getting to win-win in negotiation government finance officers association art hinshaw director,...

Getting to Win-Win in Getting to Win-Win in Negotiation Negotiation

Government Finance Officers Government Finance Officers AssociationAssociation

Art HinshawArt HinshawDirector, Lodestar Dispute Resolution ProgramDirector, Lodestar Dispute Resolution Program

Sandra Day O’Connor College of LawSandra Day O’Connor College of Law

Arizona State UniversityArizona State University

August 8, 2007August 8, 2007

© 2007 Arizona State University College of Law© 2007 Arizona State University College of Law

AgendaAgenda

BackgroundBackground

Interest Based NegotiationInterest Based Negotiation

Nuts and BoltsNuts and Bolts

ExerciseExercise

Negotiation – Negotiation – Background InfoBackground Info

Problem SolvingProblem Solving Context MattersContext Matters Words and DeedsWords and Deeds ReputationReputation Social ActivitySocial Activity The Right WayThe Right Way Comfort Level Comfort Level UncertaintyUncertainty Misteaks Misteaks

Primary Negotiation Primary Negotiation StrategiesStrategies

Adversarial / Position BasedAdversarial / Position Based

Problem Solving / Interest BasedProblem Solving / Interest Based

A Few Adversarial / A Few Adversarial / Position Based Position Based

Negotiation TacticsNegotiation Tactics Extreme claims with later small Extreme claims with later small

concessionsconcessions Take it or leave it offersTake it or leave it offers Personal insults and feather rufflingPersonal insults and feather ruffling False demands False demands Threats and warningsThreats and warnings Good cop, bad copGood cop, bad cop

Problem Solving / Problem Solving / Interest Based StrategyInterest Based Strategy Separate people from the problemSeparate people from the problem

Focus on Interests, not PositionsFocus on Interests, not Positions

Invent options for mutual gainInvent options for mutual gain

Insist on objective criteriaInsist on objective criteria

From - R. Fisher, W. Ury, and B. Patton, Getting to Yes (1991)

Interests Instead of Interests Instead of PositionsPositions

The purpose of negotiation is to serve The purpose of negotiation is to serve your interestsyour interests

Positions are what people say they wantPositions are what people say they want Interests are needs underlying the Interests are needs underlying the

positionposition Ask why and why notAsk why and why not Basic needs are powerful interests - Basic needs are powerful interests -

security, control of one’s life, security, control of one’s life, recognitionrecognition

Types of InterestsTypes of Interests

SubstantiveSubstantive

ProceduralProcedural

PsychologicalPsychological

Justification QuestionsJustification Questions

What works for you in this proposal?What works for you in this proposal? Why are you upset with the current Why are you upset with the current

situation?situation? What would about the current situation What would about the current situation

would you like to be different?would you like to be different? If you get what you ask for, what If you get what you ask for, what

problem would that solve?problem would that solve? What in this option does not work for What in this option does not work for

you?you?

Interest Based vs. Interest Based vs. Position BasedPosition Based

When you are trying to be interest When you are trying to be interest based and the other is not, what do based and the other is not, what do you do?you do?

1. Suspend your reaction1. Suspend your reaction

2. Defuse hostile emotions2. Defuse hostile emotions

3. Look for their interests3. Look for their interests

4. Ask why and why not4. Ask why and why not

5. Educate5. Educate

Best Alternative to a Best Alternative to a Negotiated Agreement Negotiated Agreement

(BATNA)(BATNA) Standard against which to judge any Standard against which to judge any

proposed agreementproposed agreement

BATNA equates to power in BATNA equates to power in negotiationsnegotiations

A Successful NegotiationA Successful Negotiation Better than your BATNABetter than your BATNA Satisfies interestsSatisfies interests

Yours – wellYours – well Theirs – acceptablyTheirs – acceptably Others - tolerablyOthers - tolerably

LegitimateLegitimate FairnessFairness

CommitmentsCommitments Well planned and realisticWell planned and realistic

Otherwise walk to BATNAOtherwise walk to BATNA

““It’s All About Money”It’s All About Money”

Reflects interestsReflects interests Reflects BATNA Reflects BATNA Is a languageIs a language Is symbolicIs symbolic Is certain and immediateIs certain and immediate Can mean many things at onceCan mean many things at once

Nuts and BoltsNuts and Bolts

Negotiation Negotiation PreparationPreparation

No such thing as too much No such thing as too much preparationpreparation

InterestsInterests BATNABATNA Setting goals Setting goals CriteriaCriteria Offer and Concession strategiesOffer and Concession strategies

Negotiate the process?Negotiate the process?

