negotiation skills-pankaj sinha

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Negotiation Skills By Pankaj K Sinha Head- Commercial Essar Offshore Subsea Ltd.

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Negotiation Skills- Pankaj Sinha

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Page 1: Negotiation Skills-Pankaj Sinha

Negotiation Skills

By Pankaj K SinhaHead- Commercial

Essar Offshore Subsea Ltd.

Page 2: Negotiation Skills-Pankaj Sinha

Vision Statement of EOSSL

To be the most preferred solution provider in Shallow and Deep water Construction

Page 3: Negotiation Skills-Pankaj Sinha

Mission Statement of EOSSL

Essar Offshore Subsea Ltd is committed to:

• Make customers, employees and otherstakeholders happy by deliveringvalue consistently

• Ensure that services and solutionsprovided by EOSSL are safe, costeffective and environment friendly

• Fast track growth in the Shallow &Deep water Construction space, acrossthe globe

Page 4: Negotiation Skills-Pankaj Sinha

What is Negotiation

Negotiation involves the art and science of drawingup deals that create lasting value.

David A. Lax and James K. Sebenius

Negotiation is the process by which people deal withtheir differences.

Harvard Business School.

The virtue of efficient Negotiation is that you don’t leave money on the table… how you splitthe money is up to you and your counterpart.

Page 5: Negotiation Skills-Pankaj Sinha

Essar Essentials- From being to becoming

1. Entrepreneurial Orientation

2. Project Management

3. Operational Excellence

4. Negotiation– The ability to leverage interpersonal relationships in the best interest of

work/organization. This individual always looks for greater efficienciesin any business transactions.

– An individual demonstrating this capability builds rapport with internaland external customers; has exhaustive understanding of businessenvironment and knows how to leverage this; believes in win-winscenarios and relentlessly tries to achieve the same; appreciates workingrelationships and contributes to effective team work across extendedteam.

– The ability to build strong relationships with both internal and externalcustomers and look at every day tasks from service

5. Customer Focus

6. Nurturing

- Quoted from Section 5.2- Essar’s Corporate Induction Manual

Page 6: Negotiation Skills-Pankaj Sinha

Let us never negotiate out of fear

But let us never fear to negotiate

John F Kennedy

Negotiation

Page 7: Negotiation Skills-Pankaj Sinha

Evolution of Negotiation

1970 to 1985

1985 to 2000

2000 to _____

What Tools do you Carry in Your

Negotiation Toolbox?

Power

Side by Side

Problem Solving

A Learning

Conversation

Page 8: Negotiation Skills-Pankaj Sinha

Evolution of Negotiation

�Give and Take Dr. Chester Karrass

�Getting to Yes Fisher and Ury

�3D Negotiation Lax and Sebenius

Page 9: Negotiation Skills-Pankaj Sinha

Types of Negotiation

1. Distributive Negotiation

2. Integrative Negotiation.

3. Most negotiations combine elements of both types,

but for the purposes of understanding, it’s

important to examine each type in its pure form.

Page 10: Negotiation Skills-Pankaj Sinha

Distributive Negotiation

1. Parties compete over the distribution of a

fixed sum of value. The key question in a

distributed negotiation is, “‘Who will claim

the most value?" A gain by one side is

made at the expanse of other.

2. The Seller’s goal is to negotiate as high a

price as possible; the Buyer’s goal is to

negotiate as low a price as possible.

3. Thus, the deal is confined: there are not

much opportunities for creativity or for

enlarging the scope of the negotiation.

Page 11: Negotiation Skills-Pankaj Sinha

Integrative Negotiation

1. In Integrative Negotiation, parties cooperate toachieve maximize benefits by integrating theirinterests into an agreement. This is also knownas a win-win negotiation.

2. Integrative negotiations tend to occur infollowing situations:

– Structuring of complex long-term StrategicRelationships, JV or other collaborations

– When the deal involves many financial andnon-financial terms

3. In an integrative negotiation,, there aremany items and issues to be negotiated,and the goal of each side is to “create”as much value as possible for itself andthe other side.

Page 12: Negotiation Skills-Pankaj Sinha

Distributive versus Integrative Negotiations

Characteristic Distributive Integrative

Outcome Win-lose Win-win

Motivation Individual gain Joint and individual gain

Interests Opposed Different but not always Opposite

Relationship Short-term Longer or Short-term

Issues involved Single Multiple

Ability to make trade-offs Not Flexible Flexible

Solution Not creative Creative

Page 13: Negotiation Skills-Pankaj Sinha

Negotiation Concepts

1. BATNA (Best Alternative to a Negotiated Agreement): youroptions if you fail to reach agreement during a negotiation.

2. Reservation Price: the least favorable point at which you’llaccept a negotiated deal; the “walk-away” price.

3. ZOPA (Zone of Possible Agreement): the range in which apotential deal can take place; defined by the overlap betweenthe parties’ reservation prices.

4. Value Creation Through Trades: the trading of goods orservices that have only modest value to their holders butexceptional value to the other party.

