Zagreb, Croatia Influence and Negotiation By Andre’ Harrell Head of International Sales & Operations
WelcomeWelcome to the Influence and Negotiation Training Program.As an account manager, your ability to influence and negotiate both internally andexternally is critical to your business success. This skill is natural to some andmore difficult for others. But like many soft skills, influence and negotiation takestime to master and requires continuous learning, implementation, and refinementby anyone who has customers.As one of your key competencies, this program has been developed tospecifically focus on influencing and negotiating skills and how to apply theseexpert management principles in your day-to-day activities.There are countless books and sources on this topic in the marketplace. Whilemany of these sources are useful, it is impossible to review them all in onetraining program. Therefore, the content in this module discusses a few keyprinciples centered on “Principled Negotiation,” developed by the HarvardNegotiation Project -- a practical, proven, practical strategy best suited for on-going business relationships. Training Goals • Provide you with a background and working knowledge of select influencing and negotiating concepts • Help you refine and improve your influencing and negotiating skills • Help you relate these concepts to the account management role using practical applications
The Roots of Principled NegotiationPrincipled Negotiation was developed by the Harvard Negotiation Project, aresearch project at Harvard University that works on negotiation problems andproduces improved methods of negotiation and mediation.It is part of the Program on Negotiation at Harvard Law School, a consortiumof scholars and projects from Harvard, MIT, Simons, and Tufts working toimprove the theory and practice of conflict resolution.These practices have been used successfully at the highest levels ofinternational diplomacy as well as in common business practice. PrincipledNegotiation was chosen for this training because it is particularly effective inbusiness negotiations.The Principled Negotiation method is further explained in the book Getting toYes, by Roger Fisher and William Ury, which is the main source of content forthis module.
Influence and Negotiation Competencies Key FactorsPersuades others to pursue positive actions and structures win- 1. Leverages resourceswin agreements to achieve mutually agreed upon goals, 2. Marketplace selling/pull throughmaximize business results, and maintain strong relationships strategies 3. Negotiates win/win Stage I (Acquiring/Contributing) • Utilizes resources (internal and external) that result in gaining support and overcoming resistance in order to meet customer needs • Coordinates, implements, and monitors marketplace selling strategies for key markets and accounts with team members • Actively negotiates with accounts and sales teams to achieve win-win results • Maintains and enhances positive relationships throughout the course of negotiations • Strives for balance between customers’ and OMP goals Stage II (Fully Functional) 1. Identifies new resources and creative applications, with appropriate risk assessment to meet company and customer goals 2. Successfully influences sales teams to implement pull/push through actions that build business 3. Demonstrates a successful track record of positive negotiations in key business accounts 4. Maintains positive relationships at the conclusion of the negotiations 5. Anticipates other’s needs and reactions and takes appropriate steps to influence them •Influence and Negotiation Competencies (cont) Stage III (Expert/Leading) • Consistently applies resources to meet J&J and customer goals • Leads initiatives to develop new resources that create value, through appropriate risk taking, for accounts, sales teams, and brands • Works to master and transfer effective negotiation skills to others • Demonstrates respect for all parties and negotiates successfully, then follows through on all commitments • Influences others to recognize and accept mutual needs, works with other SMMs, RBDs, DMs and SRs to manage conflicting priorities
Positional Bargaining: OverviewThe problem of reaching agreement is that many negotiations bargain overpositions. Each side takes a position, argues for their position, and makesconcessions to reach a compromise. This method is called positionalbargaining, but does not tend to produce very good agreements.• Arguing about positions induces parties to lock themselves into positions that may result into less than optimal agreements.• Arguing about positions can take longer than focusing on interests because both parties may try to make several offers and counter-offers before they reach an agreement that satisfies their interests.• Arguing about positions may hurt an ongoing relationship between parties.• Positional bargaining is even more difficult where there are more than two parties.Positional bargaining can be appropriate for short-term, one-time agreements.An example might be haggling over the price of a used table at a flea market.For longer-term relationships, positional bargaining can be destructive. Let’stake a closer look.
