The Fine Art of Negotiations

Course: FX230MPIPresented by:

Patrick CallahanMunicipal ConsultantSnyder & Associates

563-599-3708pcallahan@synder-associates.com

The Final Art of NegotiationsGeneral Overview of Session1. City Government – Examples of

Negotiations2. Introductions – Speaker & Participants3. The Elements of Negotiation4. Styles of Negotiations5. The Path to Preparation6. Preserving the Relationship7. Sealing the Agreement8. Tips for Negotiating

Definition of Negotiate Negotiate – to settle by bargaining;

to arrange; to transfer (a bill, etc..); to surmount; v.i. to discuss with a view of finding terms of agreement; to bargin

Webster’s Dictionary 1987 Edition

Patrick Callahan Work Experience City Experience

City of Fort Madison, IA - 1974 to 1977 City of West Point, IA – 1977 to 1978 City of Maquoketa, IA – 1978 to 1993 City of Anamosa, IA – 2005 to 2010

Consulting Experience Institute of Public Affairs – 1993 to 2005 Ruan Securities Corporation – 2000 to 2005 MCMS Consulting – 1993 to 2005 Synder & Associates – 2010 to Present

Patrick Callahan Education Formal Education

Cascade High School – 1968 Loras College – 1972 Political Science The University of Iowa – 1974 Public

Administration Recent Class - Negotiation – Get More

and Give More at Kirkwood Community College by Julia King Tamang March 12, 2012

Professional Experiences Negotiations Maquoketa – Union Negotiations Anamosa – Contractor Disputes Consultant – Cable & Gas

Franchise Renewals Consultant – Employment

Agreements on Searches for City Administrators

Negotiations in Your Daily Lives Major agreements – union

contracts and franchise renewals Routine agreements – payment

plans and employee issues Personal business – car purchases,

service fees, etc Personal lives – spouses, children

and grandchildren

City Government – Examples of Negotiations1. Collective Bargaining Agreements –

Labor Unions2. City Employees – Salary adjustments,

Fringe benefits, and Hiring3. Department Heads – Employment

Agreements4. City Budget Discussions – Meetings to

balance the budget5. Lawsuit Settlements

City Government – Examples of Negotiations 6. Contractors – Change orders on

projects7. Engineers – RFQ, RFP, & Fees8. Utility Company Franchise

Agreements9. 28E Agreements – Multiple Agencies

and Government Units10. Citizens – Utility Payment Plans

City Government – Examples of Negotiations11. Employee Termination Agreements12. Regulatory Agencies – DNR, EPA,

IRS, DOT13. Vendors – Purchase of City Supplies14. Economic Development Incentive

TIF Rebate Agreements TIF Grants Tax Abatement Agreements

Negotiations in Your Personal Lives1. Spouse/Significant Other2. Children3. Grandchildren4. Service Providers – Cable

Company5. Vendors – Car Dealers

Class Participants - Introductions Your Name Your City and Population Your Position Negotiation Experiences What is your City known for?

The Executive SummaryThe Elements of NegotiationWhat is

Negotiation?

Negotiations:

Agreement:

A process we all use instinctively

When used consciously, it can help fulfill our needs

An exchange between two or more parities for the purpose of reaching an agreement

Occurs when both parties accept the terms of the arrangement – They do not have to like it.

The Executive SummaryThe Elements of NegotiationThe Essence of

Negotiations:

The Vehicle of Negotiations:

The Criteria of Negotiations:

Cooperation

Communication

Self Knowledge Flexibility Empathy Timing

What signals success? You met or exceeded your goals Your success is good in the short

run - and in the long run You strengthened the relationship You had an efficient bargaining

process

What signals success? No damage to relationship

“Bringing them to their senses, not to their knees.”

Long term – Took care of the other person

Barriers to Negotiations1. Anger2. Fear of Rejection3. Manipulation4. Criticism5. Assumptions6. Failing to Listen7. Bottom Line – Sole Focus

Special Considerations for Public Officials 1. Client2. City Council or Board Approval3. Confidentiality4. Fiscal Limitations5. “Deep Pockets”6. Fairness and Equality

Special Considerations for Public Officials7. Precedent8. Municipal Bond Rating9. Costs of Litigation10. Public Accountability 11. Integrity

Understand yourself as a negotiator Competitor – Win/Lose Person Accommodator – “Door Mat” Collaborator – “Win/Win” Style Avoider – No interest

In any given situation we all have some of these styles.