Page 14: Negotiation Skills-Pankaj Sinha

ACCOMODATE

Build friendly relationship

Characteristics:

Promote harmony

Avoid substantive differences

Give into pressure to save relationship

Place relationship above fairness of

the outcomes

Type of Negotiation Styles

CO

NC

ER

N F

OR

RE

LA

TIO

NS

HIP

CONCERN FOR SUBSTANCELow

HighCOLLABORATE

Problem solved creatively, aiming for win-win

Characteristics:

Search for common interests

Problem-solving behaviours

Recognising both parties’ needs

Synergistic solutions

Win-win becomes the main purpose of the negotiator

High

AVOIDTake 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

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

COMPROMISE

Split the difference

Characteristics:

Meeting half way

Look for trade offs

Accept half-way measures

Aims to reduce conflict rather than problem solve synergistically

Page 15: Negotiation Skills-Pankaj Sinha

Pre-Negotiation

Negotiation

Post-Negotiation

Percentage Time

80%

5-10%

10-15%

Negotiation Strategy- Time Factor

Page 16: Negotiation Skills-Pankaj Sinha

Negotiation Strategy

1. Best Alternative To a Negotiated Agreement (BATNA).

• Absolutely essential to know whether to accept alternative arrived at through negotiation versus ending negotiation.

• Must consider other side’s BATNA as well as your own.

2. Develop your BATNA:

• Invent a list of actions possible if no agreement.

• Improve some of ideas from list, create practical alternatives.

• Select the alternatives that seem best.

Page 17: Negotiation Skills-Pankaj Sinha

Negotiation Strategy ……

3. Strengthen your BATNA• make BATNA easier, more probable, or better at satisfying

interest. • If you only accept a deal that is better than BATNA, improving

BATNA leads to better result, either through better agreement or going to the BATNA.

4. Consider their BATNA: • Understanding BATNA helps you understand how to make

agreement easier. • Understanding their BATNA allows you to estimate whether

agreement is possible.

5. Reservation Price: Translation of the BATNA into a value at the table—the amount at which you are indifferent between reaching a deal and walking away to your BATNA. .

Page 18: Negotiation Skills-Pankaj Sinha

Negotiation Strategy ……

Min Willingness to Accept Max Willingness to PaySeller’s Res. Price Buyer’s Res. Price

ZOPA

6. Zone of Possible Agreement (ZOPA):

The bargaining range created by the twoReservation Values. The ZOPA defines a“surplus” that must be divided betweenthe parties

• Assess the ZOPA

• Change the ZOPA

• Take the ZOPA

Page 19: Negotiation Skills-Pankaj Sinha

Strategy-templates

Page 20: Negotiation Skills-Pankaj Sinha

Strategy-templates

Page 21: Negotiation Skills-Pankaj Sinha

Body Language

Body language plays a critical role incommunication Accurate interpretation of bodylanguage is required for successfulnegotiations. Body language is expressed by:

� Eye and facial expressions

� Arm and hand positions

� Leg and foot positions

� Posture and body position

As important as it is to accurately interpretbody language, it’s also important torecognize that there are exceptions to everyrule - body language can help to support, orcontradict a message, or mean nothing at all.For example, the term ‘poker face’ describesan individual that has mastered the ability toshow no emotion regardless of the situation.

Page 22: Negotiation Skills-Pankaj Sinha

Negotiation Process

Opening

Closing

Bargaining

Preparation

Page 23: Negotiation Skills-Pankaj Sinha

Preparation

1. Define your goals, the other party’s goals, and the conflict.

2. Identify the goals you share with the other party.

3. Define the things you are willing to trade and their value to the

other party. Do the same for the other side: what they might offer

you and how much it is worth to you.

4. Anticipate Alternatives to determine how important it is for you to

reach a settlement.

5. Realize that you are no weaker or stronger than the other party. The

two sides share goals and both sides are willing to trade to attain

their objectives.

Page 24: Negotiation Skills-Pankaj Sinha

Opening

� Most important opportunity to

influence the other side

� Active Listening Skills

– Body Language

– Intelligent Listening

�Non-negotiable items

�Flexibility

Page 25: Negotiation Skills-Pankaj Sinha

Bargaining

1. Explore Key Commitments

2. Summarize Arguments and Seek

Acceptance

3. Look for Signals of Possible Movement

4. Identify and Highlight Common Ground

Page 26: Negotiation Skills-Pankaj Sinha

Bargaining

1. Remember: You Win ≠ They Lose

2. Negotiate Interests, not Positions

3. Focus on what you don’t know… exchangeinformation

4. Explore all the ways in which they can create valuefor you

5. Find out all the ways in which you can create valuefor them

6. Add issues

7. Negotiate multiple issues simultaneously

8. Exchange information regarding priorities

9. Trade based on differences of all kinds to createvalue

10. Search for Post-Settlement Settlements

Page 27: Negotiation Skills-Pankaj Sinha

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

� Don’t just give these away expect and receive something in return

� Look for Contingent Agreement, if required

� Never burn the bridge

Page 28: Negotiation Skills-Pankaj Sinha

Thank You

Q&A