Positional Bargaining: TypesThere are two types of positional bargaining: hard (“don’t give in”) and soft (“makeconcessions”). Characteristics and Outcomes Soft Approach Hard Approach • Participants are friends • Participants are adversaries • Agreement is the goal • Victory is the goal • Easily makes concessions • Concessions are demanded as a • Is soft of people and the problem condition of the relationship • Easily trusts others • Negotiations are hard on the people and • Changes positions easily the problem • Makes offers • Creates distrust of others • Discloses bottom line • Digs into your position • Accepts one-sided loss • Makes threats • Searches for an acceptable answer • Demands one-sided gains as the price of • Insists on agreement agreement • Avoids contests of will • Search for single answer: one you will • Yields to pressure accept • Insistent on your position • Becomes a contest of will • Pressure is applied Outcome: Outcome: You may make too many concessions You may damage the relationshipIn long-term relationships, neither approach will allow you to reach an optimalagreement. Positional bargaining is short-sighted, inefficient, neglects parties’interests, encourages stubbornness, and tends to harm the parties’ relationship.
Principled NegotiationIn principled negotiation, participants negotiate on the merits of the problem. As you will see inthe table below, principled negotiation places focus on the interests, needs and motivatingfactors of all parties to create a lasting win/win outcome. As such, it is a better approach thanpositional bargaining in most situations.Characteristics and Outcomes Characteristics Outcomes • Participants are problem solvers • Produces wise and efficient • Goal is wise outcomes agreements • Separates people from the problem • Satisfies the parties’ interests (win-win) • Is soft of people and hard on the problem • Are fair and lasting • Proceeds independent of trust • Improves the parties’ relationship • Focuses on interests, not on positions • Explores interests • Invents options for mutual gain • Develops multiple options from which to choose and decide on later • Emphasizes objective criteria over will • Yields to principle, not pressure
Key PrinciplesPart of your challenge is to get your customer to move frompositional bargaining to Principled Negotiation. You will be, ineffect, “changing the game,” which requires specificunderstanding of four key principles of negotiation success. • Separate the people from the problem • Focus on interests, not positions • Invent options for mutual gain • Use objective criteriaLet’s take a closer look at each principle.
Separate the People from the ProblemSeparating the people from the problem means separating relationshipissues (or “people problems”) from substantive issues, and dealing withthem independently. People problems tend to involve three basic typesof issues:PerceptionPerceptions are important because they define the problem and thesolution. While there is an “objective reality,” that reality is ofteninterpreted differently by different people in different situations. Whendifferent parties have different understandings of their dispute, effectivenegotiation may be very difficult to achieve.EmotionStrong emotions are both a cause of, and a result of, conflict. People inconflict may have a variety of strong and often negative emotions--anger, distrust, disappointment, frustration, confusion, worry, or fear.These emotions often mask the substantive issues in dispute. However,the emotions, too, are real and must be dealt with.CommunicationAlthough people communicate all the time, many have difficultycommunicating effectively during conflict. Negotiators may not bespeaking to each other, but may simply be grandstanding for theirrespective constituencies. Parties may not be listening to each other, butmay instead be planning their own responses. Even when both partiesare speaking and listening to each other, misunderstandings may occur.Let’s take a closer look at some useful tip in managing each issue. Generally, the best way to deal with people problems is to prevent them from arising. People problems are less likely to surface when the parties have a good relationship and think of each other as partners, rather than adversaries.
Separate the People from the ProblemSeven Strategies for Treating Perception Problems1. Try to see the situation from your customers perspective.You do not have to agree with their perceptions of the situation. But it is important tounderstand what they think and feel, and why they think and feel as they do.2. Dont deduce your customers intentions from your own fears.It is common to assume that your customer plans to do just what you fear they will do.This sort of suspicious attitude makes it difficult to accurately perceive your customersreal intentions; whatever they do you will assume the worst.3. Avoid blaming your customer for the problem.Blame, even if it is deserved, will only make your customer defensive. Even worse,your customer may attack you in response. Blame is generally counterproductive.4. Discuss each others perceptions.Explicit discussion of each sides perceptions will help both sides to better understandeach other. And discussion will help each side to avoid projecting their fears onto oneanother. Also, such discussion may reveal shared perceptions. Acknowledging sharedperceptions can strengthen your relationship, and facilitate productive negotiations.
