negotiation and conflict resolution - entrepreneurship 101 (2012/2013)

Negotiation and Conflict Resolution

MaRS Discovery District Entrepreneurship 101

Presentation by Michael Erdle, Co-Founder Practical Resolutions Inc.

Introduction

v Negotiation

v Conflict Resolution

What is Negotiation?

v Negotiation is: v  a process.

v  a structured conversation.

v  a means to an end (agreement about something).

v We do it all the time, without really thinking about it.

Basis for Negotiation

v Interests

v Rights

v Power

Escalation

Power

Power Strategies: •  Take action unilaterally. •  Win at all costs •  Attack/Defend •  Threaten •  Coerce •  Withdraw (Take the Ball and Go

Home) •  Physical (or verbal) violence

Characteristics of Power: •  Adversarial •  “Win/Lose” at best •  Usually “Lose/Lose” •  Extremely expensive •  Negative impact on future

relationships

Rights

Rights Strategies: •  Contracts (guarantee the

minimum) •  Policies, procedures, rules •  Precedent •  Past practice •  Legal action •  Third-party decisions

(e.g. arbitration)

Characteristics of Rights: •  Adversarial •  “Win/Lose” at best •  Often “Lose/Lose” •  Extremely expensive •  Time-consuming •  Impact on future relationships?

Interests

Interests Strategies: •  Identify what’s really important •  Dialogue about needs and wants •  Honest sharing of information •  Maximize results for all parties •  Help everyone explore and

understand their own interests, and interests of other parties

•  Needs an ongoing relationship

Characteristics of Interests: •  “Win/win” process •  Collaborative •  Interdependent •  Builds trust •  Positive impact on future

relationship

Costs Go Up

Control Goes Up

Litigation

Arbitration Investigation/Fact Finding

Conciliation Mediation

Negotiation Problem Solving

Prevention

All out “War” Unilateral Action

Threats, Coercion Power

Rights

Interests

Power, Rights, Interests

The “Golden Rule”

De-escalation

Duty to Negotiate in Good Faith

v Obligation to respect the legitimate interests of other party and to deal promptly, honestly, fairly and reasonably with them. v  Shelanu Inc. v. Print Three Franchising Corp. (Ontario Court of

Appeal)

v  Implied in negotiation where there is an imbalance. v  Wallace v. Grain Growers (Supreme Court of Canada)

Duty to Negotiate in Good Faith

Spectrum of contractual duties

Selfish Selfless

Honesty! Good Faith Fiduciary Duty �

Duty to Negotiate in Good Faith

v  Fiduciary: v  Trustee v  Corporate Director v  Lawyer

v  Good Faith: v  Professional Code of Ethics v  Contract v  Employee/Employer

Negotiation Steps

v Distributing Value vs. Creating Value v  Opportunistic v  Problem-solving

v  Identify Issues v  What does each side want and need?

v Consider Interests v  Common v  Complementary v  Conflicting

Effective Negotiation

v  Interests vs. Positions

v  “Needs” vs. “wants”

v  “Separate the People from the Problem.”

v  Soft on the person

v  Hard on the problem

v Consider other Options

Effective Negotiation

v  Seek Objective Alternatives

v Determine BATNA and WATNA

v  Best Alternative to Negotiated Agreement

v  Worst Alternative to Negotiated Agreement

v  Look for a “win-win” solution.

Effective Negotiation

v  Successful relationships are built on communication and trust.

v  Lack of trust leads to “win-lose” or “lose-lose”.

v Negotiation is one way of creating trust – or deciding whether trust is justified.

Multiple Negotiations

v  Selfish strategy works in a “winner take all” game.

v  Life is rarely like that.

v Most negotiations involve a continuing relationship.

v What happens if there’s a series of negotiations?

Multiple Negotiations

v  “Tit-for-Tat” strategy is most successful.

v  Four key conditions:

v Nice

v Retaliate

v Forgiving

v Generous

Multiple Negotiations

1.  The player always cooperates, unless provoked.

2.  The player always retaliates, if provoked.

3.  The player is quick to forgive –co-operate next time.

4.  The game must continue long enough for the ‘retaliation and forgiveness’ pattern to affect opponent’s behaviour.

Negotiation Styles

v  Focus on “winning”.

v  Focus on relationship.

