The Negotiations Process

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The Negotiations Process
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Verbal and Non-Verbal Communications During
Negotiation
True or False Questions
1. (T/F) ____ It is important in negotiations to
avoid actions or questions which provoke anxiety.
2. (T/F) ____ You should use humor to diffuse
tension when a conflict gets heated. 3. (T/F)
____ You should always keep your emotions under
control when trying to deal with tense
situations. 4. (T/F) ____ It is important to
take notes when people talk to you. 5. (T/F)
____ It is not appropriate to leave a conflict in
a huff and slam the door behind you.
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To Negotiate

• Whether at a bargaining table with labor and
  management a law office with plaintiffs and
  respondents Camp David with international
  combatants a hostage situation or a mediation
  between an employee and supervisor, the
  definition is the same.
• To Negotiate is to arrange or settle by
  conferring or discussing or to use information
  and/or power to affect human behavior in an
  environment filled with multiple issues and
  tensions.

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Another definition of Negotiation...

• A strategic endeavor directed toward the
  specific ends of reaching agreements and
  satisfying negotiators needs.
• Strategies are the pre-formulated game plans,
  objectives, and approaches that guide negotiators
  in reaching their goals
• Tactics are the specific ways bargainers
  implement these strategies.
• From Strategy of Conflict by Schelling

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Characteristics of Negotiations From Essentials
of Negotiations by Lewicki, Saunders

• Two or more parties are involved.
• There exists a perceived conflict of interest
  between those parties.
• Parties chose to negotiate because they believe
  they can influence each other to get a better
  deal than what they would otherwise get if action
  was unilateral.
• For time being, parties prefer to work together
  for resolution rather than fight or seek other
  non-negotiated remedies.
• Parties expect to experience give and take
  during their negotiations as each side
  compromises positions.
• Parties expect that negotiations will allow them
  to manage both the tangibles and the
  intangibles contained in their issues.

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Motivations for Negotiation

• Instrumental
• PRACTICAL value
• Negotiation to achieve tangible or quantitative
  outcomes (i.e., Wages profits productivity
  benefits etc.)
• Easy to measure

• Expressive
• ATTENTION value
• Negotiation to achieve intangible or qualitative
  outcomes (i.e., More respect easier work
  recognition more input etc.)
• More difficult to measure

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Conflicts in NegotiationsFrom Essentials of
Negotiations

• Intrapersonal or Intrapsyhic conflict
• Conflict within the individual
• Interpersonal conflict
• Conflict among and between individuals
• Intragroup conflict
• Conflict within a group
• Intergroup conflict
• Conflict among and between groups

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Barriers to Successful Negotiations

• Parties may not be open about their desired
  outcomes.
• Parties may not be clear in their own minds about
  what they actually want to accomplish with their
  proposals.
• Parties may not reveal all of the truth regarding
  their positions to each other.
• Parties may not be willing to believe all that
  they hear from each other.
• Parties may not have the right negotiators.
• Parties may not be ready to settle.

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Traditional Negotiation Relationship

• Assumptions
• For me to win, you must lose therefore, we must
  compete
• To help you is a sign of my weakness and it will
  hurt me therefore, little real communication
• My power comes from opposing, criticizing and
  beating you therefore, parties are more rigid

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Traditional Negotiation Relationship

• Outcomes
• One-sided victories (Win-Lose)
• Split-the-difference compromise
• Escalation into conflict
• Costs high to both parties
• Neither party fully achieves goals
• May lead to decay and decline of both parties

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What is the Aim of Negotiations?
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Aim of Negotiation

• To reach a desired and durable result by
  including the interests of both parties
• To reach agreement efficiently and fairly using
  talents of all participants to solve problems
• To develop a shared sense of satisfaction from
  working together successfully

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A Good Negotiating Outcome

1. Better Than Alternatives Away From The Table.
2. Satisfies Interests
3. The Best Among Many Options
4. I Do Not Feel Taken A Legitimate Outcome.
5. Efficient Process Requires Good Communication
6. Realistic Commitments - Likely to Comply, Easy
   to Implement
7. Leaves Us With A Good Working Relationship

