Commercial Proposals Guide

Commercial Management
Lecture 8
Proposals

This section is based on a workbook produce by Peter Fenn for the MSc in
Commercial Management by Distance Learning.

I keep six honest serving men, (They taught me all I knew;)
Their names are What and Where and When
And How and Why and Who
Rudyard Kipling
Learning Objectives

When you have completed this section you should be able to:

Producing the proposal

Identify methods of maximising a proposals effect

Identify the components of a proposal

Evaluate writing techniques

Evaluate review and authorisation procedures

Finalising the proposal

Evaluate interview and presentation strategies

Bid Team evaluation of proposal

Identify the evaluation process

Evaluate rating techniques

Determine deficiencies

Essential information for proposal managers

Identify methods for establishing authority

Evaluate methods of organising the proposal team
Determine when to use consultants

1
Proposals/Negotiation
Glossary

Like all areas bidding and proposals are characterized by their own
terminology and language. A brief glossary is provided here, of words
commonly encountered. You might wish to add your own.

Adjudication: This is a word used in many different senses:

1 The process carried out by a bidding organization where an estimate
of costs is converted into a bid price. The technical bid is adjudicated
by senior management and costs are converted into price. There are
occasions when the price may be less than the estimated costs due to
for example risk assessment or commercial pressures to win work (at
any cost). This presents problems for organizations which come under
scrutiny from regulators or via competition legislation.
2 The process carried out by a client organization to evaluate tenders
received. Bids are evaluated on some scoring system which allows
price and technical content to be weighted.
3 A process of dispute resolution, where an adjudicator is given power
under a contract to make binding decisions. Complex bids are
adjudicated by an independent adjudicator.

Request for Proposal RFP aka Invitation to Bid: The document from a client
seeking bids.
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Introduction

This part provides an overview of the bid proposal process. It deals with the
production and evaluation of the proposal and is divided into 3 sections:
proposals; bid team evaluation and essential information for managers.

It is based around directed reading from Winning the Bid by Neil
Tweedley.

1.1. Producing the proposal
This is an important activity in the bidding process, whether for contracts
with the government or with large private companies. The aspects requiring
most attention are:
Interpretation of the Terms of Reference
Selection of the methodological approach
Organisation of the presentation
The interpretation of the Terms of Reference is essential when the decision
to participate in the bid is to be taken, a stage in which it is important to
read between lines for the fine-tuning of the real needs of the client.
A well chosen methodological approach allows the client to be assured that
his needs have been properly understood.
An adequately organised presentation enables the reader to become
acquainted with the proposal in a comfortable manner. This comfort creates
in the potential client a positive attitude when evaluating the bid
presentation.
1.2. Remember What a Proposal Seeks to do

Sometimes it is easy to get lost in the detail of a bid; but it is worth
remembering the essentials of a simple valid contract. In order for a
contract to be formed there must be offer; acceptance and consideration.
A proposal therefore needs to be capable of acceptance, (if indeed you
want it to be capable of being accepted!); it is your offer to a client and
with the clients acceptance a contract can be formed. It may be that the
invitation to tender is confused and restricts your proposal; and there may
be a commercial decision on whether to submit an acceptable tender. But
remember that it is the bid which is the offer and capable of acceptance.
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1.3. Identifying methods of maximising a proposals effect

There are many texts which give advice on writing reports which maximise
effect. One powerful technique is the use of an Executive Summary. Try
and read a book on report writing. A useful web reference in this area is:
http://www.csun.edu/~vcecn006/summary.htm

An executive summary:

Is a job for skilled professionals (many companies employ technical
authors)
Needs to be brief, terse and to command and retain the readers
attention
Is a sales pitch based on the presentation of facts
Focuses on the salient features of both the proposer and the proposal
Provides the reader with:
An introduction to the proposer
The highlights of the proposal:
The major decisions; the innovative features and
benefits to the client
Themes of the proposal
The distinguishing features of the proposal
The organisation of the proposal

1.3.1. Identifying the components of a proposal

Of course bids will include components prescribed in the Invitation to Bid
and these may vary, but most authors describe the components of a bid as:

1. A Commercial Proposal
2. A Technical Proposal
3. A Project Proposal (or implementation/organizational proposal)
4. A Financial Proposal

Now read Bid submission - Tweedley Chapter 11.

1.3.2. Writing Techniques

Helgeson illustrates the problems with writing techniques by quoting James
Joyce

4

Onward to the dead sea they tramp to drink, unslaked and with
horrible gulpings, the slat somnolent inexhaustible flood. And the
equine portent grows again

Helgeson in his inimitable style says See you wouldnt want this guy writing
proposals for you, would you?

Therein lies the problem in writing proposals literature it aint.

Again you might try any book on report writing, and we will all have a
favourite style, but we might lay some rules. Helgeson has a direct style
but his rules are as good as anyones.

The Golden Rule

Respond to each and every and every one of the requirements set out in the
Invitation to Bid in a manner which makes it clear and easy for the reader to
understand your proposal.

The Cardinal Rules

Conform
Conform to the requirements of the Invitation to Bid; not just in the
sequence but also in:

Terminology
Spelling
Titles
Usage etc

Make the narrative flow
Address each subject in a logical orderly manner. A detailed outline or
skeleton may help.

Put yourself in the clients shoes
Imagine what the client who will evaluate or adjudicate the bid wants to
see. They want a straightforward answer to the problem without
unnecessary bumph.

Tell them what they want to know and nothing more
Spare the client the tutorial diatribe; just answer the question.

Use positive statements
Do not criticize the oppositions or find fault with 3
rd
parties

Make the format pleasing to the eye
Word processors now make the production of attractive documents so
much easier; use them to their full potential. Again many companies use
specialist technical authors to advise.

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Back up all your proposal and items with proof
The use of unsubstantiated phrases or statements detracts from a proposal.
Here the rules of research and academics come close to real life. In the
same way you wouldnt make unsubstantiated statements in research; do
not be tempted in proposals.

Be specific
Equally clients do not want a list of vague aspirations or goals; you must
describe how they will be achieved.

Set the scene
Do not plunge the reader into the middle of a proposal without setting the
scene

The News At Ten Approach
Remember the KISS principle (Keep It Simple Stupid)
Three stages
1. Tell them what you are going to tell them
2. Tell it to them
3. Tell them what you have just told them

1.3.3. Review and Authorization Procedures

Proposals take place in great haste and the stress on team members is often
severe and there may be a temptation to pay scant attention to review and
authorisation (Adjudication). Remember that the commercial conversion of
an estimate into a tender (or cost into price) is crucial.

Now read Bid submission - Tweedley Chapter 11.

1.3.4. Finishing the Proposal

Commonsense must prevail here, check that everything has been completed
to satisfaction and hold a final review. Ensure that submission takes place
to deadline and obtain a receipt. If there is a public opening, attend and
secure as much information as possible. Feedback any information on
competitors to the bid team and company databases.

Finally if you are receiving bids learn the lessons provided by court cases,
failure to comply might mean expensive re-tendering or even make your
organisation liable for tenderers costs.

A case is illustrative.

In Blackpool and Fylde Aeroclub v Blackpool BC 1990 1 W.L.R 1195 the
council made a mistake and failed to open a tender from the Aeroclub. The
court ruled that the Aeroclub could recover its wasted costs in tendering.
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1.4. Interview and Presentations

Will there be an interview of tenderers? Or a presentation? What will be
the format?

It may be that a team is required with individuals to answer technical,
financial and commercial questions. Or a beauty parade of all the
tenderers.

This may be a marketing issue and if so needs to be lead by the marketing
function.

Often such interviews and presentations are given less attention than they
deserve and valuable opportunities are lost. It may be that one member of
the team is good at presenting, and those skills should be used. A word of
warning, be aware of the power and dangers of Microsoft; there is a
complaint well documented in client organisations of Death By PowerPoint.

2.1 Clients bid team evaluation of proposal

For those undertaking the bidding the clients evaluation is wrapped in some
mystery; but this need not be so. Clients evaluate bids just like you would
evaluate bids from suppliers; they try to reduce things to an equal footing to
allow meaningful comparisons. With public clients quite often the
evaluation technique is in the public domain.

Part E deals with some of these evaluation issues. Remember, particularly
with public clients, often the evaluation techniques and procedures are in
the public domain and you can refer to them. If the bid producer, or the
bid team, can see what the client is looking for before submission the bid
can be evaluated as if by the client. It will be possible to see how the client
expects the bid to be organised and allows optimum performance. The bid
response can be most effective; remember the sole purpose of the bid is to
convince the evaluators that your company is the most capable of
performing the particular contract and therefore winning the work.

Try the MOD at

http://www.dgcom.mod.uk/dgcom/guides/sect18.htm

Or the World Bank at

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http://www.worldbank.org/html/opr/procure/procguid-ev3.doc

3.1 Essential information for proposal managers

Proposal or Bid managers need to employ a wide range of skills. There is
nothing inherently different in the role of bid management; the skills are
general management skills of: leadership and authority; resource allocation
and organisation. We might look at three such areas:

3.1.1 Identify methods for establishing authority

3.1.2 Evaluate methods of organising the proposal team

3.1.3 Determine when to use consultants

These are covered in Tweedley; now read Bid submission - Tweedley
Chapter 11.

The issue of consultants and outsourcing is dealt with in lecture 9. For the
purposes of bids and proposals we might consider the following areas where
specialist help could be required:

Technical authorship of the proposal
Technical expertise in bid development to meet specification
Presentation of bid

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Summary

Producing the proposal

Identify methods of maximising a proposals effect
Identify the components of a proposal
Evaluate writing techniques
Evaluate review and authorisation procedures
Finalising the proposal
Evaluate interview and presentation strategies

The proposal plays a critical part in success. Without a bid no company can expect
to win.

Make the most of the proposal by demonstrating an understanding of the
client, their needs and solutions to them.

