Negotiation And The Anatomy Of Conflict

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This is a one-day negotiation training that I recently presented to Qwest Communications in Denver, over a two-day period (50 people is the maximum number that exercise-based negotiation training can …

This is a one-day negotiation training that I recently presented to Qwest Communications in Denver, over a two-day period (50 people is the maximum number that exercise-based negotiation training can be effective)

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  • 1. Negotiation and the Anatomy of Conflict with a word on gender and negotiation and negotiation ethics May 11-12, 2009 Victoria Pynchon, J.D., LL.M ADR Services, Inc. Century City, California
  • 2.
    • Why we negotiate
    • The field of conflict in which we negotiate
    • How disputes arise
    • 3 ways we negotiate disputes
    • 3 types of agreements
    • How our cognitive biases affect our ability to negotiate the best deal
    • How to remedy those biases
  • 3.
    • A short detour to talk about male and female negotiation styles
    • Distributive (divide the pie) and Interest-based (enlarge the pie) bargaining
    • 3 primary strategies for dealing with difficult people
    • 3-D Negotiation Strategy & Tactics
    • What you need to know about negotiation ethics
  • 4. Why Do We Negotiate?
  • 5. Scarcity
  • 6. Power
  • 7. Values
  • 8. Identity
  • 9. Community
  • 10. Autonomy
  • 11. Pride
  • 12. Self Expression
  • 13.  
  • 14. Relative Benefits v. Absolute Numbers
  • 15. Conflict is a Perceived divergence of interests or the belief that the current aspirations of the parties cannot be simultaneously met
  • 16. Relative deprivation Injurious Event Perceptions Self interest/desire Other interest/desire Conflict’s Source Resources Values Dispute = Immediate Manifestation of Conflict Naming Blaming Claiming Tactics Yielding Avoiding Contending Problem Solving Tit for Tat Start nice Be Provokable Be Forgiving
  • 17. Persuasion Exercise
    • Object of the game
      • Get your partner to come over to your side of the line
      • The winners will each will $1.00
  • 18. Optimal Negotiated Outcome
    • Identify Value = precedent, relationships, reputation, political appearance, fairness, profit, future opportunities, survival, praise, fulfillment (personal or corporate)
    • Create value by locating and identifying all of your own and your bargaining partner’s interests (preferences, priorities, needs, desires, fears)
    • Claim value by making a case for your entitlements, trading differences, finding commonalities
    • Reap value by crafting durable agreements
    Remedy the perceived divergence of interests or the belief that the current aspirations of the parties cannot be met
  • 19. Deprivation
    • Perceived
    • Relative
    • All parties’ interests cannot be met at the same time
  • 20. Dispute Erupts
    • Injurious event
    • Name
    • Blame
    • Claim
    • http://www.break.com/index/fight_over_parking_spot.html
    Bay City News Service Posted: 04/28/2009 07:14:29 AM PDT Updated: 04/28/2009 07:14:29 AM PDT Two men have been arrested for their alleged involvement in a fight over a parking space in South San Francisco early Sunday that left one person injured, police said Monday. Officers responded around 3:15 a.m. Sunday to a report of a fight in progress on Susie Way and found four assault victims, according to police. One of the victims had been struck in the back of the head with a beer bottle and had a serious head laceration, police said. The victim was taken to a local hospital for treatment and is reportedly in stable condition. Authorities learned the suspects and victims were arguing about a parking space when the assault ensued.
  • 21. Tactics Malcolm Gladwell, Outliers Yielding/Avoiding Negative for yielder Nothing changes for other in a blind approach for landing through clouds where the first officer is convinced that the plane is heading against solid mountain rock all he says is “I am not sure if we have established our gliding path with necessary precision”.
  • 22. Contentious Tactics Ingratiation & gamesmanship Threat, promises & arguments Shaming Coercive Commitments Physical Violence Win-lose Resolution unstable
  • 23. Malcolm Gladwell, Outliers Problem Solving Satisfies some of both parties’ interests Resolution is stable
  • 24.