Me Well Satisfied You Acceptable
Both Your problem is my problem
Dont leave joint gains on the table.
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Negotiation MethodsPower, Rights, and
Interest-Based

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Negotiating Methods

• The outcome of any agreement will reflect the
  extent and manner in which the parties deal with
  the basic methods of negotiation.
• Power
• Rights
• Interests

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Negotiating Method - Power
Power
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Negotiation Method - Power

• The ability to direct the outcome of
  negotiations.
• Difficult to determine who is more powerful
  without a destructive power contest
• Perception of other partys power often incorrect
• Other party may respond irrationally

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Negotiating Methods - Rights
Rights
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Negotiation Method - Rights

• The entitlement to a negotiating outcome.
• Rarely clear answer
• Two rights sometimes contradictory
• Advocating rights is frequently costly and time
  consuming
• Rights assertion frequently requires intervention
  by a third party

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Negotiating Methods - Interests
Interests
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Negotiation Method - Interests

• What is needed for a acceptable negotiating
  outcome.
• Interests usually underlie positions
• Concern needs, desires, concerns, fears, values,
  or matters that a party really cares about
• Seeks to preserve relationships

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Negotiating Methods
Power
Rights
Interests
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Conflict Resolution MethodsPower/Rights/Interests
/Transaction Costs
Power Rights Interests
Resources Required always high time, money, stress generally costly time, money, stress time, talent
Satisfaction with Outcome one-sided the winner mixed not satisfied, to highly satisfied both interests must be satisfied or no agreement
Compliance as long as power is applied until a better opportunity presents itself very durable because interests are met
Quality of Relationship always runs risk of destruction one upmanship mutual respect, valued partner, joint problem solvers
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Positional and Interest-BasedNegotiations

• Understanding these negotiating concepts and
  recognizing when to use them.

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Positional Negotiations

• Positional negotiations is a process that starts
  with the solution. Parties propose solutions to
  each other and tender offers and counter-offers
  with the objective of reaching a solution
  acceptable to all parties.

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Positional NegotiationsAttitudes

• Resolution options are limited
• We are adversaries
• There is only one right solution Mine
• Be aggressive to win
• Any concession is a sign of weakness
• Negotiate to win all you can
• A win for you is a lose for me

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Positional NegotiationsGoals

• NEGOTIATE TO WIN!
• WIN ALL YOU CAN!
• FOCUS ON THE PRESENT!

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Positional NegotiationsWorks Best

• One Time Problem
• Parties have Equal Skills
• Comfortable with Tactics
• Desire the Right Decision

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Shortcomings in Positional Negotiating

• It tends to lock negotiators into positions they
  have taken
• Ego becomes involved the more a party is
  compelled to defend a position
• It diminishes the importance and value of
  personal relationships
• It encourages reliance on power to force
  acceptance of a position
• It discourages communication of interests,
  values, and needs that are essential to the
  search for creative solutions

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Interest-Based Negotiations

• Interest-based negotiations starts with a needs
  analysis. Parties develop an understanding of
  their individual needs and seek to educate the
  other party about these needs and learn the needs
  of the other party with the objective of engaging
  in joint problem solving to meet all parties
  needs.

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Interest Defined

• Interests are specific needs, conditions, or
  results that a party must meet for successful
  negotiations. Interests may be procedural,
  psychological, substantive, or external.

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THE INTEREST ICEBERG
Remedy Requested
Relationships
Culture
Hurts/wounds
Behaviors
Pride
Practices
Bias
History
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Interests

• PSYCHOLOGICAL
• Trust

• PROCEDURAL
• Fairness

• SUBSTANTIVE
• Outcome

• EXTERNAL
• Others

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Interest-Based NegotiationsAttitudes

• Resolution options are not limited
• We are problem solvers
• Relationships are important
• Creative solutions are possible
• There are probably several satisfactory solutions
• We may have shared interests
• Our goal is win/win

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Interest-Based NegotiationGoals

• IDENTIFY YOUR INTERESTS!
• ADVOCATE FOR YOUR NEEDS!
• PRESERVE THE RELATIONSHIP!

