NEGOTIATIONS
Structure of presentation
What is negotiation ? Four stages of negotiation process Styles of negotiation
What is negotiation ? An interactive communication process that
may take place whenever you want something from somebody else or they want something from you.
A field of knowledge and endeavour that focusses on gaining the favour of people from whom we want things
Negotiation encompasses the life in a broader sense and not necessarily to business alone
Everyone is a negotiator
An infant learns how to get things from her mother from the very first day
Everyone is a negotiator as everyone has needs which cannot be fulfilled by himself. Interdependence is the cause of all negotiations.
Four Stages of Negotiation
Preparation Exchanging information Opening and concession making
(iterative with exchanging information)
Closing and commitment
Preparation: Defining goals You must know clearly what you want
out of a negotiation. WHAT you want to achieve out of negotiation is more critical than HOW you achieve
You need to define the hierarchy of your negotiation strategy
You need to define your and opponent’s BATNA before you work out your hierarchy
What is BATNA ? It is an acronym for “Best Alternative
To a Negotiated Arrangement” In simple terms, it means what is
your next best option, it this negotiation fails or you want to walk out of this negotiation
It is a relative term. Your BATNA is different from the opponent’s BATNA
BATNA-some illustrations If you are looking for renting an apt. of
your choice at a particular rent, your next best option could be to continue where you are, or rent of an alternate apt which is your next best choice
If you are buying a Dell laptop, your next best option could be a Sony or Toshiba
Next best option could be a superior one or an inferior one
Even in a monopoly situation, you still have a BATNA of doing without it
Your BATNA vs Opponent’s BATNA You want to rent a particular apartment
with a view to reduce your rental cost. Your current apt rent is Rs. 50K pm and you are unwilling to shift at any rent above that. Your BATNA is 50K. You may not want him to know that as you want the best deal.
The landlord of that apt has another offer at 45K. So his BATNA is 45K. You may or may not be aware of that unless he mentions in the negotiation process.
Other concepts Bottomline: The minimum level that you
want to achieve at the end of the negotiation so that you get a certain benefit over your BATNA
Target: The ideal level that you want to achieve at the end of the negotiation
Starting Position: The tactical level that you want to state your opening bid with some logical basis
YOUR BATNA
YOUR BOTTOM
LINE
YOUR BOTTOM
LINE
YOUR TARGET
HIS BATNA
HIS BOTTOM
LINE
HIS BOTTOM
LINE
YOUR STARTING POSITION
HIERARCHY OF YOUR NEGOTIATION STRATEGYHIERARCHY OF YOUR NEGOTIATION STRATEGY
YOUR BATNA 50K
YOUR BOTTOMLINE 49K
YOUR BOTTOMLINE 49K
YOUR TARGET 48K
HIS BATNA45K
HIS BOTTOMLINE 46K, TGT 47K
HIS BOTTOMLINE 46K, TGT 47K
STARTING: YOU 45K, HE 50K
HIERARCHY OF YOUR NEGOTIATION STRATEGYHIERARCHY OF YOUR NEGOTIATION STRATEGY
Preparation Sequence List your issues and options Prioritise and set targets. Identify (a) deal breakers (b)
important issues (c) Bargaining chips Develop your positioning story Anticipate likely response from
opponents Develop plan B
Four Stages of Negotiation
Preparation Exchanging information Opening and concession making
(iterative with exchanging information)
Closing and commitment
Exchanging information Individual negotiations vs team
negotiations Internal exchange of information within
your team-formally and informally including the authority levels, roles that each one will play etc.
Iterative exchange of information with the other team-formally and informally with confidentiality agreements where needed
Credibility in relationships is crucial for success of negotiations
Four Stages of Negotiation
Preparation Exchanging information Opening and concession making
(iterative with exchanging information)
Closing and commitment
Opening and Concession making (the bargaining process)
(a)The Three Crucial Variables to decide your tactics
THE THREE CRUCIAL VARIABLES
1. PowerOr Leverage
2. Time
3. Information
1. Power or Leverage Power is the ability or capability to get
things done and to exercise control over people, events, situations and one’s own self
Power by itself is not good or bad, moral or immoral, ethical or unethical. It is neutral
Power is means to achieve an end and it not an end by itself
Power (contd..)
Like in a game of cards, success derives not only from holding a strong hand, but from analysing the total situation so cards can be skillfully played.
Overestimating your own power is as dangerous as underestimating your opponent’s power.
Perceived power is as important as real power.
Sources of Power/Leverage
Competition Rewarding/punishing
Legitimacy Identification
Risk-taking Morality
Commitment Precedent
Expertise Persistence
Knowledge of ‘needs’
Persuasion
Investment Attitude
2. Time and deadlines Most people tend to take decisions when
they are near their deadline. Try to understand your opponent’s
deadlines. Try not to reveal your real deadlines. Even when your opponent pretends to be
cool and serene, remember he still has his deadline.
Deadlines are not always inflexible Delay tactics can help in tiring the other
side out sometimes
The Tactic called ‘nibble’ In some situations, extensive spending of
time through ‘nibble’ pays rich dividends It helps you in tiring out the opponents This is quite useful in labour
negotiations. In India, we have seen minor coalition partners using this to get more ministerial berths
It is more relevant when the opponent’s BATNA is far worse than yours
3. Information can unlock the doors of success Early mover gets more benefits Information gathering process starts well
before bargaining process Develop the art of listening and questioning in
order to extract more information Ensure that the other side does not easily get
information on your side. Some red herrings as diversionary tactics useful. So is a poker face.
