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Why Negotiation Skills Are Important for Leaders

  • By Diana Kawarsky, MA, CCP
  • December 13, 2022

Negotiation Skills

Negotiation skills are one of the most important soft skills that a leader can possess. To succeed in business, it is essential to negotiate effectively with clients, employees, and other stakeholders. Negotiation involves compromise—it is not about getting everything you want. Leaders who can successfully negotiate are more likely to reach agreements that benefit everyone involved. In this article, we will discuss why negotiation skills are so important for leaders and how they can improve their negotiation skills.

What Is Business Negotiation?

Business negotiation is one of the most efficient methods of achieving success in the business world. It is the process of arriving at a mutually beneficial agreement between two or more parties to ensure a favourable outcome for all. During negotiations, both sides identify common points of interest and work towards solutions that benefit everyone.

Business negotiations are essential when it comes to finalizing contracts, setting prices and terms of an agreement, engaging in dispute resolution, or entering into major commercial deals. Negotiations also help parties build trust and better understand each other, often leading to stronger future agreements and partnerships.

Organizations need leaders capable of identifying win-win solutions through compromise, building consensus, and developing mutually beneficial agreements. For individual leaders, negotiation helps them advance their careers by interacting with other leaders in their field and formulating beneficial deals that can help propel them forward. 

What Challenges Do Leaders Face When Negotiating?

Leaders must possess mental strength and strong interpersonal skills to engage in successful negotiation. A successful negotiation requires both parties to be open-minded and understanding. One of the main challenges leaders face when negotiating is finding mutually beneficial solutions that satisfy both parties.

Leaders must be able to consider all options quickly and identify acceptable solutions that are not overly idealistic or unrealistic. Moreover, time constraints may add an extra layer of complexity to the process. In addition, negotiations can be particularly challenging if both parties are forced to deal with unforeseen circumstances.

Ultimately, how a leader navigates these issues will highly determine how successful their negotiation is. 

Why Negotiation Skills Are Important for Leaders and Managers

Leaders and managers possess a diverse range of responsibilities and obligations. They must supervise and guide their teams, solve complex problems, and make critical business decisions, among other things. Below are a few ways negotiation skills for managers are important.

  • Conflict Resolution: Negotiations allow both parties to come together to discuss their respective points of view and reach a mutually beneficial agreement that meets the needs of all involved. This helps to ensure that any disputes are handled efficiently and effectively.
  • Interdepartmental Collaboration: Leaders and managers must be able to negotiate with other departments in order to foster collaboration between them. Through negotiation, leaders and managers can ensure that each department understands the value of working together and the benefits that can be gained through cooperation.
  • Resource Allocation: By negotiating with other departments or stakeholders, leaders and managers can ensure that resources are allocated fairly and efficiently across all areas of the organization.
  • Performance Management: Through negotiations, leaders and managers can set expectations with employees regarding their performance objectives and provide feedback on how they are meeting those goals. This helps to ensure that employees stay motivated and focused on achieving their goals.
  • Vendor and Supplier Relationships: Leaders and managers must also have strong negotiation skills when it comes to vendor and supplier relationships. Leaders and managers can ensure that vendors provide quality products at fair prices while also ensuring that suppliers meet deadlines for delivering goods or services on time.
  • Stakeholder Engagement: By negotiating with stakeholders, leaders can ensure that everyone is on board with decisions made by the company while also creating an atmosphere of trust amongst all parties involved, which will help foster stronger relationships between them all going forward.
  • Change Management: During times of change, it is important for leaders and managers alike to negotiate with employees and stakeholders in order to get buy-in from all parties involved. By negotiating, management can explain why changes are being made, listen, and address any concerns raised by team members.
  • Decision-Making: Good negotiators understand how different perspectives interact during the decision-making processes and use this knowledge to help shape outcomes that best serve those involved.
  • Crisis Management: Finally, negotiation skills for managers prove invaluable during crisis management scenarios where decisions must be made quickly, often under immense pressure.

What Mistakes Should Leaders Avoid During Negotiations?

