Stages of the Negotiation Process

Negotiation typically consists of five stages: preparation, opening, clarifying goals, bargaining, and agreement (or lack thereof). 

Understanding each of these stages is essential for anyone entering into a negotiation. By getting to know what each stage involves and how to approach it properly, you’ll go a long way toward keeping your negotiations productive, civil, and successful.

This content is for general educational purposes only and is not intended, and should not be considered, legal advice.

1. Preparation

During the preparation phase, you and your negotiation partners put together a plan for the negotiation to follow and prepare all the materials you need to carry out that plan.

Start by defining your team’s goal in the upcoming negotiation as clearly as possible. What do you want to achieve during the negotiation and why? Define your preferred agreement and gather the research and evidence you need.

Next, anticipate how other parties in the negotiation might go through the same process. Prepare responses and counter-arguments to their main points.

Finally, settle on your Best Alternative to Negotiated Agreement, or BATNA. This will give you a benchmark for considering deals during the negotiation. If any deal would lead to an outcome worse than your BATNA, you shouldn’t take it.

2. Opening

During the opening stage of the negotiation, you and all the parties participating in the negotiation work together to establish ground rules. 

At this stage, ask questions until you have determined at least the following information:

• Who will be doing the negotiating?

• Where and when will the negotiation take place?

• How will the negotiation proceed? (Who will present their arguments first, etc.)

• Are there any constraints (such as time limits) on the negotiation?

• What are the next steps after an agreement is reached?

• What steps will all parties take if a negotiation cannot be reached?

The more clearly you can lay out these terms, the smoother the negotiation will go for all parties.

3. Clarifying goals

Here, the negotiating parties exchange their opening positions. They explain their goals for the negotiation and present their opening arguments on why they think their desired outcome is justified.

Typically, each party will take turns making their arguments. Present the evidence you collected during stage 1 and explain how it connects to your position. During other parties’ turns, ask follow-up questions to make sure you understand all of the arguments as comprehensively as possible.

4. Bargaining 

This is when negotiations begin in earnest. Once all parties understand each other’s positions and arguments, they attempt to influence each other. 

Do this by using the argument you prepared to address other parties’ goals, needs, and values directly. Explain why your position or a compromise is the best alternative for everyone involved.

The other parties you’re negotiating with will also try to influence your position. To achieve the most productive results in the bargaining stage, be prepared to compromise and amend your initial position to a degree.

5. Agreement

You reach the final stage of a negotiation when all parties successfully agree on a position. At this point, all that’s left is to discuss the logistics of moving forward with the decision.

When all details have been discussed and agreed upon, make sure you have your agreement formalized in as official a format as possible. 

What is redlining?

To reach an agreement during the bargaining phase of a negotiation, you may have to review and rewrite specific clauses of a contract agreement. Making these reviews and edits during a live negotiation is called “redlining.” 

Contract redlining is a crucial step in negotiation because it’s how negotiators keep track of the changes that need to be made to the contract. This also means that keeping the redlining process as clear, clean, and formal as possible is extremely important. 

During any negotiation, the process for redlining the contract under discussion should be formalized as early as possible. Negotiating parties should agree on who will be in charge of maintaining the integrity of the document and what technologies they will use to do so.

Tips for effective negotiations

Every negotiation is different, but there are a few tips that will serve you well in many of them:

Think long term

When you decide on your goal and the argument you’re making to pursue it, balance your immediate-term needs with maintaining the overall health of your organization and your relationships with the other negotiators. Allow this thinking to shape your overall position both before and during the negotiation.

Find underlying interests

Any negotiator’s position is an articulation of their underlying interests and needs. To agree, you don’t necessarily need to accept their position - you just need to satisfy the interests and needs it represents. Focus on identifying and speaking to these needs as accurately as possible, and you’ll be able to find and articulate solutions that appeal to all parties far more effectively. 

Generate multiple options

Generate multiple alternatives for each of your proposals, present each in turn, and then allow other negotiators to collaborate on these alternatives with you until you arrive at a solution that works best for everyone.

Use metrics and objective measures

Avoid subjectivity and arguments rooted in opinion during negotiations. Establish and agree upon objective criteria with all negotiating parties as early as possible, then use those objective criteria to arrive at a solution whenever possible. This will help keep everyone on the same page and help keep the negotiation collaborative and equitable.

Docusign IAM

Docusign IAM seamlessly connects different components of the agreement management process and leverages state-of-the-art AI to speed up contract creation, enhance negotiations, and provide strategic insights to manage your agreement portfolio.

Get in touch with us or check out our IAM Plans and Pricing today.

This content is for general educational purposes only and is not intended, and should not be considered, legal advice. Laws frequently change and this information may not be current or accurate. Docusign disclaims all warranties of any kind with respect to this material including merchantability, fitness for a particular purpose, or accuracy. You should consult with a licensed attorney in your area for legal advice.