Negotiation is at the heart of successful business operations. This is true at every level of company, and across industries, but is especially relevant for executives and other leaders.

Because negotiation is the art of bringing different people and groups together, it's easy to see how this ability can help a leader thrive. Whether they're trying to get the most out of their teams or come to an agreement with another organization, an executive with strong negotiation skills can make meaningful contributions to overall success.

It can be tempting to assume that negotiation aptitude is a trait that's inherent to certain people — that some leaders are simply more persuasive than others. In fact, negotiation is a soft skill that executives can learn through targeted education. If you're seeking to hone your own leadership resume, this could be a worthwhile area to train and develop.

Read more: Discover how executives can hone their negotiation skills.

What is negotiation's role in business leadership?

In a basic way, negotiation is about getting what you want. At the highest level, however, it's also about making sure every party in a discussion gets what they're looking for, with everyone walking away satisfied. Leaders who excel at negotiation can attain advantages for their teams, departments, and companies while maintaining strong relationships with their negotiation partners.

Business leaders must apply this approach continually in their work, sometimes dealing with internal issues and in other cases looking outward to deal with issues outside of the business's walls.

Negotiation is embedded in many routine decisions business leaders make each day, including:

• Dealing with subordinates and team personnel: From recruiting top candidates to retaining high-performing employees, leaders are regularly tasked with finding a happy medium between what these workers want and what the company is prepared to offer in salary negotiation scenarios and beyond.
• Making agreements with other companies: Attaining favorable terms in contracts is a skill with direct financial and operational benefits for companies of all kinds. In the best negotiations, both sides will walk away happy, allowing the deal to continue for years to come.
• Dispute resolution between individuals and groups: In some cases, internal disagreements between employees or teams can have a damaging effect on productivity, morale and overall cohesion. Skilled leaders can guide these situations to a mutually agreeable conclusion through a negotiation process focused on conflict resolution.

These negotiations can take several forms, calling for a variety of techniques and tactics. For example, dealing with a contract negotiation with a third-party representative is a different process from managing a longtime employee's compensation. Learning to become a skilled negotiator means anticipating these scenarios and planning for them.

Today's leaders also face a universal shift in business communications: the rise of videoconferencing and other digital contact methods. Learning how to speak persuasively and read the reactions of negotiation partners is a slightly different process when many of those negotiations transpire remotely.

Considering the variety of roles negotiation plays in smooth business operations, it's easy to see how leaders who possess the necessary skills are well-positioned for success.

Read more: See how leaders can be persuasive when communicating digitally.

Why negotiation is an essential executive skill

The ability to negotiate is a vital part of the executive toolkit today as organizations strive to create valuable and lasting relationships, internally and externally. Achieving that goal requires leaders who aren't just able to receive favorable terms at the bargaining table, but who can keep everyone happy and willing to re-engage.

Leaders who are called upon to negotiate on behalf of their companies or teams, but who haven't worked on their soft skills, may end up having trouble over the course of difficult or extended discussions. Specifically studying relevant concepts is, therefore, a way for a leader to build their overall importance to the organization.

Managing the phases of negotiations

There are a few aspects of negotiation skills that these leaders can work on through dedicated study:

• Pre-negotiation preparation: Research should precede any important discussion. A skilled negotiator will study the situation in detail, ascertaining what each party wants, what they're prepared to offer and how the other party will approach the conversation. Of course, this preparation shouldn't lead to inflexibility — leaders should be ready to change course.
• Adaptation and bargaining: Once actual negotiations begin, the most skilled participants will be able to use their own knowledge and interpersonal skills to find mutual points of agreement and compromise. There is an art to dealing with different styles, whether the other party is employing tough tactics or coming in with a more open style.
• Maintaining relationships over time: How do the participants in a negotiation feel walking away from the table? In the best cases, everyone is satisfied and ready to continue the relationship for the long term. Winning concessions may be a Pyrrhic victory if the negotiation was contentious enough to damage future discussions.

Leaders who can tackle all these phases and perform effectively before, during and after major negotiations have distinct value for their teams. These are people who can secure the company's objectives while also setting the business up for a fruitful future relationship.

Read more: Learn about the surprising role of silence in negotiations.