Distributive IssuesDistributive Issues

Caution - Too soon?Caution - Too soon? Offers and responsesOffers and responses

First offerFirst offer Concession strategiesConcession strategies CredibilityCredibility LanguageLanguage

Agreement – are we done?Agreement – are we done?

First OffersFirst Offers AdvantagesAdvantages

Set expectationsSet expectations Elicit genuine reactionElicit genuine reaction Strategic advantage Strategic advantage

Timing, BATNA, InformationTiming, BATNA, Information

DisadvantagesDisadvantages Lack of info to appropriately setLack of info to appropriately set Other side gains infoOther side gains info BracketingBracketing

First Offers – contd.First Offers – contd.

Determining the offerDetermining the offer Your original goalYour original goal Most aggressive, yet reasonable pointMost aggressive, yet reasonable point Give yourself room to moveGive yourself room to move

Expectation for the dance?Expectation for the dance? Analyze other’s interests, BATNA, Analyze other’s interests, BATNA,

negotiation style, etc.negotiation style, etc.

First Offers – contd.First Offers – contd.

When you should make themWhen you should make them Sophisticated parties w/ substantial Sophisticated parties w/ substantial

access to informationaccess to information Complex non-price issuesComplex non-price issues Technically detailed agreementsTechnically detailed agreements You have more info, defined standards, You have more info, defined standards,

or a strong BATNAor a strong BATNA

Making Offers and Making Offers and ConcessionsConcessions

Be specific and detailedBe specific and detailed Explain offer’s rationaleExplain offer’s rationale

Tie it to standardsTie it to standards Before stating the offerBefore stating the offer

Use an air of finality & increasing Use an air of finality & increasing rigidityrigidity

Avoid rangesAvoid ranges Be ready to react Be ready to react

Specific Language TipsSpecific Language Tips Significant flexibilitySignificant flexibility

““My asking price is”My asking price is” ““I’m looking to get”I’m looking to get” NOTNOT

““first offer” “non-negotiable” “bottom line”first offer” “non-negotiable” “bottom line”

Middle flexibilityMiddle flexibility ““Because of . . . I’m willing to . . .”Because of . . . I’m willing to . . .” ““This is fair and reasonable because. . .”This is fair and reasonable because. . .” NOTNOT

““bottom line” “final offerbottom line” “final offer

Specific Language Tips Specific Language Tips – contd.– contd.

Total inflexibilityTotal inflexibility ““I’ve given this a great deal of I’ve given this a great deal of

thought, and it’s the best I can do”thought, and it’s the best I can do” ““If I move any more, it’s not worth it If I move any more, it’s not worth it

for me”for me” NOTNOT

““take it or leave it” “frankly”take it or leave it” “frankly” Reaction to an offerReaction to an offer

““I’m disappointed with your offer. It I’m disappointed with your offer. It builds in a 30% profit margin and builds in a 30% profit margin and that’s out of line in this market”that’s out of line in this market”

Closing the DealClosing the Deal

Focus on the other’s gains, not their Focus on the other’s gains, not their lossloss

Beware of “nibbling”Beware of “nibbling” Watch the “take away”Watch the “take away” Make the last concession Make the last concession

Even if it is smallEven if it is small

Blast ExerciseBlast Exercise

More Practical AdviceMore Practical Advice

Getting to Yesby Fischer, Ury and Patton

Gain the Edge! Negotiating to Get What You Want

by Martin E. Latzby Martin E. Latz

Questions and AnswersQuestions and Answers