Negotiation

AWI 106 Att. 8 Rev. 3 02 Jan. 2011

29 Aug 2011/ Rev.3

 Introduction - Lets Know Each other well
Please share with us the following information about
yourself:

„ Name
„ Department
„ Job Title
„ Length of service with KN
„ Two personal things about you?

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 Group Exercise ?
„ Define Negotiation from your own prospective?

„ What is the importance of negotiation skills within

your work environment and what negotiation
practices you do?

„ What is the best way to negotiate based on your

experience?

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 Introduction
„ Negotiation is something that we do all of the time
and is not only used for business purposes. For
example, we use it in our social lives perhaps for
deciding a time to meet someone or where to go
on a day off.

„ Negotiation is usually considered as a compromise

to settle an argument or issue to benefit ourselves
as much as possible.

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 In this session we will look at the following
areas of negotiation:
„ Why negotiate?
„ Preparing to negotiate.
„ Improving your negotiation skills.
„ Becoming a better negotiator.
„ Using conflict to your advantage.
„ Understanding conflict resolution styles.
„ Using a structured approach.
„ Check your capabilities.

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 Why Negotiate?
„ Effective negotiation helps you to resolve situations
where what you want conflicts with what someone
else wants.
„ The ultimate aim therefore is to find a solution that
will satisfy both of you.
„ This is known as a win-win situation, but this is not
always the way things go and we will examine this
in more detail later.
„ We will also discover that there are different styles
of negotiation depending on the circumstances.

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 Preparing to Negotiate
„ Depending on the scale of the negotiation, some
preparation will be appropriate in order to achieve a
successful conclusion.
„ However, preparation is essential in all negotiations
irrespective of how large or small. It will only be the
level of preparation that varies.

“Information is a negotiator’s greatest weapon.”

- Victor Kiam.

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 You should consider the following:
„ Goals.
„ Trades.
„ Alternatives.
„ Relationships.
„ Expected outcomes.
„ The consequences.
„ Power.
„ Possible solutions.

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 Style is Critical:
„ For a negotiation to be win-win, both parties should
feel positive about the negotiation once it is over.

„ Despite this, emotion can be an important subject of

discussion because people’s emotional needs must
be fairly met.

„ The negotiation itself is a careful exploration of your

position and the other person’s position, with the
goal of finding a mutually acceptable compromise
that gives you both as much of what you want as
possible.
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 Style is Critical:
„ In an ideal situation, you will find that the other
person wants what you are prepared to trade and
that you are prepared to give what the other person
wants.

„ If this is not the case and one person must give

way, then it is fair for this person to try to negotiate
some form of compensation for doing so – the
scale of this compensation will often depend on the
many factors discussed above.

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 Improve Your Negotiation Skills
„ There are a number of outcomes that could occur
as a result of negotiations. Depending on how you
address the negotiations, you will reach one of the
following outcomes:
„ Win-Win.
„ Win-Lose.
„ Lose-Lose.

„ As you want to build a long, prosperous relationship

with the investor, you should aim for a win-win
agreement so that both parties feel that their needs
have been met.
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 Improve Your Negotiation Skills
My father said “You must never try to make all the
money that’s in a deal. Let the other fellow make
some money too, because if you have a reputation for
always making all the money, you won’t have many
deals.”

- John Paul Getty.

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 Become a Better Negotiator
„ The essence of negotiation is dealing with
differences between two or more parties. The final
result of the negotiation must be agreement. This
can be:

„ A mutually beneficial solution.

„ An agreement to disagree.
„ Or something in between.

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 Focus on Building a Healthy Business
Relationship
„ Consider adopting some of the following
approaches:

„ Use positive negotiation tactics.

„ Clarify expectations.
„ Separate people from issues.
„ Focus on interests.
„ Create solutions that are beneficial to both.

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 Communicate Effectively
„ Here are some useful tips that will help you
communicate better:

„ Encourage dialogue.
„ Use your voice effectively.
„ Deal with non-verbals.
„ Listen effectively.
„ Get your point across in writing.

