CIn

NEGOTIATINGFORFUNANDPROFIT

Monday,September10,2018

10:15–11:30a.m.

Presentedby

DanielMcGarveyManagingDirector,U.S.PowerandUtilityPractice

Marsh

Mastering the art of negotiation is an essential step toward protecting your compa-ny’s interests. Unfortunately, our culture sometimes teaches that it is rude or over-bearing to ask for what you want or to walk away if you can’t get what you need.This session will teach participants the key elements of a successful negotiation, in-cluding establishing your starting, fallback, and “walk-away” positions.• Teaches you how to select and prepare your negotiation team• Shows you when and how to make appropriate concessions• Demonstrates how personality traits can be used to your advantage

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opyright © 2018 International Risk Management stitute, Inc.

www.IRMI.com

DanielMcGarveyManagingDirector,USPowerandUtilityPractice

Marsh

As leader of Marsh’s US Power and Utility Practice, Mr. McGarvey has responsibility for the service ofmore than 250 utility clients. He graduated from the US Naval Academy and served in the nuclear sur-face ship community, attaining the designation of naval nuclear chief engineer and retiring with therank of Commander. As a nuclear risk management consultant, Mr. McGarvey’s experience included theservice of large public sector, utility, and construction accounts. He has subsequently served as casualtyunit manager; account manager; regional resource for utility, construction, and public sector opportu-nities; and office head. As a Chartered Property Casualty Underwriter (CPCU) instructor, Mr. McGarvey has taught the CPCU fi-nance and accounting, economics, introduction to risk management, and business law courses, in addi-tion to all three courses of the Associate in Risk Management curriculum. Mr. McGarvey received Naval Nuclear Power Training and Naval Nuclear Chief Engineer Certificationand, in 1989, earned a master of business administration degree with honors in finance from the Uni-versity of Rhode Island. In 2015, Mr. McGarvey received the IRMI Words of Wisdom (WOW) award that recognizes speakerswho have stood out as being the very best.

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Presented by:Dan McGarvey

Managing DirectorMarsh

Negotiating forFun and Profit

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Your Presenter….

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A Negotiating Parable

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Negotiation Skills – Critical For Today’s Risk Manager

• Market challenges• Claims settlement• RM service providers• Internal resource allocation• Salary and promotions

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Why Are We Poor Negotiators?

• Cultural blind-spot• Fear• No training

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Oh – And Lack of Any Preparation for Most Negotiations

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Negotiation

The art of sitting down withanother party to jointly worktoward a mutually satisfactoryoutcome...

Sounds easy enough!

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Negotiation is a Learned SkillThere are many great resourceguides to the art of negotiating

ButThe best way to improve is to

actively look for everyday opportunities

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The Opening Gambit

• “All the kids at school are wearing them”• “Can you get this to me by Friday?”• “I’d like you to take on this additional duty”• “This auto repair is going to be expensive”• “We’ve paid big losses on your account”• “Everyone is raising rates – current premiums are quite simply

unsustainable”

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Negotiating Skills Training – Common Opinions• It is an ingrained skill which can’t be taught• I’d rather chew nails than have to negotiate• I don’t have to negotiate in my job • I’m too honest to be a good negotiator

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It is a Vital Life Skill

“The diapers we receivein childhood represent

the first and only time weget exactly what we want

just by hollering”Harvey Mackay

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All of Us are Negotiators!

Those who aren’t aware of this are doomed to suffer the death of a thousand cuts!

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“The world is one bignegotiating table”

Frank Acuff

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Good Negotiating Requires Us To Regress a Bit

(Some more than others)

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Why are Young Children Such Expert Negotiators?

• Not shy about expressing needs• Know that “no” often means “maybe”• Not burdened by time constraints• Not easily intimidated• Can’t be distracted• Read people better than adults

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Negotiating Styles

Which requires by far the highest level ofpreparation, planning and skill

Collaboration

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Parable Two: “The Fence”

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Secrets of Successful Collaborative Negotiation

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Thorough Preparation is Vital

“If you don’t knowwhere you’re going,

you may end up someplace else”

Yogi Berra

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Proper Planning Will:1. Let you conclude what you want2. Make your negotiations more efficient3. Inoculate you against common tactics4. Help you devise an effective strategy5. Ensure you tie up loose ends

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Steps in the Negotiating Process

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Steps in the Negotiating Process

• Establish negotiation objectives• Prioritize these objectives• Conduct preliminary research• Build a negotiating strategy• Select and train your team• Establish fallback positions

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The Most Common Error in the Negotiation Process

Concentrating on positionsinstead of needs

(“The Orange Example”)

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Why Rehearse for Negotiations?• Clearly define team roles• Ensure everyone understands the issues• Role play and use a “devil’s advocate”• Agree on “signals”• Discuss anticipated problems• Look for creative solutions

“Don’t expect to play better than you practice”

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Establishing Fallback Positions

• Develop tiers of acceptable outcomes• Ensure your team is in agreement• Know your best alternative on each issue• Know at what point you must walk

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Selecting Your Team

XLEADER

EXPERT

OBSERVER

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The Principle of “Golden Silence”

Your secret negotiating weapon!

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Setting the Agenda• An excellent opportunity to gain control of a

negotiating session• Develop an agenda which addresses concerns of

both parties• Contact other party for input• Distribute prior to the meeting• A powerful way to ward off several common

negotiating tactics

MINE…

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Your Place or Mine?