It’s not uncommon for inexperienced entrepreneurs and business people to make critical missteps during the negotiation process that can put their deal at risk. As a leader, make sure to avoid these mistakes:

  • Not adequately preparing before meetings
  • Not anticipating all potential obstacles
  • Failing to listen to what the other party has to say
  • Displaying behaviour that indicates a lack of respect
  • Being overly aggressive in tough talks
  • Getting too emotionally involved in the conversation
  • Speaking from an overly broad viewpoint
  • Having unrealistic expectations about the negotiations

What Strategies Can Leaders Use to Improve Their Negotiation Skills? 

Developing strong negotiation skills is an essential asset for any leader. With better negotiation tactics, you can attain advantageous outcomes not only in business settings but also in day-to-day interpersonal exchanges. Below are a few effective strategies leaders can adopt to improve their negotiation abilities.

Be Prepared and Plan Ahead

Leaders interested in improving their negotiation skills should focus on preparation and planning to ensure the best results. Through careful research, leaders should come to the table ready with solid facts and information to assertively express what they want while respecting the other party’s needs. Doing thorough research on negotiation and the parties involved can also help foster confidence. 

Learn to Delegate

Delegating tasks effectively is a key ingredient of a successful leader. Negotiations require effective communication, trust and quick decision-making, so it is imperative that leaders develop strategies that help them delegate tasks efficiently. Leaders should be patient when delegating tasks and allow team members the freedom to learn from experience, which in turn will improve the negotiation skills of all involved. 

Use Effective Communication

Effective communication includes not only verbal language but also nonverbal cues, such as tone of voice, body language, and facial expressions. By being mindful of these elements and using them to convey their message clearly, leaders can build trust and rapport with their negotiating partners, which can ultimately help bring about a successful outcome. Additionally, effective communication involves active listening, allowing leaders to better understand the needs and concerns of the other party and find mutual solutions that benefit both sides.

Avoid Conflicts

Even the smallest of conflicts can result in an impasse and make it difficult for a successful resolution. When conflicts arise, leaders should stay as calm and diplomatic as possible, keeping the conversation productive by finding common ground and creative solutions to reach an agreement. Leaders must be measured and mindful in their approach and ensure they prepare thoroughly before engaging in a negotiation. 

Stay Ready with Alternatives 

When it comes to negotiating, having alternative solutions will give leaders the edge they need to secure successful outcomes. Leaders should be equipped with alternative solutions so that another outcome can still bring value, even when their desired solution isn’t implemented. Alternative solutions could include compromises on some aspects of a deal or finding creative ways to bridge gaps between stakeholders. Keeping alternative solutions in mind during negotiations gives leaders and all participants involved more options for achieving successful ends—far better than going away empty-handed.

Build Relationships and Create Value

Leaders can improve their negotiation skills by adopting certain strategies that enable them to build meaningful relationships and create value. Not only should they take the time to understand the other party’s needs and interests but it is equally important to seek common ground and identify areas of mutual benefit. This strategy creates a win-win situation, where all parties are satisfied with the outcome, and their relationship grows stronger.

Be Aware of Your Views and Biases

Leaders who identify and recognize their preconceived notions and prejudices have a much better chance of reaching successful outcomes during negotiations. The more self-aware a leader is, the more likely they are to remain open-minded to alternate solutions while understanding potential underlying motivations that may be at play on both sides. When leaders take the time to reflect on their personal perspectives, they can assess whether their attitudes are influencing the process, potentially leading to compromise rather than consensus.

Seek Feedback and Learn

Leaders need to seek feedback from colleagues, mentors, or even from their negotiation counterpart. Being open to feedback and willing to learn from mistakes is crucial in developing effective negotiation strategies. In addition, leaders can also invest in training or attend workshops to learn new techniques and approaches to negotiation.

How Leaders Can Learn the Art of Negotiation with The Soft Skills Group

The Soft Skills Group offers professional soft skills training, including conflict management and negotiation skills, to a wide range of organizations. Through education and a variety of learning solutions, we strive to empower companies and individuals to improve their workplace dynamics by harnessing the power of various types of soft skills. Contact us today to book a session.

Diana Kawarsky, MA, CCP

Diana is President of The Soft Skills Group Inc., and a senior training & development professional with over 20 years of experience in delivery, design & consulting with Fortune 500 companies, Universities & Colleges in Canada, USA, Europe, and Asia. Read More