Lewicki and Hiam's Negotiation Matrix

Choosing the Best Bargaining Strategy

Lewicki and Hiam's Negotiation Matrix - Choosing the Best Bargaining Strategy

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Make sure that you get your share of the pie.

You've got a busy day ahead.

First, one of your team members wants to meet with you to discuss a raise. Next, you have a conference call with a supplier, who wants to increase shipping rates. Finally, you've got a meeting with your boss about your budget, which she wants to cut by 15 percent. With a schedule like this, you've got a lot of negotiating to do!

The challenge is that each of these situations needs a different approach: some of these negotiations will be collaborative, while others will likely be more competitive.

Some people approach all negotiations in the same way, using an identical method each time. However, there are many different ways to negotiate; and when you choose the best strategy for each situation, you're far more likely to get what you want. But how do you know which approach to use for each situation?

Lewicki and Hiam's Negotiation Matrix helps you answer this question.

About the Tool

Roy Lewicki and Alexander Hiam developed the Negotiation Matrix and published it in their 2006 book, "Mastering Business Negotiation."

The Negotiation Matrix, shown in figure 1, helps you choose the best negotiation approach for your situation, based on the importance of the outcome and the importance of the relationship.

Figure 1

Lewicki and Hiam's Negotiation Matrix.

From "Mastering Business Negotiation: A Working Guide to Making Deals and Resolving Conflict," by Roy J. Lewicki and Alexander Hiam. © 2010, Jossey-Bass. Reproduced with permission of John Wiley and Sons, Inc.

Lewicki and Hiam say that there are five negotiation strategies that you can use: "Avoiding," "Competing," "Accommodating," "Collaborating," and "Compromising." You can determine the strategy that's best for you by looking at where your situation falls on the X- and Y-axes.

The model's X-axis looks at the importance of the outcome of the negotiation. The further right you move along this, the more important the outcome is to you. The Y-axis plots the importance of your relationship with the other person; you plot low-priority relationships at the bottom of the matrix, while you plot higher priority relationships at the top.

Uses

It's best to use the Negotiation Matrix before you enter negotiations with another person, because, by analyzing your priorities, you can choose the negotiation strategy that's best suited to your particular needs.

You can also use the matrix to analyze how other people are likely to choose to negotiate. If you let them go first, pay attention to the strategy that they choose, as this will tell you a lot about their priorities.

Tip:

Before you start negotiating, it's important to identify your BATNA (Best Alternative to a Negotiated Agreement), and the other person's BATNA. By doing this, you will be aware of the alternatives, and you'll be able to make informed decisions during the negotiation.

Let's look at each of the five negotiation strategies in greater detail.

The Five Negotiation Strategies

1. Avoiding (Postpone to Win)

The "Avoiding" strategy appears in the lower left-hand corner of the matrix, and it represents situations where the outcome and the relationship are both low priority. Put simply, it's not worth getting into a conflict over this situation. So, you can either withdraw from negotiations (temporarily or permanently) or avoid the situation altogether.

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People often use the avoidance strategy when the other person is angry or emotional. Take care to control your own emotions if the other person is upset, and focus instead on being empathic and using active listening skills.

Keep in mind that avoidance of negotiation in emotionally charged situations is often a first tactic; when the other person calms down, you can steer them into another negotiation style.

You could also choose to use the avoidance strategy when you have another strong alternative to consider, or if you can meet your needs without negotiating at all.

2. Accommodating (Lose to Win)

The "Accommodating" strategy falls in the upper left corner of the matrix; when the relationship has high importance, but the outcome of the negotiation isn't a priority.

With this strategy, you're not too worried about "losing" on the outcome in order to preserve the relationship; for instance, when you're negotiating a raise with a star employee, who you really want to keep. It's also useful in situations where you need to delay a bigger negotiation until you have more support, evidence, or time.

Last, you can use accommodation to accept a short-term loss in exchange for a long-term gain. For example, you might accommodate your boss by delaying your vacation so that she can take hers, so that, in exchange, she gives you an extra two days off in the next month.

Before accommodating, confirm that the relationship is substantially more important than the outcome. If this is the case, then build trust by making your intentions clear. Make sure that the other person understands that you're giving up your interests to accommodate his or hers – accommodation won't build relationships unless the other person understands what you're doing!