A proposal must be relevant to the wide range of readers to which it will be
exposed: executives, specialists and financiers. The proposal must be
readable, well-structured and orderly so that each type of reader can find
what they need quickly.
The proposal must emphasise those aspects that meet the most pressing
needs of the client who is buying the benefits that the proposal solutions
offer, not the features it provides. Focus therefore on the business benefits.

The proposal production must be organised so that everyone involved knows
that they have to produce and when. Give suitable guidance to the authors
on the style and format to adopt and the emphasis and benefits to
incorporate.

Bid teams should consider the use of specialist technical authors.

Bid Team evaluation of proposal

Identify the evaluation process
Evaluate rating techniques
Determine deficiencies

A typical bid document will contain a technical proposal (how to carry out the
proposed task), a commercial proposal (response to the contract terms and
conditions), an implementation proposal (showing the project plan) and a
finance proposal (stating price and financing plan). An executive summary
must encapsulate the main points from each of these.

Ensure that the teams for proposal reviews and authorisation are briefed on
what to expect well in advance. They need clear guidance on what they
have to do, and what they cannot do.

9

Essential information for proposal managers

Identify methods for establishing authority
Evaluate methods of organising the proposal team
Determine when to use consultants

Ensure that the teams for proposal reviews and authorisation are briefed on
what to expect well in advance. They need clear guidance on what they have to
do, and what they cannot do.

Consultants are often a useful addition to bid teams, the section on
outsourcing considers this.

10

Self-assessment Questions
1. Describe how effective authorship can maximise a proposals effect.

1. Describe the components of a typical proposal.

2. Discuss how clients can evaluate proposals.

3. Describe the essential skills required by a bid manager

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Proposals: Useful References

Tweedley, N (1995) Winning the Bid: A Managers Guide to Competitive Bidding,
Pitman Publishing

Additional useful texts:

Helgeson, DV (1994) Engineers and Managers Guide to Winning Proposals, Artech
House

Kennedy, C and OConnor M (1997) Winning Major Bids: The Critical Success
Factors, Policy Publications Ltd

Skitmore, RM (1989) Contract Bidding in Construction: Strategic management
and modelling, Longman Scientific and Technical.

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Part H
Negotiation
Introduction
A character in Molire; Monsieur Jordain was delighted to learn that he had
been speaking prose all his life; he thought that prose was something
special. Equally most people negotiate throughout their lives without
realising that they are negotiating and without any training.

There are three commonly perceived attributes that most men claim to do,
and do well, without any training:

Drive
Make Love
Negotiate

It appears strange that most countries require men to pass a test only to be
allowed to drive, the others need no training and no licence!

This section considers some aspects of negotiation relevant to the
Commercial Strategy and Tactics of Companies. Unfortunately, or
predictably, negotiation suffers the same fashions and fads as many
management areas. Be wary of the fads and fashions; or in academic terms
demonstrate organised scepticism. A glossary is shown below, and for a
useful starting point for web-based negotiation try:

http://www.haas.berkeley.edu/Courses/BA252-1/home.html

The most used buzz words are BATNA and WATNA.

Outline
This section considers 4 areas:
Negotiation Theory
The Harvard Negotiation Project; leading to a detailed
consideration on one text Getting to Yes and the process of
Principled Negotiation
How to settle the so-called Last Gap in negotiations
On Line Negotiations
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Learning Objectives

When you have completed this section you should be able to:

Identify key factors in negotiation

Positional Bargaining/Negotiation

Principled Bargaining/Negotiation

Evaluate methods for closing the deal

Getting to Yes

Negotiation Tactics/Strategy

Determine (Knowing) when to walk way

Evaluate techniques for closing the last gap in negotiations

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GLOSSARY
This glossary is included as a reference point, not as list of terms which
might be learned

Negotiation Terms

Anchoring and Adjustment : An opening position, from which a negotiator
incrementally moves away from (gains or losses) during a negotiation. The
choice of an anchor may be based on faulty or incomplete information, and
can potentially be misleading.

Agenda: A plan for how a negotiation will progress.

Aspiration Point: Optimal settlement point that a negotiator hopes to
achieve.

Bargaining Zone: The gap between the respective resistance points of each
party.

BATNA (Best Alternative To a Negotiated Agreement): This is your back-up
plan.

Consistency Principle: The need to appear consistent in beliefs, feelings
and behaviours, not only to others, but to ourselves, too.

Distributive Negotiation: A negotiation technique and/or type that seeks to
gain at the opponent's loss. Any situation in which one person's gain is
exactly equal to the opponent's loss is considered distributive.

Dyadic Negotiation: A negotiation between two persons, as opposed to
negotiations in which more parties are involved.

Expanding the Pie: Finding resources to include in a negotiation that fulfil
both party's needs.

Golden Bridge: A strategy by which a negotiator makes his or her opponent's
positive decision as easy as possible.

Kinesics: The study of body movements, including posture.

Inaction Anxiety: Self-imposed pressure to achieve an agreement at any
cost. Often leads a negotiator to strike a deal when s/he should have walked
away and chosen his/her BATNA.

Integrative Negotiation: A negotiation technique and/or type that seeks to
expand the pie, finding a win-win settlements. In an integrative negotiation,
one person's gain is not necessarily another person's loss.

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Interests: The concerns underlying a position.

Issues: Negotiable items that will be included in the formal agreement.

Limited Authority: A negotiating gambit whereby a negotiator says he
cannot make a decision and must resort to a higher authority.

Linkage Effect: When one deal point of a negotiation is attached to another.

Negotiating Gambit: A strategy in negotiating that should be avoided
because it damages relationships.

Negotiating Roles: Different people in a negotiating team can have
different roles such as primary negotiator, Kinesics and paralanguage
expert, etc.

Non-verbal cues: Body language that gives away how a person is feeling and
what s/he is thinking. This is closely related to kinesics.

Package: An offer which has many elements.

Paralanguage: Variations in speech: pitch, loudness, tempo, tone, duration,
laughing, crying -- how things are said.

PATNA (Probable Alternative To a Negotiated Agreement)

Position: Statement of what a person/party wants in a negotiation.

Reciprocity Principle: Occurs when a negotiating party feels obligated to
return in kind what the other side has offered or given them. This principle
might result in on side making a concession because the other side has done
the same.

Resistance Point (RP): The point beyond which a person/party will not go.
The lower limit of the range of acceptable negotiation outcomes.

WATNA (Worst Alternative To a Negotiated Agreement)

Winner's Curse: Occurs when your aspiration point is too low. You accept a
deal, and wonder whether your opponent would have given you a better
deal had you been more persistent.

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1. Negotiation Theory and Skills

Most theorists talk of two negotiation theories and strategic approaches to
negotiation:

Positional negotiation; and
Principled negotiation.

The terms positional and principled negotiating are not exclusive and in
other reading material you may find them replaced with any of the
following:

Positional = competitive; compromise; Principled = interest-based; co-
operative; collaborative

Also notice that negotiations may be divided into two types:

Dispute negotiation, focused on resolving past facts; and
Transaction negotiation, focused on reaching agreement for the
future.

While it is often helpful to appreciate this difference between dispute
negotiation and transaction negotiation, it is also beneficial to appreciate
that many negotiation situations involve the resolution of both past issues
as well as planning future relations. The theories and strategic approaches
are generic and can be applied to either disputes or transactions.

1.1. Distinguish Strategic Approach from Personality

There may be some correlation between negotiation approaches and
personality style, but the two do not necessarily go together. A positional
negotiator may be very "pleasant" to work with in terms of demeanour, but
can utilize extremely competitive tactics. Negotiator's pleasantries may
themselves be part of an overall manipulative approach! A principled
negotiator may be rather difficult or awkward in terms of personality, yet
effectively utilize interest-based, problem-solving strategies in negotiation.

The most effective negotiators will have a wide array of negotiation skills,
both positional (competitive) and principled (problem-solving), and will
effectively mix and match these approaches depending upon what the
negotiator believes will work best with a particular "negotiating partner"
depending on the specific issue being negotiated and depending on the
nature of the overall negotiating relationship (one-time transaction or
continuing relations). This approach might be likened to the contingency
17
approach to management. The difficulty, of course, is judging when to use
which technique; there are no easy answers.

Another view of negotiation is that certain strategies and behaviours are
intended to "create value" (integrative approaches) whereas other strategies
and behaviours are intended to "claim value" (be that by competition or
principle).

1.2. The Positional Approach

Positional negotiation strategy is, essentially, a manipulative approach
designed to intimidate the other party to lose confidence in their own case
and to accept the competitor's demands. This approach is characterized by
the following:

High opening demands;
Threats, Tension and Pressure;
Stretching the facts;
Sticking to positions;
Being tight lipped;
Want to outdo, outmanoeuvre the other side; and
Want clear victory.

When a Positional negotiator is asked how they will know that they have
reached a good agreement, they may reply that the agreement is "better
than fair."

1.2.1. Assumptions of the Positional Approach
There are certain assumptions, that lie behind the Positional approach to
negotiation. This "distributive" world view includes the following
assumptions:
Negotiation is the division of limited resources;
One side's gain is the other's side's loss; and
A deal today will not materially affect choices available
tomorrow.

1.2.2. Risks of the Positional Approach

While Positional negotiation tactics are often effective in "claiming" already
defined value, there are also certain risks. Foremost among these risks are
damage to the negotiating relationship and a lessened overall likelihood of
reaching agreement. A list of the disadvantages of the Positional style
includes:

Confrontation leads to rigidity;
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There is limited analysis of merits of dispute and relevant criteria
for resolving issues; there is limited development of solution
alternatives; It is hard to predict the outcome of the competitive
approach or control the process;

Protagonists are generally blind to joint gains;

Protagonists threaten their future relations; and

Protagonists are more likely to have impasse and increased costs.

1.2.3. What is positional negotiating?

It is, in a sense, somewhat a contradiction in terms! A positional approach
involves a person adopting a position and aiming to negotiate an agreement
whilst remaining as close to that position as possible. It is a style with which
we are all very familiar.