    • Agreement possible
        • Better than walking away
        • BATNA
        • Achieved through compromise
    • “ Win win”
        • Meets interests of both parties better than compromise would
        • Achieved through identifying interests, identifying and/or creating value
    • Pareto-optimal
        • Best possible negotiated outcome for both
    Thompson & Leonardelli “ Why Negotiation if the Most Popular Business School Course”
  • 25. Scarce Resources
    • Contending
        • Shirley Jackson’s “Lottery”
        • Logan’s Run
        • Strong survive/weak die
    • Problem solving
      • Hunting/gathering to agriculture/husbandry
      • Farming/hunting to industry
      • Industry to technology
      • Material (steel, cars, trains, planes) to Immaterial (knowledge)
    “ Innovate, don’t litigate (contend)” Jonathan Schwartz, CEO Sun Microsystems
  • 26. theory of mind © Victoria Pynchon ‘07
  • 27. Our ability to reason arose from our need to understand one another’s intentions and motivations, allowing us to coordinate within a group
  • 28. we developed certain tendencies of thought called cognitive biases universal ways of thinking about what motivates other people
  • 29. But we never learned to read one another’s minds
    • Suspicion followed
  • 30.
    • What do we most want to know
  • 31. What the HECK are they THINKING?
  • 32. and will it be harmful TO ME?
  • 33. Will they cooperate
  • 34. or attack ?
  • 35. How can I make them do what I want them to do?
  • 36. we read signs and symbols in an effort to control our own destiny
  • 37. and make common cognitive errors
    • Over-ascribing intention to our fellows when we are harmed and
    • Under-ascribing situation and circumstance
    • Falling prey to fundamental attribution error
  • 38. in the absence of information, we make stuff up
  • 39. We see patterns where none exist Clustering Illusion
  • 40. Cash Register Exercise
  • 41. we discount everything our bargaining partners say reactive devaluation
  • 42. confirmation bias we search for and interpret information in a way that confirms our preconceptions
  • 43.
    • Prevent us from learning Other’s mind
    • what do they want/need
    • what do they have of value
    • how do they value it
    • why do they want what they are seeking
    • Prevent us from accurately assessing
      • perils
      • opportunities
    Cognitive biases
  • 44. so how can we reach a mutually beneficial and durable agreement? By ascertaining their interests, preferences, priorities, needs, desires, constraints, strengths, and weaknesses, as well as our own
  • 45. Let’s start here!
    • Form groups from as many different internal groups as possible
    • List common and adverse interests of each external and internal bargaining party
    • 10 minutes
  • 46. Negotiating Women May 11-12, 2009 Victoria Pynchon, J.D., LL.M ADR Services, Inc. Century City, California
  • 47.
    • In 2000, 76.8 percent of women aged 25 to 54 worked outside the home.
    • Women's earnings relative to men's have stagnated at 73.2 percent.
    • 2.5 x > more women than said they feel "a great deal of apprehension”
    • Men initiate negotiations about four times as often as women.
    • will pay as much as $1,353 to avoid negotiating the price of a car
    • typically ask for and get less when they do negotiate—on average, 30 percent less than men.
    • 20 percent of adult women say they never negotiate at all
  • 48.
    • lose more than $500,000 by age 60 if don’t negotiate first salary
    • eight times as many male MA’s from Carnegie Mellon negotiated their salaries..
    • women who consistently negotiate salary increases earn a $1 million more during their careers than women who don't.
    • Women own 40 percent of all businesses in the U.S. but receive only 2.3 percent of the available equity capital. Male-owned companies receive the other 97.7. percent.
    • Women report salary expectations between 3 and 32 percent lower than those of men for the same jobs
    • men expect to earn 13 percent more than women during their first year of full-time work and 32 percent more at their career peaks.
  • 49. Male Bargaining Advantages
    • Feel bargaining advantage
    • Feel entitled to more rewards
    • Less likely to back down
    • Use more distributive tactics
    • Feel entitled to information
    • Seen as stronger speakers than women
    • Seek more power
    • Intimidate
  • 50. Female Bargaining Advantages
    • more likely to follow a set of rules or steps to get to a final outcome
    • take a broad or 'collective' perspective
    • view elements in a task as interconnected and interdependent
    • see the big picture and come up with a systematic plan on how to solve it.
    • work through steps by sharing experiences while figuring out what both sides can gain to achieve an integrated outcome.
