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Negotiation Skills
6 April 2011

Facilitator
Farina Pane Hold master degree in finance from CSU, USA and bachelor degree in accounting from UGM Former Regional HR Director of Ernst & Young Far East Area Ten years as HR practitioner, 11 years as lecturer Currently lecturer at UPH and MIBT Indonesia, speaker at CHRP Founder of Farina & Associates Managing Director of SRI Executive Search hq Dublin

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Participants introduction

Name Company Position

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Workshop learning objectives

Understand how often we all negotiate and the benefits of good negotiation skills. Recognizes the importance of preparing for the negotiation process, regardless of the circumstances. Identify the various negotiation styles, their advantages and disadvantages. Develop strategies for dealing with tough or unfair tactics. Gain skill in developing alternatives and recognizing options. Have the opportunity to practice the how to of these skills in a supportive environment.

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Agenda

What is Negotiation? Types of Negotiators Negotiation Strategy Positional Bargaining Key Motivator to Negotiation The Successful Negotiator Negotiation Process Negotiation Essentials Inventing Options for Mutual Gain Fear Negotiating Challenges Dealing with Negative Emotions Basic Negotiating Tips Selling/buying tactics
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Course Style

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Ground rules
Switch BlackBerry and mobile off Actively participate, share knowledge and experiences Respect confidentiality within this environment Ask questions Return from breaks and breakout exercises on time Parking lot Any discussion items that cannot be answered during the course of this workshop will be placed in a parking lot and addressed later.

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Participants objectives

Write down one objective from attending this workshop in a piece of post it paper Put your post it on to pre-prepared flipchart

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Practical information

Attendance list Coffee breaks Lunch Toilets Certificate of completion

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What is negotiation?

Negotiation is a way of getting what you want from others. Negotiation is the process we use to satisfy our needs when someone else controls what we want.

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Share Your Negotiating Story

Tell your group the real life case on negotiation, everybody takes turn Create your flip chart by expressing the most important aspect of negotiation.

Use color. Use illustrations, symbols, mappings, etc. Be creative. This is not an art competition!

Be prepared to share your best story Prepare answers for the following:

How do you view negotiation at your work?

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Why negotiation skills are increasingly important

Dynamic nature of business: mobility, flexibility, decentralization Interdependence: integrate expertise and specialized services Competition: becoming intensive and inevitable Information age: computer technology, relevant information Diversity: nationalities, industry background, communication style

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How do you deal with conflict?

Class discussion Prework 1

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Types of negotiator

Soft negotiators want to avoid personal conflict and so make concessions readily in order to reach agreement. They want amicable resolution; yet often end up being exploited and felling bitter. Hard negotiators see any situation as a contest of wills in which the side that takes the more extreme position and holds out longer fares better. There is a third way to negotiate, a way neither hard nor soft. The method suggests that you look for mutual gains whenever possible.

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Negotiation strategy

Any method of negotiation may be fairly judged by three criteria:

It should produce a wise agreement if agreement is possible It should be efficient It should improve or at least not damage the relationship between the parties.

Most common method: positional bargaining Alternative method: win win

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Positional Bargaining

Is a negotiation strategy that involves holding on to a fixed idea or position, of what you want and arguing for it and it alone, regardless of any underlying interests. Classic example:

Proprietor and customer over the price of an item Customer has a maximum amount she will pay Proprietor will only sell over a certain minimum amount each side starts with an extreme position and proceed from there to negotiate and make concessions.

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Negotiating Around Fixed Positions

Probe for the beliefs and goals behind the fixed position. Example of a fixed position: I will not agree to outsource, regardless of savings Surface goal: Not to be burned the way we were 5 years ago Underlying belief: Work is controllable if we do it in-house Underlying goals: To have control, stability, minimum risk, and not have to lay-off anyone. Underlying realities: Managing this work in-house is a costly pain, and not our core skill. These people can be redeployed on urgent backlog.

Now you have the basis for analysis of alternatives, risks, contingencies, develop pros and cons, then negotiate!

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Debrief
Why positional bargaining is often problematic?

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Arguing over positions produces unwise arguments

You tend to lock yourself into it The more you clarify your position and defend it again attack, the more committed you become to it The more you try to convince the other side of the impossibility of changing your opening position, the more difficult it become to do so Your ego becomes identified with your position You now have the interest in saving face Any agreement you reach must be explained in light of your position When attention is paid to positions, less attention is devoted to meeting the underlying concerns of both parties Agreement becomes less likely

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Arguing over positions endangers ongoing relationship

Positional bargaining becomes a contest of will Each negotiator asserts what he will and wont do The task of jointly devising an acceptable solution tends to become battle Each side tries through sheer will power to force the other to change its position Anger and resentment often results as one side sees itself bending to the rigid will of the other while its own legitimate concerns go unaddressed Positional bargaining then strains and sometimes shattered the relationship between the parties. Bitter feelings generated by such encounter may last a lifetime.

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Being nice is no answer

Many people recognize the high costs of hard positional bargaining they hope to avoid them by following a more gentle style of negotiation Instead of seeing the other party as adversaries, they prefer to see them as friends Rather than emphasizing a goal for victory, they emphasize the necessity of reaching agreement In a soft bargaining game, the standard moves are to make offers and concessions, to trust the other side, to be friendly and to yield as necessary to avoid confrontation

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Two styles of positional negotiating strategy

Soft
Participants

Hard

are friends Participants are adversaries The goal is agreement The goal is victory Relationship is reached by making Relationship is condition to concession demand concession Be soft on people and problem Be hard on people and problem Trust other Distrust other Make offers Make treats Disclose your bottom line Mislead as to your bottom line Accept one sided losses to reach Demand one sided losses as the agreement price of agreement Insist on agreement Insist on your position Try to avoid conflict Try to win a contest of will Yield to pressure Apply pressure
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There is an Alternative!

