What is Negotiation? Styles, Stages and Skills

Monday, 17 August 2026

Negotiation is a discussion between two or more parties with different interests that aims to reach an agreement all sides can accept. It ranges from dividing a fixed value, such as haggling over price, to creating new value by trading across several issues. Understanding its styles, stages and skills makes anyone a more effective negotiator.

Negotiation is one of the most useful skills in professional life, from commercial deals and government contracts to enterprise bargaining and everyday workplace conversations. In Australia, across the public, private and not-for-profit sectors, the ability to negotiate well shapes outcomes and relationships. In some settings, Australian law even shapes how the negotiation must be conducted. This guide explains what negotiation is, the main styles and stages, the skills that make the difference and how negotiation works in an Australian context.

What is negotiation?

Negotiation is a discussion between two or more parties who have different interests and are trying to reach an agreement. It happens whenever people need something from each other and cannot simply impose a result, from settling a price to allocating a project budget. The aim is an outcome that each party prefers to no agreement at all.

Negotiations generally take one of two forms. Recognising which one you are in shapes your approach. The Program on Negotiation at Harvard Law School distinguishes distributive negotiation, where parties divide a fixed amount of value such as price, from integrative negotiation, where they create value by trading across several issues. A distributive negotiation over a car or a house at auction is largely about one number, while an integrative negotiation over an Australian job offer might combine salary, superannuation, start date and flexible work. The same source notes that what looks distributive is often integrative underneath, once you introduce more issues to discuss. Knowing the difference helps a negotiator decide whether to claim value, create it or do both.

What are the main negotiation styles?

Beyond the broad approaches, individual negotiators tend to favour particular styles. The most widely used framework is the Thomas-Kilmann Conflict Mode Instrument (TKI), which maps five styles across two dimensions: how assertive you are about your own needs and how cooperative you are about the other party’s.

The five styles describe recognisable ways of handling a negotiation or conflict. Kilmann Diagnostics, run by the model’s co-creator, defines them as competing (assertive and uncooperative), accommodating (cooperative and unassertive), avoiding (neither), collaborating (both assertive and cooperative) and compromising (a middle ground). Each has its place: competing can suit an emergency, accommodating can protect an important relationship, while collaborating tends to produce the most durable agreements when time allows. The framework’s central point is that no single style is right for every situation. Skilled negotiators read the context and choose the style that fits, rather than defaulting to one.

What are the stages of a negotiation?

Most negotiations move through a recognisable sequence, even when they feel informal: preparation, then opening and exploring, then bargaining, then reaching and recording agreement.

A clear structure helps a negotiator stay in control at each point. The Chartered Institute of Procurement & Supply (CIPS) sets out the stages of a commercial negotiation as preparation, opening, testing, proposing, bargaining, agreement and closure. Preparation is where most of the work happens: setting objectives, researching the other party and planning. The middle stages are where positions are opened, tested and traded, while closure means documenting exactly what was agreed so there is no later dispute. CIPS stresses that negotiation is a core skill well beyond procurement, one that is just as relevant in sales, human resources, management and leadership. Following the stages keeps a negotiation purposeful rather than letting it drift, whether the setting is a commercial deal, a government tender or an enterprise agreement.

What skills does a good negotiator need?

Good negotiators rely on a set of learnable skills rather than natural charm. The classic guide Getting to Yes, written by Roger Fisher, William Ury and Bruce Patton of the Harvard Negotiation Project and first published in 1981, sets out four principles of what it calls principled negotiation: separate the people from the problem, focus on interests rather than positions, invent options for mutual gain and use objective criteria to judge the result. Underpinning these is preparation and one idea in particular. Your best alternative to a negotiated agreement (BATNA) is what you will do if no deal is reached. The Program on Negotiation describes it as your main source of power at the table, because a negotiator who knows their BATNA can walk away from a poor deal with confidence. Active listening, clear communication and the discipline to ask questions before making offers complete the core skill set.

Why do negotiation skills matter in Australia?

