Win - Win

Negotiating Principles
 Preparation
• Congratulations — you have
been selected for
negotiations!

• Now it’s time to prepare for

success

• First step — review this

presentation and your notes
to refresh yourself on the
fundamentals of effective
negotiations
 Preparation
• Strategize with your
negotiation teammates to
develop a strategy

• Develop a plan
incorporating your
negotiation knowledge
and the needs of your
customer

• Practice, refine, practice,

refine, practice
 Establish Win – Win Climate
• Seek to establish a climate of mutual trust and shared
goals
• Get to know your counterpart as a person (family,
likes & dislikes, college, sports teams, etc.). But
don’t be intrusive.
• Some clients like to small talk (schmooze) before
beginning negotiations. If you are a sensor, have
patience.
• It’s okay to get coffee for your counterpart
• Don’t miss an opportunity to personalize the
relationship:
– Congratulatory note on your counterpart’s new
baby, promotion, favorite team victory, etc.
• Consider sharing with your customer how you arrived
at your fee proposal. BENATECH sent our fee
spreadsheet to our DOD customers. First step in
establishing trust relationship.
è Seeking to establish a positive climate with
counterpart •
 It’s Not Always About Money
• Everyone would like to earn more money, but other
things may be just as important in any particular
negotiation
• You may be willing to accept a lower fee if you could
stretch out the project a few months to complete
some existing projects and free resources
• Your customer might be willing to stretch out the
schedule to obtain a reduced fee
• Same issues with your subcontractors. •
 Be Willing to Leave Something
On the table
• Contrary to Gordon Gekko (movie Wall Street), in win
– win negotiating, greed is not good.
• Even when you have the stronger negotiating position
(e.g., negotiating with a subcontractor who you
know needs the work), treat the other firm fairly.
Don’t wring everything you can out of a deal.
• It’s not worth the bad feelings and resentment, and it
may result in your sub cutting corners on quality
and or seeking to recoup the funds through
elevated change-order fees.
• Similarly, by treating the subconsultantfairly, when
you need some help (and all firms do from time to
time), the consultant might fix a mistake your firm
made at little or no extra cost.
• Your experiences on this point . . . •
 Other Tips
• If possible, have flexible travel arrangements. Don’t
put yourself in a position that you need to make
critical concessions because you have to catch that
last flight today.
• Similarly, ensure you have fallback hotel reservations
if the negotiations should go on for another day.
• Caucus as needed. If part of a negotiating team and
you are hit with a totally unanticipated question,
comment or strategy, it’s okay to say something
like “That’s an interesting point. Would it be okay
to caucus with my team to see how we can make
this work for both us?” •
Obstacles to Negotiation
• Sometimes people fail to negotiate
because they do not recognize that
they are in a bargaining position.
• Or, they may recognize the need for
bargaining but may bargain poorly
because they do not fully
understand the process and lack
good negotiating skills.
 Therefore;
• parties must be aware of their
alternatives to a negotiated
settlement
 :Weaker parties must feel assured
that they will not be overpowered in
a negotiation
 :parties must trust that their
needs and interests will be fairly
considered in the negotiation
process.
Obstacles to Negotiation
• Negotiation seems to bring conflicts .
Any misunderstanding that arises
between them will reinforce their
prejudices and arouse their
emotions.
 Therefore;
• To combat perceptual bias and
hostility, negotiators should
attempt to gain a better
understanding of the other party's
perspective and try to see the
situation as the other side sees it.
 Obstacles to Negotiation
• if the "right" people are not involved
in negotiations, the process is not
likely to succeed.
•
 Therefore;
• Agreements can be successfully
implemented only if the relevant
parties and interests have been
represented in the negotiations.
• So, all of the interested and affected
parties must be represented. And,
negotiators must truly represent
and have the trust of those they
are representing.
Negotiation Questions
What aspects of the negotiation will
indicate it is proceeding well or poorly?
What will tell you that it is time to

caucus?
What signs will you use to decide when

a change in negotiators is necessary?

What constitutes a "successful"

negotiation?
Negotiation -- Remember


 “Two elements are essential:

Reasonableness and
Flexibility.”
The Basic Components

1. Preparation
2. Objectivity
3. Strategy
4. Technique
Basic Components (1 of 2)
 1. Preparation:
 Prepare for negotiation if you want
to succeed.


 2. Objectivity:
 Assess your strengths, weaknesses,
and goals. Successful negotiators
make a point to "accentuate the
positive."
Basic Components (2 of 2)
3. Strategy:
 Plan a realistic course of action
based on sound preparation and
objective appraisal of resources.


