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The Negotiations Process

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					The Negotiations Process
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.
                   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.
     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
    Characteristics of                      Negotiations
                         Essentials of Negotiations by Lewicki, Saunders
                                                                              *From




•   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.
       Motivations for              Negotiation
• Instrumental:                     • Expressive:
  – PRACTICAL value                   – ATTENTION value
  – Negotiation to achieve            – Negotiation to achieve
    tangible or                         intangible or
    quantitative outcomes               qualitative outcomes
    (i.e., Wages; profits;              (i.e., More respect; easier
    productivity; benefits; etc.)       work; recognition; more
  – Easy to measure                     input; etc.)
                                      – More difficult to
                                        measure
        Conflicts in Negotiations
                      *From 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
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.
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
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
What is the Aim of
 Negotiations?
           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
A Good Negotiating Outcome
1.   Better Than Alternatives Away From The Table.

2.   Satisfies Interests
        Me: Well Satisfied              Both: Your problem is my problem
        You: Acceptable
3.   The Best Among Many Options
          Don’t leave joint gains on the table.
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
  Negotiation Methods:
Power, Rights, and Interest-
          Based
       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
Negotiating Method - Power




         Power
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 party’s power often incorrect
• Other party may respond irrationally
Negotiating Methods - Rights




     Rights
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
Negotiating Methods -
      Interests




               Interests
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
Negotiating Methods



       Power



   Rights   Interests
Conflict Resolution Methods
      Power/Rights/Interests/Transaction Costs


                    Power             Rights           Interests
Resources       always high:     generally          time, talent
Required:       time, money,     costly: time,
                stress           money, stress
Satisfaction    one-sided: the   mixed: not         both interests
with Outcome:   winner           satisfied, to      must be
                                 highly satisfied   satisfied or no
                                                    agreement
Compliance:     as long as       until a better     very durable
                power is         opportunity        because
                applied          presents itself    interests are
                                                    met
Quality of      always runs      “one               mutual respect,
Relationship:   risk of          upmanship”         valued partner,
Positional and Interest-
        Based
     Negotiations
Understanding these negotiating
concepts and recognizing when to
use them.
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.
        Positional Negotiations
               Attitudes
•   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
 Positional Negotiations
         Goals

NEGOTIATE TO WIN!

    WIN ALL YOU CAN!


        FOCUS ON THE PRESENT!
      Positional Negotiations
            Works Best
• One – Time Problem

• Parties have Equal Skills

• Comfortable with Tactics

• Desire the “Right” Decision
     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
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.
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.
THE INTEREST ICEBERG

                   Remedy Requested


                 Relationships


    Culture               Hurts/wounds

        Behaviors
                              Pride

              Practices        Bias

                    History


                  LSylvester
        Interests



PSYCHOLOGICAL   PROCEDURAL
• Trust         • Fairness



SUBSTANTIVE     EXTERNAL
• Outcome       • Others
     Interest-Based Negotiations
               Attitudes
•   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
    Interest-Based Negotiation
               Goals
IDENTIFY YOUR INTERESTS!

   ADVOCATE FOR YOUR NEEDS!

        PRESERVE THE RELATIONSHIP!
   Interest-Based Negotiations
          Solve the Problem(s)
• Focus on issues, not    • Look to standards for
                            what should happen.
  personalities             Keep in mind the
• Focus on interests,       standard of mutual
  not positions             caretaking; relationships
                            that always go one way
• Invent options that       become very difficult
  meet both side’s most   • Talk about how to keep
  important concerns        communications open as
                            you go forward
    Interest-Based Bargaining
            Works Best
• Relationship are Important

• Communications are Good

• Trust is Developed

• Multiple Problems
                 Comparison
    Interest-Based and Positional
             Negotiations
Interest-Based             Positional

  Identify Issues            Identify Issues
  Clarify Facts              Clarify Facts
  Find Interests             Develop Positions
  Develop Options            Advocate Positions
  Consider Standards         Reduce Your Demands
  Rate Options/Standards     Consider Counteroffers
  Reach Consensus            Reach Agreement
Positional vs Interest Based
  Negotiating Elements

   In Positional Negotiating     In Interest Based Negotiating

Open high or low                Use objective standards

Trade concessions toward        Choose from many options
midpoint-compromise             rather than splitting the
                                difference
Disguise true feelings – wear a Speak openly and clearly,
mask                            describing your interests
Discredit case and claims       Accept case made by the other
made by the other party         party as one possible solution
Use tactics to keep the other   Make sure the other negotiator
party off balance               feels comfortable,
 Creating a Stable Negotiating
         Environment

• Engage in discovery and mutual
  education
• Create advocacy
• Listen, seek to understand
• Enhance enforcement
• Enhance implementation
          Solve the Problem
• Focus on issues, not    • Look to standards for
  personalities             what should happen.
                            Keep in mind the
• Focus on interests,       standard of mutual
  not positions             caretaking; relationships
• Invent options that       that always go one way
                            become very difficult
  meet both side’s most
  important concerns      • Talk about how to keep
                            communications open as
                            you go forward
 QUESTIONS FOR EXPLORING INTERESTS

