Communication and Personality in Negotiations

This hub describes a negotiation situation that I have participated in (e.g., sale/purchase of a house, car, salary, etc.). It also analyzes the roles of communication and personality in negotiation and how they contributed to or detracted from the negotiation.

By understanding that the person you are negotiating with communicates, and what personality best suits effective long-term negotiations, you will be better prepared to produce a mutually successful outcome. As a manager, you will want to consider the personality of the person negotiations will be taking place so that you can select a compatible employee to engage in these negotiations.

Sample Negotiations and how Communication & Personality play a role:
 
Successful companies use negotiation as a tool to keep pricing competitive, reduce expenses, and increase profits. The owner of Heather’s Crew uses negotiation strategies daily as she negotiates prices with suppliers, and negotiates pay for roof crews. She also uses negotiation to find the best deals on advertising, and negotiates individual contract terms with customers. Communication is one of the most important pieces of the negotiating process, and the personality of the parties involved in negotiations plays a large role in the way agreements form. In fact, “many of the most important factors that shape a negotiation result do not occur during the negotiation; they occur before the parties start to negotiate, or shape the context around the negotiation” (Barry, Lewicki, Saunders, 2006).

Negotiating Material Prices
At Heather’s Crew, some of the most difficult negations were used to gain competitive prices on materials. For most construction projects, the cost of materials exceeds all other expenses including labor. Because of this, negotiating the lowest possible material prices is the best way to gain an advantage over competitive roofing companies. Unfortunately, most companies that sell roofing supplies reward their regular customers with better prices, but new roofing companies will have difficulty acquiring business if they can not offer their customers competitive prices. As a new company, Heather’s Crew was able to find the best prices by talking with several supply companies, and using each company’s prices against the others to slowly reduce prices. The owner of Heather’s Crew tried to do most of her negotiating by phone. This allowed her the advantage of quick conversations that were price focused, and kept the discussions based on numbers rather than friendly banter. This strategy also helped her make each supplier feel it had to offer the lowest possible prices to gain her future business.

During this process, ABC Supply Company stood out as having consistently better prices. Another point of attraction for Heather’s Crew about ABC Supply during the negotiation process is that they offered to reduce prices with very little resistance. Still, the owner of Heather’s Crew wanted to be sure that she was receiving the lowest prices. So, when she reached a point in negotiations with ABC where they were insistent that the prices she was given were the lowest available, she took the price list to each of the other supply companies in the area to see if they would beat ABC’s lowest price. Every other supply company reluctantly admitted that it would be unable to meet the negotiated prices, and that beating the prices ABC had given Heather’s Crew would be impossible. At this time, Heather’s Crew and ABC Supply Company were able to reach a win-win solution in which both companies became more profitable because of one another. The lower prices that ABC Supply Company provided for Heather’s Crew helped it win more roofing jobs, which results in the purchase of more supplies from ABC.

Communications in Negotiations
“Reduced to its essence, negotiation is a form of interpersonal communication. Communication processes, both verbal and nonverbal, are critical to achieving negotiation goals and to resolving conflicts” (Barry, Lewicki, Saunders, 2006). Negotiations can occur in a variety of forums, and each forum requires the use of numerous communication tools. When negotiating material prices, Heather’s Crew decided the most advantageous forum for communication would be through the phone. On the other hand, the supply company would have likely benefited from negotiating in person. By choosing to communicate via phone, Heather’s Crew gave each of the potential suppliers the impression that its time was important, and that numbers were what mattered more than personal interaction. This took away the suppliers ability to effectively negotiate using customer service or compatibility as selling points. Additionally, Heather’s Crew was able to avoid answering questions that gave too much information away without seeming as impolite or abrupt. This strategy allowed Heather’s Crew to maintain good report, to make their time seem valuable, and to discretely hide information that would take away negotiation power.

When negotiating, both parties involved usually prefer to keep certain information private. Still, “because each side wants to obtain some information and to conceal other information, and because each side knows that the other also wants to obtain and conceal information, communication can become complex” (Barry, Lewicki, Saunders, 2006). For example, ABC Supply Company wants to make the most from each transaction as possible, and so it benefits from hiding its lowest offer from contractors. ABC Supply also benefits from keeping contractors from finding out how much it pays for each item and from finding out where it orders the materials wholesale. Similarly, Heather’s Crew benefits from keeping the prices that other supply companies are offering private during the early negotiating stages. This prevents the suppliers who would normally charge much less from simply setting prices directly below the prices of competitors. As a new company, Heather’s Crew also benefited from only giving minimal information related to the number of roofs and estimates given each week.

Personality in Negotiations
Personality also plays a large role in negotiations. “Although individual differences may predispose bargainers to behave in certain ways, key structural factors such as the nature of the bargaining problem, the relative power between negotiators, pressures from constituencies, or simply the behavior of the other negotiator may matter more.” For example, if ABC Supply Company were given the opportunity to demonstrate integrity and genuine concern for the companies they supply for, negotiations would likely have leaned in their favor despite the prices of other supply companies. Similarly, had ABC learned about the owner of Heather’s Crew, and her committed nature that drives her toward long term working relationships, the supply company may have been more willing to give her company the same prices that long-term companies receive without the drawn out negotiation process. Unfortunately, many behaviors can detract from successful negotiations. When character traits are perceived as overly competitive or dishonest, the trust between negotiating parties is diminished and finding resolution is more difficult. "good negotiator possesses awareness, patience, and good communication skills" (McGuire, 2004).

To minimize conflict during negotiations, parties involved must work to compromise and find solutions that benefit everyone. Heather’s Crew negotiates prices with material suppliers and workers. In the same way, the owner negotiates contract prices with customers in a way that allows both the consumer and the company to benefit. Still, many people begin negotiations with only their own interests in mind. For any company to remain successful over time, negotiations are a vital tool that keeps pricing affordable, expenses manageable, and profits at their best. Successful negotiations rely on the communication between each party, and negotiations often influenced by the personality traits of those bargaining.

References
Barry, B., Lewicki, R., & Sanders, D. (2006). Negotiation. New York: McGraw-Hill Irwin.
Mcguire, Ruth (2004, July 3). Negotiation: an important life skill. The Pharmaceutical Journal, 273, Retrieved June 11, 2009 from http://www.pharmj.com/pdf/cpd/pj_20040703_negotiation.pdf