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Interest-Based NegotiationsSolve the Problem(s)

• Focus on issues, not personalities
• Focus on interests, not positions
• Invent options that meet both sides most
  important concerns

• Look to standards for what should happen. Keep
  in mind the standard of mutual caretaking
  relationships that always go one way become very
  difficult
• Talk about how to keep communications open as you
  go forward

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Interest-Based BargainingWorks Best

• Relationship are Important
• Communications are Good
• Trust is Developed
• Multiple Problems

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ComparisonInterest-Based and Positional
Negotiations

• Interest-Based
• Identify Issues
• Clarify Facts
• Find Interests
• Develop Options
• Consider Standards
• Rate Options/Standards
• Reach Consensus

• Positional
• Identify Issues
• Clarify Facts
• Develop Positions
• Advocate Positions
• Reduce Your Demands
• Consider Counteroffers
• Reach Agreement

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Positional vs Interest Based Negotiating Elements
In Positional Negotiating In Interest Based Negotiating
Open high or low Use objective standards
Trade concessions toward midpoint-compromise Choose from many options rather than splitting the difference
Disguise true feelings wear a mask Speak openly and clearly, describing your interests
Discredit case and claims made by the other party Accept case made by the other party as one possible solution
Use tactics to keep the other party off balance Make sure the other negotiator feels comfortable, unthreatened, secure and respected
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Creating a Stable Negotiating Environment

• Engage in discovery and mutual education
• Create advocacy
• Listen, seek to understand
• Enhance enforcement
• Enhance implementation

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Solve the Problem

• Focus on issues, not personalities
• Focus on interests, not positions
• Invent options that meet both sides most
  important concerns

• Look to standards for what should happen. Keep
  in mind the standard of mutual caretaking
  relationships that always go one way become very
  difficult
• Talk about how to keep communications open as you
  go forward

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QUESTIONS FOR EXPLORING INTERESTS

• What problem are we trying to solve?
• Are there other problems?
• What do you want to have happen?
• What concerns do you have?
• What is the best case scenario for you?

• What do you want to accomplish?
• What would have to happen for you to feel
  satisfied?
• What will it take for you to work together?
• Is there anything else important to you?

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Management of NegotiationsExpectations

• Reality
• Standards
• BATNA/WATNA

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Alternative Outcomes to Reaching a Negotiated
Agreement

• BATNA
• Best Alternative to a
• Negotiated Agreement

• WATNA
• Worst Alternative to a
• Negotiated Agreement

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BATNA

• The least damaging outcome anticipated if no
  agreement is reach.

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BATNA Advantages

• Forces negotiators to realistically evaluate
  their negotiating strength
• Prevents blind negotiations
• Protects from accepting terms that are too
  unfavorable

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WATNA

• The most damaging outcome to anticipate if no
  agreement is reached.

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WATNA Advantages

• Forces negotiators to realistically evaluate
  their options
• Prevents power negotiations
• Protects from rejecting terms that are in your
  interest to accept

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Management of NegotiationsClosure

• Reaching Agreement
• Drafting the Agreement
• Signing the Agreement

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Structural ComplexitiesofMulti-Party
Negotiations
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A Simple Two Party Negotiation
Party B
Party A
In any given negotiation session, many types of
negotiation occur between interdependent
individual groups. For simplicitys sake, let
us illustrate this point by examining a two-sided
dispute. At the negotiating table are parties A
B.
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Horizontal Bargaining
Party B
Party A
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Horizontal Bargaining

• Lead negotiator
• Roles
• Behavior
• Techniques
• Procedures
• Interests
• Closure