• What problem are we     • What do you want to
  trying to solve?          accomplish?
• Are there other
  problems?
                          • What would have to
                            happen for you to
• What do you want to
  have happen?              feel satisfied?
• What concerns do you    • What will it take for
  have?                     you to work
• What is the best case     together?
  scenario for you?       • Is there anything
                            else important to
                            you?
    Management of Negotiations
          Expectations
• Reality

• Standards

• BATNA/WATNA
 Alternative Outcomes to Reaching a
        Negotiated Agreement

BATNA                   WATNA
Best Alternative to a   Worst Alternative to a
Negotiated              Negotiated Agreement
 Agreement
         BATNA

The least damaging outcome
anticipated if no agreement is
            reach.
          BATNA Advantages
• Forces negotiators to realistically evaluate
  their negotiating strength
• Prevents blind negotiations
• Protects from accepting terms that are too
  unfavorable
          WATNA

The most damaging outcome to
  anticipate if no agreement is
            reached.
         WATNA Advantages
• Forces negotiators to realistically evaluate
  their options
• Prevents power negotiations
• Protects from rejecting terms that are in
  your interest to accept
    Management of Negotiations
           Closure
• Reaching Agreement

• Drafting the Agreement

• Signing the Agreement
Structural Complexities
           of
Multi-Party Negotiations
A Simple Two Party Negotiation



          Party B

   Party A

  In any given negotiation session, many types of negotiation occur
  between interdependent individual groups. For simplicity’s sake,
  let us illustrate this point by examining a two-sided dispute. At the
  negotiating table are parties A & B.
   Horizontal Bargaining



     Party B

Party A
         Horizontal Bargaining
•   Lead negotiator
•   Roles
•   Behavior
•   Techniques
•   Procedures
•   Interests
•   Closure
       Vertical Bargaining


 Constituency
 Bargaining

       Party B

Party A

Organizational
Bargaining
           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
       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.
     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.
             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
          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.
                  External Factors


               Press             Influential
                                 Individual



     Party B

Party A

          Demonstrations      Environmental
                              Group
     Collective Participation




     Party B

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


•   France
•   Germany
•   Italy
•   UK
•   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)
                 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
                  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
                 British
• Value bottom line and short term results
• Open about opinion but indirect in its
  expression, emphasizing courtesy and tact
  and formality.
• Don’t show true emotions – often reserved
  and understated
• Risk averse and cautious, favoring
  security and status quo
                      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
    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)
      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
      Feedback on Training
• Not specific to industry!!
• Alienated females with inappropriate
  language
• Task Force Assignment had no females
• Too lecture oriented
MANAGEMENT OF NEGOTIATIONS

    Interest-Based Negotiations
      Management of Negotiations
       Seven Factors to Consider
•   Preparation
•   Planning
•   Administrative
•   Communications
•   Techniques
•   Expectations
•   Closure
    Management of Negotiations
          Preparation
• Identify your interests

• Anticipate other party’s interest

• Find objective standards

• Generate possible options
    Management of Negotiations
           Planning
• Set goals for initial contact

• Collect and analyze facts

• Design a strategy

• Negotiating Team Representation
      Management of Negotiations
           Administrative
•   Time
•   Location
•   Participants
•   Room Arrangement
•   Refreshments
•   Support Roles
•   External elements
    Management of Negotiations
        Communications

• Behavior

• Verbal and non-verbal

• Trust
            Levels of Trust
• Ability to Perform

• Personal Conduct

• Compliance with Agreements
                Building Trust
•   Listen
•   Display a concern for interests
•   Demonstrate empathy
•   Keep confidences
•   Fulfill promises
•   Be respectful
How easy is it to build trust in
      negotiations?
    Destroying Trust in Negotiations
•   Act inattentive
•   Ignore interests
•   Breach a confidence
•   Break a promise
•   Embarrass the other party
•   Spring a surprise
How easy is it to destroy trust in
       negotiations?
           Rebuilding Trust
• Accept responsibility for actions

• Acknowledge your actions

• Make restitution or repairs

• Be transparent in future
    Management of Negotiations
    Problem-Solving Techniques
• Brainstorming

• Consensus-Building

• Action Planning
              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.
          Rules for Brainstorming
•   Define the problem
•   Do not criticize an idea
•   Be imaginative
•   Build on other’s ideas
•   Aim for quantity
•   Record all ideas
    Procedures for Brainstorming
• Create a relaxed comfortable environment

• Set seating arrangement

• Seek full participation

• Record ideas in full view of all
         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.
   Why use Consensus-Building?


• To benefit from each person’s unique
  knowledge, logic, and creativity.

• To reach greater commitment and support
  of the agreement and its implementation.
Procedures for Consensus-Building
•   Generate option
•   Discuss option
•   Explain consensus
•   Describe reasons for not acceptable
•   Consider means to make acceptable
•   Seek to build consensus
           Action Planning


A technique that provides structure and a
framework for reaching a solution to a
problem.
          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
    Management of Negotiations
          Expectations
• Reality Checking

• Objective Standards

• BATNA/WATNA
            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
        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.
 Alternative Outcomes to Reaching a
        Negotiated Agreement

BATNA                   WATNA
Best Alternative to a   Worst Alternative to a
Negotiated              Negotiated Agreement
 Agreement

				
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