Separate the People from the Problem This is part of theSeven Strategies for Treating Perception Problems (cont) previous page and is a clickable table.5. Seek opportunities to act inconsistently with your customers misperceptions.That is, try to disappoint your customers worst beliefs and expectations about you. Justas it is important for you to have an accurate perception of your customer, it is alsoimportant for them to have an accurate perception of you. Disappointing yourcustomers negative or inaccurate beliefs will help to change those beliefs.6. Give your customer a stake in the outcome by making sure they participate inthe negotiation process.If your customer does not feel involved in the negotiation process, then they areunlikely to feel involved in its outcome. Conversely, if they feel that the process is inpart their process, then they are more likely to accept its conclusion as their conclusion.7. Make your proposals consistent with the principles and self-image of yourcustomer.All the parties to a negotiation need to be able to reconcile the agreement with theirprinciples and self-image. That is, they need to feel the final agreement does notcompromise their integrity. Proposals which are consistent with your customersprinciples and which do not undermine their self-image are more likely to be accepted.
Separate the People from the ProblemSix Techniques for Managing Emotion1. Recognize and understand your own emotions as well as your customer’s.Is your customer angry, or just excited? Are you slightly worried, or profoundly afraid?2. Determine the source of the feelings.Are your (or your customers) emotional responses to one issue being caused by your (ortheir) response to another issue? Is your (or their) anger or distrust caused by a badexperience in the past, rather than something that is occurring now?3. Talk about feelings--yours and your customer’s.Dont suppress them or deny them. Acknowledge them and deal with them directly.4. Acknowledge your customer’s feelings as legitimate.Although you may feel differently about a situation, your customer’s feelings are real, anddenying their existence or validity is just likely to intensify those feelings. Allowing them to beexpressed and recognized helps release those feelings, so that you can move on to deal withthe substantive issues in dispute.5. Do not react emotionally to emotional outbursts.You should acknowledge the outburst with active listening (which shows that you understandthe strength of the speakers feelings), but you should not react emotionally yourself, as thatwill likely escalate the emotions and the conflict as a whole. If you are having trouble stayingcalm, temporarily leave the room. By leaving the scene you have a chance to calm down andthink. You can then plan an effective response, rather than reacting automatically which oftenmakes the situation worse.6. Use symbolic gestures.Gestures such as apologies, sympathy notes, shared meals, or even handshakes can bevery useful in expressing respect and defusing negative emotions at little cost.
Separate the People from the Problem4 Methods for Minimizing Communication Problems1. Engage in active listening.The goal of active listening is to understand your customer as well as you understandyourself. Pay close attention to what your customer is saying. Ask your customer to clarify orrepeat anything that is unclear or seems unreasonable (maybe it isn’t, but you areinterpreting it wrong). Attempt to repeat their case, as they have presented it, back to them.This shows that you are listening (which suggests that you care what they have to say) andthat you understand what they have said. It does not indicate that you agree with what theysaid–nor do you have to. You just need to indicate that you do understand them.2. Speak directly to your customer.This is not considered appropriate in some cultures, but when permitted, it helps to increaseunderstanding. Avoid being distracted by outside parties or other things going on in the sameroom. Focus on what you have to say, and on saying it in a way that your customer canunderstand.3. Speak about yourself, not about your customer.Describe your own feelings and perceptions, rather than focusing on your customer’smotives, misdeeds, or failing. By saying, "I felt let down," rather than "You broke yourpromise," you will convey the same information. But you will do so in a way that does notprovoke a defensive or hostile reaction from your customer. “You” messages suggest blame,and encourage the recipient to deny wrong-doing or blame back. “I” messages simply state aproblem, without blaming someone for it. This makes it easier for your customer to help solvethe problem, without having to admit they were wrong.4. Speak for a purpose.Too much communication can be counter-productive. Before you make a significantstatement, pause and consider what you want to communicate, why you want tocommunicate that, and how you can do it in the clearest possible way.
Focus on Interests, Not PositionsClearing Common ConfusionPeople tend to confuse positions (what they say they want) and interests (what theyreally want).Negotiating about interests means negotiating about things that people really want andneed, not what they say that want or need. Often, these are not the same.Negotiators often define what they want in all-or-nothing terms, take overly simple viewsof the problem, and seek solutions that meet their positions one hundred percent,without considering the views of the other side as important or legitimate. Arguing overpositions can be very ineffective, and even destructive. Parties can get more and moreentrenched in their positions, and positions will often move farther and farther apart, asdisputants make ever-more extreme statements in an effort to counter their opponent’sposition.While some conflicts are really structured in a win-lose way, many conflicts which arethought to be unavoidable win-lose situations are more manageable when redefined (or"reframed") in terms of underlying interests. Unlike positions, interests are the reasonswhy people want things.If the parties work to clarify WHY they want or do not want something, however, it oftenturns out that the parties interests are, at least in part, compatible. This makesnegotiating a solution--or at least a partial solution--much easier. Your position is something you have decided upon. Your interests are what caused you to decide.
