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Negotiating Lessons, Tactics and Skills:
A Presentation By:
Prof. Michael L. Bloom Director, The Transactional Lab
The University of Michigan Law School
12th Annual Midwest Supply Chain Management Conference
March 11, 2015
Increasing Your Bottom Line By Improving
How You Negotiate
Bruce A. Courtade Attorney with
Rhoades McKee, PC
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
What is Negotiation?
Oxford Dictionary:
http://www.oxforddictionaries.com/us/definition/american_english/negotiation
What Is Negotiation?
negotiation Syllabification: ne·go·ti·a·tion Pronunciation: /nəˌɡōSHēˈāSH(ə)n
NOUN
(also negotiations)
1Discussion aimed at reaching an agreement:a worldwide ban is currently under
negotiation between unions and employers
1.1 The action or process of negotiating: negotiation of the deals
1.2 The action or process of transferring ownership of a document.
Origin: late 15th century (denoting an act of dealing with another person):
from Latin negotiatio(n-), from the verb negotiari (see negotiate).
The Four Stages of Negotiation
Preparation
Info Exchange
Bargaining
Agreement
What Is Negotiation?
NEGOTIATION IS LIFE!
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
CREATING SHARED VALUE
• Agreements where both
sides get something that they
need
• “Win-Win” as espoused by
“Getting to Yes”
What is the Goal of Negotiation?
What is the Goal of Negotiation?
WHAT IS “WIN-WIN”?
www.womensally.com/categories/Negotiation
With Win-Win As Goal …
• All sides get something that
they need
• Costs very little
• Builds goodwill and momentum
• Builds or keeps the probability
of future professional
relationship
Benefits of Win-Win
Benefits of Win-Win
And … if you’re really successful …
What can you expect if you “win” so much that the
other side is either going to fail or hate you?
Eventually … the deal will crash.
Drawback of Win At All Costs Negotiating
Drawback of Win At All Costs Negotiating
What can you expect if you “win” so much that the
other side is either going to fail or hate you?
Or promises will get broken.
What can you expect if you “win” so much that the
other side is either going to fail or hate you?
Or worse yet …
Lawsuits will be filed.
Drawback of Win At All Costs Negotiating
Problems with “Win-Win”
1. Easy to Say, Hard to Do?
2. Can come off as presumptuous.
That’s right … It’s a balancing act!
Problems with “Win-Win”
And you know the problem with balancing acts:
Sometimes they leave you flat on your face!
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
TIPS FOR PREPARING TO NEGOTIATE
1. Know Your Objective.
2. Determine your BATNA
3. Do Your Homework.
a) Information is POWER
b) Learn as much as you can about the other side’s wants and
needs as possible
c) What pressures are they under?
d) What opinions/beliefs do they have?
4. Come up with a list of why your proposal benefits the other side, too
a) DO NOT SHARE THIS AT THE BEGINNING …
• Reservation Price – the point of indifference
• BATNA – your next best option
– RP depends on BATNA
• Bargaining Zone – difference between the parties’ RPs
Bargaining Zone
Seller’s RP Buyer’s RP
Determine Your BATNA
• Reservation Price – the point of indifference
• BATNA – your next best option
– RP depends on BATNA
• Bargaining Zone – difference between the parties’ RPs
Determine Your BATNA
Buyer’s RP Seller’s RP
No Bargaining Zone
• Step 1 – identify alternatives
• Step 2 – identify the best (BATNA)
• Step 3 – translate value of BATNA to RP
– Adjust for different subjective valuation of NA vs. BATNA
• Step 4 – repeat Steps 1-3 for other side
– Might be very difficult to know other side’s BATNA and RP
Determine Your BATNA
• What information do you need to better understand your BATNA and RP?
• What information do you need to better understand the other side’s BATNA and RP?
• What information is the other side likely to want from you?
• What will you reveal, and what will you conceal?
• How will you seek to obtain information from the other side?
Information Gathering
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
You have TWO ears and ONE mouth for a
reason …
So clean out yours ears and spend twice as
much time listening as you do talking …
PREPARING FOR NEGOTIATION:
The 2:1 Rule And Its Importance
And you might hear something important – even shocking!