4. Technique:
 Combine a wide range of skills;
draw on experience and self-
discipline.
 Three stages of
negotiation


Ø Initial Stages
Ø
Ø Middle Stages
Ø
Ø Ending Stages
Ø
 Initial stages
• Plan thoroughly.
• Organize the issues.
• Focus on mutual principles and concerns.
• Be aware that the first offer is often above expectations.
• Focus on long- term goals and consequences.
•
 Middle stages
• Revise strategies.
• Consider other options.
• Increase power by getting the other side to commit first.
• Add credibility by getting agreements in writing.
• To get through with dead ends, just set it aside
momentarily.
• When asked for a concession, ask for a tradeoff.
•
 Ending stages
• Counter a persistent negotiator by
withdrawing an offer.
• Do not expect in verbal promises.
• Congratulate the other side.
•
 MODULE 2

ASSESSING THE BALANCE OF

POWER
 MODULE 3

THE THREE SECRETS TO

SUCCESSFUL NEGOTIATION
Negotiating involves communicating
with people.

Let’s look at how we can

communicate with people better.
 Why Effective Communication is
Important in Negotiations
• Engineers are good at calculations and equations
• However, we deal with people all the time,
especially in negotiating
• It is imperative that we work well with people,
listen effectively, and be able to communicate
with them to accomplish our goals
• This part of my presentation will give you tools to
do that •
 Communication Model
Thought Sender Encodes Message Transmits the Message

Words Pictures

Receiver receives message:

- Hears it
- Reads it Receiver decodes
- Feels it Receiver ACTS
message — on message
Interprets meaning

How many opportunities are there

for miscommunication ?
 Personality Types/
Communication Styles
 Personality Types/
Communication Styles

• Research by Swiss psychologist Carl Jung

suggested there are recognizable
differences in personality types among
people.
• Isabel Briggs Myers and her mother Katharine
Briggs extended and refined Jung’s theory
into what is now known as the
Myers-Briggs Type Indicator® (MBTI®)
• The following slides summarizes four different
personality types that will help you work
with and communicate with people more
effectively. •
 Behavioral/Communication
Style Differences
• Feeler
– Considers people and friendships important. They are
genuinely concerned about other people’s feelings and go
out of their way not to offend.
– Strength: People sense the Feeler’s concern and are put at
ease by them.
– Weakness: Can miss the big picture and mission by being
overly concerned with others’ feelings. May not give you
bad news out of a desire not to hurt.
– Tips for working with Feelers:
• Be prepared for small talk (“schmoozing”) before getting to
the issues needing consideration. Allow time for small
talk.
• Listen and be responsive.
• Don’t be domineering or threatening.
• Be supportive of the Feeler’s issues in seeking to accomplish
your own. •
 Behavioral/Communication
Style Differences (cont.)
• Sensor
– Sensors are strong, decisive, results-oriented people.
They tend to keep their emotions to themselves.
– Strength: They are energetic, dynamic
implementers. Highly mission-focused. They get
things done!
– Weakness: Can appear overly pushy or demanding
at times. May not pickup on human dynamics of a
situation. May make a decision before having all
relevant facts
– Tips for working with sensors:
• Be brief, specific and to the point.
• Be well-prepared.
• Provide alternative solutions with pros and cons of
each.
• Don’t waste their time. •
 Behavioral/Communication
Style Differences (cont.)
• Thinker
– Thinkers are logical and organized. They deal with facts,
data, logic, details. Thinkers have tendency toward
perfection. They tend to keep their feelings and
emotions inside, and do not usually reveal them to
others.
– Strength: The information they provide is usually very
accurate.
– Weakness: Can be overly cautious. May not pickup on
human dynamics of a situation.
– Tips for working with Thinkers:
• Prepare. Be as logical, practical, orderly and accurate as you
can.
• Provide tangible and practical evidence or at least be
prepared to do so if asked.
• List pros and cons of any suggestions you make.
• Don’t be disorganized.
• Don’t rush the decision-making process if at all possible. •
 Behavioral/Communication
Style Differences (cont.)
• Intuitor
– Intuitors are highly enthusiastic and creative people.
They have strong conceptualization skills, and can
think outside the box. They enjoy the world of
possibilities, group activities (like parties) and feel less
comfortable in restrictive environments.
– Strength: Think big picture. Future oriented. Long-
range thinkers. Many ideas. Often see opportunities
others miss.
– Weakness: Can often appear to be abstract or vague,
unresponsive to deadlines.
– Tips for working with Intuitors:
• Plan interactions that support their dream.
• Allow time for exploring their ideas.
• Help them focus by providing ways for implementing
action.
• Try to stay on agenda or you will take many
tangents. •
 MODULE 4

NEGOTIATION AND BARGAINING

 Three Views of Conflict
• Traditional view - conflict must be avoided
• Human relations view - conflict is a natural and inevitable
outcome in any group
• Interactionist view - some conflict is absolutely necessary
– functional conflict - supports the goals
of the work group and improves its
performance
– dysfunctional conflict - prevents
group from achieving its goals
–
 Conflict and Group
Performance

