We’ve all been there. That awkward moment when you know you may find yourself paying more than you want simply to avoid conflict.
But, in the world of commercial negotiations, avoiding conflict is impossible, and doing so could cost your company thousands — or even millions — in lost revenue.
Understanding the importance of negotiation skills is critical in today’s volatile business world.
In this article we explain:
- The need for negotiation skills in business
- Why negotiation skills are important; and
- How The Maker Group can take your team from good to great
Table of Contents
- What Are “Negotiation Skills”?
- Why Are Negotiation Skills Important?
- The Importance of Negotiation Skills in Business
- The Importance of Negotiation in Management
- Why Should We Develop Negotiation Skills?
- The Top 3 Commercial Negotiation Skills and Why They’re Important
- #1: Making the Best Deal
- #2: Building Respectful Relationships
- #3: Improving the Final Result
- Let The Maker Group Teach You the Importance of Negotiation Skills and Prepare You for Real-World Negotiations
What Are “Negotiation Skills”?
Negotiation skills are the qualities that allow opposing parties to:
- Reach a settlement
- Compromise; or
- Make a deal
These qualities are called soft skills and usually include the ability to:
- Plan and strategize
- Communicate and persuade; and
- Cooperate
Learning these skills is key to becoming a good negotiator.
Why Are Negotiation Skills Important?
So, why are negotiation skills important anyway?
Negotiation skills play a critical role in almost every profession, and anyone looking to make it in their career must possess these skills.
Possessing good negotiation skills can get you a better salary or help you close a big deal. Whatever the situation, these skills are essential for anyone looking for success in business as well as everyday life.
Effective communication and negotiation allow you to analyze problems while still maintaining a focus on the desires of the other party.
Using the right language at the right time can go a long way.
However, negotiation doesn’t come easily to everyone. Because our internal sense of morals guides our behaviors and shapes our strategies, we often shy away from conflict and sub-optimize our deals.
The Maker Group can help. We are a team of experienced and skilled commercial negotiators who can teach your team how to excel at the negotiating table.
Using our tested and proven Maker Framework, we’ll not only teach your team the importance of negotiation skills, but we’ll also…
- Identify behavioral pitfalls
- Analyze results; and
- Deliver learnings
…so that your team returns to work with the confidence to effectively implement their new skills.
The Importance of Negotiation Skills in Business
Negotiation in business is a crucial day-to-day skill that is utilized in both formal and informal interactions and transactions, including:
- Sales or leasing contracts
- Service delivery
- Legal settlements
- And all other legal contracts
Quality negotiations not only build better relationships, but they contribute significantly to the success of your business.
Take Walmart buyers, for example. Buyers are expected to negotiate the cost of goods as low as possible in order to increase profitability. Walmart must generate $35 of topline revenue to make up for every $1 of value generated in a negotiation.
What does this mean?
To generate an extra $5 billion in revenue, Walmart must sell $165 billion in goods, or they need their buyers to do 1% better in negotiations. It’s easy to see what should happen here.
Business negotiations depend heavily on the power of small percentages.
What may seem like minuscule savings at the time, can lead to thousands, even millions, in profits.
What Are the Key Reasons Why Effective Negotiation Skills Are Increasingly Important in the Business World?
Negotiations are an everyday necessity in business. The unwavering importance of negotiation skills in business includes:
- Increasing the bottom line
- Improving communication outside and inside the company
- Creating win-win situations
- Building mutual respect with coworkers, management, and clients
In today’s business world, the ability to negotiate is a highly valued skill.
The Importance of Negotiation in Management
The importance of negotiation skills in management lies in the ability to build, maintain, and improve relationships among employees.
Managers also have the duties of:
- Negotiating with upper management to hire additional employees
- Negotiating with employees about vacation schedules, performance goals, and salary increases
- Negotiating with other managers to coordinate department operations and workgroups
- Negotiating with unhappy customers to reach an agreeable solution
- Negotiating with vendors and suppliers for product and service delivery
- And much more
The ability to negotiate with various people within the organization to reach mutually beneficial agreements and achieve company goals are important skills a manager should possess.
On the flipside, negotiating with a manager may seem intimidating to some employees. Whether it’s salary or job duties, negotiating with management directly impacts the employee’s job satisfaction.
When an organization is equipped with both managers and employees who are skilled in negotiation techniques, relationships are automatically improved because negotiations will almost always result in a win-win.
What Is the Importance of Negotiation Skills for Managers?
We’ve established how negotiation skills impact how managers build and maintain relationships, but what’s also important to note is that good negotiations create an efficient workflow.
In a poorly managed negotiation, you can spend hours discussing what the client wants and what the company needs and never really come to a mutual agreement.
