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Negotiating Lessons, Tactics and Skills:

A Presentation By:

Prof. Michael L. Bloom Director, The Transactional Lab

The University of Michigan Law School

12th Annual Midwest Supply Chain Management Conference

March 11, 2015

Increasing Your Bottom Line By Improving

How You Negotiate

Bruce A. Courtade Attorney with

Rhoades McKee, PC

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

What is Negotiation?

Oxford Dictionary:

http://www.oxforddictionaries.com/us/definition/american_english/negotiation

What Is Negotiation?

negotiation Syllabification: ne·go·ti·a·tion Pronunciation: /nəˌɡōSHēˈāSH(ə)n

NOUN

(also negotiations)

1Discussion aimed at reaching an agreement:a worldwide ban is currently under

negotiation between unions and employers

1.1 The action or process of negotiating: negotiation of the deals

1.2 The action or process of transferring ownership of a document.

Origin: late 15th century (denoting an act of dealing with another person):

from Latin negotiatio(n-), from the verb negotiari (see negotiate).

The Four Stages of Negotiation

Preparation

Info Exchange

Bargaining

Agreement

What Is Negotiation?

NEGOTIATION IS LIFE!

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

CREATING SHARED VALUE

• Agreements where both

sides get something that they

need

• “Win-Win” as espoused by

“Getting to Yes”

What is the Goal of Negotiation?

What is the Goal of Negotiation?

WHAT IS “WIN-WIN”?

www.womensally.com/categories/Negotiation

With Win-Win As Goal …

• All sides get something that

they need

• Costs very little

• Builds goodwill and momentum

• Builds or keeps the probability

of future professional

relationship

Benefits of Win-Win

Benefits of Win-Win

And … if you’re really successful …

What can you expect if you “win” so much that the

other side is either going to fail or hate you?

Eventually … the deal will crash.

Drawback of Win At All Costs Negotiating

Drawback of Win At All Costs Negotiating

What can you expect if you “win” so much that the

other side is either going to fail or hate you?

Or promises will get broken.

What can you expect if you “win” so much that the

other side is either going to fail or hate you?

Or worse yet …

Lawsuits will be filed.

Drawback of Win At All Costs Negotiating

Problems with “Win-Win”

1. Easy to Say, Hard to Do?

2. Can come off as presumptuous.

That’s right … It’s a balancing act!

Problems with “Win-Win”

And you know the problem with balancing acts:

Sometimes they leave you flat on your face!

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

TIPS FOR PREPARING TO NEGOTIATE

1. Know Your Objective.

2. Determine your BATNA

3. Do Your Homework.

a) Information is POWER

b) Learn as much as you can about the other side’s wants and

needs as possible

c) What pressures are they under?

d) What opinions/beliefs do they have?

4. Come up with a list of why your proposal benefits the other side, too

a) DO NOT SHARE THIS AT THE BEGINNING …

• Reservation Price – the point of indifference

• BATNA – your next best option

– RP depends on BATNA

• Bargaining Zone – difference between the parties’ RPs

Bargaining Zone

Seller’s RP Buyer’s RP

Determine Your BATNA

• Reservation Price – the point of indifference

• BATNA – your next best option

– RP depends on BATNA

• Bargaining Zone – difference between the parties’ RPs

Determine Your BATNA

Buyer’s RP Seller’s RP

No Bargaining Zone

• Step 1 – identify alternatives

• Step 2 – identify the best (BATNA)

• Step 3 – translate value of BATNA to RP

– Adjust for different subjective valuation of NA vs. BATNA

• Step 4 – repeat Steps 1-3 for other side

– Might be very difficult to know other side’s BATNA and RP

Determine Your BATNA

• What information do you need to better understand your BATNA and RP?

• What information do you need to better understand the other side’s BATNA and RP?

• What information is the other side likely to want from you?

• What will you reveal, and what will you conceal?

• How will you seek to obtain information from the other side?

Information Gathering

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

You have TWO ears and ONE mouth for a

reason …

So clean out yours ears and spend twice as

much time listening as you do talking …

PREPARING FOR NEGOTIATION:

The 2:1 Rule And Its Importance

And you might hear something important – even shocking!