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Win - Lose

Win - Win

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Power Ploys

v Classic “Hard Bargaining” Ploys v Extreme claims, small concessions

v  “Take or leave it.”

v Unreciprocated offers

v Threats and warnings

v Attacking the alternatives v Good cop, bad cop

Ways to Respond

v Extreme claims, small concessions v Tit for Tat – make equally small concessions.

v  “Take or leave it.”

v Make a counter offer.

v Offer an alternative. v Don’t be afraid to walk away.

Ways to Respond

v Unreciprocated offers v Don’t negotiate against yourself.

v Wait for a serious counter offer.

v  Threats and warnings

v Don’t make a counter-threat. v Challenge the underlying assumptions .

Ways to Respond

v Attacking the alternatives v Ask for an explanation.

v  “Why do you have a problem with…?”

v Good cop, bad cop

v Negotiate with the boss. v Use the “good cop” to your advantage.

Understanding Interests

Common Interests

v  Parties want the same things.

v E.g. company and workers both want to avoid strikes and workplace grievances (costs them both money).

Understanding Interests

Complementary Interests

v  Parties want different things, but they don’t conflict.

v E.g. company wants to increase productivity & profits; workers want better pensions.

Understanding Interests

Conflicting Interests

v  Parties want different and incompatible things.

v E.g. company wants to reduce labour costs; workers want to be paid more.

Negotiation Skills

v Communication is the key to effective negotiation.

v Assertiveness vs. Empathy

v Effective negotiator is assertive and empathetic

v What you say is often less important than how you say it.

v Tone v Body language

Negotiation Skills

v Understanding and recognition do not mean compromise and concession.

v  “I understand” vs. “I agree”.

v Your own emotions and subconscious brain can hinder your ability to negotiate effectively.

Negotiation Skills

v  Listening v Develop “active listening”.

v Understanding v Acknowledge the other person’s perspective.

v  Flexibility v Be open to other options.

v  Pragmatism v Accept the best available option.

Conflict Resolution: Match Process to Business Goals

v Litigation v  Public

v  Little control over time & expense

v Arbitration

v  Private v  Quicker and

cheaper?

v Mediation v  Private

v  Cheaper and quicker

v  Control outcome

v Facilitation

v  Informal v  Inexpensive

Costs Go Up

Control Goes Up

Litigation

Arbitration Investigation/Fact Finding

Conciliation Mediation

Facilitation Problem Solving

Negotiation

All out “War” Unilateral Action

Threats, Coercion Power

Rights

Interests

Power, Rights, Interests

Facilitation

v  Informal process

v  Parties control process and outcome

v  Facilitator ensures that all issues are addressed and all parties have an opportunity to be heard

v  Examples: partnering workshops; joint problem-solving; facilitated negotiations (re-negotiations)

Mediation

v A more formal process of facilitated negotiation.

v  The Mediator guides the process and helps the parties negotiate more effectively.

v  The Mediator does not decide who is right or wrong.

Mediation

v  Interest-based Mediation v Mediator is a facilitator. v Focus on interests, not legal rights or obligations. v Options for creative solutions.

v Evaluative Mediation v Neutral evaluation. v Based on legal rights & obligations.

Mediation

v Qualities of an effective mediator: v  Subject area knowledge

v Negotiation & mediation process skills

v Lets parties make key decisions

v Creative approach to the problem

v Patience

Arbitration

v Adversarial process

v  Less formal than litigation, but need to follow procedural rules for fairness and efficiency

v Not necessarily quicker or cheaper than litigation

v  Parties can select arbitrator with particular legal, financial or licensing expertise

v  Private – don’t “air dirty laundry”

Arbitration

v Qualities of an effective arbitrator:

v  Subject matter expertise

v Active control over process

v Fairness and good judgment

Other Dispute Processes

v  Executive Committee v  Formal escalation process

v  Risk that positions become harder as they escalate v  Executives must remain engaged throughout the agreement

v  Project Umpire v  Can facilitate or mediate resolution of project disputes

v  Can also provide neutral evaluation or non-binding arbitration v  Umpire is engaged throughout the project

v  Available to deal with issues on short notice

Resources

v  Fischer, Ury and Patton: Getting to Yes, Penguin, 1991

v  Ury: Getting Past No, Bantam, 1993

v  Cohen: You Can Negotiate Anything, Bantam, 1980

v  Mnookin, Peppet and Tulumello: Beyond Winning, Harvard University Press, 2000

v  ADR Institute of Ontario (ADRIO) http://www.adrontario.ca/

Questions?