Negotiations Skills By Prof.

Rumana Shaikh

Basics of Negotiations
We all negotiate, all the time at home, with fiends, at office, in public. These negotiations can be about anything. Negotiation is the most effective way of resolving conflicts and securing agreements. A two way discussion to agree terms. Conferring for the purpose of mutual agreement. Establishing consensus amongst two or more parties.

Negotiations Is..

A dialogue between two or more parties, with an intent of coming to a mutually agreed solution, because each party has something the other wants. A communication process between two or more people in which they consider alternatives to arrive at mutually agreeable solutions or mutually satisfactory objectives.

Balancing outcomes and relationships

Distributive negotiations Integrative negotiations Multiphase and multiparty negotiations

Distributive Negotiations
A negotiations in which the parties compete over a fixed sum of value. Key question is who will claim the maximum value? A gain by one party is at the expense of the other. Win-lose situation.

Distributive bargaining basics

Play your cards close to your chest The opposite is equally true The only information we should ever reveal are those alternative options Be realistic

Integrative Approach

A negotiation in which the parties cooperate to achieve the maximum benefits by integrating their interest into an agreement. These deals are about creating value and claiming it. Win-win situation.

Integrative Negotiations Basics

Multiple issues Sharing Problem solving Bridge Building

The real win-win concept

The true meaning of a win-win settlement is a negotiated agreement where the agreement reached cannot be improved further by any discussions.

What does not constitute a win-win deal?

One size fits all win-win approach Compromise The relationship Take our time

5/1/2012

The Art of Negotiating Advesh Consultancy Services

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Winning strategy
Ask smart questions Play fair Present multiple offers Third party assistance

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Multiphase and Multiparty negotiations

One person or one team of people sitting across the table from another. Business and professional negotiations commonly involve more than two parties. Coalitions can form among the parties. There are two types of coalitions 1. A natural coalition 2. single Issue coalition. The challenge of multiparty negotiation is managing coalitions, breaking them apart or keeping them together depending on your own interest.

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Multiparty negotiations management

Non - Agreement Consequences Decision Making First agreement objective

1.

1. 2. 3. 4.

Managing the process

Appoint a chair person Filling in the information frame
Scouts Ambassadors Coordinators Guards

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Mind your step 1. Intolerance 2. Keep emotions in check 3. Preparation Positive discussion strategies 1. Delphi Technique 2. Brain storming 3. Nominal group techniques 4. Use of agenda

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Multiphase negotiations
Building trust with Japanese "It will take 'two years of eating and Drinking' before you will get an order".

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If they don't call and you have to call them. "If they haven't said anything positive, such as 'we are interested. "Expect nothing, and then you will not be disappointed. Walk away, and get on with your life. If they come back to you, think of it as a surprise bonus" - words of wisdom particularly useful for smaller companies.

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BATNA
Best Alternative To a Negotiated Agreement
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WHAT IS BATNA?
How do the proposals match your realistic alternative if you cannot come to a deal? The more attractive your BATNA is compared with the proposals you receive, the more POWER you have; the less attractive your BATNA is compared to the deal on offer, the less power you have.

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BATNA
Retain the existing supplier Go to another supplier Strike/Lockout Not an immediate requirement

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DEVELOPING BATNA

List what you would do if you fail to reach an agreement Convert the most promising options into practical choices. Select the single best option; that is your BATNA Compare your BATNA to all proposals If an offer is better than your BATNA,consider improving or accepting it If an offer is worse than your BATNA, consider rejecting it If they will not improve their offer consider exercising your BATNA
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BATNA
Know your BATNA
Work with all the BATNAs Be ready to walk

Strong and Weak BATNAs

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Improving your position

Improve your BATNA Identify other sides BATNA Weaken the other Partys BATNA

Not all BATNAs are simple

When you have no alternatives
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BATNA Exercise 1
You have a good motor cycle which is 4 years old. It gives good mileage. However you want to replace it with a new one. You have Rs 30000 cash in hand You want the balance to be arranged thru loan You have 12% interest in your mind. The financier is asking for 15% What is your BATNA?

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BATNA EXERCISE 2
You are attending an interview for change of job. You are in salary negotiation stage. You are concerned about your childs education. Currently you are on a transferable job.You are demanding 30% increase. The new company is offering the same salary. What is your BATNA?

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BATNA
Developed by Roger Fisher and William Ury

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RESERVATION PRICE
Reservation Price is the least favourable point at which one will accept a deal

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ZOPA ZONE OF POSSIBLE AGREEMENT

ZOPA is the area or range in which a deal that satisfies both parties can take place.
It is the set of agreements that potentially satisfy both parties.