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada,
Inc.
 Conflict-Handling Styles

Forcing
Collaborating
Assertive

Resolving conflicts by
satisfying one ’ s own needs Rewarding conflict by seeking
at the expense of another ’ s an advantageous solution for
all parties

Resolving conflict by each

party giving up something
of value
Assertiveness

Compromising

Resolving conflicts by Resolving conflicts by

withdrawing from or placing another ’ s needs
suppressing them and concerns above your
own
Avoiding
Unassertive

Accommodating

Uncooperative Cooperative
Cooperativeness

Robbins et al., Fundamentals of Management, 4th Canadian Edition ©2005 Pearson Education Canada,
Inc.
 The Zone of Agreement
Zone of
agreement

Seller ’ s
surplus Buyer ’ s surplus

Money ( $ )
s x b
Seller ’ s reservation Final Buyer ’ s reservation
price Contract price
( seller wants s or ( buyer wants b or
more ) less )
Seller wants to move x to the buyer wants to move x to
right the left
 Formulating a Negotiation
Strategy
• Strategic plan
– Commitment to an overall approach
that has a good chance of achieving
the negotiator’s objectives
• Soft : avoid conflict, make
concessions; often end up exploited
and feeling bitter
• Hard : sees any situation as a contest
of wills. Exhausts people and
resources and harms relationships
• Other strategies are between hard and
soft, but each involves a trade off
• Making good tactical decisions
 Starting Point
• A successful negotiation must have a
basic framework
– The alternative to negotiation
– The minimum threshold for a
negotiated deal
– How flexible a party is willing to be,
and what tradeoffs it is willing to
make
 RULES OF NEGOTIATING
• The lower you start, the lower will be
you final price. Ask for more than
what you need.
• The less time you are given, the less
negotiating power you have.
 RULES OF NEGOTIATING
• The more credible you are, the more
believable is your price.
• The more written documentation you
have, the more believable is your
price.
•
 RULES OF NEGOTIATING
• The weaker your perceived position,
the more of discount will be
expected.
• If you give a much requested
concession, demand a bigger
concession in return.
•
 RULES OF NEGOTIATING
• Know their deadlines
• Be aware of your options
• Be aware of their options
• Use all the time available to
negotiate
 RULES OF NEGOTIATING
• Be comfortable with stress and
pressure.
• Make small concessions, slowly.
• Control your pattern of concessions.
• Make non-price concessions
whenever possible.
• Never agree to “split the difference.”
 RULES OF NEGOTIATING
• Negotiate at the end of the day.
• “I’m sorry, but I don’t have the
authority.”
• Don’t be afraid to walk away and
negotiate another day.
ust Know Rules

Rule No ZERO
Know the Basic Info

66
 Must Know Rules
Rule No 1
No Free Gifts – Seek
a Trade - off

Make sure you highlight your

compromises and make them
against a compromise by the
other party

67
 Must Know Rules
Rule No 2
Start Higher Than What
You Desire

I. Write down what you want and

always start higher than what
you desire
II. The recent CNG price hike story

68
 Must Know Rules
Rule No 3
Identify Your Envelope
of Negotiation

I. Ranges
I. Opening
II. Target
III. Bottom Line
II. The car - buying experience

69
 Must Know Rules
Rule No 4
Know Your BATNA

I. The Power to Walk Away

70
 Must Know Rules
Rule No 5
Never Settle Issues
Individually – Always
Settle them as a Package

71
 Must Know Rules

Rule No 6
Conclude With a ‘ Nibble ’

What ’ s a ‘ Nibble ’
§Little snack or a bite
Add the ‘ free shipping ’ or ‘ two days
warranty ’ at the end

72
 Must Know Rules

Rule No 7
Keep Looking for
Creative Concessions to
Trade

I. ‘ Free Complementary Session ’

Concession
I. Think of your most common negotiation
situations and think of high - value ,
low - cost concessions you can offer
73
 The Rules that Maximize Retur

Rule No 8
Focus on Interests not
Positions

74
 The Rules that Maximize Retur

Rule No 9
Always Communicate
Benefits of Your Offer
not Features

Difference between ‘ Feature ’ and

‘ Benefits ’

75
 MODULE 5

NEGOTIATING STYLES
 Step Five - Agree
• Usually final concession :
“IF you do that, THEN we have a
deal!”
• Gain commitment
• Record and agree results
• Leave satisfied
Think about your influencing style

