Negotiation Skills

Part 1: Win/Lose

Role Play Rules

1. Do not show others your confidential information

2. Stay in your role

3. Use any tactics/strategies you wish, but remember that they may be discussed in class

4. No violence

Planning – things to think about…

Do I want to make the opening bid or should I let the other person go first?

What is my opening bid? What is my target? (i.e., what do I really want to

pay) If I’m buying, what is the most I would pay? If I’m selling, what is the least I’ll accept? What tactics am I going to use to get my way?

Important Elements of the Negotiation Process

Two parties in a voluntary, interdependent relationship

Conflict of Interest No set rules to resolve the conflict Two kinds of activity

– Division of resources– Resolution of intangibles

Expectation of Give and Take

Factors influencing the Bargaining Process

Tangibles (e.g., price, terms, wages) Intangibles (e.g., wanting to win, beating the

other guy) Relationships and past history Bias towards viewing issues as win/lose Intertwined nature of ‘win/lose’ and ‘win/win’

issues

Nature of Win/Lose Bargaining

Fixed-pie (Zero-sum) Strategy

– Evaluate the costs and benefits of staying in the relationship, maximizing your outcome or not settling and going elsewhere

– Determine the value of your Target point (likely settlement price) Opening bid (asking price, first offer) Resistance point (walking away price)

Win/Lose Tactics

Justify the value of your desired outcome Minimize disclosure of your target and resistance

points Try to convince the other party that your: Opening

bid = Target Point = Resistance Point Work to lower the other party’s resistance point Convince the other party that you have a good

“BATNA” Open with an “extreme” opening offer

Concessions

Your first concession always conveys a message about how you are going to negotiate– An extreme opening offer + few concessions =

firmness– A moderate opening offer + cooperative stance =

flexible

Dirty Tricks / Deliberate Deception

Phony Facts Ambiguous or Limited Authority Stressful Situations (e.g., uncomfortable physical

surroundings, the other party's turf) Personal Attacks (e.g., "looks like you were up all night -

things not going well at the office?" ) Good guy/Bad guy (a.k.a., Good Cop/Bad Cop) Threats .."you will agree to this or else we will ...“ Calculated delay: - stalling or doing nothing Snow Job Temper Tantrum Nibble Bogey

What if the Opponent is more Powerful?

Protect yourself – don't agree to something you don't want– Don't focus too much on your bottom line or you might

give up everything right down to your last dollar; rather focus on your target point

– Know your BATNA (you might feel insecure and more likely to give in if you don't know your BATNA)

– Establish a "tripwire" or point that is something better than your BATNA - this point will slow you down and may keep you from giving up too much

– Think about the other party's BATNA

Negotiation Skills

Part 2: Win/Win

Bargaining over Positions

Positions are like offers and counter-offers sometimes called "bids“

Arguing about positions – induces parties to lock themselves into positions that may

result in less than optimal agreements– can take longer than focusing on interests because both

parties may try to make several offers and counter-offers before they reach an agreement that satisfies their interests

– may hurt an ongoing relationship between the parties

Solution: Negotiate on the "merits" of the problem

Use principled negotiations– View participants in negotiations as problem solvers and

not as friends or adversaries– View the goal as achieving a wise outcome efficiently

and amicably, not just reaching an agreement or winning

Separate the people from the problem– "Be soft on the people and hard on the problem.”

Solution: Negotiate on the "merits" of the problem (cont’d)

Focus on interests not positions– Explore each other's interests (what they really want or

need) , this is more than making offers, counter-offers, or threats

– Avoid fixating on a bottom line

Invent options for mutual gain– use brainstorming to invent multiple options– don’t judge the options during the brainstorming; decide

later which options are best

Solution: Negotiate on the "merits" of the problem (cont’d)

Use objective criteria– Focus attention on standards that are

independent of the feelings or will of the negotiators

– Use logic and reason– Yield to an argument or presentation that is

based on reason and principle - not to one based on pressure

Some Tactics

Expanding the pieNonspecific compensationLogrollingCost cuttingBridging

The Behaviour of Successful Negotiators

What is a successful negotiator?1. He/She should be rated as effective by both

sides

2. He/She should have a track-record of significant successes

3. He/She should have a low incidence of implementation failures.

How the Skilled Negotiator Plans

Amount of Planning timeIts not the amount of planning which makes for success, its how that time is used

Exploration of OptionsThe skilled negotiator considers a wider range of outcomes/options

Skilled Negotiator 5.1 / negotiable issue

Average Negotiator 2.6 / negotiable issue

How the Skilled Negotiator Plans (cont’d)

