negotiations. structure of presentation what is negotiation ? four stages of negotiation process...

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

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

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

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.)

negotiations. structure of presentation what is negotiation ? four stages of negotiation process...

Documents