    • more concerned about how problems are solved than merely solving the problem itself
    • Instead of concentrating on what they want or need to get out of the negotiation women focus on what both sides need and how both parties can get what they want
  • 51. Distributive and Interest Based Bargaining May 11-12, 2009 Victoria Pynchon, J.D., LL.M ADR Services, Inc. Century City, California
  • 52. Distributive Bargaining
    • The process by which the parties distribute between themselves what they believe to be a fixed “pie” of money, goods or services
    • A Zero Sum exchange in which whatever one side gains, the other side loses
    • Parties move toward resolution through a series of concessions
  • 53. Grammar of Negotiation
  • 54. Book Sale Exercise Zone of Potential Agreement (“ZOPA”) SELLER’S WALK AWAY POSITION $4,500 BUYER’S WALK AWAY POSITION $5,000 $0 $7,000
  • 55. Why We Don’t Enjoy Negotiating Well, he never done this before, but seein' as it's special circumstances and all, he says I can knock one hunnert off that TruCoat.
  • 56. Book Sale Exercise
  • 57. Preparing to Bargain
  • 58. The Dance
    • Anchor
    • Dance ends at Midpoint Between First Two Reasonable Offers
    • Each Concession tends to be half the size of the previous concession and takes twice as long to be made
    • If you try to short-circuit dance, your bargaining partner may be encouraged to use the mid-point offer to claim more value for himself
    • Extreme Offers
      • Make them soft
      • Monitor response
      • Anticipate making concessions
    • Reasonable offer
      • Demonstrate commitment
      • Make only modest concessions
      • Stress merit
  • 59. Competitive Bargaining
    • make high initial demands
    • maintain those high level demands throughout the course of the negotiation
    • make few (and small) concessions
    • adhere to a high level of aspiration for one's own "side."
    • obtain as much information from the other side as possible
    • give as little information about one's own position away
    • bluff
    • mislead
    • threaten retaliatory action if the other side does not comply.
  • 60.
    • Make contingent concessions, i.e., we’ll drop price to $1.9 million if you provide letter of credit or increase initial payment, etc.
      • Creates appearance of increase in their number
      • Almost risk free
    • Label concessions & demand reciprocity
    • Stress difficulty in making concession
      • This will cut our profit razor thin
      • If we make this concession, you should be willing to pay in dollars rather than yen (or every 30 rather than 60 days or with interest)
          • Concessions & Reciprocity
  • 61. A Reason and a Number Resource Materials Part I, page 49
  • 62. The Population of Iraq (exercise)
  • 63. ANCHORING The party making the first reasonable offer should prevail over his bargaining partner who must respond in the range set by that party.
  • 64. Using, Resisting & Creating (Meta) Anchors
    • Set false anchor
    • Frame the “deal”
        • Nature of problem deal is capable of resolving
        • Characterize deal in way favorable to your strengths
          • Routine extension of old rather than new “deal”
          • View sale of biz as stand-alone vs. synergy created by acquisition by buyer
            • Focuses on future rather than present
            • Focuses on value to BOTH parties
      • Lax & Sebenius 3-D Negotiation at 199-201
  • 65. Framing
    • Present Losses as Gains
      • Strong tendency to prefer avoiding losses over acquiring gains
      • competitor’s deal would be a loss because – mired in bureaucracy; can afford to fail; product not as good
    • Use language that emphasizes your position & frames information in your favor
      • fewer rather than greater – greater attention to needs; partner in place; more dedicated, motivated, faster
  • 66.
    • Cooperative Responses to Competitive Bargainer
      • sub-divide concessions by dividing issues into smallest parts & offer concessions only on sub-parts;
      • make hypothetical offers that can be disowned later;
      • demand principled justifications for positions; and,
      • respond tit-for-tat, i.e., to intransigence with intransigence and cooperation with cooperation.
    • Mutual problem-solving inquiries include:
      • what the parties believe would be a "fair" solution to the problem;
      • whether the parties can agree on criteria for a "fair" settlement;
      • and, what priorities each party has, i.e.,
        • which issues are most important to each party and
        • which unimportant.
    McNamara’s First Rule of War Empathize with your enemy The man able to put himself into Kruschev’s shoes was the only one able to suggest a way for Kruschev to back down AND save face, i.e., ignore the second hard-line message and respond to the first.