In Australia, negotiation runs through professional and public life, which makes it a practical skill worth developing. The scale is significant. According to the Department of Finance, Australian government entities awarded contracts worth $104.9 billion on AusTender in 2024-25, each one the product of specification, evaluation and negotiation. Workplace bargaining adds to this: the Fair Work Commission, the national workplace tribunal, approved 933 new enterprise agreements in the September 2024 quarter, covering more than 340,000 employees across the public and private sectors.

Australia also has rules that shape how some negotiations must be run. Under the Fair Work Act 2009, parties bargaining for an enterprise agreement must meet good faith bargaining requirements: attending meetings, sharing relevant information, responding to and genuinely considering proposals and refraining from unfair conduct, though they are not required to make concessions. In government buying, the Commonwealth Procurement Rules require officials to reach a value-for-money outcome in which price is not the only factor. For Australian professionals, negotiating well means understanding both the universal skills and the local rules that apply to their setting.

Building negotiation skills with AcademyGlobal

Negotiation is a learnable, highly transferable skill that develops fastest through structured practice with feedback rather than trial and error on real deals. AcademyGlobal (AG), a Sydney-based professional development provider that has taught negotiation skills across the public, private and not-for-profit sectors since 2004 and is ISO 9001:2015 certified, runs practical negotiation programs for Australian professionals. To build the capability directly, explore AG’s Negotiation Essentials course, which grounds preparation, styles, stages and value creation in realistic scenarios. The wider Negotiation, Influence and Persuasion portfolio extends these skills into influence and stakeholder settings, while for procurement and commercial teams the CIPS Study Centre and the CIPS Level 5 Advanced Diploma in Procurement and Supply develop negotiation to an advanced, accredited standard.

These programs sit alongside AG’s Leadership and Management Skills portfolio and are delivered by faculty who have negotiated in senior commercial and government roles. AG has taught negotiation in more than 20 countries on 5 continents and counts all levels of Australian government among its clients, so the skills are taught in the context participants actually work in. Learned well, negotiation turns difficult conversations into agreements that hold while protecting both value and relationships.

Frequently asked questions

What is the difference between distributive and integrative negotiation?

Distributive negotiation divides a fixed amount of value, so one party’s gain is the other’s loss, as when haggling over price. Integrative negotiation creates value by trading across several issues, aiming for an outcome that benefits both sides.

What is a BATNA in negotiation?

BATNA stands for best alternative to a negotiated agreement. It is what you will do if no deal is reached. Knowing your BATNA tells you when to accept an offer and when to walk away. It is also a key source of negotiating power.

What are the five negotiation styles?

The Thomas-Kilmann framework describes five styles: competing, collaborating, compromising, avoiding and accommodating. They differ in how assertive and how cooperative they are. No single style is best, so effective negotiators choose the one that suits the situation.

How should I prepare for a negotiation?

Preparation is the most important stage. Set clear objectives, research the other party’s interests and constraints, decide your walk-away point and plan the issues you can trade. Thorough preparation is what separates confident negotiators from reactive ones.

Is negotiation an important skill in Australian workplaces?

Yes. Negotiation is central to Australian working life, from commercial deals and government procurement to enterprise bargaining, which covered hundreds of thousands of employees in 2024 alone. Strong negotiation skills help professionals across the public, private and not-for-profit sectors.

Are there legal rules for negotiating in Australia?

For most negotiations, no specific law applies. When bargaining for an enterprise agreement, though, the Fair Work Act 2009 requires parties to bargain in good faith, which means meeting, sharing information and genuinely considering proposals. Government buyers must also negotiate for value for money under the Commonwealth Procurement Rules.

References

Program on Negotiation, Harvard Law School (2026). What Is Distributive Negotiation?

Fisher, R., Ury, W. and Patton, B. (2011). Getting to Yes: Negotiating Agreement Without Giving In. Penguin.

Kilmann Diagnostics (2026). Thomas-Kilmann Conflict Mode Instrument (TKI).

Chartered Institute of Procurement & Supply (2024). Negotiation.

Fair Work Commission (2024). Enterprise Agreements Data.

Fair Work Commission (2024). Good Faith Bargaining.

Department of Finance (2025). Commonwealth Procurement.