SUCCESSFUL SUCCESSFUL N E GO T I A T I O N SN E GO T I A T I O N S

SUCCESSFULSUCCESSFULN E GO T I A T I O N SN E GO T I A T I O N S

ByByB. A. Agbonifoh, B. A. Agbonifoh, Ph.DPh.D

Professor of Marketing & Strategic Professor of Marketing & Strategic ManagementManagement

UNIVERSITY OF BENINUNIVERSITY OF BENIN

INTRODUCTIONINTRODUCTION

Negotiation is a pervasive activity. It is all Negotiation is a pervasive activity. It is all around us. Let’s take a few examples:around us. Let’s take a few examples:

A manager meets with his/her boss to A manager meets with his/her boss to discuss a salary increase.discuss a salary increase.

A potential car owner tries to reach an A potential car owner tries to reach an agreement with a dealer on the price of a agreement with a dealer on the price of a car.car.

Two drivers try to settle a dispute arising Two drivers try to settle a dispute arising

from a car accident. from a car accident.

A group of oil companies plans a joint A group of oil companies plans a joint venture exploration for offshore oil. venture exploration for offshore oil.

Government officials meet with union Government officials meet with union leaders to avert an impending strike. leaders to avert an impending strike.

Five banks meet to agree on merger Five banks meet to agree on merger or acquisition terms.or acquisition terms.

Each of these involves negotiations.Each of these involves negotiations.

NEGOTIATION MINDSETSNEGOTIATION MINDSETSTHERE ARE 3 BASIC NEGOTIATION THERE ARE 3 BASIC NEGOTIATION MINDSETS. THEY ARE TYPIFIED BY:MINDSETS. THEY ARE TYPIFIED BY:

-- The Soft Negotiator;The Soft Negotiator;

-- The Hard Negotiator; andThe Hard Negotiator; and

-- The Principled NegotiatorThe Principled Negotiator

THE SOFT NEGOTIATORTHE SOFT NEGOTIATORWants to avoid personal conflicts;Wants to avoid personal conflicts;Wants an amicable resolution; Wants an amicable resolution; And so makes concessions readily And so makes concessions readily

in order to reach agreement; in order to reach agreement; Yet he/she often ends up being Yet he/she often ends up being

exploited;exploited;And feeling bitter. And feeling bitter.

THE HARD NEGOTIATOR• Sees any negotiation situation as a

contest of wills;• Believes that the side that takes the

more extreme position and holds out longer fares the better.

• Wants to win; yet he often ends up eliciting resistance from the other party;

• His hard approach exhausts him and tends to harm his relationship with the other side.

THE PRINCIPLED NEGOTIATOR• Neither hard nor soft OR both hard and

soft.

• Uses the method of ‘principled negotiation’.

• Involves deciding issues on their merits rather than through a haggling process focused on what each side says it will and will not do.

• It involves looking for mutual gains wherever possible.

• Where your interests conflict, the results are based on some fair standards, independent of the will of the other side.

• The method is hard on merits but soft on people.

• It shows you how to obtain what you are entitled to and still be decent.

• It enables you to be fair while protecting you against those who would want to take advantage of your fairness.

WHAT THEN IS NEGOTIATION?

Negotiation is a process in which one or more representatives of two or more parties interact in an explicit attempt to reach a jointly acceptable position on one or more divisive issues.

• To negotiate means to bargain, to confer for the purpose of mutual agreement.

• Negotiation is an interpersonal process that occurs between interdependent parties.

• It is also a decision-making process among interdependent parties.

• The parties differ or believe that they differ in their preferences.

• Negotiations involve attempts by each party to influence the choices of the other in order to gain a more favourable position or stand in relation to the other.

• The series of actions or moves enacted by the parties are attempts to make the opponent to shift his position.

• Influencing the choices of the other may be through a combination of coercive and persuasive strategies.

EXAMPLES OF SUCH STRATEGIES• Giving and receiving concessions.• Threats• Building alliances• Debates

THE PURPOSE OF THE PURPOSE OF NEGOTIATIONSNEGOTIATIONS

Every negotiator has two kinds of interests: in the Every negotiator has two kinds of interests: in the substance and in the relationship. substance and in the relationship.

The substantive interest in business negotiations is The substantive interest in business negotiations is to to create an economic benefit for the negotiator’s create an economic benefit for the negotiator’s businessbusiness. .

But note that price is only one of the factors of But note that price is only one of the factors of interest.interest.

There is often more to be gained by ignoring price at There is often more to be gained by ignoring price at the outset and identifying all other factors by which the outset and identifying all other factors by which your economic benefits may be improved. your economic benefits may be improved.

RELATIONSHIP AS A PURPOSERELATIONSHIP AS A PURPOSE

A negotiator also wants to maintain a A negotiator also wants to maintain a working relationship good enough to working relationship good enough to produce an acceptable agreement. produce an acceptable agreement.