• Easier to walk out of their office• Higher authority delay also more useful• Easier to control pressure in yours• Offering to go to theirs shows good faith• Neutral setting best for tough sessions

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The Opening Ceremonies• Introduce participants• Secure commitment to collaborative negotiation • Establish agreement on objectives• Build rapport and comfort level• And . . .

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Make it a Habit to AlwaysAgree on Common

Ground First

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Why Keep Initial Demands High?

• You will make an impression• Why give up power before you must?• Will make any better deal look good• Allow the other party to come away with a “win”• Reduces potential for “buyer’s remorse”

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Inoculate Yourself Against Common Negotiating Tactics

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Responding to an offer:

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You Must Master “The Wince”

He Didn’tLike That

Offer!!

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Too Cool to “Wince” ?

(This could be costly)

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Managing a Concession Pattern• Know what you can’t concede• Have at least three concessions in hand• Manage expectations carefully• No concession is painless!• Tie every concession to reciprocation• Always know your walk-away position

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Always Reject the First Offer…

Otherwise, it is likely neitherside will leave satisfied

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However:

• You should not give an overtly negative response to a proposal

• A proposal rejected out of hand may change the negotiation to an argument

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Listening With Your Eyes and Your Ears

• In general, the party which speaks most during a negotiation ends up with the short end of the deal

• Well prepared questions can help you get to the heart of the matter

• Body language can speak volumes

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Keeping it Moving With Questions

“Judge a man byhis questions, notby his answers”

Voltaire

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The Fine Art of “Probing”

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Always Volunteer to Author the Final Agreement

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When the Other Party Insists on Going Negative…

(You may have him right whereyou want him)

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“Disciplining” as a Negotiating Tool

Disciplining involves the use of a series of maneuvers designed to return the negotiationto a collaborative effort when one party becomes confrontational

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Examples of “Disciplining”

• Seek commitment to common purpose• Express awareness of behavior• Address other team’s leader• Question desirability of this tactic in light of pre-agreed

ground rules• Take a break

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Keep Your Emotions in Check

“When arguing with a fool,check frequently to ensure

he is not similarly occupied”Abraham Lincoln

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Rule # 1: Always Be Willing to Walk

Corollary: Never WantAnything Too Much!

Decide in haste…Repent at leisure

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Know Where You Stand

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Damage Control• Avoid making rash statements• Reestablish contact rapidly• Leave “face-saving” options open• “Just isn’t our time and place”• Consider mediation as an option

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Why Study Negotiating Tactics?

• Recognize them at work on you• May be employed ethically• Not a quiver of arrows!

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“A tactic exposed is nolonger a tactic”

Herb Cohen

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The “Delay” Tactic

• Useful when other party knows you have a deadline• Useful when other party knows you have many duties• “I’ve got nothing but time”• Effective against “drivers”

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Countering the “Delay” Tactic

• Set deadlines• Reward speed with concession• Counter-delay if you have this option

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The “Outrageous Behavior” Tactic

• A tactic intended to knock you off guard through sheer shock value

• Might involve unexpected personal attacks• May feign lack of interest in negotiation

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Countering the “Outrageous Behavior” Tactic

• Ignore the behavior if tactic is blatant• Initiate disciplining• Report to supervisor• Call for a break

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The “Speed/Pressure” Tactic • Other party creates an artificial deadline or other source of time stress• May involve an imaginary second suitor• May involve senior management directive• Could involve personal appeal (I’ll lose my job if we can’t agree today)

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Countering the “Speed/Pressure” Tactic

• Assess credibility of the perceived threat• Higher authority tactic for delay• And always remember...

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Agree in haste...

Repent at leisure

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The “Good Guy- Bad Guy” Tactic

• One party is such a jerk that he makes dealing with the other party seem pleasant

• The “Good Guy” tries to be your friend• The two collaborate to wrest concessions from you• Carter-Reagan example

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Countering the “Good Guy- Bad Guy” Tactic

• Recognize tactic by name• Use time if you have the time advantage• Tactic will wear out over time

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The “Hardball” Tactic

• The other party goes right for the throat with an unreasonable demand, personal attack or a real or implied threat

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Countering the “Hardball” Tactic

• Proper opening ceremonies will blunt this attack • Disciplining approach• Question to identify real issues• Assess credibility of threat (call bluff)

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Turning an Attack with a Question • How is it that we have come to this point?• Why do you feel this way?• Is there a better time to get together?• Would you accept these terms?• Why would we accept that offer?

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The “Nibbling” Tactic

• Takes advantage of the psychological relief many feel when a tough decision is made

• Party appears to give up major concessions and then skewers you with the details

• Used when the other party accepts your first offer

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Countering the “Nibbling” Tactic

• Never celebrate early • Never leave the bargaining table until all details are worked out• Never make a unilateral concession• Remember: no detail is unimportant

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The “Chicken Plucking” Tactic

• The other party leverages you into a series of escalating commitments without ever offering a reciprocal commitment

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Countering the “Chicken Plucking” Tactic

• Refuse to provide commitments without any commitment from the other party

• Why don’t you make me an offer?

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The “Red Herring” Tactic

• One party focuses almost exclusively on a relatively minor issue which may have emotional significance

• The goal is to distract you from other key issues, wear you down, and trick you into a concession pattern

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Countering the “Red Herring” Tactic

• Skillful use of pre-agreed agenda may inoculate• Set the issue aside if possible• Use higher authority counter• Call the other party on the tactic

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In Summary….

• Anticipate• Strategize• Prepare• Practice• Empathize• Recognize• (and sometimes) Walk

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Thank Youfor Your Kind

Attention

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