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 When Negotiating Look for Nonverbal
Clues
„ Your mother probably taught you that it’s rude to
stare. But when you negotiate a business deal,
close observation of your opponent makes sense.

„ By inspecting your opponent’s every physical move,

you can often determine whether he or she is
holding something back or not telling the truth.

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 When Negotiating Look for Nonverbal
Clues
„ The key is not to stare so much that you make your
opponent uncomfortable, but to be aware of his or
her movements through casual glances and friendly
eye contact. It will almost certainly give you an
edge.

„ First, identify a subject’s mannerisms during the

initial friendly stages of a discussion.

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 When Negotiating Look for Nonverbal
Clues
„ Once you know how they normally behave, you
may be able to tell when they start to put on an act.

„ The same goes for executives who loudly and

repeatedly proclaim that they are making a
concession, when in fact they’re not giving up
much.

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 A range of nonverbal clues may serve as
red flags during a negotiation:
Examples include:

„ Hair pulling.
„ Lip biting.
„ Eye blinking.
„ Gulping.
„ Throat clearing.

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 Watch For Signs of Deception
Deception is shown by movements such as:

„ Covering of the mouth with the hands.

„ Rubbing the side of the nose.
„ Jerking the head quickly to the side.
„ Leaning away from you.

If these things occur when they’re saying something

critical to the negotiation, that’s even more significant.

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 Watch For Signs of Deception
„ When most people lie, they subconsciously want to
apologize for it. They feel guilty for lying and that
shows in their non-verbal behavior. Look for:

„ Expansive, welcoming gestures that seem to flow

naturally from the person’s behavior.

„ The further the palms come out from the body the better.

„ Resist drawing rash conclusions based on someone who

suddenly starts scratching or acting jittery.

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 Body Aspects
Our body says a lot about us in many ways as we
communicate. Body movement can indicate
attitudes and feelings while also acting as
illustrators and regulators. Our body movement
includes:

„ The Head „ Legs

„ Eyes „ Arms
„ Shoulders „ Fingers
„ Lips „ Orientation
„ Eyebrows „ Hands
„ Neck „ Gestures
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 Body Aspects
„ Just think of the different messages which are
communicated through facing a person, touching,
standing at various distances and in different
stances.

„ This discussion has broken down body language

into several areas:

„ Proxemic.
„ Appearance.
„ Eye Contact.
„ Physical behavior.

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 Proxemics
„ Proxemics is the amount of space around or
between us and others:

„ 0-18 inches is intimate space reserved for family and

close friends.

„ 18 inches to 4 feet is personal space used in most

interpersonal interactions.

„ 4-12 feet is social-consultative space used in more formal

interactions.

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 Appearance
„ Appearance is a second important factor involved in
nonverbal communication:

„ Teenagers use fashion to make a statement or show they

belong to a particular group.

„ Clothing communication is continued in later life.

„ Adornments are another form of appearance.

„ Appearance also takes into account personal grooming

such as cleanliness, doing one’s hair, nail trimming or
wearing make-up.

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 Eye Contact
„ Many sayings hold that the eye is the window to the
mind.

„ Some important do’s and do nots of eye contact are:

„ When speaking to a group, look at everyone.

„ Look at people who are key decision makers.
„ Look at reactive listeners.
„ Don’t look at the floor, scripts or anything that causes
you to tilt your head away from the receiver.
„ Don’t look at bad listeners that may distract you and the
person you are communicating with.
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 The Body
„ As mentioned earlier, there are many parts of your
body that add to the nonverbal message. This type
of nonverbal communication is called kinetic code.
The first important aspect of kinesics is posture:

„ Standing or sitting in a relaxed professional manner is a

positive posture nonverbal.

„ Also, being comfortably upright, squarely facing an

audience, and evenly distributing your weight are all
aspects of posture that communicate professionalism.

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 The Body
„ Nonverbals communicated by moving the trunk of
your body are called body gestures.

„ Some examples are:

„ Stepping aside for a transition or;

„ Stepping forward to emphasize a point.