Which style is best?

Collaboration Accommodation

Competition Avoidance

Substantive outcome

important? YES NO

YES

NO

Relational outcome important?

What is your predominate style of Negotiations? Work Life? Personal Life?

Group Discussion

Keys to managing style Develop flexibility Know your strengths and

weaknesses Compensate for your weakness –

outside assistance Know your “hot buttons” – take a

break

Know your power sources & strengths

Information or other resources Personal traits Skills – Especially communications Expertise Experience (your or someone

else’s)

Know your power sources & strengths

Problem solving Trade Information – “Buy Points” Do not make too many

assumptions – Check it out!

Take history into account Your general negotiating

experience Your negotiating experience with

this person or company Look for how your experience

creates an advantage or bias

Know your beliefs & attitudes What are your beliefs and attitudes

about negotiations? Do they apply here? How will they affect this deal? Know your attitude on money Your attitude towards the boss –

i.e. city council

Authority & constituencies How much authority or power do you have

to affect the outcome of this negotiation? Do city or state laws or policies restrict or

protect you? Are there rules by which you must abide? Are you negotiating in behalf of someone

higher up who has the final say? City council?

Why are negotiators unprepared?

People assume “just talking” is low risk

Preparation takes too much time People don’t know how to prepare

well

Why are negotiators unprepared?

Many deals are lost or missed due to poor preparation

Not ready? Postpone it Know how to prepare

Path to preparation Stakeholders Challenge Position Interests Options

Alternatives Legitimacy Communication Relationship Commitments

Group Discussion The Path to Preparation

Two Examples Collective Bargaining Agreement Construction Project – Contractor

change order

1. What are some actions that could be taken to prepare for negotiations?

2. How do you maintain a good working relationship after negotiations?

Preparation: Identify stakeholders Who has stake in the outcome?

Anyone at the table Anyone who stands to gain or lose

anything they value Any “invisible” players or

constituencies Anyone on either side who is affected

by the outcome

Preparation: Interests Look for the interests behind

positions Ask “why?” and “for what purpose?” Ask yourself, “What will happen if I get

this?” Consider the other side’s interests

Probe for their underlying interests Record this information and use it Verify it

Preparation: Four kinds of interests Content (substantive)

Be specific and measurable Break complex goals into strategic stages

Relationship Present Future

Identity Your sense of “who I am” and the other side’s

Process How to communicate

Preparation: What can be traded Define the bargaining “mix”

What are the pieces? Are any pieces linked?

Prioritize your interests Content, relationship, identity and

process Identify limits (upper and lower

constraits) for substantive issues

Preparation: What can be traded Hold off on commitment until your

know their needs and desires Not sure on their priorities – Ask

them Goal – Give away low value stuff

Preparation: What do people want? Consider short and long term

interests Check to make sure your interests

include the needs of your constituents in your organization Political mistakes now, cost you later

Look beyond this first deal What is the order of priority

Preparation: What’s most important? Order tells relative importance Order tells relative value in terms

of dollars Order helps avoid making

concessions on the wrong things Order helps you decide on

packages later on in the deal

Preparation: Developing supporting arguments What facts support your view?

What validates those facts? Who can help you elaborate or

clarify facts? What data do you need?

Get help, if necessary

Preparation: Exploring their interests Why are these objectives important to

them? How did they come to this position? What if they can’t reach your goals? How have their needs changed since you

last talked? Last, outline what you don’t know.

Inquire about those things as you go along.

Preparation: Researching the other party Things to learn

Their objectives Their interests Their alternatives Their resources Their reputation, style, and behavior Their authority to make an agreement Their likely strategy and tactics

Researching the other party Need a network of contacts to call Check on-line for information Keep track of the information Remember their style and

credibility Try to get to know them

Preparation: Consider options An option is a possible agreement

or parts of an agreement Common mistakes

Taking a narrow, one-sided focus Having only one option, with no fall-backs Thinking that the only approach is to

close the gap between differences Key element

Ability to design the “bargaining mix”

Preparation: Building options packages Step 1

Examine interests Figure the “give-aways” from their list

that are easily fulfilled and record those

Identify your “throw-aways” (confidential list)

Preparation: Expanding the pie Step 2

Don’t divide the pie, EXPAND the pie

Remember – the deal is not just about the money.