PREPARING FOR NEGOTIATION:

The 2:1 Rule And Its Importance

PREPARING FOR NEGOTIATION:

The 2:1 Rule And Its Importance

Reaffirmation is Crucial!

“What I hear you saying is …”

“I understand that you are saying …”

Shows you respect your opponent’s position AND

care about what s/he has to say

General Strategy #1:

Timing Isn’t Everything … But Is Important!

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #2

Blessed Are The Flexible, For They Cannot Be Broken!

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #3:

Keep Your Emotions

In Check!

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #4:

Find common ground early; return to it often

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #5:

Be assertive but not aggressive

Assertive = part of negotiating – stake your ground

and stand firmly upon it

Aggressive = confrontational: you see to your own

interests without regard to others

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #5:

Assertive =

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #5:

Aggressive =

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #6:

Always be prepared to

walk away

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #7: Don’t be in a hurry!

1. Focus on their pressure – not yours!

2. Focusing on why YOU need to make a deal plays into the other side’s

hands.

3. Benefit of homework: knowing why they need to get the deal done

helps you understand their needs, which helps get the deal done for

you.

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

General Strategy #8:

Don’t give anything up without getting something in return.

“Salami it” or “Pizza Pie It” or “Use the Velveeta.”

BE CAREFUL ABOUT OFFERING A SLICE IF YOU ARE NOT

SURE!

MORE NEGOTIATION TIPS

Ask Good Questions!

Ask open-ended questions

• “Can you explain how you arrived at that

decision?”

• “What’s a major roadblock you see preventing us

from reaching a deal?”

• “How do we move forward from here?”

AVOID “yes” or “no” questions

Avoid Building Barriers

Use “I” instead of “you” to avoid finger-pointing and

barrier-building

• Instead of “You shouldn’t do that” …

• Try “I don’t feel comfortable when you do that.”

Building trust information exchange creative

problem solving

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

Throw In A “Hmmm”

Or a Wow!

Takes practice; use with caution …Goal is gentle

indication that you’re not on the same page

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

Avoid Hand Grenades!

Avoid the following phrases:

• “I’m going to be honest with

you”

• “Take it or leave it”

• “What’s your absolute

bottom line?”

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

TEN (OR MORE) TIPS FOR YOUR

NEXT NEGOTIATION

SILENCE CAN BE YOUR FRIEND!

Let the other side respond before you hurt yourself!

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

Avoid Ambiguous Words

• “Can” vs. “Will”

• “Possibly” = “Probably Won’t”

• “Will Try” = Not Promising ANYTHING

Use numbered paragraphs

Avoid abbreviations unless clearly defined

CLOSING THE DEAL:

When to Get What In Writing

Be explicit about who has an obligation

• Active Voice (“Seller shall purchase insurance”)

• Not Passive Voice (“Insurance shall be

purchased”)

CLOSING THE DEAL:

When to Get What In Writing

“SMAC” in business vs. “SMACK” in Negotiation

In corporate vision statements, SMAC is:

• Specific;

• Measurable;

• Achievable; and

• Challenging.

CLOSING THE DEAL:

When to Get What In Writing

“SMAC” in business vs. “SMACK” in Negotiation

In writing negotiation settlement agreements, SMACK is:

• Specific;

• Measurable;

• Accountable;

• Counsel-Approved; and

• Kept.

CLOSING THE DEAL:

When to Get What In Writing

“SMAC” in business vs.

“SMACK” in Negotiation

Failure to remember any

one of the “SMACK”

requirements could result

in nasty consequences …

CLOSING THE DEAL:

When to Get What In Writing

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

Today’s Goals –

Gain A Basic Understanding of:

• What is Negotiation?

• What is the Goal of Negotiation?

• Preparing for Negotiation

• Ten (or More!) Tips for Negotiating

• Closing the Deal: Putting It In Writing

BREAK BEFORE BREAKOUT

PRACTICE NEGOTIATION

DEBRIEFING

QUESTIONS AND

ANSWERS

Professor Michael L. Bloom Director, Transactional Lab

Clinical Assistant Professor

Univ. of Michigan Law School

bloomich@umich.edu

734-763-3812

Bruce A. Courtade Attorney

Rhoades McKee

bcourtade@rhoadesmckee.com

616-233-5152