Negotiation John Fisher jfishercs'depaul'edu

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NegotiationJohn Fisherjfisher_at_cs.depaul.edu

• Materials tonight from
• Roger Fisher William Ury, Getting to Yes, 2nd
  Edition
• Ira Asherman, 50 Activities to Teach Negotiation
• http//ocw.mit.edu
• Jacki Knapman, American University Law School

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What is Negotiation?

• Negotiation a field of knowledge that focuses on
  gaining the favor of people from whom we want
  things. -Herb Cohen

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We negotiate when
Meta message All negotiation Involves the same
issues you can use the same techniques to master
them all.

• We decide which movie to see with our significant
  other
• We decide which city to live in with our spouse
• We look to buy a car
• We try to get a raise
• We try to get into a class that is full
• We plea bargain a criminal charge
• We establish project timelines
• We establish boundaries between Israel and Egypt
• We determine protocol of Iraqi arms inspectors

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Tonight Strategies and Process

• Strategies
• Distributive (fixed-pie)
• Integrative (expanding the pie)

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Negotiation Process
ID people issues ID interests (both parties) Note
options on table Note suggested decision criteria

• Analysis
• Planning
• Execution

• Data Gathering
• Scenario Planning
• Negotiation

People generate ideas Rank and value
interests Generate additional options Research
objective criteria
Relationship Building Exchanging Information
Opening and Making Concessions Closing and
Gaining Commitment
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Distributive Bargaining a conflict situation

• Distributive Bargaining occurs when the goals of
  one party are in fundamental and direct conflict
  with the goals of the other party.

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When to use Distributive Strategy?

• Maximize the value obtained in a single deal and
  when the relationship is not important.

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Distributive Tactics

• Invisible man (Good cop/ Bad cop)
• Requirement to check with another party not in
  room. Other party will not approve offer.
• Highball and Low Ball
• The negotiator starts with a ridiculous high or
  low opening, the theory is that such an offer
  will cause the other party to re-evaluate their
  own opening offer and move closer to the
  resistance point. The danger is that negotiation
  could be halted due to the perception that it is
  a waste of time.
• Bogey
• Negotiators pretend that an issue of little or no
  importance to them is quite important. Later on
  this issue can be traded for major concessions on
  issues that are actually important to the
  negotiator.

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Distributive Tactics

• The Nibble
• While being close to an agreement, the negotiator
  asks to include a clause that had not been
  considered earlier. Such as a tie while
  purchasing a suit. The amount is to loose for the
  deal to be broken, but large enough to upset the
  other party.
• Chicken
• In labor-management negotiations, management may
  tell the union that if they do not agree to the
  current contract offer, management will close the
  factory and go out of business. This is a high
  stake gamble. Management must be willing to
  follow through with their threat. The negotiation
  is turned into a high stake.
• Intimidation or Aggressive Behavior
• This tactics attempt to force the other party to
  agree by employing various emotional ploys,
  usually anger and fear. One form of intimidation
  is increasing the appearance of legitimacy. This
  plot can be used by banks and their multiple
  forms while borrowing money. The party will not
  question the contract terms.

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Advantages Disadvantages of Distributive
Techniques

• Shows strength
• Damage relationships
• Elicits revenge

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Combating Hardball Distributive Tactics

• Prepare, identify bluffing, important issues, use
  of bogey
• Ask diagnostic questions, suggest alternative
  packages
• Discuss the negotiation process set ground
  rules, name the tactic
• Go to the balcony-take a break
• Use humor

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First Role Play

• 10 Minute preparation 10 minute negotiation
  more time if you need it.
• Take a name tag from the table we will have two
  negotiators and one observer role.
• Jointly turn in your resolution (use your role
  names)

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During Preparation

• List what you know to be fact
• List your assumptions
• List the dimensions that might be negotiated
• List your interests
• List your alternatives
• Name your initial offer
• Name your desired result

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How do you negotiate if the other side if more
powerful?

• You need to know your BATNA
• best alternative to a negotiated agreement

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What is BATNA

• What is the best result you would get if you
  walked away from this negotiation?
• If you dont sell your house, what will you do
  with it?
• If you dont buy this software, what are your
  alternatives?
• Figure out the value of your BATNA, and then you
  know what your base for negotiating is.

best alternative to a negotiated agreement
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BATNA is Power

• It protects you from making an agreement you
  should reject
• It helps you to make your best agreement in the
  situation
• It tells you when you should walk away from the
  table.

best alternative to a negotiated agreement
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It is foolish to enter into a negotiation without
knowing your BATNA

• How do you know this proposal is the better
  option?
• How do you know if you should walk away?
• What were the BATNAs in our opening exercise?

best alternative to a negotiated agreement
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You need to

• Know your BATNA
• Improve your BATNA
• Estimate their BATNA

best alternative to a negotiated agreement
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Improve your BATNA

• Brainstorm list of alternatives to negotiated
  agreement
• Research list and develop some of the best
  specific alternatives
• Creatively work to improve the best alternatives,
  thereby raising your BATNA
• Eg get another job offer!

best alternative to a negotiated agreement
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Once you have identified your BATNA, you can look
for alternative for improving it (inside or
outside the negotiation)

• Your BATNA is based on your interests, not on
  your bargaining position!

best alternative to a negotiated agreement
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Why BATNA and not bottom line

• BATNA
• Interest-based
• Objective (based on an alternative)
• Informs intelligent decision-making

• Bottom Line
• Position based
• Subjective
• Promotes hardening of stance

best alternative to a negotiated agreement
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Know the other sides BATNA

• If you know what the other sides BATNA is, then
  you know how far they can go in negotiation and
  at what point they will walk away.

best alternative to a negotiated agreement
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You can still use a trip wire with a BATNA

• Not the same as a bottom line, but functions to
  promote hesitation and reconsideration.
• e.g. if I dont get an offer above 200,000, then
  I will not settle, but sleep on the decision.