People: separate the people from the problem Interest: focus on interests, not positions Options: generate a variety of possibilities before deciding what to do Criteria: insist that the result be based on some objective standard

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LUNCH BREAK
Be back to this room at 13:00

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Negotiation myths
1)
2) 3) 4)

Good negotiators are born Experience is a great teacher Good negotiators take risks Good negotiators rely on intuition

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The successful negotiator

They see possibilities rather than problems. They keep an open mind. They have confidence in their own abilities (or act like they do). They are willing to listen. Their egos dont get in the way of a win/win solution. They are creative and ready to consider ways of doing things differently.

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Understanding Key Motivators

Think back to the last time you were blindsided by an unexpected motivator. What was it? Typical tangible motivators: Fiscal impacts (Enterprise & for their own or department) Workload/Overtime/training/vacation impact Contractual/Organizational issues, etc Less Tangible: Desire to be heard and have their needs acknowledged Desire to save face/look good in the eyes of others Resistance to change (fear of unknown/untried) Desire to satisfy their own or bosses hidden agenda Biases, dislikes, ethnic customs, political alliances, etc Emotional (and why should they trust you?) TIP: Learn to read body language
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Common Negotiating Mistakes

oWeak knowledge of key motivators oPoor handling of Alternatives oFailure to fully acknowledge the concerns of others oImpatience/ Poor timing oAllowing emotions to escalate oNegotiating with the un-empowered oPoor close

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Negotiation Process
1.

2.

Prepare before beginning to negotiate gather as much information as you can Know what you want when negotiation:

BATNA: best alternative to negotiated agreement WAP: and your walk away point

3.

4.

5. 6.

Listen to what is being said know your own HOT BUTTON what makes you react Communicate clearly when negotiation: use words and body language to send unspoken messages Know when to pause when negotiating Know when to close the deal do not rush
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Preparing a negotiation
Win-win negotiation preparation sheet

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Know Your Hot Buttons

Subject Who Exercise: List the last 3 discussed pushed your your buttons? Why you felt Next time times did you someone pressed feel Hot Button. I will.. manipulated?

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Timing Factors
Minimize spontaneous (unprepared) negotiations Watch for bad times to avoid (or finish by) Seek an adequate time slot Take the time to establish rapport/ice-break Establish common goals and understandings Know when to be silent ( hit the pause button) Know when to close Know the effect of a delayed vs expedient decision Be prepared to adjourn if antagonism cant be defused or more research is required Allow sufficient time for advanced review of key material by involved stakeholders
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Location Factors

Seek a site conducive to negotiating: Free from interruptions/distractions/noise Comfortable (seating, temperature, lighting, etc) Appropriately equipped (flip chart? Table space?) Non-threatening (equitable seats, etc) Culturally appropriate Calming (soft tones, possibly carpeted) Light refreshments (breaking bread together can be a clincher)

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How to invent creative options

Separate inventing from deciding. Invent first, decide later! Apply effective brainstorming principles: Design your purpose Design an informal atmosphere Choose a facilitator to keep the group on track Clarify ground rules: "no criticism; "off the record Broaden the options on the table. Expand the most promising ideas from the brainstorming session. Invent agreements of different strengths. If you can't agree on substance, perhaps you can agree on procedure. Change the scope of a proposed agreement - put it in smaller or manageable units. Look for mutual gain by expanding the pie. Avoid: "less for you, more for me" thinking. Identify shared interests.
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Four major obstacles inhibit inventing options:

Premature judgment Searching for the single answer The assumption of a fixed pie Thinking that "solving their problem is their problem.

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Handling of Alternatives

Being Proactive with Alternatives can: Help position the recommended solution Reduce wheel spinning Speed decision making Increase Executive appeal and credibility But there are dangers advancing alternatives If alternatives are premature or not well considered If intangible motivators not satisfied Trust not established

Tip: maximize advanced dialogue with key interest groups (except where prohibited).
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Selling techniques
1. 2.

3. 4. 5. 6. 7. 8.

9. 10.

Have an alternative negotiate with freedom of choice Negotiate when the sale is conditionally agreed, not before Aim high Let the other side go first on price List all of the other sides requirements before negotiating Trade concessions dont give them away Keep the whole picture in your mind Prepare and keep looking for variables (tradable concessions for both sides) Keep accurate notes Summarise and clarify the negotiation as you go
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Six Basic Negotiating Tips

1.

2. 3.

4.

5.

6.

Never discuss settlement terms until the end of the process Discover the term parameters of the other person Try to get the other person to make the first offer or proposal Prepare before meeting by considering why you are negotiation, what you expect to gain, why it is important to you, and what you expect to have to offer Test the market: get comparables, talk with others, establish reasonable parameters Be aware when to close the deal
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Fear

The Fear of Humiliation Fear of Failure Fear of Rejection Fear of Powerlessness

and the reason is: Lack of preparation Not understand the process of negotiation Not knowing the strategy and tactics that can be employed during the negotiation AND HOW TO OVERCOME???
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Challenges to effective and efficient negotiations

Adversarial tactics Piecemeal thinking Tedium High cost Irrational decisions Complexity Win-lose outcomes

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Dealing with negative emotions

To overcome our anger we have to recognize it isnt going to get us what we want. Remain calm in the face of all these challenges. Try to maintain emotional distance Learn how to defuse tension Know your hot buttons

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Personal development planning

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Thank you
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