In fact, in dealings with many long-term In fact, in dealings with many long-term clients, business partners, family clients, business partners, family members, fellow professionals, members, fellow professionals, government officials or foreign nations, government officials or foreign nations, the ongoing relationship is far more the ongoing relationship is far more important than the outcome of any important than the outcome of any particular negotiation.particular negotiation.

STAGES IN NEGOTIATIONSSTAGES IN NEGOTIATIONS

Preparing for NegotiationsPreparing for Negotiations The Set-up or introductory phaseThe Set-up or introductory phase The Negotiation ProperThe Negotiation Proper The Agreement PhaseThe Agreement Phase The Implementation PhaseThe Implementation Phase

Preparing for Preparing for NegotiationsNegotiationsPreparation coversPreparation covers

Establishing the overall targets.Establishing the overall targets.Collecting and analysing information.Collecting and analysing information.Defining the strategy to be adopted.Defining the strategy to be adopted.Selecting the tactics to be employed.Selecting the tactics to be employed. Identifying the skills needed.Identifying the skills needed.

Establishing the Overall Establishing the Overall TargetsTargets

1.1. Ascertain what your opponent Ascertain what your opponent

hopes to obtain from the hopes to obtain from the meeting. meeting.

2.2. Plan your strategy for achieving:Plan your strategy for achieving:-- All of your needs;All of your needs;-- Most of your wants; andMost of your wants; and-- Some of your desires.Some of your desires.

1.1. Decide on the issues you want Decide on the issues you want and those that you do not want and those that you do not want on the agenda .on the agenda .

2.2. Set your aspiration level .Set your aspiration level .

3.3. Decide on your very minimum Decide on your very minimum or maximum and therefore your or maximum and therefore your walk away point on each issue.walk away point on each issue.

Collecting and Analysing Collecting and Analysing Information on:Information on:

the subject of the negotiation: For the subject of the negotiation: For example,example,-- other sources of supplies;other sources of supplies;-- types available;types available;-- quality;quality;-- prices;prices;-- technical backup;technical backup;-- other terms;other terms;

• the parties to the negotiation; e.g. the parties to the negotiation; e.g. -- the nature of their business;the nature of their business;-- reputation/integrity;reputation/integrity;-- experience/track record;experience/track record;-- attitudes;attitudes;-- needs, preferences;needs, preferences;-- style;style;-- level of authority;level of authority;-- time and resource constraints, etc time and resource constraints, etc

Defining the Strategy to be Defining the Strategy to be AdoptedAdopted

Strategy is a grand design by which the Strategy is a grand design by which the negotiator expects to achieve his/her negotiator expects to achieve his/her ultimate goals.ultimate goals.

Strategy planning includes:Strategy planning includes:-- composition of the negotiating composition of the negotiating team.team.-- assignment of roles to members of assignment of roles to members of the the team;team;-- team building, team building,

-- decisions on the order in which decisions on the order in which the the important issues are to be taken.important issues are to be taken.

-- selection of a location or venue.selection of a location or venue.

-- decision on the stand to take on decision on the stand to take on the the various issues.various issues.

-- What to do and when to do them;What to do and when to do them;(e.g. when an issue for which(e.g. when an issue for whichyou are not prepared is raised).you are not prepared is raised).

The Set-up Phase The Set-up Phase involves:involves:

Making preliminary contacts;Making preliminary contacts;Exchange of pleasantries;Exchange of pleasantries; introducing members of the introducing members of the

negotiating teams;negotiating teams;Agreeing on the agenda, physical Agreeing on the agenda, physical

arrangements such as sitting arrangements such as sitting arrangements, time schedule of arrangements, time schedule of meetings, ground rules of negotiation.meetings, ground rules of negotiation.

The Negotiation Proper

Consists of the following sub-stages:

• The proposal stage• The Debate Stage• The Bargaining stage• Closing Stage

The proposal stage

• In putting forward your proposal, observe the following:

• Put forward your proposal with as little emotion as possible.

• Leave yourself plenty of room to manoevre when presenting your case; do not say that your position is immovable.

• Be fluent, confident and credible.

• Explain the conditions attached to your proposal before making your initial offer.

When responding to a proposal• Wait for the other party to finish

before responding.• Do not make concessions too quickly.• For each concession, stress that it is

a major loss to you.• Ask for a break to consider any new

proposal.

The Debate StageThis refers to extensive discussions of facts and assumptions underlying the basic positions of the parties.

• Use the opportunity to search for some common ground and to strengthen your case.

• Do not allow the debate to degenerate into emotional outbursts or accusations and counter-accusations. Keep the debate calm.

• If you are frustrated or angry, try not to let it show.

• Do not score points off the opposition; instead, work to form a bond with them.

• If they make a mistake, be aware that it strengthens your case, but allow them to retreat without loss of credibility.

• It may be helpful if you start the discussion on points of mutual agreement before moving on to issues on which you disagree.

The Bargaining Stage

• Bargaining is a delicate process whereby parties trade positions and make concessions.

• Offer the smallest concessions first; you may not need to go any further.

Do not concede ground unless you Do not concede ground unless you receive something in return.receive something in return.