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Some themes that keep popping up
Meta Message

• Preparation
• The more planning and research you do going in to
  a negotiation, the better off you are.
• If you dont know your BATNA, you are negotiating
  blind (and all of us do that sometimes)
• Know the other sides position
• Know their BATNA
• Know their interests (not just their positions)

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Lack of Preparation is perhaps our most serious
handicap

• -Roger Fisher and Danny Ertel

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Second Role Play

• 10 Minute preparation 10 minute negotiation
  more time if you need it.
• Take a name tag from the table we will have two
  negotiators and one observer role.
• Jointly turn in your resolution (use your role
  names)

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Negotiation Preparation ABCs 1

• Do you know your
• Interests?
• BATNA ?
• Trip Wire Point?
• Initial Offer?
• Non-tangibles (need for status, power,
  affiliation)
• Areas to create value (enlarge the pie)
• What are you and your partner likely to value
  differently?

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Negotiation Preparation ABCs 2

• Have you thought about your counterparts
• Interests?
• BATNA ?
• Non-tangibles (need for status, power,
  affiliation)
• Constraints?

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And now for something completely different
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Redefined Purpose of Negotiation

• Satisfy your interests and the other sides
  interests too.

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Integrative Strategies

• Separate the people from the problems
• Focus on interests, not positions
• Invent options for mutual gain
• Insist on using objective criteria

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Negotiation Process
ID people issues ID interests (both parties) Note
options on table Note suggested decision criteria

• Analysis
• Planning
• Execution

• Data Gathering
• Scenario Planning
• Negotiation

People generate ideas Rank and value
interests Generate additional options Research
objective criteria
Relationship Building Exchanging Information
Opening and Making Concessions Closing and
Gaining Commitment
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Separate the people from the problems

• Negotiators are people first
• Every negotiator has two kinds of interests
• In the substance, and
• In the relationship
• Communicate to be understood
• And make sure you understand what they are
  communicating!

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Focus on interests, not positions
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Positions vs. Interests

• Positions
• what you say you want
• Stance taken
• Request made

• Interests
• why do you want what you want?
• Why you have taken stance or made request

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Good Negotiators ...

• Never take positions for granted
• Look for underlying interests

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Single most important skill

• Put yourself in the other persons shoes.
• Ask why?
• Ask why not?

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How do you identify interests?

• Ask why.
• Why do I want this position? What does it gain
  me that I am striving for?
• Ask why not,
• Why do I not want their offer? What do I not get
  that I am striving for?
• Look at both your and their interests!

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Realize each side has multiple interests

• You have many interests
• Some will be shared with other party
• Some will be different from other party
• Eg. Leasing an apartment
• You both want clean, secure, well maintained
  place
• They want to know the rent will be timely and you
  are trustworthy they want more money
• You want to know facilities will work and will be
  repaired if they dont you want to pay less

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The most powerful interests are basic human needs

• Security
• Economic well being
• Control
• Sense of belonging
• Recognition

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1. Invent options for mutual gain
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Options

• Refer to the way the underlying interests might
  be met.
• An option is a possible agreement or part of one.
  
• An option is not a commitment, but brainstormed
  idea
• Explore options before making any decisions
• No commitment at this stage
• No judgment, criticism-just invent

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Power of Options

• Invent options to meet both sides interests-a
  stronger position the more options you have
• Brainstorm first, evaluate later

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2. Insist on using objective criteria
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The Power of Standards

• Standards help the other side persuade their
  constituents
• Use independent standards to persuade both
  parties that an agreement is fair.

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Independent Standards When

• No creative options to satisfy both sides
• A distributive situation in which the
  relationship or perceived fairness matters.

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Independent Standards What

• Market value
• Precedent
• Industry Standard

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Independent Standards

• Find standards that apply.
• Relevant
• Widely accepted
• Think about the standards the other side will
  use. What is their best argument.

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Integrative Win-Win Strategies

• Strategies that Work
• Build trust and share information tactically
• Ask diagnostic questions
• Make multiple offers simultaneously
• Invent options for mutual gain
• Capitalize on differences (valuation,
  expectations, etc.)

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Third Role Play

• 10 Minutes preparation 30 minutes negotiation
• Take a name tag from the table do not use your
  own name for this role play
• Write down your BATNA (and submit with role name)
  before you begin negotiations
• Jointly turn in your resolution (use your role
  names)

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Worksheet

• Do you know your
• Interests?
• BATNA ?
• Trip Wire Point?
• Initial Offer?
• Non-tangibles (need for status, power,
  affiliation)
• Areas to create value (enlarge the pie)
• What are you and your partner likely to value
  differently?

• Have you thought about your counterparts
• Interests?
• BATNA ?
• Non-tangibles (need for status, power,
  affiliation)
• Constraints?

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Lessons Learned?

• What was most difficult?
• What was easiest?
• What can you use at work?
• What can you use outside of work?

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The End