It allows for only limited and fairly predictable negotiating. In many
instances it may degenerate into nothing more than a 'battle of wills', each
party wondering who is going to' give in' first.

People adopting a positional style will assume that only one party can
emerge from the negotiation a clear winner. This is often termed the
"WIN/LOSE" approach.

1.2.4. What are the characteristics of positional negotiating?

Extreme opening positions. People adopt extreme positions because the
nature of this negotiating style is such that, if there is to be agreement
finally, it will be due to the parties having moved from their opening
positions to some mid-way / compromise point. The thinking is, and this
appears to be borne out by research, that extreme opening offers achieve
higher settlements for that party.

Focus on party's rights. Such a focus enables people to justify their
respective positions. Repeated reference to the legal / moral/economic
'right' of a party's position should eventually make the other party(ies]
accept it.

Aggression. As a 'battle of wills' becomes apparent, social niceties will likely
be dispensed with. Personal attacks directed at the other negotiator(s] can
be justified if the result is the agreement you wanted.

Predictable negotiating positions. Once the extreme opening positions have
been established and the parties have done their initial posturing, if the
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negotiation is to continue the parties will have to embark upon some, at
least minimal, concession giving.

1.2.5. What are the advantages of positional negotiating?

Time: It can result in a fairly speedy negotiation -successful or otherwise. If
all parties involved are being positional then the negotiation may soon
breakdown. Alternatively, once the parties recognise that they are all
adopting the same approach, the negotiation may move on to the
concession giving / tit for tat stage and thereafter settlement.

Uncomplicated: Engaging in positional negotiating does not require onerous
amounts of preparation time or manpower. Once into the negotiation, the
style enjoys universally understood ground rules i.e. extreme opening
position leads either to acceptable compromise or to negotiation
breakdown.

Favours the powerful: Where there exists a marked power imbalance
between the negotiating parties, the powerful party has the potential to
achieve exactly what they want by being positional.

Inexpensive: The time factor, the limited demand on human resources, the
failure even, all amount to it being an inexpensive means of seeking to
achieve what you want.

1.2.6. What are the disadvantages of positional negotiating?

Inflexibility: A positional approach does not lend itself to creative solutions
because the parties are too concerned to remain as close as possible to their
opening positions. There is no place for flexibility in the negotiation, save
for the degree to which parties may be prepared to move from their
extreme positions.

Damages relationships: The nature of this negotiating style is such that it is
unlikely to enhance relationships between the parties involved. Indeed, it
may very well damage and even destroy existing relationships. Parties need,
therefore, to consider how important it is to maintain the relationship. In
the commercial world this is often a major consideration since damage may
restrict the possibility of future or repeat business.

Failure rate: If all parties adopt a positional approach, the negotiation may
be very short lived. Yet the parties may genuinely want to reach agreement
with each other and just not know how to go about it.

Achieves unsatisfactory / inefficient agreement: Although parties may reach
agreement by being positional, the agreement is likely to be somewhat
arbitrary based on the extreme starting points of the parties. Moreover, as
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the focus is on people's respective rights, any agreement reached will likely
fail to satisfy any of the parties to any great extent.

Too predictable: People's understanding of this style is such that no opening
positions are likely to be taken seriously. So there is no incentive for a party
to 'break the mould' and open with what they really want. No other party
would believe them!

Is tedious: Positional negotiating does not make for an overly stimulating
time on account of the predictability, inflexibility and simplicity.

1.3. The Integrative Approach
Before considering Principled Negotiation it is worth examining integrative
negotiation and the Harvard Negotiation Project (HNP) since Principled
Negotiation is a result of both integrative negotiation and the (HNP).

The integrative, collaborative or problem-solving approach to negotiation
has been described as "enlightened self-interest," rather than the
"egocentric variety." This approach consists of joint problem-solving, where
gains are not necessarily viewed as at the expense of the other party.

1.3.1. Assumptions of the Integrative Approach

There is a different view behind the integrative approach to negotiation.
The primary assumptions of the integrative approach are the following:

Some common interests exist between parties;
Negotiation is benefited by a full discussion of each participant's
perspective and interests; and
We live in an integrated and complex world and our problems can
be best resolved through application of our best intelligence and
creativity.

1.3.2. Risks of the Integrative Approach

Risks of the integrative approach are based upon the common sense
observation that "it takes two to collaborate." If one party is unwilling to
participate in integrative, problem solving negotiation, the more
collaborative negotiator may put themselves at risk in the following ways:

The negotiator will be forced to either "give in" or adopt a
competitive stance;
The negotiator may see themselves as a failure if they do not
reach agreement; and
The negotiator lays themselves open by honestly disclosing
information that is not reciprocated.
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1.4. The Harvard Negotiation Project
The Harvard Negotiation Project's mission is to improve the theory,
teaching, and practice of negotiation and dispute resolution, so that people
can deal more constructively with conflicts ranging from the interpersonal
to the international.
The Project, or HNP as it is commonly known, was created in 1979.The work
of HNP routinely moves back and forth between the worlds of theory and
practice to develop ideas that practitioners find useful and scholars sound.
In general, HNP's work can be grouped into four categories: theory building;
education and training; real-world intervention; and written materials for
practitioners. A sampling of HNP activities in each category follows.
1.4.1. Theory Building
HNP is perhaps best known for the development of the theory of "principled
negotiation," as presented in Getting to YES: Negotiating Agreement
Without Giving In, by Roger Fisher, Bill Ury, and Bruce Patton. First
published in 1981, and revised and expanded in a tenth anniversary edition
(Penguin 1991), Getting to YES outlines a commonsense approach to
negotiation that has been read by millions of people in 25 different
languages. In clear, straightforward writing, Getting to YES shows
negotiators how to separate relationship issues from substance and deal
with the latter by focusing on interests, not positions; inventing options for
mutual gain; and using independent standards of fairness to avoid a bitter
contest of will.
1.4.2. Real-World Intervention
HNP frequently tests its theories in practice, often in the heat of some of
the world's most intransigent conflicts. From South Africa to Latin America,
the Mideast to the Balkans, HNP works with individuals and governments on
initiatives ranging from injecting a single idea at a crucial time to initiating
and framing an entire process for dealing with a conflict.
Recently an HNP technique called "facilitated joint brainstorming" was
tested with a high-level but unofficial group from Ecuador and Peru to
generate new options that both sides could jointly present to their
superiors. The conference led to a peace initiative that ultimately settled a
highly contentious border dispute that had persisted for 50 years and
resulted in numerous armed conflicts.
Of course you can find more at http://www.pon.harvard.edu/

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1.5. Principled Negotiation

Principled negotiation was a product of HNP and grew from the alternatives
to positional bargaining offered by the integrative approach. In their book,
Getting to Yes, Fisher and Ury set forth their concept of "Principled
Negotiation." Here is a brief summary of the main points of principled
negotiation:

Separate the People from the Problem
Focus on Interests, Not Positions
Invent Options for Mutual Gain
Select from Among Options by Using Objective Criteria
1.5.1. Separate the People from the Problem

Fisher and Ury suggest that we are all people first and that there are always
substantive and relational issues in negotiation and mediation. They
describe means of dealing with relational issues, including considering each
party's perception (for example by reversing roles); seeking to make
negotiation proposals consistent with the other party's interests; making
emotions explicit and legitimate; and through active listening.
1.5.2. Focus on Interests, Not Positions

Positions may be thought of as one dimensional points in a space of infinite
possible solutions. Positions are symbolic representations of a participant's
underlying interests. To find out interests, you may ask questions like:
"What is motivating you here?" "What are you trying to satisfy" or "What
would you like to accomplish?" You may also ask: "If you had what you are
asking for (your position), what would that experientially get you - what
interests would that satisfy?"

In negotiation, there are multiple, shared, compatible, and conflicting
interests. Identifying shared and compatible interests as "common ground"
or "points of agreement" is helpful in establishing a foundation for additional
negotiation discussions. Principles can often be extrapolated from "points of
agreement" to resolve other issues. Also note that focusing on interests
tends to direct the discussion to the present and future, and away from the
difficulties of the past. If we have learned anything about the past, it is that
"we can not change it." The past may help us to identify problems needing
solution, but, other than that, it does not tend to yield the best solutions
for the future.
1.5.3. Invent Options for Mutual Gain

Before seeking to reach agreement on solutions for the future, Fisher and
Ury suggest that multiple solution options be developed prior to evaluation
of those options. The typical way of doing this is called brainstorming. In
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brainstorming, the parties, with or without the mediator's participation,
generate many possible solutions before deciding which of those best fulfill
the parties' joint interests. In developing options, parties look for mutual
gains.
1.5.4. Select from Among Options by Using Objective Criteria

Using objective criteria (standards independent of the will of any party) is
where the label "principled negotiation" comes from. Fisher and Ury suggest
that solution selection be done according to concepts, standards or
principles that the parties believe in and are not under the control of any
single party. Fisher and Ury recommend that selections be based upon such
objective criteria as precedent, tradition, a course of dealing, outside
recommendations, or the flip of a coin.
1.5.5. What are the advantages of principled negotiating?

Maintains relationships: It can be seen that this negotiating style is unlikely
to provoke the aggression that may be shown in positional negotiating. As
the emphasis is on mutually beneficial agreements, there is no need for
undue competitiveness. Parties can negotiate in an atmosphere conducive to
ending on good terms with each other. Preserves a positive relationship.

Achieves satisfactory / efficient agreements: Principled negotiating can do
this because the parties don't limit themselves to the narrow confines of
whose' right is to prevail. The agreement can meet as many of the parties
needs as they have been prepared to reveal.

Flexibility: The nature of principled negotiating means that there can be
flexibility over what and who is included in the negotiation. As particular
interests become apparent, if needs be, other relevant parties can be
brought into the negotiation. Other disclosed interests may result in the
negotiation going off at a tangent that could not have been anticipated
beforehand.