Preparation: Finalizing options Evaluate the risk and benefits of options,

use sub-groups for complex options Narrow the range to a few of the best Be willing to justify personal preferences Be alert to the influence of intangibles Cool off and come back Keep decisions tentative till the end –

conditional language

Preparation: Relationship When done – get it in writing

When done – Shut up

Preparation: Consider alternatives Best Alternative to Negotiated

Agreement (BATNA) What will you do if you can’t

agree? BATNA What are your option if the deal fails How good is your Plan B, really?

Preparation: Legitimacy What criteria can you use to

persuade each other that you are not being ripped off? Legitimacy is a tool to persuade others Legitimacy is a shield to protect yourself

Examples Collective bargaining – salary survey Change orders – Unit prices

Preparation: Relationships Common mistakes

Confusing relationship and substance

Assuming that’s how the relationship is, it is given and it is “their fault”

Preparation: Relationships Prepare to address relationship

and substance independently Prepare to take unconditionally

constructive steps to improve the relationship

Do not give up on a bad relationship

Preparation: Commitments Common mistakes

Not knowing what “done” looks like Failing to determine actions needed

to reach agreement

Preparation: Nailing down the agreement Selective paraphrase Ask for paraphrase of what you’ve said Reinforce ideas you like in their

proposal Resist movement away from agreement

Remember your BATNA Get them to make a public agreement and

acknowledge the agreement to their team

Preparation: Sealing agreements Reciprocity (back scratch) Use their commitment to a position –

make sure they articulate it a few times

Name those will agree Name similar deals in the past Note scarcity of time or other

resources

Preparations: More steps to agreement Plan the steps to agreement

Decision makers – who will sign? Who should we be consulting for buy-in?

Implementation – what about happens next to make this happen?

What to do – offer to write the agreement Possible obstacles to implementation Ways to deal with obstacles

Steps necessary to get a binding agreement

Group DiscussionA. Past Negotiations

1. What have you done that helped “seal the deal”?

2. What did you learn about yourself as a negotiator?

B. Future Negotiations1. What did you learn today that could help

you with future negotiations?2. What will you do differently during your

next negotiation session?

Special Considerations for Negotiations1. Location of Negotiations2. Setting of Negotiations3. The Art of Body Language4. Interpersonal Relations5. Good Guy/Bad Guy Roles6. Exploring Creative Solutions7. Always bring a Calculator to the

Negotiation Table.

The Negotiation Model 1. Prepare2. Establish the Objectives3. Define the Issues4. Clarify the Interests5. Identify Objective Criteria6. Explore the Alternatives7. Select the Best Form of Agreement

Preparation: When you have no time Consider the situation – then…

Prep the most goal-critical areas Prep the most problematic areas

12 Tips for Negotiating and Compromising with Difficult People

1. Have a positive attitude2. Meet on mutual ground3. Clearly define and agree on the

issue4. Do your homework5. Take an honest inventory of yourself6. Look for shared interests

- Ryan Lynch at Dale Carnegie Training

12 Tips for Negotiating and Compromising with Difficult People

7. Deal with facts, not emotions8. Be honest9. Present alternatives and provide

evidence10. Be an expert communicator11. End on a good note12. Enjoy the process

- Ryan Lynch at Dale Carnegie Training

Negotiation Handouts1. 12 Tips for Negotiating and

compromising with difficult people by Ryan Lynch – Dale Carnegie Training

2. Union/Labor Negotiations – Municipal Policy Leaders Handbook – Institute of Public Affairs

3. 28E Agreement Checklist – Institute of Public Affairs

4. Suggested Reading – Complied by Lynn M. Walding

Choose 3 small steps to improve your negotiation skills and outcomes

YOUR PLAN OF ACTION Getting to Yes: How to Negotiate

Agreement Without Giving In by Roger Fisher and William Ury

Any Questions?Patrick Callahan

Municipal ConsultantSnyder & Associates

563-599-3708pcallahan@synder-associates.com