PREPARING FOR NEGOTIATION:
The 2:1 Rule And Its Importance
PREPARING FOR NEGOTIATION:
The 2:1 Rule And Its Importance
Reaffirmation is Crucial!
“What I hear you saying is …”
“I understand that you are saying …”
Shows you respect your opponent’s position AND
care about what s/he has to say
General Strategy #1:
Timing Isn’t Everything … But Is Important!
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #2
Blessed Are The Flexible, For They Cannot Be Broken!
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #3:
Keep Your Emotions
In Check!
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #4:
Find common ground early; return to it often
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #5:
Be assertive but not aggressive
Assertive = part of negotiating – stake your ground
and stand firmly upon it
Aggressive = confrontational: you see to your own
interests without regard to others
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #5:
Assertive =
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #5:
Aggressive =
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #6:
Always be prepared to
walk away
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #7: Don’t be in a hurry!
1. Focus on their pressure – not yours!
2. Focusing on why YOU need to make a deal plays into the other side’s
hands.
3. Benefit of homework: knowing why they need to get the deal done
helps you understand their needs, which helps get the deal done for
you.
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
General Strategy #8:
Don’t give anything up without getting something in return.
“Salami it” or “Pizza Pie It” or “Use the Velveeta.”
BE CAREFUL ABOUT OFFERING A SLICE IF YOU ARE NOT
SURE!
MORE NEGOTIATION TIPS
Ask Good Questions!
Ask open-ended questions
• “Can you explain how you arrived at that
decision?”
• “What’s a major roadblock you see preventing us
from reaching a deal?”
• “How do we move forward from here?”
AVOID “yes” or “no” questions
Avoid Building Barriers
Use “I” instead of “you” to avoid finger-pointing and
barrier-building
• Instead of “You shouldn’t do that” …
• Try “I don’t feel comfortable when you do that.”
Building trust information exchange creative
problem solving
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
Throw In A “Hmmm”
Or a Wow!
Takes practice; use with caution …Goal is gentle
indication that you’re not on the same page
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
Avoid Hand Grenades!
Avoid the following phrases:
• “I’m going to be honest with
you”
• “Take it or leave it”
• “What’s your absolute
bottom line?”
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
TEN (OR MORE) TIPS FOR YOUR
NEXT NEGOTIATION
SILENCE CAN BE YOUR FRIEND!
Let the other side respond before you hurt yourself!
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
Avoid Ambiguous Words
• “Can” vs. “Will”
• “Possibly” = “Probably Won’t”
• “Will Try” = Not Promising ANYTHING
Use numbered paragraphs
Avoid abbreviations unless clearly defined
CLOSING THE DEAL:
When to Get What In Writing
Be explicit about who has an obligation
• Active Voice (“Seller shall purchase insurance”)
• Not Passive Voice (“Insurance shall be
purchased”)
CLOSING THE DEAL:
When to Get What In Writing
“SMAC” in business vs. “SMACK” in Negotiation
In corporate vision statements, SMAC is:
• Specific;
• Measurable;
• Achievable; and
• Challenging.
CLOSING THE DEAL:
When to Get What In Writing
“SMAC” in business vs. “SMACK” in Negotiation
In writing negotiation settlement agreements, SMACK is:
• Specific;
• Measurable;
• Accountable;
• Counsel-Approved; and
• Kept.
CLOSING THE DEAL:
When to Get What In Writing
“SMAC” in business vs.
“SMACK” in Negotiation
Failure to remember any
one of the “SMACK”
requirements could result
in nasty consequences …
CLOSING THE DEAL:
When to Get What In Writing
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
Today’s Goals –
Gain A Basic Understanding of:
• What is Negotiation?
• What is the Goal of Negotiation?
• Preparing for Negotiation
• Ten (or More!) Tips for Negotiating
• Closing the Deal: Putting It In Writing
BREAK BEFORE BREAKOUT
PRACTICE NEGOTIATION
DEBRIEFING
QUESTIONS AND
ANSWERS
Professor Michael L. Bloom Director, Transactional Lab
Clinical Assistant Professor
Univ. of Michigan Law School
734-763-3812
Bruce A. Courtade Attorney
Rhoades McKee
616-233-5152