BCO 313 Negotiation Anne Dwyer

BCO 313 NegotiationAnne Dwyer

Negotiation Defined

Gifford –“the process in which two or more participants attempt to reach a joint decision on matters of common concern in situations where they are in actual or potential disagreement or conflict”

Objectives

Understand goals of negotiation Recognize negotiator roles and

reasons for behavior Improve preparatory skills Understand the negotiation process

1. Fundamentals of Negotiation

Stages and angles of negotiation Understanding the other negotiating party Negotiation styles Relationship building The long-term and the short-term approach Leverage The BATNA

Personal Experiences

Positive negotiation Negative negotiation Pointless negotiation ‘Never mind’ negotiation

Why do people negotiate? whenever they need someone else to help them

accomplish their goals* Create something new

New relationship, partnership, entity, transaction* Conflict

Hope to resolve dispute because they think they can use some form of

influence to get a better deal (promotion,sale) to secure an agreement instead of a public fight

When to Negotiate?

Win/Win outcome is desirable to both parties

You occupy a defensible position Both parties have options

When to NOT Negotiate:

You are in competition with the other party.

One or both sides enter with false intentions

(both sides must want win/win). Can’t possibly win You or other party lack authority

How to Negotiate?

Gain greater understanding of the other side’s motives, objectives, and constraints

Allow the other side to learn some of your motives, objectives, constraints

Seek common ground (Win/Win) Build relationships

To Summarize (so far)

Both sides must want and be willing to pursue win/win.

Don’t negotiate w/ someone whose intent is to defeat you (& vice versa)* “Don’t wrestle with a pig…you both get

dirty and the pig likes it!”

Negotiator Roles

Equal parties Employer/Employee Superior/Subordinate Agent/Beneficiary (or

other recipient) Seller/Customer

* Where does Doctor/Patient fit in?

Negotiator Roles

Your role determines:* What latitude you have* What behavior is expected of you* Behavior you expect from

the other party* Constraints

Preparation: Negotiation Brief Identify and prioritize key issues: Collect relevant facts Determine roles Examine your position

* strengths, weaknesses, BATNA, limits, and ranges of options

Know about the other party, Consider the other party’s needs, How would you proceed in their role?

Integrative opportunities : Logrolling, bundling Talk about negotiation with others

Some Negotiating lessons are tough to take...

The Pre-Negotiation Planning Phase 1

1.Decide if Subject Matter Expert involvement required

2.Research options/issues and precedence's

3.Understand the motivators of affected stakeholders

4.Know impact of each option (time, cost, quality, scope)

5.Risk/opportunity assessments6.Timing issues (urgency, best time to

meet …)7.Summarize pros and cons

The Pre-Negotiation Planning Phase 2

1. Cultural considerations (people and Enterprise)

2. Formulate strategy based on knowledge of the stakeholders

3. Pre-meeting info dissemination4. Invite appropriate empowered representatives5. Set conducive agenda, facilities, timeslot, and

refreshments6. Plan for timely post negotiation action7. Plan for analysis of “lessons learned” after

negotiating

Preparing to Negotiate

Set goals and strategies Work through emotions beforehand

* “It’s nothing personal…just business” Vito Corleone, “The Godfather”

Conceptualize What is at stake? What are the parties trying to achieve? What is the relationship of the parties? What are the legal constraints? What behaviors could/should be used? What other people are involved? How can we have a successful negotiation?

What is at stake?

Resources Values or Beliefs Preferences or Interests Relationship Identity

THE METHOD – Fisher and Ury (1991) “Getting to Yes”

Separate the People from the Problem

Focus on Interests, Not Positions Invent Options for Mutual Gain Insist on Using Objective Criteria

The Negotiation Process

Finding Common Ground* Active listening is critical.

Exploring Differences* Ask “Why?”

Tactics* Disclosures* Opening Offers & Counteroffers

The Negotiation Process

Tactics vary w/ negotiation position

* How much do you disclose?* First offer: aim high? middle ground?* Counteroffers* Principled negotiation* Time out’s

To a lawyer there are three Ways of Dealing with Conflict

Domination Compromise IntegrationTo a communicator you can also … Fight? Flight? Freeze? Flow?

Fuse?

The Negotiation Process

Recognize and Use Milestones* Track achievement of both parties’

critical objectives* Compare “scorecard” when tackling

the toughest issues

The Negotiation Process

How do you know when you’re done?* Success - Both sides:

Achieve critical objectives Are “happy” (satisfied)

* Failure Irreconcilable differences Capitulation of one side

The Negotiation Process

When finished:

* Summarize and document * Thank the other party for their efforts* Leave the door open for further

negotiation

Negotiation Debrief

A. How did the negotiation go?B. What was the tone of the

negotiation?C. What did you learn?D. What was your settlement? If no

settlement is there a follow-up letter?