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Vertical Bargaining
Constituency Bargaining
Party B
Party A
Organizational Bargaining
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Vertical Bargaining

• Constituency
• Team member represents a special group
• Constituency can assist in clarify interests
• Need to keep informed
• Organizational
• Team is delegated negotiating authority
• Understand interests of delegating authority
• Need to keep informed

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Unilateral Bargaining Vested Interest
Party B
Party A
Unilateral vested-interest bargaining occurs when
one or more members of a team covertly approach
members of another team.
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Unilateral Bargaining Conciliatory
Party B
Party A
Unilateral conciliatory bargaining occurs when
one or more parties informally, and possibly
privately, explore alternatives for
settlements with members of another team. Those
overtures are conducted with the full knowledge
of the team in the hope that the information
shared will lead to fruitful bargaining for all
sides.
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Unilateral Bargaining

• Conciliatory Interest
• Authorized by the team or lead negotiator
• Used to clarify data or identify mutual needs
• Requires accountability
• Constructive
• Vested Interest
• Unauthorized covert meeting
• Conducted for the benefit of the team member
• Destroys team synergy
• Destructive

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Bilateral Bargaining
?
Party B
!
Party A
Bilateral bargaining occurs between the teams and
is generally conducted by a spokesperson or by
authorized team members. In this type of
negotiation, the history of the dispute is
reviewed, issues and interests are identified,
alternatives are generated and discussed and
agreements are reached.
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External Factors
Influential Individual
Press
Party B
Party A
Environmental Group
Demonstrations
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Collective Participation
Party B
Party A
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Exercise Modifications

• The company is Belgrade Baby Foods
• The crime is potentially a felony
• Each table should
• 1) identify their own interests
• 2) Identify the other sides interests
• 3) Create options to satisfy both interests
• 4) Post all on a flip chart and be prepared to
  report out to the other side

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Influences on Negotiation
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What are the cultural influences in negotiations
to be aware of when dealing with representatives
from

• France
• Germany
• Italy
• UK

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• Goals (contract or relationship)
• Attitudes towards negotiation process (win-win,
  win-lose)
• Personal styles (formal vs. informal)
• Styles of communication (direct/indirect)
• Time sensitivity (high or low)
• Emotionalism (high or low)
• Agreement form (specific or general)
• Agreement building process (bottom up or top
  down)
• Negotiating team organization (unilateral or
  consensus)
• Risk Taking (higher or lower)

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France

• Less team oriented negotiate individual
• Debate is stimulating
• Well prepared
• Parties can make decisions
• Strategies include logical proposals, arguments
  and counter proposals
• Preference for discussing philosophy
• Important meetings treated very formally

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Germany

• Well prepared, serious, organized
• Tough positional stances
• Least affected by interpersonal issues/relations
• Negotiations are formal and will follow agenda
• Relationships should not intrude on tasks
• Low risk takers
• Conflict viewed as inadequate preparation
• Emotional outbursts and frequent interruptions
  not appreciated
• Decision making takes time

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British

• Value bottom line and short term results
• Open about opinion but indirect in its
  expression, emphasizing courtesy and tact and
  formality.
• Dont show true emotions often reserved and
  understated
• Risk averse and cautious, favoring security and
  status quo

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Italy

• Personal relationships important
• Need to feel they can get along with counterparts
• Confident, shrewd and competent
• Initial negotiations can include lots of casual
  talks and positioning tactics
• Takes a long time to get to point
• Multiple conversations at once and interruptions
  common
• Presentation must be organized, clear and
  polished with dramatic effect for audience

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What is the Serbian Approach to Negotiation?