Focus on Interests, Not PositionsPutting it Into PracticeIdentify your customer’s interest regarding the issue at hand.This can be done by asking why they hold the positions they do and byconsidering why they don’t hold some other possible position. Each partyusually has a number of different interests underlying their positions. Andinterests may differ somewhat among the individual members of each side.However, all people will share basic interests or needs, such as the need forsecurity and economic well-being.Discuss interests with your customer after you have identified them.If a party wants the other side to take their interests into account, the partymust explain their interests clearly. The other side will be more motivated totake those interests into account if the first party shows that they are payingattention to the other sides interests. Discussions should look forward to thedesired solution, rather than focusing on past events. Parties should keep aclear focus on their interests, but remain open to different proposals andpositions.By focusing on interests, parties can more easily fulfill the third principle –invent options for mutual gain. In U.S. conflict resolution training programs, a story is commonly told about two children fighting over an orange. Both children take the position that they need (and deserve) the whole orange. If the mother listens to the two childrens positions, she will likely decide that one child deserves the orange more than the other--giving the whole orange to one--or she will cut the orange in half, giving each a part. But the story goes on to explain that one child actually wanted the orange to eat, while the other wanted the rind for a science project. Had the children explained their underlying reasons for wanting the orange--that is, had they explained their interests--a win-win solution could have been found that would have given both children everything they wanted.
Invent Options for Mutual GainInventing options for mutual gain means you should look for new solutions to theproblem that will allow both sides to win, not just fight over the original positionswhich assume that for one side to win, the other side must lose.4 Basic Steps for Inventing Options• Step 1: State the problem• Step 2: Analyze the problem• Step 3: Consider general approaches• Step 4: Consider specific actionsBarriers• Parties may decide prematurely on an option and so fail to consider alternatives.• The parties may be intent on narrowing their options to find the single answer.• The 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.
Invent Options for Mutual GainOvercoming BarriersSeparate the act of inventing options from the act of judging them.Separate creative decision-making from the judgmental critical process ofchoosing the outcome. The best way to do this is to have a brainstormingsession to come up with ideas. During brainstorming, bring people togetherin an informal atmosphere and brainstorm for all possible solutions to theproblem using a facilitator, if possible. Define your purpose and make itclear that this is a vehicle to consider creative solutions and not a“negotiation.” The goal is a large number of alternatives from which tochoose. Post brainstorm, identify the most promising ideas, inventimprovements for promising ideas, set up a time to evaluate the ideas, anddecide what to do.Broaden your options rather than look for a single answer.Look for the strengths and weaknesses in particular strategies and examineproblem from view of different professionals and disciplines. Change thescope of the proposed agreement by putting it in smaller or moremanageable units.Look for Mutual GainTry to find the shared interests and look for ways in which both parties canbenefit.When interests differ, seek options in which those differences can be madecompatible or even complementary. The key to reconciling differentinterests is to look for items that are of low cost to you and high benefit tothem, and vice versa.Make Their Decision EasyTry to make proposals that are appealing to your customer, and that thecustomer would find easy to agree to. To do this, it is important to identifythe decision makers and target proposals directly toward them. Proposalsare easier to agree to when they seem legitimate, or when they aresupported by precedent.
Insist on Objective CriteriaWhen interests are directly opposed, use objective criteria to resolve differences.Decisions based on reasonable standards make it easier for the parties to agreeand preserve their good relationship.Developing Objective Criteria:• Criteria need to be independent of the will of both parties.• Criteria need to be sensible and practical to the situation for which it is being applied.• You and your customer must feel that the criteria are treating them fairly and must agree on them. One way to test for objectivity is to ask if both sides would agree to be bound by those standards.Sample Criteria or “Fair Standards” Market value Professional standards What a court would decide Precedent Scientific judgment Moral standards Efficiency Costs Equal treatment Tradition Reciprocity Etc.Using Objective Criteria• Approach each issue as a shared search for objective criteria. Ask for the reasoning behind your customer’s suggestions. Using your customer’s reasoning to support your own position can be a powerful way to negotiate.• Keep an open mind. You and your customer must be reasonable and be willing to reconsider positions when there is reason to.• Never give in to pressure. If your customer stubbornly refuses to be reasonable, shift the discussion from a search for substantive criteria to a search for procedural criteria.