  • 67. Tit for Tat
    • Cooperation in a world of distrust
    • Romeo and Juliet
    • The Prisoner’s Dilemma
  • 68. Negotiate from Strength "When others sense your willingness to walk away, your hand is strengthened. Sometimes you are better off not getting to yes.“ Robert Rubin, Chairman of Citigroup Executive Committee, former Secretary of the Treasury
  • 69. Prepare Purchase and Sale of Pharmaceutical Plant Over Lunch
  • 70. The Cash Register Exercise & The Persuasion Exercise Distributive vs. Integrative Bargaining Dividing Fisher and Ury’s Famous Orange Distributive Solution Interest Based Solution
  • 71. Asking Diagnostic Questions THE GUY WALKS INTO THE BAR EXERCISE
  • 72.
      • Competitor’s strengths, weaknesses
      • Competitor’s motivations, concerns, preferences, desires, needs, priorities, risk tolerance, optimism/pessimism about the future
      • Know Your Best Alternative to a Negotiated Agreement (“BATNA”)
          • Agreement reached must be better than no agreement at all
          • Bottom line or “reserve” price
    • Plan Your Opening Offer/Demand
    • Plan the Number of Bargaining Moves (concessions) you’re willing to make in Advance
    A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.
  • 73. Bargaining Chips
    • INTERESTS
    • Potential future business opportunities
    • Competitive market advantages
    • Protecting market position
    • Gaining competitive advantage
    • Acquiring a Piece of the Action
    • Securing Future
    • Avoiding Risk
    • Creating a Trading Partner
    • Gaining Synergies
    • Expanding Customer Base
    • TERMS
    • Service/guarantees
    • third party sources of recovery
    • Timing of payments
    • Metrics for satisfactory performance
    • Method of payment
      • Exchange rates
      • Letters of credit
  • 74. Diagnostic Questions
    • What are my intended outcomes and interests?
      • Preferences, priorities, needs, desires, fears, aspirations, bottom line
    • What are their possible interests and outcomes?
      • Put yourself in their shoes
    • What are the options?
      • Potential points of agreement
      • Differences that might be dove-tailed
  • 75.
    • Give good legal customer service
      • Probe for what customer really needs
        • “ if I can find a way to satisfy that need, I will
      • Facilitate sales process without sacrificing protection for company
        • Identify probable risks
        • Be willing to bear some risk in exchange for satisfying more important interest
        • Persistent points of impasse, have several potential solutions
  • 76.
    • What is my Plan B?
    • Worst case scenario?
    • External standards
    • Reserve price/terms/limits
    • Game plan
  • 77. Creating Value
    • Compatibility (identifying issues for which parties don’t have a conflict of interest)
    • logrolling, or trading off concessions on low-priority issues for gains on higher priority issues
    • trading differential time preferences, or allocating more initial outcomes to the more impatient party and greater profits over a longer period to the more patient party
    • adding issues, or adding to the agreement issues not inherent in the initial negotiation framework
    • contingent contracts, or bets based on different expectations regarding a future event.
    • Research reveals that negotiators often fail to implement these strategies and to reach integrative agreements
  • 78. Creating Value for Both
  • 79. “ It’s a Buyer’s Market”
    • Don’t reveal own weakness
    • Leverage their Weakness
    • Identify and value your Distinct Value Proposition
      • Better product
      • Higher quality service
      • Good reputation
      • Attention
      • Nimbleness
      • Working outside the box
      • Negotiating from a Position of Weakness , Resource Materials, Vol. I at 41-43
  • 80. Bargaining from a Position of Weakness
  • 81. Reframe Weakness as Strength
    • 1912 Presidential campaign
    • Used photo of Roosevelt without permission
    • 3 million copies printed
    • Penalty $1/copy
  • 82.
    • Telegram: planning to print 3 million copies of campaign speech. Excellent opportunity for photographers.
    • How much are you willing to pay us to use your photograph?
    • “ Appreciate opportunity but can afford to pay $250.”