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EXAMPLE

You as a buyer has set a reservation price of Rs. 275,000 for the purchase of the commercial warehouse, that is as high as you are willing to go. Unknown to you the seller has set a Reservation price of 250,000. That is the least he will accept for the property.What will be your ZOPA???
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Value creation through Trades..

Negotiating Parties can Improve their positions by creating the values at their Disposal.

It is usually the form of each party getting something it wants in return of something it values much less.

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What is conflict?
Culture and conflict.
Conflict is likely to be high when:
Persons from short-term cultures work with

persons from long-term cultures.

Persons from individualistic cultures work with

persons from collectivistic cultures.

Persons from high power distance cultures

work with persons from low power distance cultures.

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An Individualism - Collectivism . . . Cultural Dialogue: Ms. Anderson: Hassan was looking at your paper. Abdullah: He was? Ms. Anderson: Yes. He copied some of your answers. Abdullah: Perhaps he didnt know the answers. Ms. Anderson: Im sure he didnt. Abdullah: Then its lucky he was sitting next to me.

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How can the conflict be managed successfully?

Conflict resolution.
A situation in which the underlying

reasons for a given destructive conflict are eliminated.

Effective resolution begins with a

diagnosis of the stage to which conflict has developed and recognition of the cause(s) of the conflict.
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The conflict management grid

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 (1,1) Avoidance.
Unassertive and uncooperative.
Downplaying disagreement.

Failing to participate in the situation

and/or staying neutral at all costs.

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 (1,9) Accommodation or smoothing.

Unassertive and cooperative.
Letting the others wishes rule.

Smoothing over differences to maintain

superficial harmony.

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(5,5) Compromise.
Moderate assertiveness and moderate

cooperativeness.
Working toward partial satisfaction of

everyones concerns.
Seeking acceptable rather than optimal

solutions so that no one totally wins or loses.

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(9,1) Competition and authoritative

command.
Assertive and uncooperative. Working against the wishes of the other party. Fighting to dominate in win/lose competition. Forcing things to a favorable conclusion through

the exercise of authority.

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(9,9) Collaboration and problem

solving.
Assertive and cooperative. Seeking the satisfaction of everyones

concerns by working through differences.

Finding and solving problems so

everyone gains as a result.

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Telephone and Email Negotiating Tips

Good and bad aspects of telephone Some telephone traps a) There is no Face to Face b) You never know who is listening c) Interruptions are deadly d) You cant examine documents e) There is a tendency to expect Resolution

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a)
b) c)

Learning to master the Telephone

Learn to Listen Ask the purpose of the call Always use a checklist or agenda Dont hold Telephone Negotiations where interruptions may occur. Have all the materials available on the Phone. Confirm the conversation with the follow up letter.
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d)
e) f)

Email Rules of Thumb a) Grammar and Punctuations makes impression. b) Nonverbal expressions can be misinterpreted, so be careful. c) Follow up is important and courteous

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STAGES OF NEGOTIATION

Phase 1: Preparation Phase 2: Interacting

Phase 3: Agreement

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Negotiation Process

Closing

Preparation

Bargaining

Opening

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PREPARATION

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PREPARATION
Understanding ones own position and interests of the other party or parties the issues at stake, and alternative solutions.
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PREPARATION
1.

Consider What a good outcome would be for you and the other side. Identify potential value creation opportunities Identify your BATNA and Reservation Price and do the same for the other side. Shore up your BATNA
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2.

3.

4.

PREPARATION
5.

6.
7. 8. 9.

Anticipate the Authority Issue Learn All you can About the Other Side Prepare for Flexibility in the Process Gather External Standards and Criteria Relevant to Fairness Alter the process in your favour

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CRITICAL ELEMENTS/DIMENSIONS OF NEGOTIATION

Knowledge or information Time or Deadline Pressure

Strength or Power
All the above are inter-twined

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INFORMATION
More information you have, the better you will be able to negotiate Information and facts help you to generate alternatives, strategies and convince the other party Information about the other party, market information, trends, technologies Published Standards, guidelines, data equip you to put your points effectively

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TIME
Time plays a critical role in Negotiation Paretos Law 80/20 80% of results are generally agreed upon in the last 20% of the time Time / Deadline pressure weakens you / builds tension

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POWER / STRENGTH

The ability to influence / control the group and the events Besides the authority of your position, knowledge is your strength The balance of power keeps shifting from one side to the other during the negotiation process Negotiation will end when -The balance of power shifts totally to one side a WinLose situation When the balance of power is shared 51 equally a Win-Win situation

