Effective negotiation - practical tips and common mistakes

As the expiry date of a lease approaches, landlords, their commercial managers and tenants will be considering the renegotiation and renewal of their tenancy arrangements.

Being a successful negotiator is a valuable asset in any property transaction. How you negotiate can make a significant difference to the outcome, even if you start from a weaker bargaining position.

While there is no substitute for negotiation experience or practice, this article is intended to provide you with some practical tips for the next time you are required to negotiate a property transaction.

There are a range of negotiation strategies and tactics, including 'principled' or 'interest-based' negotiation (sometimes called win-win negotiation). The Harvard Program on Negotiation is an effective 'principled' negotiation strategy that you can use to improve your negotiation power. It involves a set of techniques which focus on the underlying interests of the parties, rather than haggling over arbitrary starting positions.

The strategy is based on four key pillars as listed below:

• separating the people from the problem
• focusing on interests, not positions
• generating a variety of options before deciding what to do
• insisting that the result be based on some objective standard.

For more detail on the Harvard Program on Negotiation, please visit: http://www.pon.harvard.edu/

No matter how skilful you are, there is a limit to what can be practically achieved in some negotiations. You can reasonably expect a successful negotiation when you make the other side an offer that is more attractive than their 'Best Alternative to a Negotiated Agreement' (BATNA or walk-away alternative). Otherwise, there may not be much point in entering into negotiations.

There are many methods of enhancing your negotiating power, including:

• developing a good working relationship with the people you are negotiating with
• understanding each side's interests
• developing creative options
• carefully considering and committing to what you will and will not do in the negotiation
• clarifying what you want the other side to do.

However one of the most effective ways to increase your negotiating power is to improve your walk-away alternative, reduce the other side's walk-away alternative, or preferably both. A strong BATNA on your side (or a weak BATNA on the other side) may persuade the other party to make or accept an offer, irrespective of their relative bargaining power and position.

The art of improving your BATNA (and reducing the other side's BATNA) requires thorough preparation, working through the four pillars identified in the Harvard Program. Below are some practical tips and common mistakes:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.