Leadership, Knowledge, SolutionsWorldwide. Negotiating Skills: Get What You Need Without the...

Leadership, Knowledge, Solutions…Worldwide.Leadership, Knowledge, Solutions…Worldwide.

Negotiating Skills: Get What You Negotiating Skills: Get What You Need Without the Sleepless NightsNeed Without the Sleepless Nights

NASBP, September, 2011NASBP, September, 2011

Dan McGarvey, CPCU, ARM, CEBSDan McGarvey, CPCU, ARM, CEBSChairman, Marsh Utility PracticeChairman, Marsh Utility [email protected]

mailto:[email protected]

Marsh—Leadership, Knowledge, Solutions…Worldwide. 2

Your PresenterYour Presenter


Daniel S. McGarvey

Mr. McGarvey, managing director at Marsh, leads the company’s U.S. Power and Utility practice, with responsibility for the service of more than 250 utility clients. He graduated from the U.S. Naval Academy and served in the nuclear surface ship community, attaining the designation of Naval Nuclear Chief Engineer and retiring with the rank of Commander. He was hired as a nuclear risk management consultant in 1989, and soon broadened his experience to include the service of large public sector, utility, and construction accounts. He has subsequently served as casualty unit manager, account manager, regional resource for utility, construction, and public sector opportunities, and office head.

As a CPCU instructor, he has taught the Finance and Accounting course, Economics course, Introduction to Risk Management, Business Law, and all three courses of the ARM curriculum.


A Negotiation ParableA Negotiation Parable


Why AreWhy Are We PoorWe PoorNegotiators?Negotiators?

• CulturalCultural• FearFear• No TrainingNo Training


Oh - And lack ofOh - And lack ofany preparation forany preparation formost negotiationsmost negotiations

I’m Here! This Shouldn’t be too Tough


Why Study Negotiation?Why Study Negotiation?(Common Opinions)(Common Opinions)

It is an ingrained skill which can’t be It is an ingrained skill which can’t be taughttaught

I’d rather chew nails than have to I’d rather chew nails than have to negotiatenegotiate

I don’t have to negotiate in my job I don’t have to negotiate in my job I’m I’m too honesttoo honest to be a good negotiator to be a good negotiator

Me?


““The diapers we receiveThe diapers we receivein childhood representin childhood representthe first and only time wethe first and only time weget exactly what we wantget exactly what we wantjust by hollering”just by hollering” Harvey MackayHarvey Mackay


All of Us Are Negotiators!All of Us Are Negotiators!

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


Examples of the Opening GambitExamples of the Opening Gambit

• “ “All the kids at school are wearing them”All the kids at school are wearing them”• “ “Can you get this to me by Friday?”Can you get this to me by Friday?”• “ “I’d like you to take on this additional duty”I’d like you to take on this additional duty”• “ “This auto repair is going to be expensive”This auto repair is going to be expensive”


Good Negotiating RequiresGood Negotiating RequiresUs To Regress a BitUs To Regress a Bit

(Some more than others)(Some more than others)


Why Are Children SuchWhy Are Children SuchExpert Negotiators?Expert Negotiators?

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


N

S

W E

Planning Your NegotiationPlanning Your Negotiation

• Establish negotiation objectivesEstablish negotiation objectives• Prioritize these objectivesPrioritize these objectives• Conduct preliminary researchConduct preliminary research• Build a negotiating strategyBuild a negotiating strategy• Establish fallback positionsEstablish fallback positions


Why Rehearse Your Negotiation?Why Rehearse Your Negotiation?

• Clearly define team rolesClearly define team roles• Ensure everyone understands the issuesEnsure everyone understands the issues• Role play and use a “devil’s advocate”Role play and use a “devil’s advocate”• Agree on “signals”Agree on “signals”• Discuss anticipated problemsDiscuss anticipated problems• Look for creative solutionsLook for creative solutions

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


SelectingSelectingYour TeamYour Team

X


The PrincipleThe Principleof “Golden Silence”of “Golden Silence”

Your secret negotiating weapon!Your secret negotiating weapon!