Common GroundSkilled negotiators give over 3 times as much attention to common ground areas than do average negotiators

Long-Term or Short-Term?Skilled negotiators spend twice as much time as average negotiators planning for long-term considerations

How the Skilled Negotiator Plans (cont’d)

Setting LimitsSkilled negotiators are more likely to set upper and lower limits and plan in terms of a rangeAverage negotiators are more likely to plan their objectives around a fixed point

Sequence and Issue PlanningTypical Issue Plan used by Average Negotiators

A then B then C then D

How the Skilled Negotiator Plans (cont’d)

Sequence and Issue Planning (cont’d)Typical Issue Plan used by Skilled Negotiators

A

B

D

C

Issues are independent and not linked by a sequence flexibility

Face-to-Face Behaviour

IrritatorsWords used as ‘self praise’ which imply the other party is unfair

e.g., this is a ‘generous/fair/reasonable offer’

While average negotiators use these irritants fairly regularly, skilled negotiators tend to avoid them

Face-to-Face Behaviour (cont’d)

Counter ProposalsSkilled negotiators make immediate counter-proposals much less frequently than average negotiators

1. Counterproposals introduce an additional option/issue which may complicate the negotiation

2. They are put forth at a time when the other party is more concerned with their own proposal

3. They are perceived as disagreeing or blocking by the other party

Face-to-Face Behaviour (cont’d)

Defend / Attack SpiralsUse of emotional or value loaded behaviors.What one negotiator may view as a legitimate defense, the other may view as an unwarranted attach spiraling conflictAverage negotiators are more likely to react defensively (e.g., “you can’t blame us for that”)When skilled negotiators do attach, they give no warning and attack hard.

Face-to-Face Behaviour (cont’d)

Behaviour LabelingSkilled negotiators give an advance indication of the behaviour they are about to use

e.g., Can I ask you a question? ….

Why? Social pressure forces a response Slows the negotiation down Introduces a formality which keeps the negotiation on

a rational level Reduces ambiguity

Face-to-Face Behaviour (cont’d)

Behaviour Labeling (cont’d)EXCEPT WHEN…. it’s a disagreement.

Skilled Negotiators

Reason/Explanation Statement of Disagreement

Average Negotiators Statement of Disagreement Reason/Explanation

Face-to-Face Behaviour (cont’d)

Testing Understanding and SummarizingSkilled negotiators more likely to use these two types of behaviour more often because of their concern with clarity and the prevention of misunderstanding

Other reasons

Reflecting – i.e., turning the other party’s words back to obtain further response

e.g., “So do I understand that you are saying that you don’t see any merit in this proposal at all?”

Implementation Concern – while average negotiators may rush to ‘close the deal’ leaving some issues ambiguous, skilled negotiators are concerned with the implementation success

Face-to-Face Behaviour (cont’d)

Asking QuestionsSkilled negotiator ask more than twice as many questions as do average negotiators

1. Questions provide data about the other party’s thinking and position

2. Questions give control over the discussion3. Questions are more acceptable alternatives to direct

disagreement4. Questions keep the other party active and reduce their

thinking time5. Questions give the negotiator breathing space to

collect his/her own thoughts

Face-to-Face Behaviour (cont’d)

Feelings CommentarySkilled negotiators are more likely to provide internal information

e.g., “I’m uncertain how to react to what you’ve just said. If the information you’ve given me is true, then I would like to accept it.; yet I feel some doubts inside me about its accuracy. So part of me feels happy and part feels suspicious. Can you help me resolve this?”

The expression of feelings is linked to establishing trust

The expression may or may not be genuine, but gives the other party a feeling of security

Face-to-Face Behaviour (cont’d)

Argument DilutionAverage negotiators tend to try to ‘tip the scale’ with as many arguments in their favour as possible

The skilled negotiator uses fewer but stronger arguments

e.g. Argument Weight

A 10

B 10

C 10

D 7

E 3

Reviewing the Negotiation

Over two-thirds of skilled negotiators set aside some time after a negotiation to review it and consider what they had learned. Just under half of average negotiators do the same.

Skilled negotiators were more likely to keep a journal

Journal Reflection Suggestions

I had planned to behave one way, but did not, why? And how can I better stick to my original plan?

The conflict management style I am least comfortable with is ______, and what can I do to increase my comfort level?

When things don’t go my way in a negotiation, I tend to _______. What are the advantages and disadvantages to this, and what steps can I take to behave differently when the situation warrants it.