Achieves agreements: The characteristics of principled negotiating should
result in agreement more often than not. This style allows for at least
partial agreement whereas positional negotiating does not. Partial
agreement stands a good chance of subsequently leading to agreement on
everything or a decision not to pursue the unresolved matters.

Can redress power imbalances: Notwithstanding a significant power
imbalance, principled negotiating may establish that interests of the
powerful party make their dependence upon the less powerful party
surprisingly strong.

Stimulating: This negotiating style does not have the predictability
associated with the positional approach. Parties have scope for achieving
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comprehensive, satisfying agreements, which can provide for challenging
negotiations.
1.5.6. What are the disadvantages of principled negotiating?

Time: This type of negotiating can take some time to reach a settlement.
The ultimate result should justify the time spent but parties engaged in
principled negotiating may need to be prepared to exercise patience.

Complexity: It can be seen that principled negotiating is far more complex
than its positional counterpart. More effort will be required of parties both
in preparing for and during the negotiation. It may take a number of
attempts before people feel comfortable negotiating in this way, especially
for those people who regard themselves as having a good track record with
their positional bargaining approach.

Cost: Since it can take longer and is likely to demand, overall, more man
hours, it may be seen as being the more expensive option. However, the
cost should be looked at in the context of the whole negotiation and, we
have seen that the end result should be a much better agreement than
would otherwise have been achieved.
1.5.7. Some Issues in Principled Negotiating
What if the other party is more powerful? - Developing a BATNA

In the event that the other party has some negotiating advantage, Fisher
and Ury suggest that the answer is to improve the quality of your "best
alternative to a negotiated agreement" (your BATNA). For example, if you
are negotiating for a job and want to make a case for a higher wage, you
improve your negotiating power by having another job offer available, or at
least as a possibility.
What if They Won't Play or Use Dirty Tricks?

Fisher and Ury's answer to the resistant competitive negotiator is to "insist"
on principled negotiation in a way that is most acceptable to the other side.
The principled negotiator might ask about the other sides concerns, show
he or she understands these concerns, and, in return, ask the competitor to
recognize all concerns. Following the exploration of all interests, Fisher and
Ury suggest inducing the competitive negotiator to brainstorm options and
to think in terms of objective criteria for decision-making.

Another way of thinking about encouraging principled or integrative
bargaining is to think in terms of matching, pacing, leading and modeling.
To get a negotiator to shift orientations, it is critical that they first
experience themselves as fully heard in terms of content, intensity and
emotion. By so matching and pacing with a negotiator (asking a few
25
clarifying questions), the negotiator will become more open to your lead
and modelling of productive means of negotiating.
1.5.8. Converting Positions to Interests to Positive Intentions

Negotiating parties tend to come to negotiation with well-rehearsed
positional statements about the truth of the situation. As wise negotiators,
we know that we want to assist all parties to get below their positions to
achieve a full understanding of their respective interests. If you view
negotiating parties as, essentially, survivors, wanting to improve their
situations, you may be able to assist negotiating parties to recognize that
even the most difficult interests, like revenge and anger, can be understood
in terms of positive intentions, such as a desire for acknowledgment and
respect. So reframed, the mediation effort can become a joint search for
mutually acceptable solutions to the parties identified positive intentions.
This reframing of the entire mediation effort can dramatically shift the
entire atmosphere of your negotiation.

1.6. Negotiation Power

Negotiation power can be defined as "the ability of the negotiator to
influence the behaviour of another. Commentators have observed a variety
of aspects and qualities of negotiation power. It is important to take note of
these various aspects and qualities of negotiating power: a number of
aspects and qualities of negotiating power that have been identified
include:

Negotiating power is relative between the parties;
Negotiating power changes over time;
Negotiating power is always limited;
Negotiating power can be either real or apparent;
The exercise of negotiation power has both benefits and costs;
Negotiating power relates to the ability to punish or benefit;
Negotiating power is enhanced by legal support, personal
knowledge, skill, resources and hard work;
Negotiating power is increased by the ability to endure
uncertainty and by commitment;
Negotiating power is enhanced by a good negotiating relationship;
Negotiating power depends on the perceived BATNA; and
Negotiating power exists to the extent that it is accepted

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1.7. Basic Negotiation Tactics

Important negotiation tactics include:

Preparation for Negotiation
Opening Offers
Stages of Negotiation
Strategies and Ethics

1.7.1. Preparation

There are only three things which matter in negotiation: preparation,
preparation and preparation.

To facilitate that preparation a framework of questions which skilled
negotiators ask includes:

What are the (hypothesised) causes of conflict?

What range of interventions may be helpful?

Needs, Concerns and Goals

What are each party's needs, concerns and goals?
Which of these need urgent attention?
Rank needs, concerns and goals from vital to desirable,
What needs, concerns, and goals are apparently shared; independent; or in
conflict?
What is WATNA; BATNA and PATNA for each party?
Facts

What are the alleged facts?
What is the evidence supposedly supporting the alleged facts?
What facts are agreed upon?
What degree of clarity on agreed, disputed and missing facts is necessary for
advice/negotiations to begin?
Rules and Objective Criteria

What range of rules and precedents may apply to this situation ?
What are the standard arguments to and fro arising from these
precedents?

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Outcomes

What range of outcomes are possible -best to worst? Lateral thinking?
What is client's targeted or preferred outcome?
What outcomes will be resisted (the resistance point)?

Dynamics

Who should engage in preliminary meetings (for example, lawyers, parties,
experts)?
Who should be present; who should not be present?
What is known about the preferred negotiation style of all parties involved?
What authority to settle does each party have? What influential people exist
in the background?
What are past patterns of interaction? What fears exist about a negotiation
meeting?
What documents need to be prepared/submitted/read by whom? By what
deadlines'?
To what extent can complex alleged facts, evidence, arguments pro and
con, precedents, interests and needs and agreements be summarised
visually?

1.7.2. Opening Offers
Two vital and interrelated questions for practising negotiators (and for
researchers attempting to systematise and measure negotiator behaviour)
are:

Who should make the first offer?
What form should the first offer take?

Anecdotally, many negotiators predictably try to avoid making the first
offer; or begin with offers or respond to offers with an exaggerated ambit
claim.

What form should the first offer take?

There are many ways to open negotiations, three common ones are:

soft high (the maximalist opening), claim to be soft and yet open
as high as possible in the hope that the other side will quickly
move to a point within the bargaining zone;
firm reasonable (the "equitable" opening), claim to be firm and
that the opening offer is an equitable i.e. fair offer;
problem solving, suggest that the negotiation is to solve a common
problem via objective assessment.

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Each opening has a number of advantages and disadvantages. It is essential
that skilled negotiators:

know how to open by anyone of these three methods.

even thought they may have a preferred style, are able to use all
three openings with confidence.

practise in damage-free simulations using alternative methods.

negotiate with the "opposition", before the first offers are made,
about which of the three forms of opening is most appropriate.
(This may require considerable education of "the opposition", few
are experienced in this approach and may feel uncomfortable, a
skilled third party facilitator can often help)

be able to articulate openly the well-known advantages and
disadvantages of each form of opening.

openly or by known coded messages identify to the other side
which of the three openings appears to have been used. For
example, negotiators use a number of codes to indicate a high soft
opening:

On the current facts, our client would be prepared to settle for...

Our client is claiming ...

1.7.3. Stages of Negotiation

Empirical studies of negotiation behaviour suggest that there are
predictable stages through which most negotiations pass. Obviously) there
are many variables which affect the timing of each stage. These four stages
(described by different terminology by different researchers) are:

Stage 1: orientation and positioning;
Stage 2: argumentation, compromise and search for alternative solutions;
Stage 3: emergence and crisis;
Stage 4: agreement or final breakdown.

1.7.3.1. Stage One

Working relationship established
Initial negotiating positions adopted

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1.7.3.2. Stage Two

Argument and persuasion
Search for alternative solutions
Concession making

1.7.3.3. Stage Three

Pressure for agreement or deadlock builds
Crisis occurs

1.7.3.4. Stage Four

Deadlock or basic agreement occurs
Wrap up details

Exercise

The four observed stages are worthy of further thought, in terms of a recent
negotiation with which you have been involved:

What factors speed up or slow down the stages?
How can the third (crisis) stage be managed?
What management styles appear to be more or less effective?

1.7.4. Strategies and Ethics
The current interest in studies of negotiation and systematisation of
negotiation behaviours arises partly out of the realisation that knowledge is
power. And where there is access to power, there can be abuse of power.

Accordingly there is considerable complementary interest in most
professions in ethical standards and discipline in reaction to negotiating
behaviours. While ethical standards will continue to be debated, some
professional negotiators (including lawyers) and researchers have attempted
to systematise a range of strategies to use in anticipation or response to:

lying and exaggeration;
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bluffs and threats;
stalling;
non-disclosure;
add-ons;
obscurantist behaviour about facts or precedents.

Other important strategic questions include:

Who should "open" the negotiations?
What style of negotiation is appropriate to the transaction or conflict?
When should negotiation styles be changed?
When and how should litigation be run parallel to negotiations?
When should negotiation be (temporarily) terminated?

The four basic rules of thumb for legal negotiators developed by the Centre
for Dispute Resolution at Pepperdine University
http://law-www.pepperdine.edu/straus/

are:

Begin reasonably.
Retaliate whenever the other party is unreasonable.
Communicate clearly and constantly.
Forgive, but never forget.

1.8. The Last Gap

What is the last gap in a negotiation? It is the last step necessary to reach an
agreement between the negotiating parties. Often that last gap or last
increment emerges after long and exhausting negotiations which have led to
agreement on all issues but one. For example, that one issue may be:

How to cross the difference of 600 or 1 million in the parties'
"final" offers?