INTERACTING

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INTERACTING
Getting the other side to the Table Getting off to a good start Power of Anchoring Using Concessionary moves Tactics for Distributive negotiation General Tactics

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Getting the other side to the Table

Offer incentives
Put a price for on the status-quo Mobilise Support

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Getting off to a good start

Express respect for the other sides experience and expertise Frame the task positively, as a joint endeavour Emphasise your openness to the other sides interests and concerns. Start with the agenda

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Getting off to a good start Some tips

Breaking Bread Have coffee, snacks or light drinks available. Use small talk to dispel tension If the other side is very formal, dont speak casually. If the other side is decidedly informal, speak in a more casual way.
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HIGH
ACCOMMODATE Build friendly relationship Characteristics: Promote harmony Avoid substantive differences Give into pressure to save relationship Place relationship above fairness of COMPROMISE Split the difference Characteristics: COLLABORATE Problem solved creatively, aiming for winwin Characteristics: Search for common interests Problem-solving behaviours Recognising both parties needs Synergistic solutions Win-win becomes the main purpose of the negotiator

CONCERN FOR RELATIONSHIP

the outcomes

Meeting half way

Look for trade offs AVOID Take whatever you can get/Inaction Characteristics: Feeling of powerlessness Indifference to the result Resignation, surrender Take what the other party is willing to concede Withdraw & remove = behaviour of negotiator Accept half-way measures Aims to reduce conflict rather than problem solve synergistically DEFEAT Be a winner at any cost/Competitive Characteristics: Win-Lose competition Pressure/Intimidation Adversarial relationships Defeating the other becomes a goal for the negotiator

CONCERN FOR SUBSTANCE

LOW

HIGH

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Distributive Negotiations
Win-Lose Negotiations Anchoring is an attempt to establish a reference point around which negotiations will make adjustments. When should you anchor Counter anchoring Be prepared for concessionary moves

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Integrative Negotiations

Slower and more explorative opening Dont start with numbers. Making a good start is critical Ask open ended questions Probe the other sides willingness to trade off one thing for the other. Inquire about the other partys underlying interests Listen closely Be an active listener Express empathy Work to create a two-way exchange of information Continue relationship building efforts Refrain from personal attacks. Maintain a sense of humour

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The Art of Listening

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NONVERBAL BEHAVIOUR
What is going on in the inside

shows
on the outside

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Face and Head

Broken Eye Contact(Hide) Looking pat you(Bored) Piercing(Angry) Steady(Honest) Head Turned slightly(Evaluating you) Tilted Head(Uncertain about what you said) Nodding(In agreement) Smiling(Confident)

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Arms and Hands

Arms folded tightly(not receptive) Arm over the back of the chair(need for dominance or negative reaction) Open palms(Positive) Hands clasped behind head(Need for dominance) Steeling of the fingers(Need to control negotiation) Hand wringling(Nervousness) Self touching(General nervousness)
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Legs
Crossing your legs has a devastating effect Out of 2000 videotaped sales meetings, not one sale was made by people who had their legs crossed Source How to Read a Person like a Book by Gerard I. Nirenberg and Henry H. Calero

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Dominance/Power
Making piercing eye contact Putting hands behind head or neck Placing hands on hips Standing while counterpart is seated Steepling

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Submission/Nervousness
Fidgetting Making minimum eye contact Touching hands to face , hair etc Using briefcase to guard body Clearing throat

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Disagreement/Anger
Getting red Pointing a finger Squinting Turning body away Crossing arms or legs

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Boredom and Lack of Interest

Failing to make eye contact Playing with objects Staring blankly Picking at clothes Looking at watch/door

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Uncertainty/Indecision
Cleaning glasses Looking puzzled Putting fingers to mouth Biting lip Tilting head

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Suspicion/Dishonesty
Touching nose while speaking Covering mouth Avoiding eye contact Crossing arms/legs Moving body away

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Evaluation
Nodding Maintaining good eye contact Tilting head slightly Stroking chin Touching index finger to lips

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Confidence, Cooperation and Honesty

Leaning forward Keeping arms and palms open Maintaining great eye contact Placing feet flat on floor Sitting with legs uncrossed Smiling

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Challenges & Obstacles

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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
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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?

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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 dont 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?
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CLOSURE

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Closing
Be Prepared to Concede
Begin with those of Low Priority and seek High Priority Items Never Concede on More than possible by your Brief Use your Concessions Wisely Dont just give these away expect and receive something in return
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Being Confident Being Prepared Being Willing to Walk Away

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Convince Collaborate Create

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