Finding quick solutions to tough problems moves the work ahead more effortlessly, and this can only be achieved with effective negotiation skills.
Why Should We Develop Negotiation Skills?
Negotiation skills need to be developed; we are not always born with them. Not only are these skills important in our daily lives, but they’re also very useful in our professional lives.
Negotiation skills teach us:
- Effective teamwork
- Improved communication
- Decision-making skills; and
- Conflict management
In addition to these essential traits, negotiation skills teach us:
- How to be understanding of the needs of others
- To give importance to our own needs; and
- To find a mutually agreeable solution to any problem
Negotiation skills are critical in everything we do, but especially for commercial businesses. If your team isn’t performing on the floor then you’re likely leaving big money on the table.
The Maker Group is an established negotiaion consulting firm comprised of expert commercial negotiators with decades of experience.
We have developed an 8-step negotiation process that is backed by proven behavioral frameworks, and we’re ready to help your team maximize their potential on the negotiating table.
Contact us today for more details.
The Top 3 Commercial Negotiation Skills and Why They’re Important
#1: Making the Best Deal
The entire idea behind the process of negotiation is to win the deal for the value you desire. To do this, you must find leeway in the other party’s list of demands.
An agreement will only happen if both sides of the negotiation approve of the other’s needs, but how do you do this?
A good negotiator enters into a deal with the ability to:
- Identify any potential problems before they occur
- Pay attention to the other party and adjust their approach accordingly
- Clearly communicate their goals; and
- Maintain a positive environment.
The entire goal is to get the best deal possible, which in turn, improves your bottom line.
Why Is the Ability to Make the Best Deal an Important Negotiation Skill?
The importance of negotiation skills in business cannot be overstated, they are essential to keeping your business afloat.
Getting the best deal or contract for your company will:
- Increase revenue and raise profits
- Protect the rights of all parties involved
- Deliver lasting solutions; and
- Avoid future conflict
While it’s not always easy, effective negotiations will not only increase your business dealings but also ensure that your clients don’t make unreasonable demands and pay well.
#2: Building Respectful Relationships
Respect is essential to the success of any business. External and internal alignment play key roles in driving your business forward with mutual regard for both your clients and your employees.
Having strong negotiating skills will leave a lasting impression, affecting both future negotiations as well as your reputation within your industry.
Any successful negotiation starts with respectful communication of your goals as well as an understanding of the opposing party’s needs and wants. Building rapport is a critical step towards reaching an agreement, and that simply cannot be done without respect.
Why Is Building Respectful Relationships an Important Negotiation Skill?
In order to have your own needs met within a negotiation, you must be respected by the other party. Whether it’s a…
- Vendor
- Employee
- Client
- Service provider; or
- Money-lender
…without respect, you won’t achieve your desired results.
Once you’ve established a rapport, and the respect is mutual, tensions are reduced and a positive atmosphere for negotiating is achieved.
#3: Improving the Final Result
Everyone wants to win. It’s in our nature.
But, when it comes to effective negotiation there should never be a clear winner.
Many people believe that negotiating should result in a positive outcome for one party, while the other party essentially “loses”. But, when done properly, negotiations should benefit every party involved.
Creating a win-win situation at the end of a deal can be a tricky task, but the alternative could be losing the deal altogether.
Why Is Improving the Final Result an Important Negotiation Skill?
Taking into account the interests and needs of the other party in a negotiation will give you the upper hand in reaching a mutually satisfactory deal.
But why wouldn’t you want to win? Isn’t it better to come out on top?
Yes — and no.
If the parties on the other end of the deal feel as though they are losing, they are more likely to…
- push back
- walk away; or
- begrudgingly take the deal
…and then likely take their business elsewhere next time.
So, while it may seem like a good strategy to win the negotiation at first, it can end up coming back to bite you in the end.
Remember — no one wants to feel like the loser. A great negotiator uses respectful communication to ensure everyone comes out a winner in the end.
Let The Maker Group Teach You the Importance of Negotiation Skills and Prepare You for Real-World Negotiations
As a negotiator, some of the discomforts you must learn to overcome include:
- Conflict
- Uncertainty; and
- Rejection
The average person will shy away from negotiating for these reasons, however, the importance of negotiation skills can never be stressed enough for those who are in a commercial negotiation role.
Learning how to recognize and accept that conflict is uncomfortable is okay, and we want to show you how.
The Maker Group is a team of experienced commercial negotiators and trainers who deliver custom training and consultation solutions to help your team not only understand the importance of negotiation skills but also know how to effectively use them in the workplace.
Contact us today to find out more about our negotiation training workshops and consulting services.
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