This may be the most important part of the process. Before you start negotiating, do your homework. What’s the nature of the conflict? What’s the history leading up to this negotiation? Who’s involved and what are their perceptions of the conflict? Then consider your goals, in writing, with a range of outcomes from “most helpful” to “minimally acceptable.” If you’re a supply manager at Dell Computer, for instance, and your goal is to get a significant cost reduction from your keyboard supplier, make sure this goal stays paramount in discussions and doesn’t get overshadowed by other issues. Next, assess what you think are the other party’s goals. What intangible or hidden interests may be important to them? On what might they be willing to settle? Think carefully about what the other side might be willing to give up. People who underestimate their opponent’s willingness to give on key issues before the negotiation even starts end up with lower outcomes.33

Once you’ve gathered your information, develop a strategy. You should determine your and the other side’s best alternative to a negotiated agreement, or BATNA. Your BATNA determines the lowest value acceptable to you for a negotiated agreement. Any offer you receive that is higher than your BATNA is better than an impasse. Conversely, you shouldn’t expect success in your negotiation effort unless you’re able to make the other side an offer it finds more attractive than its BATNA.

In nearly all cases, the party with superior alternatives will do better in a negotiation, so experts advise negotiators to solidify their BATNA prior to any interaction.34 Therefore, be equipped to counter arguments with facts and figures that support your position. There is an interesting exception to this general rule—negotiators with absolutely no alternative to a negotiated agreement sometimes “go for broke” since they don’t even consider what would happen if the negotiation falls through.35

Once you’ve done your planning and developed a strategy, you’re ready to define with the other party the ground rules and procedures of the negotiation itself. Who will do the negotiating? Where will it take place? What time constraints, if any, will apply? To what issues will negotiation be limited? Will you follow a specific procedure if an impasse is reached? During this phase, the parties will exchange their initial proposals or demands.

When you have exchanged initial positions, you and the other party will explain, amplify, clarify, bolster, and justify your original demands. This step needn’t be confrontational. Rather, it’s an opportunity for educating each other on the issues, why they are important, and how you arrived at your initial demands. Provide the other party with any documentation that supports your position.

The essence of the negotiation process is the actual give-and-take in trying to hash out an agreement. This is where both parties need to make concessions. Relationships change as a result of negotiation, so take that into consideration. If you could “win” a negotiation but push the other side into resentment or animosity, it might be wiser to pursue a more compromising style. If preserving the relationship will make you seem easily exploited, you may consider a more aggressive style. As an example of how the tone of a relationship in negotiations matters, people who feel good about the process of a job offer negotiation are more satisfied with their jobs and less likely to turn over a year later regardless of their actual outcomes from these negotiations.36

The final step in the negotiation process is formalizing your agreement and developing procedures necessary for implementing and monitoring it. For major negotiations—from labor–management negotiations to bargaining over lease terms—this requires hammering out the specifics in a formal contract. For other cases, closure of the negotiation process is nothing more formal than a handshake.