Next, show respect for the other person's position or abilities with sincere praise or compliments. Remember, your goal is to enhance and preserve this relationship, so be positive and forthcoming.

3. Competing (Win-Lose)

This strategy is shown in the lower right-hand corner of the matrix. Here, the outcome is important, while preserving the relationship may not be important at all.

This strategy is best when you need to win, even at the expense of the relationship. A good example of the competitive strategy is when you buy a car; you want the best deal possible, and maintaining a friendly, lasting relationship with the salesperson isn't important.

You can use this strategy when you're negotiating with someone who represents someone else, or when both parties have only short-term goals.

Competitive negotiation doesn't mean that a relationship has to be ruined. Both sides can still respect each other, so long as you both stay fair and honest in the negotiations. It takes strong character, assertiveness, and inner strength to negotiate successfully in this type of scenario, so work on building these skills early on.

It's important to go into competitive negotiations with a clear understanding of what you need to get out of the situation. Write down what you want to achieve, as well as a range of other offers or concessions that you're willing to give up to get what you want. By doing this first, you develop a better understanding of what you can exchange with the other person.

If you're negotiating with an unfamiliar party, start the negotiation off with lots of questions. Do your best to get to know the other side; you might even want to ask the person what his or her objectives are.

Distributive bargaining often falls into the competitive strategy because it's "win-lose." Despite this, it's important to remember that both parties can still work towards an outcome that they agree is fair and reasonable.

4. Collaborating (Win-Win)

The "Collaborating" strategy makes up the upper right corner of the matrix. Collaboration is a win-win or integrative negotiation style, because the negotiation is important to win, at the same time that you preserve the relationship. Both parties need to achieve their goals in some way.

Collaboration is often the best approach when there are undesirable outcomes, such as two parties fighting over a very small reward. With collaboration, you can both work together to achieve a larger reward, instead of settling for even smaller pieces.

Start the collaborative negotiating style by displaying trust and building rapport . Tell the other party openly what you intend to do and what your goals are. By being open in this way, you'll build trust and create bonds.

Your reputation also plays a part in how successful your collaboration efforts will be. If you have a reputation built on fairness, honesty, and integrity, then it will be easier for the other party to trust you in the process. Make sure that you deserve a good reputation!

Creative problem solving is an important part of collaboration; for both parties to win, you must find new, creative ways to look at the problem.

5. Compromise (Split the Difference)

"Compromise" is located in the center of the matrix. Compromise is often sought when parties can't find ways to collaborate fully, but when they still want to meet their goals and preserve the relationship. Compromise requires less intentional effort than collaboration.

Compromise often uses strategies from the other four negotiation styles, which is why understanding the other styles will help you compromise more effectively. On some issues, you might need to use the give and take of collaboration, while other issues might require the competitive negotiation style.

It's important to stay flexible during this process. Remember, you're going to gain as well as lose here, so make sure that you fully understand your goals, especially if you're negotiating on behalf of someone else. You also need to prioritize certain goals, so that you know what you can and cannot afford to lose.

Keep in mind that the person who makes the first offer is often the one who loses most overall, so, if you can, let the other party take the lead early on. Not only does this put you in a stronger position, but it also gives you a good look at the other party's priorities and goals. When you come back with a counteroffer, start with small compromises. If you start small, this can help avoid escalating demands from both sides.

Last, show that you want to negotiate by addressing the other party's key interests or concerns. This will demonstrate your fairness and empathy, and show that you're willing to work to achieve a win for everyone.

Tip:

See our article on the Persuasion Tools Model, which gives a different insight into choosing the best negotiation style.

Key Points

Roy Lewicki and Alexander Hiam developed the Negotiation Matrix and published it in their 2006 book, "Mastering Business Negotiation."

The matrix allows you to choose the best negotiation strategy, based on the importance of the outcome and of the relationship in each situation. These five styles are "Avoiding," "Competing," "Accommodating," "Collaborating," and "Compromising."

To use the model, plot the importance of the relationship on the Y-axis and the importance of the outcome on the X-axis. This will help you pinpoint the best negotiation style to use in each situation.