The Psychology of Commercial Negotiation- Contract Negotiation Series 5

What are the main motivational factors driving negotiation? The strength and motivation of the negotiator highly depend on how close is she/he to achieve the goal of the bargain in commercial contracts or business deals. Negotiator usually starts with a strong positioning of what the party position is related to a particular goal or objective. It might be that this stage is equally spread among the parties, till the negotiator see the other side approach towards achieving the common objective. There might not be a question of achieving immediate agreement, but setting up favourable terms can be appealing. 

Nevertheless, the party’s objectives in most cases differ, which give prime magnitude to the commercial agreement terms. The risk of losing the bargain might not be the same for both parties, however, one thing is sure, both will lose the business if the agreement is not achieved. This is where the fear of losing the play can become the main motor driving commercial negotiation. 

Negotiators are not robots but human beings with the conglomerate of complex emotions and believe driven by their organisations and also of what have been the main shaper of their experience and knowledge. Their attitudes and emotions are driven by their self-esteem not to lose the agreement, but mostly by their fear of the outcome on what terms both parties would reach the same. 

Nevertheless, it should be remembered that the people drive the negotiation process with their emotions and fears but the objectives and aims of both parties are separated from the people emotions and fears. This is important to be remembered by the people staying around the negotiation table. Negotiators’ attitudes and concerns changes throughout the process, as the same progress in time. They can be seen as actions from one side that produces a particular reaction from the other side. It is important, however, for the attitudes to be closely monitored and what consequence they may have on the negotiation process and outcomes. The attitudes which can affect the whole negotiation process are usually evolving from:

- Recent and direct experience between parties, negotiating on another project 

- Information obtained from third parties who have been in touch and have direct experience with the party. 

- Any bias or preconception have been developed for the opponent and the negotiators as a character. If the negotiators are knowing each other from previous projects, this might have a positive outcome, but again, great care and preparation are required in advance. It should be remembered that the negotiators should keep away from forming attitudes towards each other’s personality, as this may only harm the commercial outcome. The relationship between negotiators plays significant importance in forming the agreement between parties, where the commercial negotiation can be seen as a microeconomic activity, which outcome depend on the relationships of two persons. Forming the right relationships between the chess players, creating an amicable atmosphere is imperative, where;

- Comprehensive research is required to build the opponents picture and their place in the market with their economic activity, building a full picture of the organisation’s competitive advantages and disadvantages is needed so a fluid and dynamic negotiation plan is designed. 

- A careful amendment of the negotiation plan is needed, based on how the commercial negotiation progress and the achievement of good relationships between negotiators. 

Forming a good interpersonal relationship with the opposing party is an indispensable component for negotiating success. A good negotiation cannot be performed without the required level of empathy, sensitivity and perception. 

Veselin Shivachev

Vedera Consulting
+44 (0) 2381941164


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