Negotiation Skills-Pankaj Sinha
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Negotiation Skills- Pankaj Sinha

Negotiation Skills- Pankaj Sinha

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Negotiation Skills-Pankaj Sinha Presentation Transcript

  • 1. Negotiation Skills By Pankaj K Sinha Head- Commercial Essar Offshore Subsea Ltd.
  • 2. Vision Statement of EOSSL To be the most preferred solution provider in Shallow and Deep water Construction
  • 3. Mission Statement of EOSSL Essar Offshore Subsea Ltd is committed to: • Make customers, employees and other stakeholders happy by delivering value consistently • Ensure that services and solutions provided by EOSSL are safe, cost effective and environment friendly • Fast track growth in the Shallow & Deep water Construction space, across the globe
  • 4. What is Negotiation Negotiation involves the art and science of drawing up deals that create lasting value. David A. Lax and James K. Sebenius Negotiation is the process by which people deal with their differences. Harvard Business School. The virtue of efficient Negotiation is that you don’t leave money on the table… how you split the money is up to you and your counterpart.
  • 5. Essar Essentials- From being to becoming 1. Entrepreneurial Orientation 2. Project Management 3. Operational Excellence 4. Negotiation – The ability to leverage interpersonal relationships in the best interest of work/organization. This individual always looks for greater efficiencies in any business transactions. – An individual demonstrating this capability builds rapport with internal and external customers; has exhaustive understanding of business environment and knows how to leverage this; believes in win-win scenarios and relentlessly tries to achieve the same; appreciates working relationships and contributes to effective team work across extended team. – The ability to build strong relationships with both internal and external customers and look at every day tasks from service 5. Customer Focus 6. Nurturing - Quoted from Section 5.2- Essar’s Corporate Induction Manual
  • 6. Negotiation Let us never negotiate out of fear But let us never fear to negotiate John F Kennedy
  • 7. Evolution of Negotiation 1970 to 1985 Power 1985 to 2000 Side by Side Problem Solving 2000 to _____ A Learning Conversation What Tools do you Carry in Your Negotiation Toolbox?
  • 8. Evolution of Negotiation Give and Take Dr. Chester Karrass Getting to Yes Fisher and Ury 3D Negotiation Lax and Sebenius
  • 9. Types of Negotiation 1. Distributive Negotiation 2. Integrative Negotiation. 3. Most negotiations combine elements of both types, but for the purposes of understanding, it’s important to examine each type in its pure form.
  • 10. Distributive Negotiation 1. Parties compete over the distribution of a fixed sum of value. The key question in a distributed negotiation is, “‘Who will claim the most value?" A gain by one side is made at the expanse of other. 2. The Seller’s goal is to negotiate as high a price as possible; the Buyer’s goal is to negotiate as low a price as possible. 3. Thus, the deal is confined: there are not much opportunities for creativity or for enlarging the scope of the negotiation.
  • 11. Integrative Negotiation 1. In Integrative Negotiation, parties cooperate to achieve maximize benefits by integrating their interests into an agreement. This is also known as a win-win negotiation. 2. Integrative negotiations tend to occur in following situations: – Structuring of complex long-term Strategic Relationships, JV or other collaborations – When the deal involves many financial and non-financial terms 3. In an integrative negotiation,, there are many items and issues to be negotiated, and the goal of each side is to “create” as much value as possible for itself and the other side.
  • 12. Distributive versus Integrative Negotiations Characteristic Distributive Integrative Outcome Win-lose Win-win Motivation Individual gain Joint and individual gain Interests Opposed Different but not always Opposite Relationship Short-term Longer or Short-term Issues involved Single Multiple Ability to make trade-offs Not Flexible Flexible Solution Not creative Creative
  • 13. Negotiation Concepts 1. BATNA (Best Alternative to a Negotiated Agreement): your options if you fail to reach agreement during a negotiation. 2. Reservation Price: the least favorable point at which you’ll accept a negotiated deal; the “walk-away” price. 3. ZOPA (Zone of Possible Agreement): the range in which a potential deal can take place; defined by the overlap between the parties’ reservation prices. 4. Value Creation Through Trades: the trading of goods or services that have only modest value to their holders but exceptional value to the other party.
