negotiation Management CH3.pptx

Chapter 3: Negotation Managment Negotiation Skills and Techniques Overview *Definition of Negotiations : -Negotiation is a dialogue between two or more people or parties intended to reach a beneficial outcome. This beneficial outcome can be for all of the parties involved, or just for one or some...

Chapter 3: Negotation Managment Negotiation Skills and Techniques Overview *Definition of Negotiations : -Negotiation is a dialogue between two or more people or parties intended to reach a beneficial outcome. This beneficial outcome can be for all of the parties involved, or just for one or some of them. -It is aimed to resolve points of difference, to gain advantage for an individual or collective, or to craft outcomes to satisfy various interests. It is often conducted by putting forward a position and making small concessions to achieve an agreement. The degree to which the negotiating parties trust each other to implement the negotiated solution is a major factor in determining whether negotiations are successful. Negotiation is not a zero-sum game; if there is no cooperation, the negotiation will fail. Variety of Negotiations *Daily routine Negotiations *Commercial Negotiations *Employment Negotiations *Political Negotiations *Price Negotiations *Terms and Conditions Negotiations *Hostage Negotiations *Social Negotiations *Technology Negotiations *Barter Negotiations Types of Negotiations Distributive Negotiation (Win-Lose) -Distributive negotiation is also sometimes called positional or hardbargaining negotiation. It tends to approach negotiation on the model of haggling in a market. -In a distributive negotiation, each side often adopts an extreme position, knowing that it will not be accepted, and then employs a combination of guile, bluffing, and brinkmanship in order to cede as little as possible before reaching a deal. -Distributive bargainers conceive of negotiation as a process of distributing a fixed amount of value Types of Negotiations Integrative Negotiation (Win-Win) -Integrative negotiation is also called interest-based, merit-based, or principled negotiation. It is a set of techniques that attempts to improve the quality and likelihood of negotiated agreement by providing an alternative to traditional distributive negotiation techniques. -While distributive negotiation assumes there is a fixed amount of value (a "fixed pie") to be divided between the parties, integrative negotiation often attempts to create value in the course of the negotiation ("expand the pie"). -It focuses on the underlying interests of the parties rather than their arbitrary starting positions, approaches negotiation as a shared problem rather than a personalized battle, and insists upon adherence to objective, principled criteria as the basis for agreement. Negotiationstyles Accommodating Individuals who enjoy solving the other party's problems and preserving personal relationships. Accommodators are sensitive to the emotional states, body language, and verbal signals of the other parties. They can, however, feel taken advantage of in situations when the other party places little emphasis on the relationship. Avoiding Individuals who do not like to negotiate and don't do it unless warranted. When negotiating, avoiders tend to defer and dodge the confrontational aspects of negotiating; however, they may be perceived as tactful and diplomatic. Collaborating Individuals who enjoy negotiations that involve solving tough problems in creative ways. Collaborators are good at using negotiations to understand the concerns and interests of the other parties. They can, however, create problems by transforming simple situations into more complex ones. Competing Individuals who enjoy negotiations because they present an opportunity to win something. Competitive negotiators have strong instincts for all aspects of negotiating and are often strategic. Because their style can dominate the bargaining process, competitive negotiators often neglect the importance of relationships. Stages of Negotiation Cycle *Before The Negotiation Strategy : Increase Your Power - Gather Benchmark Data - Enhance Your BATNAs Strategy : Control the Logistics - Choose a Day With Nice Weather - Choose an Early Time - Choose the Right Medium - Negotiate at Your Office Strategy : Encourage Cooperative Behaviour - Avoid Negotiation Terminology - Schedule a Future Interaction Stages of Negotiation Cycle *During the Negotiation Strategy : Convey the Proper Emotions - Show the Signs of Disappointment - Become Angry (When Appropriate) Strategy : Demonstrate Your Power - Mention Your BATNAs - Avoid Disclaimers and Weak Language Strategy : Properly Address the Terms - Address all Relevant Terms - Rank Order the Terms Stages of Negotiation Cycle *Ending The Negotiation Strategy : Anchor Your Offer - Make the First Offer - Request a High Precise Range Strategy : Frame Your Offer - Separate Gains / Combine Losses - Create Visual Balance - Justify With Graphs Strategy : Counter Their Offer - Ask Diagnostic Questions - Always Counter Their First Offer - Pause After They Make an Offer Stages of Negotiation Cycle *After The Negotiation Strategy : Finalize The Deal - Follow Up With an Email Summary - Compliment Their Negotiation Skills - Be the First to Draft the Contract Determining goals is the first step in the negotiation process Negotiators should specify goals and objectives clearly The goals set have direct and indirect effects on the negotiator’s strategy Judges effective by both slides Track record success Skilled negotiators spend more time (than average negotiators) preparing the negotiation, by gathering more information and setting their objectives, priorities and limits It is important to present as many reasons as possible to support each of your proposals The key to persuading someone is to present your argument logically Win-Win negotiating involves both parties stating their ideal outcomes and then splitting the difference     With clients, when you’re advising/selling? When you’re buying, e.g. to outsource services? Will you have more negotiation opportunities in future? What makes these negotiations difficult?  