Most negotiators and business people can relate horror stories with humour
and/or anguish about clients becoming stuck on the last issue of a lengthy
negotiation. Individuals can tell how they themselves have offered to write
a cheque to cover the last gap in order to help the disputants end the drawn
out negotiations and almost invariably the disputants refuse the offer as a
matter of principle.
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1.8.1. The Importance of the Last Gap

Why does the last increment or last issue assume such importance and so
often anecdotally provide a stumbling block to a negotiated settlement?
There are a number of possible explanations:

The last dance -final loss of the conflict or the relationship;
Unfinished emotional business;
The last straw- "I have given up so much already";
Sense of having been tricked;
Skilled helpers attempt to prove "worth";
Recriminations for lost time and money;
1.8.2. The Last Dance

Negotiations have often been compared to a dance, where one or both
parties circle one another apparently reluctant to end the process.
Particularly in family disputes, a settlement represents the final loss of the
relationship and is therefore often avoided.

The avoider may need to be challenged privately by a trusted adviser about
his or her apparent need to avoid that final loss of the relationship. Some
patience and new strategies are needed as the avoider weaves and ducks
around the resolution of the last issue with a series of "oh but" statements.

The most clinging form of the last dance has been described by Isolina Ricci
as negative intimacy This occurs where one or both parties are finding
meaning to life by being a martyr, or by being in constant conflict. A
settlement represents loss of meaning." Thus the last gap will never be
crossed but will be preserved. Even if the other party concedes the last gap,
the negatively intimate negotiator will create a new last gap, known as an
add on For example, just as agreement is apparently reached:

There's something else I want to raise...; There's one more thing that
has to be done 'I want an apology.

1.8.3. Unfinished Emotional Business

The last gap may represent a cry by one or both parties that there are some
unfinished emotional issues between the disputants. Commercial reality or
common sense does not prevail for good reasons.

"We cannot allow this dispute to be nominally 'finished' when one major
issue has not even been discussed, let alone resolved namely my sense of
anger, devastation, guilt or powerlessness. I will hang on to these
negotiations and to your presence in this room until my feelings are
32

acknowledged, expressed or healed, or diminished to a tolerable level of
pain."

Thus once again, jamming on the last gap may have nothing to do with the
substance of the last gap. Rather it may be a cry for help

The dominant method of negotiation in Western cultures appears to be
positional bargaining. Each party makes an extreme claim and- by gradual
increments moves towards a resolution point somewhere between those
extremes. Repeat players such as corporations are experienced in playing
this game.

However, one-off or less experienced negotiators tend to go through
disappointment and anger as they see their original claim whittled away by
one concession after another. This is particularly so where they believe that
their original offer was reasonable, or at least not unrealistic.

At the end of several rounds of mutual concessions, both (now angry)
negotiators may have a strong sense that each has conceded so much
already so much has already been "lost" -without losing yet again on the last
issue. Accordingly, each disappointed disputant digs in and insists that the
other concede on the last issue. "I want you to give something today as I
have already gone way past my bottom line. Be reasonable! each disputant
echoes to the other.
1.8.4. The Last Straw

Some negotiators may feel intensely that this last impasse is the last straw
they have been steamrolled all day and are finally putting up a stop sign to
preserve some sense of integrity. A dramatic walkout may also be staged or
threatened.

The walkout relieves the pressure of the negotiation room, avoids the last
concession, demonstrates to all how intensive the pain is, and may inflict
some pain on the other side for his or her "unreasonableness".

Negotiators should be able to anticipate the walkout and normally have a
variety of strategies ready to prevent or delay its occurrence. This is
because a walkout enables each side to characterise the other as
"unreasonable" -one for unreasonably "causing" the termination of the
meeting, the other for immaturely exiting. Each party is stereotyped and a
new cause for a relationship conflict is founded. Additionally, after a
walkout it is difficult to muster enthusiasm, cash and timetables for another
face-to-face meeting. Strategies to avoid the last gap, including preventing
walk-outs are included at 1.9 below.

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1.8.5. Sense of Having been Tricked

Some negotiators sense that they have been tricked when the negotiations
reach the last gap, and someone predictably suggests split the difference.
This is because they believe that their first offer was reasonable, whereas
the other parties' first offer was wildly exaggerated. The standard process of
incremental concessions has left the range of offers biased towards the
exaggerated opening offer.

The person who perceives that he or she opened reasonably will often be
fuming for being punished for his or her reasonable behaviour. This
pattern of behaviour of course encourages some experienced negotiators
avoid opening with reasonable offers.

Even more experienced negotiators will tend to discuss how negotiations
should open: firm reasonable or soft high, before the process commences.

1.8.6. Negotiators Need to Prove Worth

The last gap is sometimes a sticking point as the negotiators want to win
that gap both to establish their negotiation skills and if they are
independent skilled helpers, to pay their own fees. Clients will face triple
disappointment if they "lose" their expected outcome, "lose" the last gap,
and then have to pay fees of skilled helpers (such as lawyers and
accountants) from their diminished share. Lawyers understand the
marketing need to justify their fees and to support disenchanted clients who
will be their main source of publicity for future clients. Therefore some
lawyers may feel the need to negotiate long and aggressively on the last
gap.

1.8.7. Recriminations for Lost Time and Money

Reaching the last gap sometimes brings home a depressing reality to one or
all the negotiating parties. They are about to settle for a deal that was
offered and rejected previously. Now they are about to settle for the same
figures with nothing to show for the extra tension, absences from work,
uncertainty and thousands of pounds of expenditure on fees. This pattern
reflects the negotiation adages that "the right offer at the wrong time is
the wrong offer", the negotiation dance takes time and money; disputes
settle when they are ready to settle -not before.

However, this loss of time and money will result in some angry statements
particularly by negotiators who are not repeat players:

34

We could have settled for these arrangements two years ago if only you
had been less greedy."

(To the lawyer) "I've spent another X thousand dollars on you - and what do I
have to show for it? Nothing!"

"I was willing to settle for that amount one year ago -but now you'll have to
pay all my legal expenses."

"Two years of pain and expense -for what? -only to make the lawyers richer."

(To the lawyer) "I wish you had pushed me to agree two years ago when
similar figures were on the table."

(To the lawyer) "Your initial advice two years ago suggested that I'd get
much more than this paltry offer. And now you seem to be pushing me to
accept."

This is a familiar litany of recrimination for lost opportunity against self, the
other party, and the expert advisers. It can make navigating the last gap a
tense passage of blame and defence both within and across negotiating
teams.

1.9. Can the Last Gap be Avoided?
Are there any strategies whereby the last gap can be avoided in negotiations
or is it inevitable? This is certainly a worthwhile topic for empirical
research. How often is there a clear impasse over the last gap? What are the
variable factors which can be measured when the last gap is absent?

It may be that almost every negotiation necessarily involves a measure of
distributive and positional bargaining, and therefore a measure of pain and
pause. Nevertheless, a number of preventative strategies may help both
parties to prepare for the last gap so that it creates less of an impasse.

1.9.1. Education -Talk and Diagrams

A skilled helper (lawyer, counsellor, negotiator, mediator) can educate a
client concerning predictable patterns of negotiation and impasse by:

giving out literature or videos on negotiation;
repetitively giving educational lectures;
drawing negotiation diagrams;
listing the fifteen ways to cross the last gap so that the client can
consider these in advance (see 1.10).
35

This education process may cognitively help the one-shot client to:

reduce the sense of panic or anger when the last gap is reached;
feel some control over the stressful and mysterious negotiation
process.

However, the obvious should be stated -intellectual assent by a client to a
series of "educational" verbal propositions from the mouth of a skilled helper
may be a totally ineffective learning experience. The humbling adage is that
family law clients hear only every fifth word spoken by their lawyers.

1.9.2. Keep something in reserve

Some keep something in reserve in preparation for the prophesied road
block at the last gap. On standard negotiation principles, the something"
should be of high value to the offeree, but of lower value to the offeror.
Identifying these extras requires a problem solving search for the interests,
needs and goals of the other side.

1.9.3. Maximalist Opening Offer

Some practise open high, as it is easy to give up something; but very
difficult to take back". This homespun wisdom supposedly prepares for
concessions around the last gap, as the initial claim has been overstated in
value.

This rule of thumb is a two-edged sword. It may fulfil its aim, or may in fact
cause the very problem of deadlock it is aiming to predict and avoid. For
example, first, used against inexperienced negotiators, or against a one-off
party, it may cause considerable anger for being unreasonable or "out of
the range". It fulfils the prophecy that the offeror is unreasonable",
"hysterical" or greedy and negotiations are terminated.

A predictable pattern of stand-off, bluff, harassment, threat to use an
umpire, followed by eventual incremental concessions is resumed. Secondly,
used against an experienced negotiator or client, the maximalist claim is
usually readily identified, named and ignored. Thereby, the inexperienced
offeror lawyer or client may not have the skills to withdraw without loss of
face.

In the jargon of negotiators, the inexperienced offeror made the opening
offer "high" but not "soft". She or he failed to attach sufficient
understandable code words to the high opening.

Thirdly, used against an experienced party the maximalist claim may result
in a maximalist counter-claim. The following months or years of incremental
36

concessions will leave both parties with heightened tension over crossing the
last gap.
1.9.4. Problem-solving Opening Approach

Another preventative strategy is to open communications in a problem-
solving style. For example, My client has the following five goals. My
client has the following three concerns ...; This is our understanding of a
chronology of facts; We are willing to discuss possible options or solutions
but would first like you to set out your client's general or specific concerns
and goals; Can you provide us with the following information and
documents so that we can properly advise our client.

These classic problem-solving openings are designed to delay stating
positions, maximise communication, reduce suspicion and put as many chips
of value on the negotiating table as possible. In the jargon of the industry, it
is worthwhile spending time and skill to enlarge the pie so that packaged or
linked bargaining can then take place. The last gap is delayed by keeping all
issues unresolved by face-saving conditional and linked offers at different
levels of specificity.

It has been one of the myths of the ADR industry that this helpful problem-
solving approach will dispense with positional bargaining and the last gap.
This is clearly not correct. Even a packaged and linked multi-issue offer
eventually becomes specific in its terms, and at that point there will be a
last gap. We are getting closer but I can never drop my percentage below
55 per cent.

