Negotiation skills - Key concepts when planning a negotiation

Negotiating skillsNegotiating skills

Patricia Maguet LevyPatricia Maguet Levy

February – May 2014February – May 2014

What does What does negotiatenegotiate mean?mean?

Cambridge Dictionary of American EnglishCambridge Dictionary of American English

NegotiateNegotiate (DISCUSS) (DISCUSS)

to have formal discussions with to have formal discussions with

someone in order to reach an someone in order to reach an

agreementagreement

Harvard Business Essentials: The means by which people deal with their differences

Negotiation situationsNegotiation situations

There is some There is some conflictconflict of interest between of interest between two or more two or more partiesparties

The parties wish to The parties wish to create something create something new new that can’t be done on his or her ownthat can’t be done on his or her own

They prefer to search for They prefer to search for agreementagreement rather:rather:

fight openlyfight openly give ingive in

break off contact.break off contact.

Harvard Business Essentials

What is What is notnot negotiation? negotiation?

When your boss gives you an order and your only choice is to do what he or she says.

If an outsider is brought in to make a

decision between parties using arbitration, the parties are legally bound to follow the arbitrator’s decision.

When parties are not working together to reach an agreement, negotiation does not take place.

What is What is notnot negotiation? negotiation?

Am I a negotiator?Am I a negotiator?

We are inborn negotiators:“if you let me stay out until midnight

then I’ll tidy my bedroom”. We negotiate all the time.

To get a pay rise To get promoted at work To buy a car, a house For business

Preparing to negotiatePreparing to negotiate

KEY CONCEPTKEY CONCEPT

Objectives and GoalsObjectives and GoalsWhy do you want to negotiate?Why do you want to negotiate?

Identify everything that can be negotiated and think about the goals you want to obtain for

each item.


Objectives and GoalsObjectives and Goals

IssuesIssues

- What is the negotiation about?-What are we going to discuss?

-Will you create an agenda?.


You will need to agree on the issues to be discussed with all the parties involved

PositionPositionWhat do you want?What do you want?

- It tells the other side what you want

- It can eventually produce the terms of an acceptable agreement


You don’t need to reveal your position at the beginning of the negotiation process

The rolesThe roles

-Who is involved in the negotiation process?-Will you negotiate as an individual or with a team?-And your counterpart?-Is it a multi-party negotiation?


Interests, needs, wants, Interests, needs, wants, motivationsmotivations

Why do you want it? Why do you want it?

Looking at the interests of the parties, is the best way to a negotiated agreement.



Interest: needs, wants and goalsInterest: needs, wants and goals

When looking for interests we are looking for NEEDS. All NEEDS are not equal, we need to PRIORITIZE. Explicit needs can be very different from Implicit needs.

You need to identify your implicit needs and specially those of the counterparts.

WHY?


Useful questions Useful questions

-Ask what their interests / objections are-What are you most concerned about…-What problems do you foresee?-Is there anything else we need to do to…

Don’t forget you must listen attentively


Maslow hierarchy of NeedsMaslow hierarchy of Needs

““Negotiating is not listening Negotiating is not listening to what they say, but to what they say, but

finding out what they want“ finding out what they want“

Reinhard Selten. Reinhard Selten.

Economics Nobel Prize.Economics Nobel Prize.


Interest: needs, wants, motivationInterest: needs, wants, motivation


InformationInformation

critical factscritical facts

objective criteria objective criteria

can make the difference in the middle of a can make the difference in the middle of a negotiation process. negotiation process.

Gather all the relevant facts!Gather all the relevant facts!


InformationInformation


Set ground rules Set ground rules

Control the settingControl the setting

Where?

When?

Who?

How often?

…


BOTTOM LINEBOTTOM LINE

RESERVATION PRICERESERVATION PRICE

The worst acceptable outcomeThe worst acceptable outcome

Your walk-awayYour walk-away

The least favorable point at which you would The least favorable point at which you would accept a deal accept a deal


BOTTOM LINEBOTTOM LINE

BENEFIT : It will help you in resisting pressure and temptations and from making a decision you could later regret (siren song “Let’s agree and put an end to this” )

DISADVANTAGES: - it’s too rigid - it inhibits imagination- is likely to be set too high / too low


ZONE OF POSSIBLE AGREEMENTZONE OF POSSIBLE AGREEMENT

The difference between the Seller’s Reservation The difference between the Seller’s Reservation Price and the Buyer’s Reservation PricePrice and the Buyer’s Reservation Price

250$ 275$Seller’s ZOPA Buyer’sReservation Price Reservation Price

KEY CONCEPTKEY CONCEPTPowerPower

-Who has more power, you or your counterpart?


-Authority-Knowledge-Punishing or rewarding-Scarcity-Contacts or connections

-Location-Need-Investment-Urgency-Personality

Sources of Power?Sources of Power?


BATNABATNABEST ALTERNATIVE TO A NEGOTIATED

AGREEMENT

MAANMEJOR ALTERNATIVA A UN ACUERDO

NEGOCIADO

Always know your BATNA before entering any negotiation


BATNABATNA

The reason to negotiate is to produce something better than the results you can obtain without

negotiating.

Your BATNA will be the standard against which any proposed agreement should be measured.

Developing your Developing your BATNABATNA

In any negotiation there are realities that are hard to change no matter how good a negotiator you are.

To protect yourself and to make the most of your assets you can use BATNA


Generating possible BATNAs requires three distinct operations: Inventing a list of actions you might take if

no agreement is reached Improving some of the more promising

ideas and converting them into practical alternatives

Selecting the one realistic option that seems the best.

Developing your BATNADeveloping your BATNAExample for a family wanting to sell a Example for a family wanting to sell a

househouse

What will we do if we don’t sell after 6 months?

Will we keep it on the market indefinitely? Will we rent it? Will we turn the land into a parking? Will we let someone live in it rent-free if

they paint it?How those alternatives compare with the

best offer we received for the house?


MLATNAMLATNAMOST LIKELY ALTERNATIVE TO A

NEGOTIATED AGREEMENT

MPAANALTERNATIVA MÁS PROBABLE A UN

ACUERDO NEGOCIADO

Always know your MLATNA before entering any negotiation


WATNAWATNAWORST ALTERNATIVE TO A NEGOTIATED

AGREEMENT

PAANPEOR ALTERNATIVA A UN ACUERDO

NEGOCIADO

Always know your WATNA before entering any negotiation


Don’t forget to consider the other side’s BATNA, WATNA, MLATNA


BENEFIT : It’s flexible enough It forces you to think of all the alternatives

before you accept an agreement It prevents you from being too optimistic

( for example to see your alternatives in the aggregate)

LEVERAGELEVERAGE

== Counterpart’s Counterpart’s

need level need level

–– Your need LevelYour need Level

++ Your BATNA Your BATNA

-- Counterpart’s Counterpart’s

BATNABATNA

ASSESS YOUR LEVERAGEASSESS YOUR LEVERAGE

NEED SCORE

HIGH NEED 1

AVERAGE NEED 0

LOW NEED -1

BATNA SCORE

GOOD ALTERNATIVE 1

AVERAGE ALTERNATIVE 0

BAD ALTERNATIVE -1


The agreementThe agreement

-How will agreement be implemented -Who is responsible?-Do we need a written / oral / formal agreement? -Do we need feedback from others??

Negotiation skills - Key concepts when planning a negotiation

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