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 The Body
„ Hand gestures are what are most often identified as
nonverbal communication. One reason is because
they are so obvious to a receiver and seen to be partly
conscious. It is important to let your gestures flow
naturally as if in conversation with a close friend.

„ You may also use gestures to:

„ Specifically describe shape and size.

„ Emphasize a point.
„ Enumerate a list.
„ Or picking out a specific item.
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 The Face
„ The last area of physical nonverbal communication
is facial expression. A face can:

„ Ask questions.
„ Show doubt.
„ Surprise.
„ Sadness.
„ Happiness.
„ And a wealth of other messages.

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 Sending Signals Without Words
„ Your handshake provides clues to your
personality.

„ Aggressive people have firm handshakes.

„ People with low self esteem often have limp
handshakes.
„ Politicians typically shake your hand with their other
hand covering the shake or holding your elbow.
„ Domineering men often squeeze the hand of women
during a greeting.

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 Sending Signals Without Words
„ Body language is extremely important in a
negotiating situation. Some would argue that it is
just as important as what you say and what is on
your agenda.

„ Why? Because we can learn quite a lot about

people by their nonverbal actions. This is one of the
ways that a negotiator is trying to size you up a
potential business partner.

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 Seven Signals of Success
„ The Greeting.
„ Facial Signals.
„ The Eyes.
„ The Head.
„ The Mouth.
„ The Hands.
„ The Feet.

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 The Seven Signals for Success
„ So far we have focused primarily on the pitfalls to
avoid; but what messages should be sent, and how?
Here are seven general suggestions on good body
language for the negotiation:

„ On greeting the other person give (and hopefully receive) a

friendly “eyebrow flash”
„ Use mirroring techniques.
„ Maintain a naturally alert head position.
„ Remember to avert your gaze from time to time.
„ Do not hurry any movement.
„ Relax with every breath.
„ Walk slowly, deliberately, and tall upon entering the room.

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 Handle Conflict Effectively
„ To reach a win-win agreement, you need to
address conflict in a constructive way.

„ Being patient, handling stress and controlling your

emotions are essential.

„ You should have a high tolerance for frustration and

take whatever time is necessary to reach
agreement.

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 Handle Conflict Effectively
„ Long negotiations, tedious processes, conflict and
unexpected events will increase your stress level –
keep your emotions under control.

„ It is healthy to express how you feel, but don’t let

your emotions cloud your judgment or negatively
affect your business relationship with the investor.

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 Be Flexible and Creative:
„ Be flexible – don’t reject the investor’s alternatives
too quickly.

„ Avoid the desire to get everything and never give

in.

„ Admit that you don’t know something or that you

were wrong.

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 Understand Power and Use it Effectively
„ Power can come from a variety of sources such as:

„ Having a second-best opinion if you cannot reach a deal

with the investor.
„ Seeking to establish a two way communication.
„ Respecting the investor.
„ Probing for the reason behind the investor’s position.
„ Looking for alternatives that benefit you both;
„ Using an agreed upon method for assessing the value of
the elements of the proposal.

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 Disclose Information Effectively
„ Essentially there are two main approaches to
disclosing information:

„ Blurting it all out reduces your credibility.

„ Disclosing Bit by Bit increases your credibility.

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 Approach Negotiation Logically
„ Every issue needs to be discussed. There are two
basic approaches you might choose.

„ Address the easy points first to build momentum. It is

usually easier to start the negotiation by reaching
agreement on minor issues.

„ Go over issues that are more important to both parties

and then using minor issues to sweeten the deal.

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 Use Conflict to Your Advantage
„ Conflict that is not handled effectively is one of the
biggest deal breakers. During negotiations, parties
have different positions:

„ One party is holding back information from the other.

„ Different goals – both parties seek competing outcomes

for exit strategies.

„ Different values – the investor wants more control of the

business at hand than you are willing to give up. This
combination often results in conflict.

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 Resolving Conflict Improves Your Image
„ Some conflict will be dealt with quickly and easily.
By solving problems during negotiations, you will
have demonstrated:

„ Your creativity and communication skills.