When negotiating a package, make When negotiating a package, make concessions on a minor issue to concessions on a minor issue to lessen intransigence on a major one.lessen intransigence on a major one.

The Closing StageThe Closing StageRecord fully all agreements. Record fully all agreements. Read over any notes covering the Read over any notes covering the

early part of your negotiations.early part of your negotiations.Discuss and define any words that Discuss and define any words that

might be ambiguous in a written might be ambiguous in a written format.format.

Make sure you do not ignore issues in Make sure you do not ignore issues in order to speed up the negotiations.order to speed up the negotiations.

The Agreement PhaseThe Agreement Phase

Following the arguments and counter-Following the arguments and counter-arguments at the bargaining phase, arguments at the bargaining phase, concessions are made and received.concessions are made and received.

Agreements on the various issues are Agreements on the various issues are documented and initialled by the documented and initialled by the parties. parties.

Subsequently, the terms of the Subsequently, the terms of the agreement may have to be ratified by agreement may have to be ratified by a higher body.a higher body.

When the parties cannot reach an When the parties cannot reach an agreement on any particular issue, a agreement on any particular issue, a deadlock is said to occur.deadlock is said to occur.

In some cases, a third party is invited In some cases, a third party is invited to arbitrate and resolve the deadlock.to arbitrate and resolve the deadlock.

The Implementation The Implementation PhasePhase

This is the stage in which each party to This is the stage in which each party to the agreement is expected to perform the agreement is expected to perform his part as contained in the his part as contained in the agreement.agreement.

The first step is to draw up a The first step is to draw up a programme which should indicate programme which should indicate what will be done, when, by whom and what will be done, when, by whom and to what effect.to what effect.

It may be necessary to set up a joint It may be necessary to set up a joint team to implement or to review the team to implement or to review the work done by the parties.work done by the parties.

Where some of the people assigned to Where some of the people assigned to implement a negotiated agreement implement a negotiated agreement were not involved in the negotiations, were not involved in the negotiations, they should be properly briefed.they should be properly briefed.

Suitable persons should be appointed Suitable persons should be appointed

to implement the agreements.to implement the agreements.

TACTICS & GAMBITS

Ask for more than you expect to get. Never say yes to the first offer. Flinch at proposals. Avoid confrontational negotiation. Use the vise technique; Say “you can do

better than that” or “You will have to do better than that”.

Ambiguous authority/Invoking higher authority.

Splitting the difference.

Always ask for a trade-off.

Good guy, bad guy.

Play the reluctant buyer & reluctant seller.

Negotiate the fee before doing the work.

People believe what they see in writing.

Use stressful situations to advantage.

Always congratulate the other side.

Do not let the other side write the contract.

Read the entire contract before signing.

HANDLING BREAKDOWNS

Breakdowns occur when one party stands up in anger and leaves the meeting. If this happens:

Do not respond with an eye for an eye. If one member of the opposing team walked

out, persuade his colleagues to bring him back.

• If the entire team left, send the individual on your team who is closest to them (possibly the good guy) to bring them back immediately.

• Contact the other party immediately after a walkout.

• Agree on a date for future talks to limit damage.

• Do not insist on an apology when order has been restored.

• If a breakdown cannot be remedied internally, then you may need to call a third party.

NEGOTIATION RULES

• The aim should be to change the game from face-to-face confrontation to side-by-side problem solving.

• The prize in negotiation is not obtaining your position but satisfying your interests.

• If you want the other party to listen to you, listen to them first.

• If you want the other party to acknowledge your point, acknowledge theirs first.

• Effective negotiators listen far more than they talk.

• Distinguish between the person and his behaviour.

• Try and build good working relationships before problems arise.

• Present your views as an addition to, not in opposition to.

• Don’t say ‘but’, say ‘yes, and’.

• Acknowledge the other party’s view and stand for your own.

• Build trust incrementally.

• Look for low-cost, high-benefit trade-offs.

• Aim for mutual satisfaction, not victory.

• Your goal is not to defeat the other party but to win him over.

• When you feel like talking back, listen.

SUMMARYSUMMARYSUCESSFUL NEGOTIATION IS ABOUT:SUCESSFUL NEGOTIATION IS ABOUT:

Choosing the right people to negotiate.Choosing the right people to negotiate.

Developing the right skills, knowledge and Developing the right skills, knowledge and attitudes.attitudes.

Preparing adequately for every Preparing adequately for every negotiations.negotiations.

Learning to use the right strategies at Learning to use the right strategies at the right time.the right time.

Learning to tackle strategies and Learning to tackle strategies and tactics that the other party may use on tactics that the other party may use on you.you.

Being confident and bold in asking.Being confident and bold in asking.

Not making concessions too quickly.Not making concessions too quickly.

Focusing on your negotiation Focusing on your negotiation objectives.objectives.

Not destroying your future Not destroying your future relationship with the other partyrelationship with the other party

Reading the agreement carefully Reading the agreement carefully before signing.before signing.

Practising, practising and practisingPractising, practising and practising

THANK YOU FOR LISTENINGTHANK YOU FOR LISTENING