Setting the AgendaSetting the Agenda• An excellent opportunity to gain An excellent opportunity to gain control of a negotiating sessioncontrol of a negotiating session• Develop an agenda which addressesDevelop an agenda which addresses concerns of both partiesconcerns of both parties• Contact other party for inputContact other party for input• Distribute prior to the meetingDistribute prior to the meeting• A powerful way to ward offA powerful way to ward off several common negotiatingseveral common negotiating tacticstactics


The Setting:The Setting:• Easier to walk out of their officeEasier to walk out of their office• Higher authority delay also more usefulHigher authority delay also more useful• Easier to control pressure in yoursEasier to control pressure in yours• Offering to go to theirs shows good faithOffering to go to theirs shows good faith• Neutral setting best for tough sessionsNeutral setting best for tough sessions


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


Inoculate yourself against Inoculate yourself against common negotiating tacticscommon negotiating tactics


Make it a Habit to AlwaysMake it a Habit to AlwaysAgree on CommonAgree on Common

Ground FirstGround First


Responding to an offer:Responding to an offer:


You Must Master You Must Master ““The Wince”The Wince”

He didn’tlike thatoffer!!


Too Cool toToo Cool to “ “Wince”?Wince”?

(This could be costly)(This could be costly)


• Know what you can’t concedeKnow what you can’t concede• Have at least three concessions in handHave at least three concessions in hand• Manage expectations carefullyManage expectations carefully• No concession is painless!No concession is painless!• Tie every concession to reciprocationTie every concession to reciprocation• Always know your Always know your walk-away positionwalk-away position

Managing a ConcessionManaging a ConcessionPatternPattern


Every ConcessionEvery ConcessionShould Shout…Should Shout…

1.1. This is a This is a very meaningfulvery meaningful concession concession2.2. There may not be many more There may not be many more3.3. Certainly not without reciprocation! Certainly not without reciprocation!


Always Volunteer toAlways Volunteer toWrite-Up the Agreement!Write-Up the Agreement!


When the Other PartyWhen the Other PartyInsists on Going NegativeInsists on Going Negative

(You may have him right where(You may have him right whereyou want him)you want him)


““When arguing with a fool,When arguing with a fool, check frequently to ensurecheck frequently to ensure he is not similarly occupied”he is not similarly occupied”

Abraham LincolnAbraham Lincoln


Keep Your Own Emotions Keep Your Own Emotions in Check at All Cost!in Check at All Cost!

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


Examples of “Disciplining”:Examples of “Disciplining”:

• Seek commitment to common purposeSeek commitment to common purpose• Express awareness of behaviorExpress awareness of behavior• Address other team’s leaderAddress other team’s leader• Question desirability of this tactic in lightQuestion desirability of this tactic in light of pre-agreed ground rulesof pre-agreed ground rules• Take a breakTake a break


Rule #1: Always BeRule #1: Always BePrepared to WalkPrepared to Walk

Corollary: Never WantCorollary: Never Want Anything Too Much!Anything Too Much!

Decide in haste…Repent at leisure


Negotiatin

g

Negotiatin

g

Begging

Begging


Damage ControlDamage Control

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


Why Study Negotiating Tactics?Why Study Negotiating Tactics?• Recognize them at work on youRecognize them at work on you• May be employed ethicallyMay be employed ethically• Not a quiver of arrowsNot a quiver of arrows

““A tactic exposed is noA tactic exposed is no longer a tactic”longer a tactic” Herb Cohen


Negotiating Tactics 101Negotiating Tactics 101

Tactic: Tactic: NibblingNibbling

Counter-tactics:Counter-tactics:

• Takes advantage of the psychological reliefTakes advantage of the psychological relief many feel when a tough decision is mademany feel when a tough decision is made• Party appears to give up major concessions thenParty appears to give up major concessions then skewers you with the detailsskewers you with the details• Use when the other party accepts your first offerUse when the other party accepts your first offer

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



Tactic: Tactic: Good Guy/Bad GuyGood Guy/Bad Guy


• 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

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



Tactic: Tactic: Chicken-PluckingChicken-Plucking


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

• Refuse to provide commitments without any Refuse to provide commitments without any commitment from the other partycommitment from the other party• Why don’t you make Why don’t you make meme an offer? an offer?



Tactic: Tactic: The AmbushThe Ambush


• The other party catches you completely unpreparedThe other party catches you completely unprepared and attempts to conduct what amounts to a negotiationand attempts to conduct what amounts to a negotiation

• Higher authority delayHigher authority delay• Discipline Discipline


In Summary:In Summary: RecognizeRecognizeAnticipateAnticipateStrategizeStrategizeRehearseRehearseManageManage

WalkWalkAnd invest in training your teamAnd invest in training your team

in the art of negotiationin the art of negotiation

Leadership, Knowledge, Solutions…Worldwide.

Thank YouThank Youfor Your Kindfor Your Kind

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Leadership, Knowledge, SolutionsWorldwide. Negotiating Skills: Get What You Need Without the...

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