1.10. How to Cross the Last Gap in Negotiations

Apart from anticipating the last gap, what strategies are available to cross
this hurdle in negotiations? Firstly it is crucial to realise that there are
many solutions and there still is opportunity to negotiate about the most
palatable of these; to avoid a dramatic and premature walkout before all
the options have been considered.

Options for Crossing the Last Gap in Negotiations

Many methods exist including

Talk/try to convince
Split difference
Expanding the pie by subdividing the last gap
Expanding the pie by an add-on offer What if I moved on
Refer to a third party umpire
Chance flip coin
Chance draw from a hat
Transfer the last gap to a third party
37
Conditional offers and placating incremental fears What if I could convince
our side to...? How would you respond?
Pause and speak to significant others
Pause and schedule time for a specific offer
Defer division of last gap; divide rest
Sell last item at auction; split proceeds
Pick-a-pile; you cut, I choose
Skilled helper has a face-saving tantrum.

1.10.1. Talk/Try to Convince

A common response at the last one million pounds, or 10,000, is for one or
both negotiators to re-hash old arguments in an attempt to convince the
other party to give in. These arguments take various forms:

I have given up so much in these negotiations; now it's your
turn;
a lengthy filibuster re-iterating all the merits of the speaker's
claims, and the weaknesses of the agitated or glassy-eyed
listener;
an angry speech about how the listener's first offer was
outrageous, so he or she should make the last incremental
concession to be fair;
a lengthy speech about the cost of litigation, the costs already
incurred and the likelihood of settlement at the door of the court;
a detailed historical version of the concessions made to date in
the negotiation leading to the predictable conclusion that it is the
listener's turn to be reasonable and make the last concession;
a short but angry speech with express or implied threats about
walking out, stonewalling, scorched earth, subpoenaing relatives
or business associates;
a combination of some or all of these speeches.

Anecdotally, these speeches rarely appear to be directly successful in
crossing the last gap. The listeners may become inflamed to hear such a
one-sided presentation (yet again) so late in the day, and deliver a counter
speech or the speaker may back himself or herself into a positional corner.
Nevertheless, some degree of managed speech making at the last gap may
serve latent functions of catharsis, boredom, the last dagger, further
emotional pain, or attempted justification of perceived role and fees of a
skilled helper, or the farewell address. A managed last speech may be
important given the complex psychological functions that the last gap
appears to serve.
1.10.2. Split Difference

This method is commonly suggested where the last gap consists of money or
other divisible items It has the merits of simplicity that both parties lose
38

equally and that it is culturally commonplace. However, given the complex
psychological dynamics surrounding the last gap, splitting the difference
may be seen as too quick, part of an orchestrated plan of attack, or
involving another painful loss.

1.10.3. Expanding the Pie by Sub-dividing the Last Gap

The last increment can sometimes be divided in ways apart from an equal
split by dividing the time of use or time of payment. For example:

The last 10,000 can be paid over time in instalments;
The last 100,000 can be paid at a later date with an interest
component.
1.10.4. Expanding the Pie by an Add-on Offer

One party can attempt to overcome an impasse on the last increment by re-
opening "decided" issue, or adding another issue to the negotiating table.
In these ways, there is an attempt to prevent the last issue from being the
last. For example: If that last 10,000 is paid to me, I would be-willing to
redirect all old customers to you.

Obviously, it is not always easy to re-open or to discover extra value to
place on the bargaining table. One of the clear benefits of questioning and
listening skills is that a negotiator can develop ideas on the needs, concerns
and interests of the other disputant so that extra value can be put on the
table. Some negotiators begin bargaining with a positional style. When an
impasse is reached, they switch (or have a fellow negotiator switch) to an
interest-based problem-solving approach.

1.10.5. Refer to a Third Party Umpire

The impasse of the last item can be "resolved" by:
agreeing to refer the whole dispute to an arbitrator or to a judge;
agreeing to refer just the issue of crossing the last gap to an
arbitrator. A respected expert can be paid for two hours of his or
her time to come to a binding oral or written decision only on the
last 20,000.

Note:

In mediation, the disputants may request that a trusted mediator make a
recommendation or a binding decision on how the impasse should be
resolved. Most mediators respond to such requests with reluctance and
make speeches about neutrality. However, occasionally the parties manage
to persuade the mediator to accept one or both of those roles. In passing it
should be mentioned that judging and arbitrating have many different sub-
39
categories which can be set out for disputants to consider. These include
baseball arbitration (both parties submit a figure to the arbitrator who can
only choose one of the submitted figures); night baseball arbitration (both
parties submit secret and sealed offers; the arbitrator makes a decision and
opens the sealed offers; the offer closest to the arbitrator's decision is
binding); high-low arbitration (parties agreed to the range of outcomes; the
arbitrator can only decide within that range); scope arbitration (the
arbitrator is only authorised to decide upon a range of outcomes divided by,
say, 15 per cent; parties agree to settle within that range); on-the-papers
arbitration ( a cheap and quick decision-making process where there are no
oral presentations); early neutral evaluation (an expert gives a non-binding
assessment of the likely court outcome of a dispute).

1.10.6. Chance -Flip-a-coin
Chance provides an important option for deciding who gets the last gap.
This is because flipping a coin:
is cheap and fast;
involves an equal chance of winning or losing;
avoids loss of face by being "beaten" by other more personal
strategies;
is sometimes culturally acceptable in a gambling society;
provides a stark visual metaphor of going to court and also
reflects the educational conversations of many lawyers and
clients;
is so abhorrent to some risk-averse disputants that they return to
the remaining list of options with enthusiasm!

1.10.7. Chance-: Draw from a Range of Solutions

This is a alternative version of chance which avoids the all-or-nothing result
of flipping a coin. Several solutions are written out on slips of paper, placed
in a hat, and the one drawn out prevails. For example if the last increment
is 20,000) then ten slips of paper can be placed in a hat beginning with
2,000 and ending with 20,000 with gaps of 2,000 written on each slip of
paper. The drawer receives whatever number is on the drawn piece of
paper; the residue of the last gap goes to the other disputant.

Of course this method can be extended to a range of more complicated
alternative solutions.

1.10.8. Transfer the Last Gap to a Third Party

This option involves both parties agreeing to transfer the last gap to pay the
fees of skilled helpers such as lawyers or mediators, or to pay for renovating
a business before a sale.

40

Such transfers to third parties may have the clear benefits of mutually
avoiding a loss, and of wedding a third party to the solution chosen.

1.10.9. Conditional Offers and Placating the
Incremental Fear

Where a pattern of incremental bargaining has been' established each
disputant will usually be concerned about the consequences of initiating any
offer across the last gap. Why? Because any offer is likely to be whittled
away by a incremental counter offer. For example, if the last gap between
A and B is 20,000, and A offers to split the difference (10,000 to A), how
is B likely to respond? B is likely to respond, split the difference again only
5,000 to A. Thus there is a reluctance to make the first move, and the
Impasse remains intact.

Accordingly, some negotiators make exploratory conditional offers in an
attempt to placate the fear of incremental counter-offers. This works best if
there are at least two negotiators (for example, lawyer and client) on each
negotiating team.

Lawyer: What if I could persuade my client to make a split the-
difference offer would you guarantee that you wouldnt try to cut
down her offer?

Opposing Disputant: What do you mean?

Lawyer: Well I'm not willing to put the effort into persuading my
client against her wishes to modify her position if you're going to try
to cut her offer in half. She will then feel betrayed. I'm not willing to
put in the work to attempt to persuade her unless I know what your
response will be. And there are no guarantees I can persuade her .

Opposing Disputant: Let me talk to my lawyer about this in private for
a moment. We'll be right back.

Obviously, a negotiator attempting to discover the other sides willingness
to settle for a hypothesised offer can manipulate this option. However, the
offeree's response is also clearly conditional (if your client makes that
offer) and can be withdrawn readily. Moreover, raising any: suspicion of
manipulation will usually be counter-productive at such a late stage of
nearly successful negotiations.

1.10.10. Pause and Speak to Significant Others

The intensity of a negotiation or mediation session means that it is easy to
become weary, to lose perspective and to make a mountain out of a
molehill. Additionally, some people are cautious and are accustomed to
41
reflecting upon options available before making a commitment. Accordingly,
it is a helpful strategy to suggest a break to consider one or I more written
options, with a clear appointment to resume negotiations, and with
encouragement for each disputant to speak to specified trusted third
parties. Where a mediator is being used, it is often helpful for all disputants
to make contact during the break to clarify, brainstorm and hypothesise on
negotiation dynamics (for example, "What will be the likely response if I
make this offer?

1.10.11. Pause and Schedule Time for a Specific Offer

As a variation on the previous procedure, the parties can actually draft a
precise or general form of offer before the break is taken. This may, for
example, represent splitting the difference which is too difficult to
swallow during the negotiations.

A time and place is then agreed upon for one party to contact the other and
make the offer as drafted (for 'example, phone on Wednesday night
between 6 and 8 pm). Both agree not to haggle, but either to accept or
reject the ritual pre-planned offer and to return to the
negotiation/mediation table at a specified time with the result. This
procedure gives a concrete proposal, reduces the fear of incremental
haggling during the break, ritualises conflicted conversations, provides a
deadline, and allows the parties to return to the negotiation table knowing
what has been decided.

1.10.12. Sell the Last Item at an Auction; Split the
Proceeds

This option involves an agreement to sell the last contested item(s) at a
without reserve auction, usually with all parties free to bid. The most
determined bidder wins the item and the net proceeds of the auction are
then divided in portions agreed to beforehand.

