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Negotiation Strategies for Project Managers

November 26, 2010 | Author: PM Hut | Filed under: Project Management Best Practices, Project Management Guides

Negotiation Strategies for Project Managers
By Keith Mathis - PM Expert Live

Negotiation is a process involving two or more people with conflicting positions. These people attempt to reach an agreement by modifying their original positions. Usually, it requires
bargaining in order to reach an acceptable arrangement. The arrangement, however, should not be seen as a “win-lose” situation. The solution should be mutually beneficial or, in some instances, mutually unprofitable.

There are three main types of negotiation used in the everyday business of an organization:

  1. Day-to-day managerial negotiations solves internal problems and working relationship between groups of employees.
  2. Commercial negotiations are between an organization and an external party for financial gain.
  3. Legal negotiations are formal and legally binding over disputes.

Negotiations are most commonly about the following project aspects:

  • Scope - what is to be accomplished
  • Quality - the specific measures to be taken to ensure quality
  • Cost - the parties’ financial outcomes
  • Time - deadlines and resources
  • Risk - who assumes what risks
  • Human resources - over staffing Procurement - cost, delivery, and specifications
  • Communications - affected by appropriate communications of project status

There are several personality traits of successful negotiators. Being empathetic, respectful, fair, patient, flexible, and having a sense of humor are just a few. Each of these traits will allow you to have a successful negotiating experience, especially if it is a tough or overly drawn out circumstance. When going through the negotiation process, make sure that you don’t make these common mistakes.

While there are many potential mistakes of which we can make you aware, I will just highlight a few.

  • Starting to negotiate before you are ready

    Have all the information regarding the negotiation set up prior to the meeting. Know what concessions your company is willing to make. It only makes the whole process longer if you have to get approval from someone else first.

  • Negotiating with the wrong person

    Don’t waste your time and energy on someone who cannot help you. While it would give you a practice run on what to say, it only costs you time, energy, and possibly money. Find out who the decision maker is, and meet directly with him or her.

  • Worrying too much about the other guy

    While you should be considerate of the other person, your goal is to do the best for your company. Being well liked is nice, but people will take advantage of you if they sense you will give them whatever they want just so they’ll like you.

  • Not focusing on closing the negotiation

    At the end of the negotiation, an agreement must be reached, agreed upon, and understood.

When you get too many people, all with different opinions, involved in a negotiation, pitfalls will quickly arise. A clash of wills will soon arise and some people will dig in their heels and not want to budge on their stance. Once egos get involved, positions become inflexible. However, do not fear! There are solutions to these pitfalls.

The most important thing to do is to separate the people from the problem. Staying objective will help to keep personal opinions out. Focus on the interests of the organization, not personal gain. Invent options for mutual gain. You want everyone to come away from the negotiation feeling like they are walking away a winner.

Jeffrey Pinto, author of Project Management Handbook1 has outlined five strategies for negotiation.

  1. Concession making - This strategy involves changing your proposal so that it provides less benefit to you and more benefit to the other side. You may agree to make the requested changes without any additional charges or extensions to the project completion date.

  2. Contending - This strategy involves trying to persuade the other side to make a proposal more favorable to you, but less favorable to them. Tactics include threats and arguments. You are unwilling to make any additional concessions.

  3. Compromising - This strategy is intermediate between concession making and contending. A middle ground is sought that involves some degree of sacrifice for both sides. Two project managers may agree to share the costs of the changes or agree to an extension in the project completion date.

  4. Problem solving - This strategy refers to efforts to find agreements that are highly beneficial to both parties. Project managers may honestly discuss their objectives and priorities. By exchanging information on budgets and deadlines, a solution may be found.

  5. Inaction or withdrawal - The strategy of inaction involves attempts to delay or avoid serious negotiations. The strategy of withdrawal involves terminating negotiations without an agreement.

Some negotiations that are made and done with people from other countries. Always remember that different cultures approach negotiations in very different ways. Cultural differences exist between races, age groups and sexes. For example, shaking hands may imply “we’ve got a deal”, may simply mean “goodbye”, or may even be offensive. Some cultures don’t have the same respect for women and may not take them seriously during a negotiation.

Be aware of cultural differences. Although you may not agree with their practices, demonstrate respect for different cultures. Evaluate implications of cultural differences. Educate yourself on the differences and know how to overcome them. Anticipate and resolve conflict quickly. If you make a cultural faux pax, apologize and do everything within your power to make amends. Embrace the diversity as a chance to expound your knowledge of our world.

The world revolves around negotiations. Some are done hostilely, while others are laid back. Knowing how to effectively conduct a negotiation will make the whole process rum more smoothly.

1The book is mentioned merely as a reference. PM Hut’s articles are never meant to act as a promotion vehicle for any individual, book, or product.

Dr. Keith Mathis, founder and CEO of The Mathis Group, specializes in Project Management, Management Leadership, and Marketing training for private businesses and government agencies of all kinds. He offers 33 Project Management courses, is a Project Management Professional, is certified by the Project Management Institute and will customize every training session to your individual company’s needs. The Mathis Group also sponsors www.pmexpertlive.com, which is a powerful project management resource with free reports, podcasts, videos, and a monthly newsletter. He also offers customized management training and coaching on any subject with prolific communication and professionalism.

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This entry was posted on Friday, November 26th, 2010 and is filed under Project Management Best Practices, Project Management Guides. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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