Important negotiation concepts for leaders

Building a skillful and effective negotiation style involves combining several factors. On the one hand, executives need to put their own personality and perspective into their conversations. These characteristics provide a unique advantage and a sense of sincerity and conviction.

On the other hand, there are tactics to master and concepts to understand that will help lead to successful negotiations in a variety of scenarios. Learning about negotiation through executive education allows leaders to hone these skills while also helping them bring their personal insights and outlooks to the bargaining table.

All these components, taken together, can make a person into an expert negotiator. The best performers will master each little piece of the experience, from overall mindset to technical points of order, and wrap them up in their own perspective.

Practice makes perfect when it comes to mastering negotiations, which is why so many courses on the subject involve simulations and role-playing scenarios. MIT Sloan Executive Education's Negotiation Essentials Sprint and Negotiation Strategy Sprint use AI-powered interactions to build a thorough picture of negotiation in action. These realistic situations allow participants to see how they would react in real time and build their skills accordingly.

Negotiation points to know

When starting to think critically about the role of a negotiator, it pays to understand the latest insights and related best practices. Some of the oft-cited concepts around effective negotiations today include:

• The Zone of Possible Agreement (ZOPA): This is a term that describes the areas where parties in a negotiation may bring their discussions to a satisfying conclusion. If an outcome is within the ZOPA, that means it meets both sides' minimum acceptable standards and therefore represents possible common ground.
• The Best Alternative to a Negotiated Agreement (BATNA): Rather than something to discuss during a negotiation, the BATNA is a backup plan that should be available from the start. This represents what a company will do if a negotiation fails. Having this backup plan worked out beforehand gives negotiators the power to walk away from an unproductive discussion without taking a disadvantageous deal.
• Walkaway point: This is a concept and tactic closely related to the BATNA. It's the point at which a deal is no longer acceptable, and the person negotiating is willing to walk away with no agreement rather than settle for a bad outcome. It's easier to set a strategically sound walkaway point if there's a BATNA in place.
• Stretch goal: In addition to the key objectives of any negotiation, companies can come to the table with stretch goals. These are ambitious points that can help negotiators aim higher than their minimum acceptable outcome. If the discussions go exceptionally well, the company can hit its stretch goals. If not, it can still walk away with an agreeable conclusion.

Mastering such concepts and taking on new negotiation abilities is a powerful way to both build a personal resume and set your team and company up for success, as so many crucial points can be settled at the bargaining table.

Read more: Learn about the high-speed Negotiation Strategy Sprint.

How will the AI era affect negotiation?

One important point to note when learning about negotiation tactic management is that the state of the art is currently undergoing a change. Not only are communications becoming increasingly digital, executives are also turning to generative AI (GenAI) tools to inform and shape more parts of their daily work, potentially including the way they negotiate.

One of the primary ways AI is shaping negotiation is by providing analysis and feedback. With the ability to study new data points, it's now possible to take a more granular look at negotiation performance than ever before. Leaders who harness AI tools as teaching aids or take executive education courses infused with this technology can gain a new perspective on negotiation best practices.

Using GenAI as a teaching tool is a way to unlock new practice scenarios, allowing course participants to train their methods even when a live partner isn't available. The rich data gathered from these sessions can lead to further refinement. Professor Jared Curhan is one of the MIT Sloan Executive Education faculty members experimenting with these cutting-edge methods.

Read more: See how AI is shaping the future of negotiation.

Learn more about negotiation through executive education

Negotiation is a deep and varied piece of the executive experience. As such, there's more than one way to learn the related concepts, tactics, and techniques. Executive education offerings on the subject range from quick digital sprints to extensive courses, all designed to impart a specific set of knowledge and information that will help leaders excel.

Studying these concepts through MIT Sloan Executive Education is a way to build your own knowledge and experience, whether you're hoping to move up within your current organization or strengthen your resume for a potential career change. Across industries and business types, there's a universal need for leaders with an effective negotiation style, for dispute resolution both internally and externally.

By learning from top industry professionals, you can get a cutting-edge view of negotiation that will position you for success as technologies and tactics evolve.

Browse MIT Sloan Executive Education courses focused on negotiation.