• Goals (contract or relationship)
• Attitudes towards negotiation process (win-win,
  win-lose)
• Personal styles (formal vs. informal)
• Styles of communication (direct/indirect)
• Time sensitivity (high or low)
• Emotionalism (high or low)
• Agreement form (specific or general)
• Agreement building process (bottom up or top
  down)
• Negotiating team organization (unilateral or
  consensus)
• Risk Taking (higher or lower)

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Parameters of contract

• Sales and marketing training for sales force of
  brake manufacture
• General sales training, not industry specific
• Focus on concepts, leave specific knowledge to
  participants

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Feedback on Training

• Not specific to industry!!
• Alienated females with inappropriate language
• Task Force Assignment had no females
• Too lecture oriented

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MANAGEMENT OF NEGOTIATIONS

• Interest-Based Negotiations

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Management of NegotiationsSeven Factors to
Consider

• Preparation
• Planning
• Administrative
• Communications
• Techniques
• Expectations
• Closure

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Management of NegotiationsPreparation

• Identify your interests
• Anticipate other partys interest
• Find objective standards
• Generate possible options

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Management of NegotiationsPlanning

• Set goals for initial contact
• Collect and analyze facts
• Design a strategy
• Negotiating Team Representation

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Management of NegotiationsAdministrative

• Time
• Location
• Participants
• Room Arrangement
• Refreshments
• Support Roles
• External elements

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Management of NegotiationsCommunications

• Behavior
• Verbal and non-verbal
• Trust

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Levels of Trust

• Ability to Perform
• Personal Conduct
• Compliance with Agreements

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Building Trust

• Listen
• Display a concern for interests
• Demonstrate empathy
• Keep confidences
• Fulfill promises
• Be respectful

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How easy is it to build trust in negotiations?
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Destroying Trust in Negotiations

• Act inattentive
• Ignore interests
• Breach a confidence
• Break a promise
• Embarrass the other party
• Spring a surprise

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How easy is it to destroy trust in negotiations?
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Rebuilding Trust

• Accept responsibility for actions
• Acknowledge your actions
• Make restitution or repairs
• Be transparent in future

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Management of NegotiationsProblem-Solving
Techniques

• Brainstorming
• Consensus-Building
• Action Planning

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Brainstorming

• A technique used to generate as many original
  ideas as possible for solving a problem or an
  impasse without judging them. It is based on the
  theory that the more people working on the
  problem the more ideas that will be generated.

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Rules for Brainstorming

• Define the problem
• Do not criticize an idea
• Be imaginative
• Build on others ideas
• Aim for quantity
• Record all ideas

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Procedures for Brainstorming

• Create a relaxed comfortable environment
• Set seating arrangement
• Seek full participation
• Record ideas in full view of all

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Consensus-Building

• A technique that reaches an agreement by
  identifying the interests of concerned parties
  and then builds a solution to maximize meeting
  those interests. The terms of the agreement do
  not have to be the first choice of all parties,
  but rather a solution that everyone can accept.

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Why use Consensus-Building?

• To benefit from each persons unique knowledge,
  logic, and creativity.
• To reach greater commitment and support of the
  agreement and its implementation.

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Procedures for Consensus-Building

• Generate option
• Discuss option
• Explain consensus
• Describe reasons for not acceptable
• Consider means to make acceptable
• Seek to build consensus

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Action Planning

• A technique that provides structure and a
  framework for reaching a solution to a problem.

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Action Planning

• Identify the real problem
• Redefine the problem
• Determine the causes of the problem
• Discuss consequences of not resolving it
• Brainstorm possible solutions
• Use consensus to select a solution
• Record the agreement

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Management of NegotiationsExpectations

• Reality Checking
• Objective Standards
• BATNA/WATNA

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Reality Checking

• What is my real interest in the outcome
• Do I need to maintain this relationship
• Are there external interests here
• What are the consequences of not reaching an
  agreement

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Objective Standards

• Tangible factors for comparing and evaluating
  options. These may include laws, court
  decisions, regulations, industry guides, trade
  practice, past performance, expert evaluations,
  or similar transactions.

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Alternative Outcomes to Reaching a Negotiated
Agreement

• BATNA
• Best Alternative to a
• Negotiated Agreement

• WATNA
• Worst Alternative to a
• Negotiated Agreement