  • 14. Type of Negotiation Styles High COLLABORATE ACCOMODATE Problem solved creatively, aiming for win-win Build friendly relationship Characteristics: Characteristics: Search for common interests Promote harmony Problem-solving behaviours Avoid substantive differences Recognising both parties’ needs Give into pressure to save COMPROMISE Synergistic solutions relationship CONCERN FOR RELATIONSHIP Win-win becomes the main purpose Place relationship above fairness of Split the difference of the negotiator the outcomes Characteristics: Meeting half way AVOID DEFEAT Look for trade offs Take whatever you can get/Inaction Be a winner at any cost/Competitive Accept half-way measures Characteristics: Characteristics: Aims to reduce conflict rather than problem Feeling of powerlessness solve synergistically Win-Lose competition Indifference to the result Pressure/Intimidation Resignation, surrender Adversarial relationships Take what the other party is willing Defeating the other becomes a goal to concede for the negotiator Withdraw & remove = behaviour of negotiator Low CONCERN FOR SUBSTANCE High
  • 15. Negotiation Strategy- Time Factor Percentage Time Pre-Negotiation 80% Negotiation 5-10% Post-Negotiation 10-15%
  • 16. Negotiation Strategy 1. Best Alternative To a Negotiated Agreement (BATNA). • Absolutely essential to know whether to accept alternative arrived at through negotiation versus ending negotiation. • Must consider other side’s BATNA as well as your own. 2. Develop your BATNA: • Invent a list of actions possible if no agreement. • Improve some of ideas from list, create practical alternatives. • Select the alternatives that seem best.
  • 17. Negotiation Strategy …… 3. Strengthen your BATNA • make BATNA easier, more probable, or better at satisfying interest. • If you only accept a deal that is better than BATNA, improving BATNA leads to better result, either through better agreement or going to the BATNA. 4. Consider their BATNA: • Understanding BATNA helps you understand how to make agreement easier. • Understanding their BATNA allows you to estimate whether agreement is possible. 5. Reservation Price: Translation of the BATNA into a value at the table—the amount at which you are indifferent between reaching a deal and walking away to your BATNA. .
  • 18. Negotiation Strategy …… 6. Zone of Possible Agreement (ZOPA): The bargaining range created by the two Reservation Values. The ZOPA defines a “surplus” that must be divided between the parties • Assess the ZOPA • Change the ZOPA • Take the ZOPA ZOPA Min Willingness to Accept Max Willingness to Pay Seller’s Res. Price Buyer’s Res. Price
  • 19. Strategy-templates
  • 20. Strategy-templates
  • 21. Body Language Body language plays a critical role in communication Accurate interpretation of body language is required for successful negotiations. Body language is expressed by: Eye and facial expressions Arm and hand positions Leg and foot positions Posture and body position As important as it is to accurately interpret body language, it’s also important to recognize that there are exceptions to every rule - body language can help to support, or contradict a message, or mean nothing at all. For example, the term ‘poker face’ describes an individual that has mastered the ability to show no emotion regardless of the situation.
  • 22. Negotiation Process Closing Preparation Bargaining Opening
  • 23. Preparation 1. Define your goals, the other party’s goals, and the conflict. 2. Identify the goals you share with the other party. 3. Define the things you are willing to trade and their value to the other party. Do the same for the other side: what they might offer you and how much it is worth to you. 4. Anticipate Alternatives to determine how important it is for you to reach a settlement. 5. Realize that you are no weaker or stronger than the other party. The two sides share goals and both sides are willing to trade to attain their objectives.
  • 24. Opening Most important opportunity to influence the other side Active Listening Skills – Body Language – Intelligent Listening Non-negotiable items Flexibility
  • 25. Bargaining 1. Explore Key Commitments 2. Summarize Arguments and Seek Acceptance 3. Look for Signals of Possible Movement 4. Identify and Highlight Common Ground
  • 26. Bargaining 1. Remember: You Win ≠ They Lose 2. Negotiate Interests, not Positions 3. Focus on what you don’t know… exchange information 4. Explore all the ways in which they can create value for you 5. Find out all the ways in which you can create value for them 6. Add issues 7. Negotiate multiple issues simultaneously 8. Exchange information regarding priorities 9. Trade based on differences of all kinds to create value 10. Search for Post-Settlement Settlements
  • 27. Closing Be Prepared to Concede Begin with those of Low Priority and seek High Priority Items Never Concede on More than possible by your Brief Use your Concessions Wisely Don’t just give these away expect and receive something in return Look for Contingent Agreement, if required Never burn the bridge
  • 28. Thank You Q&A