Adversary’s competitors are good source of information. So is internet.
LISTENING Listening includes observing and hearing Listen with your ‘third ear’ and observe
with your ‘third eye’ Look for verbal clues, non-verbal clues
and unintentional clues Develop the art of ‘reading between the
lines’ Watch your listen-talk ratio
Non-verbal clues Studies have shown that only 7% of
communication happens through words 38% of communication happens through
tone of voice and 55% through body language
People tend to have one dominant state of communicating from three states: visual, auditory and kinesthetic. Once you understand that and mirror their state in your response, you will build a faster rapport that can elicit more information for you
BARRIERS TO EFFECTIVE LISTENING The urge to talk to score a point The urge to react to what is being said The urge to counter a view that is being
expressed The urge to share our own knowledge The desire to impress others The desire to win approval and affection
from others The desire to lead others
THE ART OF ASKING QUESTIONS If you don’t ask questions, you don’t get
answers. Quality answers come from quality questions
The masters of the art of asking questions are kids.. Learn from them
Questions help us to shift focus, challenge our own presumptions and help to reframe the problems
Open-ended questions help us a lot in eliciting much more information
Words like ‘what’, ‘for what purpose’ and ‘what if’ help us get better answers
Opening and Concession making (the bargaining process)
(2) Common mistakes that negotiators make
Guard yourself against Neglecting the other side’s problems Focussing only on price and neglecting
other important variables Adamantly sticking to positions taken
beyond a point Working too hard for a compromise solution Neglecting your BATNAs Being inflexible on your strategy when it
requires revisiting in course of negotiation
Four Stages of Negotiation
Preparation Exchanging information Opening and concession making
(iterative with exchanging information)
Closing and commitment
Closing and commitment Even if you have scored a major victory
in the negotiation, you should not show it on your faces or in your behaviour
Importance of reducing the detailed understanding in writing to avoid misunderstandings and backtracking
Use of minutes, MOU and legal agreements
Internal documentation of learnings for future use
Styles of Negotiation
Collaborator (problem Solver)
Accommodator(smoothing)
Competitor(forcing)
Conflict Avoider(withdrawal)
NeedFor Others’Approval
NeedForOthers’Approval
High
Low
Degree of AsssertivenessHigh Low
The Competitive Negotiator He sees almost everything as a
constant struggle of winning or losing Is a tough battler who seeks to win at
any cost Plays for “I win, you lose” His style is more useful in a one-off
negotiation where stakes are high, time is limited and bluffing is possible than the one which requires long-term relationship building
How does the competitive negotiator operate ?
Extreme initial position Limited authority Emotional tactics Views of opponent’s concessions as a
weakness rather than accommodation
Stingy in his own concessions Ignores deadlines
The collaborative negotiator
Goes for an outcome which provides acceptable gains for all parties
Views conflicts as problems to be resolved to find creative solutions
Plays for “win-win” His style is more useful where long-
term relationships are crucial
How does the collaborative negotiator operate ? Uses negotiation process as a tool to
meet needs of both sides rather than a technicality to achieve his own ends
Works towards harmonising or reconciling needs of both sides, building trust and gaining commitments
Seeks to go beneath the surface of the conflicts in order to resolve them
Demonstrates to the other side how they have achieved their goals while achieving his own goals
The accommodating negotiator He seeks to achieve his goals by
seeming to accommodate to the opponent. Gets more satisfaction from solving other people’s problems
Can be seen as a weak negotiator by a competitive opponent and a friendly negotiator by a collaborative opponent
Often tends to be manipulative to mask his weakness for accommodation
The ‘conflict-avoiding’ negotiator Has a personality that tends to avoid
conflict. Does not feel comfortable to handle conflict situations or has the fear of confrontation
Tends to be manipulative or surrenders easily or walks away easily
Is different from the collaborative negotiator who seeks to resolve conflicts by going to the depth of the issue without indulging in escapism
Be Yourself “Everyone has his or her own negotiating
style, and the worst thing you can do is to adopt a negotiating technique that does not feel comfortable because credibility, based on evident sincerity, is the most important single asset of a good negotiator.” -James C. Freund (Anatomy of a merger)
How to handle negotiating styles Important to understand your own style and
the opponent’s style as early as possible You should then tailor your moves
accordingly. e.g. If you are dealing with a competitive opponent, don’t be in a hurry to make concessions
Try to be unpredictable to opponents by adopting different styles in different situations
Develop versatility in adopting multiple styles
Selecting the right Style
Joint ventures/MergersCollaborator (problem Solver)
Relationships (marriage,Friendships)Accommodator(smoothing)
Transactions (divorce,Property sale)Competitor(forcing)
Tacit coordination (airline seat)Conflict Avoider oraccommodator
NeedFor Others’Approval
PerceivedImp. ofLong termrelations
High
Low
Perceived conflict over stakesHigh Low
The Old Book on Negotiation
“win-win” negotiations are the good ones
“win-lose” negotiations are the bad ones
“lose-lose” negotiations are the tragedies
The New book on Negotiation
Everyone negotiates for one and only one reason: to achieve their goals.
No one ever does anything that is against their interests or perceived interests.
Reference books “Getting to Yes”- Roger Fisher, Bill Urly
and Bruce Patton “Bargaining for Advantage”- G. Richard
Shell “The Negotiating Game”- Chester L
Karrass “Unlimited Power”- Anthony Robbins
(for non-verbal clues, rapport building etc.)