Case Study1978 Camp David Egyptian-Israeli NegotiationsThe ConflictWhen the negotiations started, each side’s position were completely opposite eachother. Egypt insisted on complete sovereignty over the Sinai Peninsula (whichIsrael had occupied in the 1967 6-day war), while Israel insisted on keeping controlof at least some of the Sinai. Map after map was drawn, each with differentdividing lines. None managed to meet the positions of both sides simultaneously.The SolutionLooking to their interests instead of their positions made it possible to develop asolution. Israel’s interest lay in security; they did not want Egyptian tanks poised ontheir border ready to roll across at any time. Egypt’s interest lay in sovereignty; theSinai had been part of Egypt since the time of the Pharaohs. By reframing theconflict in this way, a solution was reached. Egypt was given full sovereignty overthe Sinai, but large portions of the area were demilitarized, which assured Israel’ssecurity at the same time.
What if They are More Powerful?Beware of the Bottom LineOften negotiators establish a bottom line (or the worst acceptable outcome) in advance in anattempt to protect themselves or reject any proposal below that line. Because the bottom lineis decided upon in advance, the figure may be arbitrary or unrealistic. Having alreadycommitted to a rigid bottom line also inhibits inventiveness in generating options.Know your BATNAInstead of focusing on the bottom line, concentrate on knowing your Best Alternative to aNegotiated Agreement, or BATNA. In order to know whether or not to accept a proposedsettlement obtained through negotiation, you must know whether or not you can get a betteroutcome in some other way. If the negotiated agreement is better than your "best alternative,"you should take it. If it is not as good as your BATNA, you should either go back to thenegotiating table to try again, or leave the table to pursue your other option(s).
What if They are More Powerful?Developing Your BATNA• Make a list of your options if you don’t reach an agreement.• Compare them realistically to the agreement you are negotiating.• Improve some of them and convert them into practical alternatives.• Tentatively select the one that seems the best.• Think about your customer’s BATNA.Strengthening Your BATNASince the disputants with the best BATNAs have the best negotiating position, it is importantto improve your BATNA whenever possible. Good negotiators know when their opponent isdesperate for an agreement. When that occurs, they will demand much more, knowing theiropponent will have to give in. If the opponent apparently has many options outside ofnegotiation, however, they are likely to get many more concessions, in an effort to keep themat the negotiating table. Thus making your BATNA as strong as possible before negotiating,and then making that BATNA known to your opponent will strengthen your negotiatingposition. The better your BATNA, the greater your power.
What if They Won’t Play?Strategy 1: Continue to Use Principled NegotiationTry ignoring their position and concentrate on merits. This method can becontagious and they may let you change the game without realizing it.Strategy 2: Use Negotiation JujitsuTurn their attacks against them to move them toward principled negotiation.Rather than responding to force, let it come to you and them work on theunderlying interest that is creating the force. Attacks usually consist of threemaneuvers: • Asserting their position forcefully • Attacking your ideas • Attacking youLet’s look at how to overcome each.
What if They Won’t Play?Using Negotiation JujitsuAsserting their position forcefullyDon’t attack their position. Try to ask questions to betterunderstand it. Their position must reflect a set of principles. Ifyou probe to find out what their principles are, you can betterunderstand how to reach agreement. Discuss what wouldhappen if their ideas were adopted. Often people who want toomuch can appreciate the uncomfortable position their ideas willput everyone in.Attacking your ideasDon’t defend your ideas. Invite criticism and advice. Instead ofasking people to accept or reject an idea, ask them what iswrong with it? Examine their negative judgments to understandtheir underlying interests. Ask them what they would do if theywere in your position?Attacking youIf personally attacked, resist the temptation to defend yourself orlaunch a counter-attack. Let them blow off steam, tell them youunderstand what they are saying, and then recast an attack onyou as an attack on the problem. “We’re both here to resolvethe issue, we both have the same concerns, what do yousuggest we do?” Ask questions and pause
What if They Won’t Play?Using Negotiation Jujitsu 1. "Please correct me if Im wrong" 2. "We appreciate what youve done for us." 3. "Our concern is fairness." 4. Wed like to settle this based on some objective standards - not on who can do what to whom." 5. "Trust is a separate issue" or "its not a question of trust." 6. "Could I ask a few questions to see if my facts are right?" 7. "Whats the principle behind your action?" 8. "Let me see if I understand what you are saying." 9. "Let me get back to you." 10. "Let me show you where Im having trouble following your reasoning." 11. "One fair solution might be ..."