Inspirational Personal

Logical Forceful
 7 Deadly Sins of Negotiating

• Pride - Be prepared to compromise

• Gluttony - Don’t bite off more than you can
chew
• Anger - Handle objections calmly
• Covetousness - Prioritise needs/wants
• Envy - Know competitors strengths &
weaknesses… AND your own
• Sloth - Do your homework
• Lust - Don’t look desperate to settle
 An Unconditionally Constructive
Strategy
 Do only those things that are both good for the relationship
and good for us
- whether or not they reciprocate
RATIONALITY Even if they are acting emotionally, balance emotions
with reason
UNDERSTANDING Even if they misunderstand us, try to understand them

COMMUNICATION Even if they are not listening, consult them before

deciding on matters that affect them

RELIABILITY Even if they are trying to deceive us, neither trust

them nor deceive them: be reliable

NON - COERCIVE MODES Even if they are trying to coerce us, neither yield to
OF INFLUENCES that coercion nor try to coerce them, be open to
persuasion and try to persuade them
ACCEPTANCE Even if they reject us and our concerns as unworthy of
their consideration, accept them as worthy of
consideration, care about them and be open to learning
from them
"Getting Together"
Fisher
 Three Approaches To Resolving
Disputes
MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM

Power

Rights

Interests

Distressed System

"Dispute Resolution" Goldberg Green Sander

 Three Approaches To Resolving
Disputes
MOVING FROM A DISTRESSED TO AN EFFECTIVE RESOLUTION SYSTEM

Interests

Rights

Power

Effective System
Goldberg
 42

Negotiation Check List

Good Practice Avoid

Actively listen Interrupting
Question for clarification Attacking
Summarising Blaming

Test commitment Talking too much

Seeking & giving information Sarcasm

Encourage two way conversation Threats

State and plan your proposal – then summarise Taking it personally

Use the ‘if you ….then we’ll’ principle Closed body language
 MODULE 6

PLANNING : THE KEY TO

WIN-WIN NEGOTIATION
 MODULE 7

TRADING CONCESSIONS
 MODULE 8

PREPARING AND CONDUCTING

INDIVIDUAL AND TEAM
NEGOTIATIONS
Tactics & Tips

1.Decline to speak first: who speaks second usually has a better opportunity to
analyze his counterpart
3.Volunteering to keep the minutes of the meeting:When you do so, you will
have a better opportunity to phrase the minutes, and better window to analyze and
assess negotiation pathway.
5.Stress on time-frames: Aiming to transmit sense of urgency and a feeling of
punctuality to your counterpart.
7.Good guy / bad guy approach: Here, the role of the “bad guy”, or tough
negotiator is to lower counterpart’s expectations below required. Then when the
“good guy” offers the demanded solution, it gets more acceptance.
9.Claim limited authority: Never be shy saying “Sorry, but I really can not have
the rights to do this, I am not authorized to go down to this level”. Even the
president can say “I am not authorized to accept this, it will deeply frustrate the
shareholders”
11.Caucusing: If you needed to re-align your team talks and perspectives, or to
update about an analysis you made, you can ask for a caucusing moments
with your team.
13.Walking out: If you needed to buy a moment to think a point over, you can
excuse to restroom or to smoke a cigarette.
15.Concession patterns: Whenever you feel cornerized and in a very bad
negotiation positions. You can postpone reaching a consensus, or decide to focus
on decreasing losses other than maximizing benefits.
17.Fait accompli : “What is done is done, let us face the current situation”. You
might use this approach if you do not wish to dig in the past and relate
consequences to it.
19.Love it or Leave it : When you hold a very potent position, and you are not
willing to create a win-win for whatever reason. You can as a last option use the
“take it or leave it” approach. Not as is, but to give the meaning in a descent way
that allows your counterpart a surrender with dignity.
STAGES OF NEGOTIATION
• Phase 1:
Preparation

• Phase 2:
Interacting

• Phase 3:
Agreement

PREPARATION
INTERACTING
The Art of Listening
Challenges &
Obstacles
 TACTICS REGARDING
PRICE
Should I ever state my acceptable
range?
Should I ever tell the other side my
bottom line?
Suppose that the other side opens with
an incredibly unreasonable number,
should I counter with an equally
unreasonable number, or decline to
counter at all?
 TACTICS REGARDING
PROCESS
Is it acceptable to make two moves at a
time?
Is it smart or fair to bluff?
In a complex deal, is it better to
reach agreement issue by issue or wait
until the end?
Is it better to deal with difficult or
easy issues first?
 TACTICS REGARDING
PEOPLE
Collaborative negotiator vs. positional hard
bargainer?
How should I react if the other side seeks
to change something in its offer after a
deal has been reached?
What should I do when the negotiator on the
other side has a temper tantrum?
I don’t believe in what the other side says.
Is it essential to negotiate face to face?
How should I react when the other side
challenges my credentials, status or
authority to make a deal?
CLOSURE