Summary of Negotiation for Observers

A. How did the negotiation go?B. What was the tone of the negotiation?C. What did your classmates do well and what

need improvement?D. What advice would you give to your

classmates (things you liked, things that you might have done differently, any annoying habits (like ummm, or tapping pencil).

Caveats

The negotiating table is NOT a smorgasbord!* Don’t go back for “seconds”.

Greed is risky. Don’t play games.

* Demonstrate respect* Avoid surprises

Caveats

Beware “winning the battle and losing the war”

Don’t make offers you can’t keep.* Retracting an offer will often destroy

the spirit of negotiation.* Lying or misrepresentation may be

grounds to invalidate the agreement.

Exercises Form into teams of 3 (4 if necessary). 1. Negotiations for a scarce resource

The person who’s birthday occurs earliest in the year plays the role of the Negotiating PM (Performance Manager). Next birthday is Susan’s Manager. The third (and fourth?) persons are Observers who note use/abuse of “win-win” techniques.

Background: The Negotiating PM has a Programmer off sick, and wants to negotiate two weeks of Susan’s time to work on the Company’s most important project immediately, because Susan is the best programmer, and knows the tasks. Delays may affect everyone’s bonus.Susan’s Manager is concerned the loss of Susan will mean she will not be able to complete tasks on another project their department is committed to deliver (requiring at least one week of work in the next 3 weeks), because the Negotiating PM has a reputation of over-utilizing resources (and padding their schedule contingency). Other commitments will also need juggling.

Time: 3 minutes

Analysis of Exercise 1Susan’s Manager’s: Who felt things went very well?

Why?Observers: Lead a constructive discussion within

your team on the “win-win” techniques (2 minutes).

1. Established rapport and common goals?2. Probed for understanding of beliefs, goals, win-win

options, and hidden stakeholder motivators? 3. Paraphrased for confirmation/affirmation?4. Analysed outcomes and risks?5. Summarized what was agreed on, and next steps?• If stalled, returned to a fundamental that was agree

on?• Built on this common ground?• Avoided emotional responses (even if insulted)?• Considered interim options (or postponement) if

undesirable outcome was imminent, or key info missing?

Exercise #2Change roles. The PM becomes the Observer. The observer becomes a driver whose car has broken down at a garage 2 hours away from Toronto. Susan’s Manager becomes the head mechanic at the garage.

Background: You have to be in Toronto for an important meeting in 4 hours. The mechanic estimates it will take an hour to fix your car, but there are several local clients already expecting their cars to be fixed this morning. The mechanic wants your business, but does not want to let down any of the regular clients.

Time: 3 minutes

Analysis of Exercise 2Mechanics: Who felt things went very well? Why?Observers: Lead a constructive discussion within

your team on the “win-win” techniques (2 minutes).

1. Established rapport and common goals?2. Probed for understanding of beliefs, goals, win-win

options, and hidden stakeholder motivators? 3. Paraphrased for confirmation/affirmation?4. Analysed outcomes and risks?5. Summarized what was agreed on, and next steps?• If stalled, returned to a fundamental that was agree

on?• Built on this common ground?• Avoided emotional responses (even if insulted)?• Considered interim options (or postponement) if

undesirable outcome was imminent or key information is missing?

Exercise #3

Rotate the negotiator role to be the proud owner of a new sports car. Select someone to be a good friend wants to borrow the car on Saturday. Background: The Negotiator is not using the car this weekend, but is concerned the good friend is a fast driver. The friend is generous, and has done you several favours for the Negotiator, including a recent birthday gift.

Time: 3 minutes

Common Negotiating Mistakes

Preparation/anticipation and listening are key!• Weak knowledge of key motivators• Poor handling of Alternatives• Failure to fully acknowledge the concerns of others• Impatience/ Poor timing• Allowing emotions to escalate• Negotiating with the un-empowered• Poor close

Summary

Highly disparate parties can achieve win/win solutions.

Parties must be prepared, serious, sincere, and committed.

Keys to success are preparation, effective two-way communication, and principled negotiation.

Summary

The reasons negotiations fail include:* poor preparation * wrong intentions* greed* indecision* emotion

“Shall we talk?”

Ongoing: Keep a Negotiation Journal

Sign up: http://www.pon.harvard.edu/index.php?seminar=tr

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