Corporate Negotiating

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Positions vs Interests Although the terms are being used interchangeably, interests and positions are not the same. Positions are the demand and offers made by the parties in a negotiation – what they want, or think they want. Interests are what the parties consider most important to them – what they truly need, or why they want it. A position may be a means to satisfy an interest, but it is not necessarily the only – or best – way to do so. For example, Andrew approaches his boss for a raise. Andrew then quits his job, or continues to work unhappily while the resentment builds. Nobody wins. Does Andrew really need a raise? No that is simply his position, what he thinks he wants. But why does Andrew think he want a raise? What is his real interest? Not more money, but some means of improving his lifestyle. While a raise would satisfy this interest, there are also other ways to satisfy it. A company car, health benefits or a housing allowance might serve the purpose as well. His boss might be able to satisfy Andrew’s interest through one of these means, even if a raise is out of the question. Focusing on positions often leads to interests going unsatisfied or even unrecognized. In a negotiation you must instead focus on your interests – what is most important to you. You must also be able to satisfy the interest of the other party. For each position advanced (by you or your counterpart) you should ask: Why? For what purpose? This enables you to uncover the underlying interest behind each position. Look at your negotiating wish list and focus on your interests. Ask yourself “why” (perhaps more than once), to determine your true interests. Prioritise them so you are clear on which are most important to you. Try to get a rough idea of the other parties’ priorities as well.

Different valuations You will find that at times you value something far more than the other party, and vice versa. This is an ideal opportunity to create value. American billionaire Donald Trump tells of a particular piece of property he wished to purchase, but the owner was asking far too much. In negotiating another deal, Trump learned that one of his counterparts had an option to purchase the coveted parcel from the owner at a much lower price. As Trump‘s counterpart no longer wished to exercise the option, it was worth little to him – but it was very valuable to Trump! He paid a higher price than he would otherwise have done because his counterpart included the option, which Trump then exercised to get a much better deal from the owner. Trump and his counterpart had a win-win situation based on a differently valued asset. To identify items that may be valued differently by the parties, consider the following:    Perceptions – some people will pay more to save face, look good, or have their egos stroked. Risk – a risk-averse party may be willing to give up more if the other person assumes the risk. Combining similar resources and skills to achieve economies of scale – two parties can pool their demands to negotiate more favourable rates.

Combining different resources and skills to accomplish together what neither could do alone – a property owner and a building contractor can form a joint venture to develop the property and get a better return than either might have otherwise enjoyed. By making concessions that are valued differently, each side can get more by giving up less! What painless concessions can you make that might be valued by the other party? What might they easily do for you that would be of great value to you? By focusing on interests and exploiting differently valued resources, you are more likely to attain a winwin outcome.

David Goldwich

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Description: Corporate Negotiating
Wong Chee Siong Wong Chee Siong