused on your outcome. Successful negotiators will work toward an outcome that satisfies all parties.
#4: Negotiating Is Integrative
Negotiation includes bargaining as a key step in the process.
However, successful negotiations are integrative and may include multiple steps, such as:
- Preparation for the negotiation
- Discussing bargaining issues
- Negotiating each contingency
- Overcoming any negotiation breakdowns
- Reaching an agreement
- Ratifying the agreement
- Administering the agreement
#5: Negotiating Is Intended for High-Complexity Deals
The fact is, you cannot handle high-complexity deals with bargaining alone. Some deals may take days, weeks, or even years to reach an agreement, and that simply can’t be done if both parties aren’t coming to the table with compromise.
Surviving complex negotiations takes patience and a lot of preparation. Each party involved must take the time to identify their preferred outcome and any possible barriers before even coming to the table.
But, even if you’ve followed best practices and have a stellar negotiation team, you must still be prepared to adapt and go with the flow.
Learning to maneuver roadblocks when things don’t go to plan will help you achieve a win-win solution.
Bargaining and Negotiation Skills: The Bottom Line
At the end of the day, negotiation skills will always outweigh the importance and power of bargaining skills. Bargaining is just one cog in the much bigger wheel of negotiation.
Making the distinction between the two and training your employees accordingly can save your company a lot of lost profits in the long run.
The Maker Group Offers Negotiation Skills Training for Professionals at Every Level
At The Maker Group, it’s our mission to maximize the negotiation potential of your team. We are a team of commercial negotiators with combined decades of experience that has positioned us as leaders in negotiation training. We’re ready to help you.
We tailor our negotiation training workshops to meet your organization’s specific needs and demands. Using proven behavioral methods and our proprietary Maker Framework, we consistently meet our clients’ expectations.
For more information, contact The Maker Group. We make good, great.