1.10.13. Pick-a-pile

Where the last gap consists of a number of items, then the parties can be
offered the "pick-a-pile" option, which is well known to family lawyers. One
party agrees to divide the chattels into two lists of approximately equal
value and submit these lists to the other party by a deadline. The other
party then has a specified time in which to choose one list as his or her
share. Like dispute resolution by chance, this pick-a-pile option is so filled
with risk and tension that some disputants quickly reject it and return to the
list of" remaining options with some relief.
42

1.10.14. Skilled Helper has a Face-saving Tantrum

This option is rarely chosen by the disputants. However, some parties
comment confidentially during or after a mediation to a, mediator -"I wish
you would apply more pressure to us both; we are stuck". Accordingly, when
the last gap persists, some mediators try this option from their box of tools.
For example, with varying degrees of simulated anger, the mediator
comments: "I cannot believe it. You have both sat here for three hours and
patiently and successfully negotiated through four issues. Now you're about-
to throw it all away on this miserable bunch of paintings. You both really
disappoint me. I'm not going to let you out of here until you both do the
right thing and. ..etc etc."

This option may cause the mediator to lose reputation and two clients, or
may enable both parties to avoid any loss of face by making the last
concession. They can blame the mediator for "forcing" the last concession
(and rescuing them both from their painted-in corners).

This dramatic option may be particularly successful if the mediator has
gained the respect and trust of all parties (both lawyers and disputants)
over time.
1.11. Online Negotiation

As one might expect there are opportunities presented by the use of
negotiation via the Internet. There are many companies offering their
services as intermediaries and their servers as space for negotiation; these
are often secure negotiation rooms e.g.

http://www.browndavisclark.bigstep.com/aboutus.html

http://www.coolsolar.com/en/negotiation/default.asp

Online teaching of negotiation is also widely available try:

http://www.haas.berkeley.edu/Courses/BA252-1/home.html

1.12. Online Bidding

Ken Binmore talked of the online realtime bidding opportunities available;
one the most intriguing was airlines bidding on line in realtime for landing
slots at major airports.

43
1.12.1. Human (Employee) Online Auctions
The Internet has revived the art of the auction. Everything from an
old pair of socks once owned by Elvis to that rare 1970's original Abba
album can be had by the highest bidder. The concept is spreading to
specialty sites; there are auctions for antique photos, seafood, beads,
home appliances and even Internet advertising space.
One area for expansion is the possibility of auctioning people. That is
not a reference to anything illegal or an intro to a discussion of the
world's oldest profession. The auctioning of people and their talents
represents a revolutionary new way to find a job or employee.
Instead of merely posting a resume, jobseekers can let the market
bid to obtain their services. Employers, HR professionals and
recruiters being able to click around online to find the talent needed
for a special project in a remote location. It is a natural step in
evolving online economy.
Employee auctions began when a group of Information Technology
(IT) professionals put their services up for bid on Internet auction
giant eBay. Their experience led to the formation of bid4geeks.com,
a fledgling web site currently running more than 200 IT-related talent
auctions. Talent auctions have spread, but are still in their infancy. In
a research study conducted by myjobsearch.com in October 1999,
only two out of the top ten Internet job boards offered talent
auctions. The largest, Monster.com, is leading the early charge with
nearly 24,000 active talent auctions in progress.
BestjobsUSA.com, another leading jobs board, has introduced a
program called Work Exchange that offers a different angle on the
bidding concept. A freelance professional registers for the site and
surfs the available projects posted by different companies. The
companies post information concerning the scope of the needed
work, length of the project and their anticipated costs. Then the
freelancer bids on the project and the lowest bidder wins.
The talent auction business faced an uphill battle in gaining
mainstream acceptance. Just as there are millions more resumes
posted online than jobs, the number of auctions without bidders is
staggering. Of the 250 talent auctions surveyed by myjobsearch.com,
only *one* seller received a bid. At bid4geeks.com, the oldest
employee auction site, only 14 companies have placed bids out of an
available pool of over 200 jobseekers. These ratios hardly meet the
standards typical of successful auction web sites.
Mainstream acceptance of employee auctions is still patchy, but
there are signs the overall job market is ready to embrace this new
idea. The explosion in the work-from-home market, the huge demand
for IT professionals, and the marketing ingenuity of the
entrepreneurial professional make auction-style employment
enticing.
44

The US Department of Labor maintains a bank of statistics to support
these trends. The work-from-home and small business sector grew by
200% between 1997 and 2001. More than 45% of new jobs were IT-
related, it would be interesting to see this data revisited after the
dot.com crash.
The appeal to employers is obvious. It gives them a "try-before-you-
buy" option in obtaining new employees. In this world of part time
workers and telecommuting, talent auctions may represent a less
expensive means of recruiting. The size of a workforce within any
given company can literally change at will. In the fast paced
environment of changing industries clued in to earnings and stock
prices, auctions can be a powerful tool of management.
In the November 1999 issue of "PC Computing," respected high-tech
journalist Paul Somerson says employee auctions will be the next big
thing. Somerson writes, "most people may end up e-lancing" over the
Internet in the years to come. Talent auctions are but a beginning to
that transition.
1.13. Conclusion
Managers are becoming more sophisticated in their knowledge of negotiation
dynamics. This section has introduced
Negotiation Theory
The Harvard Negotiation Project; leading to a detailed
consideration on one text Getting to Yes and the process of
Principled Negotiation
How to settle the so-called Last Gap in negotiations
On Line Negotiations

In particular the section has systematised some of the reasons for the
difficulties experienced in crossing the last gap.

45
Summary

Identify key factors in negotiation

Positional Bargaining/Negotiation
Principled Bargaining/Negotiation

Most theorists talk of two negotiation theories and strategic approaches to
negotiation: Positional negotiation; and Principled negotiation. The terms are not
exclusive, the literature uses many variants.

Positional = competitive; compromise; Principled = interest-based; co-operative;
collaborative

The most effective negotiators will both approaches and employ a contingency
approach when deciding which to employ and when.

Evaluate methods for closing the deal
Getting to Yes
Negotiation Tactics/Strategy

The Havard Negotiation Project developed a theory of principled negotiation which
produced a famous book Getting To Yes with techniques to enable people to deal
with conflicts constructively.

There is much advice on tactics and strategy; perhaps the best piece of advice is
that only three things matter in negotiation:
Preparation, Preparation and Preparation

46

Determine (Knowing) when to walk way

The ability to walk away from negotiations is crucial and following the theory of
principled negotiation the BATNA is central to determining when to walk away.

The BATNA is key to making the most of existing assets. Power in a negotiation
comes from the ability to walk away from negotiations. Thus the party with the
best BATNA is the more powerful party in the negotiation.

Evaluate techniques for closing the last gap in negotiations

The last gap in a negotiation is the last step necessary to reach an agreement
between the negotiating parties.

Apart from anticipating and therefore avoiding the last gap there are a number of
strategies available to close the last gap. One powerful strategy is to employ a
skilled helper; if you cant find a skilled helper, Peter Fenn is available at a modest
fee.
47
Self-assessment Questions
1. Outline the major negotiation theories and strategies.

2. Consider how principled negotiation could have assisted in a recent
project with which you have been associated.

3. What are the common criticisms of principled negotiation.

4. Consider the techniques for settling the so-called last gap in
negotiation and assess how this would have helped in a recent project with
which you have been associated.

48

5. How could your organisation exploit the potential of on-line bidding

(a) as a participant

(b) as a provider for on-line bidding

Negotiation: Useful References

D Schon, The Reflective Practitioner (Jossey-Bass, San Francisco, 1983);
W Fisher and W Ury, Getting to Yes

49
Apendix A

Getting to Yes: Negotiating Agreement Without Giving In Roger Fisher and
William Ury

In this classic text, Fisher and Ury describe their four principles for effective
negotiation. They also describe three common obstacles to negotiation and
discuss ways to overcome those obstacles. Fisher and Ury explain that a
good agreement is one which is wise and efficient, and which improves the
parties' relationship. Wise agreements satisfy the parties' interests and are
fair and lasting. The authors' goal is to develop a method for reaching good
agreements. Negotiations often take the form of positional bargaining. In
positional bargaining each part opens with their position on an issue. The
parties then bargain from their separate opening positions to agree on one
position. Haggling over a price is a typical example of positional bargaining.
Fisher and Ury argue that positional bargaining does not tend to produce
good agreements. It is an inefficient means of reaching agreements, and the
agreements tend to neglect the parties' interests. It encourages
stubbornness and so tends to harm the parties' relationship. Principled
negotiation provides a better way of reaching good agreements. Fisher and
Ury develop four principles of negotiation. Their process of principled
negotiation can be used effectively on almost any type of dispute.

separate the people from the problem;
focus on interests rather than positions;
generate a variety of options before settling on an agreement;
insist that the agreement be based on objective criteria.

These principles should be observed at each stage of the negotiation
process. The process begins with the analysis of the situation or problem, of
the other parties' interests and perceptions, and of the existing options. The
next stage is to plan ways of responding to the situation and the other
parties. Finally, the parties discuss the problem trying to find a solution on
which they can
agree.

Separating People and Issues
Fisher and Ury's first principle is to separate the people from the issues.
People tend to become personally involved with the issues and with their
side's positions. And so they will tend to take responses to those issues and
positions as personal attacks. Separating the people from the issues allows
the parties to address the issues without damaging their relationship. It also
helps them to get a clearer view of the substantive problem. The authors
identify three basic sorts of people problems.

Differences of perception among the parties
Since most conflicts are based in differing interpretations of the facts, it is
crucial for both sides to understand the other's viewpoint. The parties
should try to put themselves in the other's place. The parties should not
50

simply assume that their worst fears will become the actions of the other
party. Nor should one side blame the other for the problem. Each side
should try to make proposals which would be appealing to the other side.
The more that the parties are involved in the process, the more likely they
are to be involved in and to support the outcome.

Emotions
Negotiation can be a frustrating process. People often react with fear or
anger when they feel that
their interests are threatened. The first step in dealing with emotions is to
acknowledge them, and to try to understand their source. The parties must
acknowledge the fact that certain emotions are present, even when they
don't see those feelings as reasonable. Dismissing another's feelings as
unreasonable is likely to provoke an even more intense emotional response.
The parties must allow the other side to express their emotions. They must
not react emotionally to emotional outbursts. Symbolic gestures such as
apologies or an expression of sympathy can help to defuse strong emotions.