Prepare and plan with great care, including identifying ‘negotiable issues’  Identify and use your ‘Leaver’  ‘Trade concessions/Benefit’ – don't give them away a) b) With clients With outsourced suppliers  What issues do you have?  What issues may they have?  Are there enough issues to negotiate with?  Any others you can introduce, that may be  negotiable? If no, plan to persuade/convinced ; if yes, plan to negotiate. 1. Persuade / convinced 1st and only negotiate later…if you have to 2. Logic is not persuasive/Initiative! 3. Beware argument dilution/alternation 4. Effective persuasion leads to ‘I’d like to deal with you if…’ 5. Average persuaders give things away to achieve this 6. Identify and use your leavers 7. You may need to instigate/initiating the negotiating 8. Trade concessions, don’t give them away 9. Remember Win-Win is not 50:50 10. Never, ever forget that ‘no deal’ is better than a bad dea “Negotiations in which both parties come away winners and both parties are committed to upholding their ends of the agreement” (The Win-Win Negotiator)  Negotiation  Both parties  Winners  Committed  Upholding their ends of the agreement Fundamental principle in negotiations — need satisfaction Look for creative ways to satisfy your and your counterpart’s needs Establish a friendly climate of mutual interests and trust Negotiation is the beginning of a process, not the end — Look for a long-term mutually beneficial relationship Don’t be afraid to give up something to get something Be open to creative ways to satisfy critical needs — look beyond current situation for win - win Everyone is better off than before the negotiation Congratulations — you have been selected for negotiations! Now it’s time to prepare for success First step — review this presentation and your notes to refresh yourself on the fundamentals of effective negotiations Strategize with your negotiation teammates to develop a strategy Develop a plan incorporating your negotiation knowledge and the needs of your customer Practice, refine, practice, refine, practice Assess outcome values and the costs of termination for the other party Manage the other party’s impressions Modify the other party’s perceptions/Understanding Manipulate the actual costs of delay or termination Screen your behavior: ◦ Say and do as little as possible Direct action to alter impressions ◦ Present facts that enhance one’s position Make outcomes appear less attractive Make the cost of obtaining goals appear higher Make demands and positions appear more or less attractive to the other party – whichever suits your needs Plan disruptive action ◦ Raise the costs of delay to the other party Form an alliance with outsiders ◦ Involve (or threaten to involve) other parties who can influence the outcome in your favor Schedule manipulations ◦ One party is usually more vulnerable to delaying than the other Opening offers ◦ Where will you start? Opening stance ◦ What is your attitude? Competitive? 🞄 Moderate? Initial concessions ◦ Should any be made? If so, how large? The role of concessions/Benefits ◦ Without them, there is either capitulation or deadlock Patterns of concession making ◦ The pattern contains valuable information Final offers (making a commitment) ◦ “This is all I can do” Resources, issues, and bargaining mix Interests and needs Walk away point and alternative(s) Targets and opening bids Constituents, social structure, and authority to make an agreement Reputation and negotiation style Likely strategy and tactics Getting too emotional Focus on personalities, not issues Not trying to understand the other person (too focused on our own needs) Wanting to win at all costs Regarding negotiation as confrontational/ Face to Face Professional Confident, Relaxed, at ease Open, honest, sincere & credible Respectful of other peoples vales Show empathy, and understanding Committed to a WIN:WIN result Continually enhancing their skills You are fully briefed on the subject matter of the negotiation You are clear about your objectives and what you are trying to achieve: The LIM Model: Like to Achieve (most favoured option, ideal settlement) Intend to Achieve (expected result, realistic settlement) Must Achieve (fall back position, bottom line) You have worked out your tactics and how best to put your case. You have tried to figure out what the other parties objectives will be You have gathered background information (personalities involved, power balance, attitudes etc.) This is the single most important stage of negotiation.Both parties will be trying to find out and understand the other’s position and requirements. Successful negotiators ask twice the number of questions and spend over twice the amount of time acquiring and clarifying information than do average negotiators. As soon as a number or term is mentioned by one party, you have begun to move out of information exchange and into bargaining.... Exchange of terms Never give a concession/benefits....trade it reluctantly/unwillingly Reject constructively Note the moving base line Look for the agreement signals Your judgement : Is this best and final offer? If yes: ◦ List the agreement in detail ◦ List the points of explanation, clarification and interpretation ◦ Record agreed summary with all at the table ◦ Re-start negotiations if any dispute over agreement Tends to see negotiators as friends Sees agreement as the goals prepared to make concessions to cultivate the relationship Is willing to trust the other side Is willing to modify position at an early stage Discloses “bottom line” early in discussions Avoids contests of will on particular points Concedes to pressure Sees negotiators as opponents or adversaries Sees victory as the goal Demands concessions to establish a relationship Tends to mistrust the other side Is reluctant to alter position in any way Misleads as to “bottom line” Expects to win contests of wills Applies pressure Negotiators need to: Set a clear target and resistance points Understand and work to improve their BATNA(Best alternative to a negotiated agreement) Start with good opening offer Make appropriate concessions Manage the commitment process Negotiation Skills — Learned or natural ability? Definition of negotiation Negotiation Strategies Personality Types / Communication Styles Win - Win Negotiating Principles Prepare and Practice Continuing education on negotiating skills