„ Your ability to develop mutually agreeable business
relationships.

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 Inability to Resolve Conflict Can Be a
Valuable Lesson
„ Some conflict cannot be resolved. You hit a brick
wall during negotiations.

„ You both strongly disagree with each other and

decide that you can never form a positive working
relationship with this person

„ It might be time to walk away from the table before

any potentially legally binding agreements are
reached or signed. This can happen but we learn
from the experience and use what we have learned
in future conflict situations.
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 Other Positive Outcomes
„ By dealing effectively with conflict, some positive
results can occur:

„ Different points of view are expressed.

„ Problem solving skills can be enhanced.
„ Critical issues are discussed that might not have been.
„ If everyone agrees all of the time, then group members
start to believe that they cannot fail.

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 Understand Conflict Resolution Styles:
„ Understanding how people deal with conflict may
help you see what is coming and handle it more
effectively.

„ Be careful about trying to pigeonhole the other person

into one style during a negotiation.

„ The way an individual addresses conflict may change

based on the situation.

„ Your reactions and behavior may also influence the other

person to adopt a different style.

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 Examine Your Style and Reactions
„ Look at the following styles of handling conflict:

„ Can you identify your own preferred approach?

„ Of the approaches you don’t usually take, which one
makes you uncomfortable?
„ If an investor adopts one of these styles, how will you
handle your negative reaction?
„ What will you do to exert a positive influence on the
situation?

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 Collaboration Often Recommended
„ While each style has its own advantages and
disadvantages, the collaboration style is often
recommended as it allows both parties to gain
maximum benefit from the interaction.

„ The style that you use will be influenced by your

present motivation and emotional state, the
circumstances that led up to your conflict, your
personality, the investor’s willingness to participate
and many other factors.

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 Collaboration Often Recommended
„ While the collaboration method is proffered, it isn’t
always possible to achieve.

„ A good understanding of the different styles and

their uses will help you devise your strategy for
resolving conflict.

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 Use a Structured Approach
„ A structured approach to conflict resolution can
help you reach a win-win agreement in your
negotiations.

„ The following approach is simple, easy to use and

logical.

„ Like any approach, the following one is designed to

be guidance. Adapt it as you see fit.

„ Apply it not only during negotiations but also in

your daily operations.

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 The Five Stage Approach
„ Open Discussion of Problems.

„ Identify Differences.

„ Build Understanding for Point of View.

„ Reduce Defensiveness.

„ Begin Mutual Problem Solving.

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 In Conclusion
„ Negotiation is usually considered as a compromise
to settle an argument or issue to benefit ourselves as
much as possible.

„ Effective negotiation helps you to resolve situations

where what you want conflicts with what someone
else wants. The ultimate aim therefore is to find a
solution that will satisfy you both. This is known as a
win-win situation.

„ Preparation is essential in all negotiations

irrespective of how large or small. It will only be the
level of preparation that varies.

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 In Conclusion
„ Focusing on a positive healthy business relationship
helps you work towards a win-win agreement. By
knowing you are in for the long haul, you may want to
be more flexible, open and understanding.

„ Communication is probably one of the most important

elements of the negotiation process. It helps build
trust, ease tension and understand the investor.

„ When negotiating, look for nonverbal clues.

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 In Conclusion
„ Handle conflict effectively. To reach a win-win
agreement, you need to address conflict in a
constructive way.

„ Understand and use power effectively. Even though

you might perceive the other person as powerful
because they control something you don’t, such as
finance or services, you may also have power which
can come from a variety of sources.

„ Disclose information effectively. When and how

information is disclosed can make a difference in the
results of a negotiation.

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 In Conclusion
„ Approach negotiation logically. Every issue needs to
be discussed.

„ Use conflict to your advantage. Conflict that is not

handled effectively is one of the biggest deal
breakers. Understanding how people deal with
conflict may help us see what is coming and handle it
more effectively.

„ A structure approach to conflict resolution can help

you reach a win-win agreement in your negotiation.

Let us never negotiate out of fear but let us never fear

negotiation. - John F. Kennedy.
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