Communication
Negotiators may not be speaking to each other, but may simply be
grandstanding for their respective constituencies. The parties may not be
listening to each other, but may instead be planning their own responses.
Even when the parties are speaking to each other and are listening,
misunderstandings may occur. To combat these problems, the parties should
employ active listening. The listeners should give the speaker their full
attention, occasionally summarizing the speaker's points to confirm their
understanding. It is important to remember that understanding the other's
case does not mean agreeing with it. Speakers should direct their speech
toward the other parties and keep focused on what they are trying to
communicate. Each side should avoid blaming or attacking the other, and
should speak about themselves.

Generally the best way to deal with people problems is to prevent them
from arising. People problems are less likely to come up if the parties have
a good relationship, and think of each other as partners in negotiation
rather than as adversaries.

Focus on Interests
Good agreements focus on the parties' interests, rather than their positions.
As Fisher and Ury explain, "Your position is something you have decided
upon. Your interests are what caused you to so decide."[p. 42] Defining a
problem in terms of positions means that at least one party will "lose" the
dispute. When a problem is defined in terms of the parties' underlying
interests it is often possible to find a solution which satisfies both parties'
interests.

The first step is to identify the parties' interests regarding the issue at hand.
This can be done by asking why they hold the positions they do, and by
considering why they don't hold some other possible position. Each party
usually has a number of different interests underlying their positions. And
51
interests may differ somewhat among the individual members of each side.
However, all people will share certain basic interests or needs, such as the
need for security and economic well-being.

Once the parties have identified their interests, they must discuss them
together. If a party wants the other side to take their interests into account,
that party must explain their interests clearly. The other side will be more
motivated to take those interests into account if the first party shows that
they are paying attention to the other side's interests. Discussions should
look forward to the desired solution, rather than focusing on past events.
Parties should keep a clear focus on their interests, but remain open to
different proposals and positions.

Generate Options

Fisher and Ury identify four obstacles to generating creative options for
solving a problem.

Parties may decide prematurely on an option and so fail to
consider alternatives.
Parties may be intent on narrowing their options to find the single
answer.
Parties may define the problem in win-lose terms,
assuming that the only options are for one side to win and the
other to lose.
A party may decide that it is up to the other side to come up with
a solution to the problem.

The authors also suggest four techniques for overcoming these obstacles and
generating creative options.

Separate the invention process from the evaluation stage.

The parties should come together in an informal atmosphere and brainstorm
for all possible solutions to the problem. Wild and creative proposals are
encouraged. Brainstorming sessions can be made more creative and
productive by encouraging the parties to shift between four types of
thinking: stating the problem, analyzing the problem, considering general
approaches, and considering specific actions. Parties may suggest partial
solutions to the problem. Only after a variety of proposals have been made
should the group turn to evaluating the ideas. Evaluation should start with
the most promising proposals. The parties may also refine and improve
proposals at this point. Participants can avoid falling into a win-lose
mentality by focusing on shared interests. When the parties' interests differ,
they should seek options in which those differences can be made compatible
or even complementary. The key to reconciling different interests is to "look
for items that are of low cost to you and high benefit to them, and vice
versa."[p. 79] Each side should try to make proposals that are appealing to
the other side, and that the other side would find easy to agree to. To do
this it is important to identify the decision makers and target proposals
52

directly toward them. Proposals are easier to agree to when they seem
legitimate, or when they are supported by precedent. Threats are usually
less effective at motivating agreement than are beneficial offers.

Use Objective Criteria

When interests are directly opposed, the parties should use objective
criteria to resolve their differences. Allowing such differences to spark a
battle of wills will destroy relationships, is inefficient, and is not likely to
produce wise agreements. Decisions based on reasonable standards makes it
easier for the parties to agree and preserve their good relationship. The first
step is to develop objective criteria. Usually there are a number of different
criteria which could be used. The parties must agree which criteria is best
for their situation. Criteria should be both legitimate and practical.
Scientific findings, professional standards, or legal precedent are possible
sources of objective criteria. One way to test for objectivity is to ask if both
sides would agree to be bound by those standards. Rather than agreeing in
substantive criteria, the parties may create a fair procedure for resolving
their dispute. For example, children may fairly divide a piece of cake by
having one child cut it, and the other choose their piece.

There are three points to keep in mind when using objective criteria.

1. Each issue should be approached as a shared search for objective
criteria. Ask for the reasoning behind the other party's suggestions.
Using the other parties' reasoning to support your own position can be
a powerful way to negotiate.

2. Each party must keep an open mind. They must be reasonable, and
be willing to reconsider their positions when there is reason to.

3. While they should be reasonable, negotiators must never give in to
pressure, threats, or bribes. When the other party stubbornly refuses
to be reasonable, the first party may shift the discussion from a
search for substantive criteria to a search for procedural criteria.

When the Other Party Is More Powerful

No negotiation method can completely overcome differences in power.
However, Fisher and Ury suggest ways to protect the weaker party against a
poor agreement, and to help the weaker party make the most of their
assets. Often negotiators will establish a "bottom line" in an attempt to
protect themselves against a poor agreement. The bottom line is what the
party anticipates as the worst acceptable outcome. Negotiators decide in
advance of actual negotiations to reject any proposal below that line. Fisher
and Ury argue against using bottom lines. Because the bottom line figure is
decided upon in advance of discussions, the figure may be arbitrary or
unrealistic. Having already committed oneself to a rigid bottom line also
inhibits inventiveness in generating options.

53
Instead the weaker party should concentrate on assessing their best
alternative to a negotiated agreement (BATNA). The authors note that "the
reason you negotiate is to produce something better than the results you
can obtain without negotiating."[p. 104] The weaker party should reject
agreements that would leave them worse off than their BATNA. Without a
clear idea of their BATNA a party is simply negotiating blindly. The BATNA is
also key to making the most of existing assets. Power in a negotiation comes
from the ability to walk away from negotiations. Thus the party with the
best BATNA is the more powerful party in the negotiation. Generally, the
weaker party can take unilateral steps to improve their alternatives to
negotiation. They must identify potential opportunities and take steps to
further develop those opportunities.

The weaker party will have a better understanding of the negotiation
context if they also try to estimate the other side's BATNA. Fisher and Ury
conclude that "developing your BATNA thus not only enables you to
determine what is a minimally acceptable agreement, it will probably raise
that minimum."[p. 111]

When the Other Party Won't Use Principled Negotiation

Sometimes the other side refuses to budge from their positions, makes
personal attacks, seeks only to maximize their own gains, and generally
refuses to partake in principled negotiations. Fisher and Ury describe three
approaches for dealing with opponents who are stuck in positional
bargaining.

First, one side may simply continue to use the principled approach. The
authors point out that this approach is often contagious.

Second, the principled party may use "negotiation jujitsu" to bring the other
party in line. The key is to refuse to respond in kind to their positional
bargaining. When the other side attacks, the principles party should not
counter attack, but should deflect the attack back onto the problem.
Positional bargainers usually attack either by asserting their position, or by
attacking the other side's ideas or people. When they assert their position,
respond by asking for the reasons behind that position. When they attack
the other side's ideas, the principle party should take it as constructive
criticism and invite further feedback and advice. Personal attacks should be
recast as attacks on the problem. Generally the principled party should use
questions and strategic silences to draw the other party out.

When the other party remains stuck in positional bargaining, the one-text
approach may be used. In this approach a third party is brought in. The third
party should interview each side separately to determine what their
underlying interests are. The third party then assembles a list of their
interests and asks each side for their comments and criticisms of the list.
She then takes those comments and draws up a proposal. The proposal is
given to the parties for comments, redrafted, and returned again for more
54

comments. This process continues until the third party feels that no further
improvements can be made.

At that point, the parties must decide whether to accept the refined
proposal or to abandon negotiations.

When the Other Party Uses Dirty Tricks

Sometimes parties will use unethical or unpleasant tricks in an attempt to
gain an advantage in negotiations such as good guy/bad guy routines,
uncomfortable seating, and leaks to the media. The best way to respond to
such tricky tactics is to explicitly raise the issue in negotiations, and to
engage in principled negotiation to establish procedural ground rules for the
negotiation. Fisher and Ury identify the general types of tricky tactics.
Parties may engage in deliberate deception about the facts, their authority,
or their intentions. The best way to protect against being deceived is to
seek verification the other side's claims. It may help to ask them for further
clarification of a claim, or to put the claim in writing. However, in doing
this it is very important not to bee seen as calling the other party a liar;
that is, as making a personal attack. Another common type of tactic is
psychological warfare. When the tricky party uses a stressful environment,
the principled party should identify the problematic element and suggest a
more comfortable or fair change. Subtle personal attacks can be made less
effective simply be recognizing them for what they are. Explicitly
identifying them to the offending party will often put an end to such
attacks. Threats are a way to apply psychological pressure. The principled
negotiator should ignore them where possible, or undertake principled
negotiations on the use of threats in the proceedings. The last class of trick
tactics are positional pressure tactics which attempt to structure
negotiations so that only one side can make concessions. The tricky side may
refuse to negotiate, hoping to use their entry into negotiations as a
bargaining chip, or they may open with extreme demands. The principled
negotiator should recognize this as a bargaining tactic, and look into their
interests in refusing to negotiate. They may escalate their demands for
every concession they make. The principled negotiator should explicitly
identify this tactic to the participants, and give the parties a chance to
consider whether they want to continue negotiations under such conditions.
Parties may try to make irrevocable commitments to certain positions, or to
make-take-it-or-leave-it offers. The principled party may decline to
recognize the commitment or the finality of the offer, instead treating them
as proposals or expressed interests. Insist that any proposals be evaluated
on their merits, and don't hesitate to point out dirty tricks.

55

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