What if They Use Dirty Tricks?Sometimes parties will use unethical or unpleasant tricks in an attempt togain an advantage in negotiations such as good guy/bad guy routines,uncomfortable seating, etc. The best way to respond to tricky tactics is toexplicitly raise the issue in negotiations, and to engage in principlednegotiation to establish procedural ground rules for the negotiation.Neutralizing Dirty Tricks • Recognize the tactic. • Raise the issue explicitly. • Question the tactic’s legitimacy and desirability. • Negotiate to change the procedure. Negotiate on the dirty tricks first.
What if They Use Dirty Tricks?Types of Dirty TricksDeliberate DeceptionParties may engage in deliberate deception about the facts, their authority, or theirintentions. The best way to protect against being deceived is to seek verification ofyour customer’s claims. It may help to ask them for further clarification of a claim, orto put the claim in writing. However, in doing this it is very important not to be seenas calling them a liar; that is, as making a personal attack.Psychological WarfareWhen the customer uses a stressful environment, you should identify the problematicelement and suggest a more comfortable or fair change. Subtle personal attacks canbe made less effective simply be recognizing them for what they are. Explicitlyidentifying them to the offending party will often put an end to suck attacks. Threatsare a way to apply psychological pressure. You should ignore them where possible,or undertake principled negotiations on the use of threats in the proceedings.Positional PressurePositional pressure tactics attempt to structure negotiations so that only one side canmake concessions. They may refuse to negotiate, hoping to use their entry intonegotiations as a bargaining chip, or they may open with extreme demands. Youshould recognize this as a bargaining tactic, and look into their interests in refusing tonegotiate. They may escalate their demands for every concession they make. Youshould explicitly identify this tactic to the participants, and give the parties a chanceto consider whether they want to continue negotiations under such conditions.Parties may try to make irrevocable commitments to certain positions, or to maketake-it-or-leave-it offers. You may decline to recognize the commitment or the finalityof the offer, instead treating them as proposals or expressed interests. Insist that anyproposals be evaluated on their merits, and dont hesitate to point out dirty tricks.
Case Study – More PowerfulPositional BargainingAuto Insurance Adjuster (AIA): We’ve decided your car claim is worth $6,600Use Objective CriteriaTom: What standard did you use to determine that amount? Do you know where Ican buy a comparable car for that amount?Invites you to do positional bargaining.AIA: How much are you asking for?Standards-based replyTom: I found a comparable car for $8,000Emotional reactionAIA: Whew, $8,000 is too muchDo we agree on fairness?Tom: I’m not asking for $8,000. Do you agree that it’s fair for me to get enoughmoney to replace the car?Positional BargainingAIA: Okay, I’ll offer you $7,000 and that’s the highest I can go. Company policy.Objective CriteriaTom: How does the company figure that?What if they are more powerful?AIA: Look $7,000 is all you’ll get. Take it or leave it.Tom is in a spot. Click NEXT to see how he resolves it.
Case Study – More PowerfulInsist on using objective criteriaTom: $7000 may be fair. I don’t know. I certainly understand your position if you’rebound by company policy. But unless you can state objectively why $7,000 is theamount I’m entitled to, I think I’ll do better in court. Why don’t we study the matterand talk again? Is Wednesday at 11 a good time to talk?AIA: Okay, I’ve got an ad from today’s newspaper for an ’89 Taurus for $6,800.Tom has gotten the AIA to use standards based objective criteria. Now, Tomcan begin negotiating each point on its merits.Tom: What’s the mileage?AIA: 49,000. Why?Tom: Because mine only has 25,000 miles. How many dollars does it say thatincrease is worth in your book?AIA: Let me see…$450Tom: That brings the value to $7250. Does it say anything about a sound system?AIA: No.Tom: How about air conditioning….In this real example, Tom received $8,024 - $1,400 more than the original offer.
Case Study – Won’t PlayIn 1970, an American lawyer had a chance to interview President Nasser of Egypt on theArab-Israeli conflict. He asked Nasser, “What is it you want Golda Meir to do?’Nasser replied, “Withdraw!”“Withdraw?” the lawyer asked.“Withdraw from every inch of Arab territory!”“Without a deal? With nothing from you?” the American asked incredulously.“Nothing. It’s our territory. She should promise to withdraw,“ Nasser replied.Then, the American asked, “What would happen to Golda Meir if she addressed theIsraeli people and said, “On behalf of the people of Israel, I hereby promise to withdrawfrom every inch of territory occupied in ’67. Plus, I have no commitment of any kind fromthe Arabs.”Nasser burst out laughing, “Oh, would she have trouble at home.”Understanding the unrealistic option Egypt had been offering Israel may have contributedto Nasser’s stated willingness later that day to accept a cease fire.
Let’s look at some frequently FAQsasked questions aboutPrincipled Negotiation. Does positional bargaining ever make sense? The short answer is yes, as long as one of several conditions applies: You don’t plan on having an ongoing relationship with the other side, you don’t want to spend the time arguing a point on its merits, and it can be a quick way to finalize a deal after you’ve used Principled Negotiation to identify each other’s interests, invented options for mutual gain and discussed relevant standards of fairness. What if the customer believes in a different standard of fairness? Agreement on the “best” standard is not necessary. You and your customer may have two different standards in mind based on individual values, culture, experience, and perception. That’s why it is best to use a standard that comes outside of the negotiation. People can argue on why a car should cost more money or less money. They often use to a separate standard like Kelly’s Blue Book as a fair and impartial standard. Should I be fair if I don’t have to be? Principled Negotiation is not a treatise on morality or fairness. It exists because many people like to end a negotiation knowing they got the “right” amount. If you find that you have an ability to consistently get more than you deserve, then it is up to you to decide on the moral and other potential complications that can arise from negotiating an unfair agreement. What do I do if the people are the problem? People problems often require more attention than substantive ones. Build a working relationship that is independent of substantive agreement or disagreement. Negotiate the relationship on its merits. Raise your concerns with your customer’s behavior. Resist the temptation to treat them the same way they treat you. FAQs (cont) Should I negotiate even with terrorists or people like Hitler? When does it make sense not to negotiate? However unsavory your customer, unless you have a better BATNA, the question you face is not whether to negotiate but how to negotiate. Negotiation does not mean giving in. How should I adjust my negotiating approach to account for differences of personality, gender culture, and so on? Get in step with cultural differences, but avoid stereotyping. In developing a relationship, get to know the person. Things like pacing, level of formality, even
physical proximity are concerns that you need to be aware of when negotiating.How should I decide things like “Where should we meet?,” “Who shouldmake the first offer,?” “How high should I start?”Questions like “Where should we meet?” are answered with other questionssuch as, “What are we worried about? Are we worried that we’ll be interrupted?”Then, meet in a neutral site. “Are we worried we won’t be able to leave?” Then,don’t meet in your office. Questions like “Who should make the first offer” or“How high should I start” depend on your preparation. If you are well prepared,an offer or solution should evolve.Concretely, how do I move from inventing options to makingcommitments?Steps to moving toward concrete closure include:• Envision outcomes from the start.• Consider crafting a framework agreement. That way you can begin committing what would look like an outline before narrowing down specifics.• Move toward commitment gradually.• Be persistent in pursuing your interests, but not rigid in pursuing any particular solution.
FAQs (cont)How do I try out these ideas without taking too much risk?Perhaps you are worried that you will not be able to execute this approach wellenough to make it work better than your current approach. The best advice is tostart small. Practice with a simple negotiation where your BATNA is strong,where relevant favorable standards are available and where your customer islikely to be amenable. Prepare extensively and review your performance bykeeping a diary so you can have a record of what you did well or what mightneed adjustment.Can the way I negotiate really make a difference if my customer is morepowerful? How do I enhance my negotiating power?How you prepare and how you negotiate can make an enormous differencewhatever the situation. However, there are some things you can’t get. Even themost skilled negotiator can’t make a deal to buy the White House. You shouldnot expect success in negotiation unless you are able to make your customer anoffer that is more attractive than their BATNA. If you can’t, negotiation seemspointless. Concentrate instead on improving your BATNA and changing theirs.