  • 83. “ How David Beats Goliath” 5/11/09 New Yorker
    • Last 200 years of warfare
      • Goliaths won 71.5% of time
      • Contests where Goliath has 10x > power, Davids win nearly 1/3 rd of the time
      • Where “Davids” chose unconventional strategy, won 63.6% of the time
        • Bedouins v. Turkish
          • Speed, time, endurance, knowledge of terrain, courage
          • “ art of war [is] about legs not arms”
        • Full-court press
          • Endurance, stamina
          • surprise
  • 84. Half Hour to Negotiate Sale of Pharmaceutical Plant
  • 85. Dealing with Difficult People May 11-12, 2009 Victoria Pynchon, J.D., LL.M, ADR Services, Inc. Century City, California %$%#@*@
  • 86. Behind every accusation is a cry for help
  • 87. “ They won’t use our form!” “They say ‘yes’ but they mean ‘no’.” “They don’t do what they say they will” “They don’t do their homework” “They don’t think of the big picture” “They don’t plan ahead” “It’s all or nothing” “They don’t use their discretion” “They’re not decisive” “They blind-side me” “They act like they’re playing for the other team” “They won’t close the deal”
  • 88.
    • They’re not difficult, they are uninformed
      • Educate them about their true interests, consequences of their actions, our BATNA
      • Help them understand what is in their best interest
      • May have misunderstood or ignored a crucial piece of information
    From Bazerman & Malhotra, Negotiation Genius
  • 89.
    • They are not irrational; they have hidden constraints
      • Institutional
      • Precedential
      • Promises to others
      • Deadlines
    From Bazerman & Malhotra, Negotiation Genius
  • 90.
    • They’re not evil; they have hidden interests.
      • Personal (unrelated to you or deal)
      • Relational (related to you but not to deal, i.e., “face”)
      • Political, social, cultural
    From Bazerman & Malhotra, Negotiation Genius
  • 91.  
  • 92. Don’t say “yes yes yes” when what you really mean is “no no no”
  • 93.
    • People err in one direction or the other by:
      • Prioritizing the relationship & saying “yes” when you want/need to say “no” or
      • Prioritizing their own power by brusquely saying “no” or
      • Take middle ground of avoidance saying nothing & hoping a problem won’t arise
      • Resource Materials, Vol. I, 45-46
  • 94. The Central Question
    • How can we address ______________________ our interests
    • While at the same time addressing ______________ your interests
    • in a way that satisfies _____________? our common interests
    With thanks to mediator Sam Imperati
  • 95.  
  • 96.  
  • 97. Name Where Focus Moves Tactics “ at the table” People, process Improved communication, build trust, counter hardball ploys, bridge interests Deal design “ on the drawing board” Value, substance, outcomes Invent and structure agreements to create greater value, better meet objectives, are more sustainable Set Up “ away from the table” Architecture Ensure most favorable scope (right parties, interests, no-deal options, sequence
  • 98. Party Interests: Apparent Interests: Hidden Sequence Customer Price, terms, external events, history, current corporate events, public statements internal goals, pressures, priorities, fears Sales, business representatives, legal, management Qwest Price, terms, competition, history, current corporate goals, concerns Internal goals, pressures, priorities, fears Sales, CD&S, Offer Management, Regulatory, Legal, etc. Competitors Price, terms, etc. Same as above
  • 99. Scope Sequence Process Interests Goals Type of deal: procurement, sale, service Product, service, price, terms, parties, approval internal and external, press Aligning interests, dove-tailing differences, problem solving, distributive/integrative strategy/tactics Qwes t: Profit, growth, reputation, limitation of liability Right deal at right time with right parties at right price Parties to deal : Qwest, customer, suppliers Customer/Provider: profit, growth, reputation, limitation of liability Moves Qwest in desired corporate direction; forwards interests of stakeholders Non-parties: Government, shareholders, public, competition Avoids potential liabilities, reputational damages
  • 100. Apparent/Ascertainable Interests Hidden Interests/Constraints Price, terms, timing Corporate Relation to other goals, plans, concerns, priorities, preferences History, orientation to the future, threats to survival, profitability, stock price, mergers (planned or in process) Personal: financial, power, reputation, fears, constraints, priorities People whose interests are at stake if deal goes south Third parties : stock market, analysts, bankers, government, customers, shareholders, competitors, adversaries, allies
  • 101. Negotiation Ethics
  • 102.
      • Lying about bottom line expected & sanctioned
      • Misleading legal statements not likely problem – caveat emptor (“hire a lawyer”)
      • Reasons for positions not expected to be believedREASONS FOR NEGOTIATION
        • Often very convincing
        • facts rather than opinion
        • Material or immaterial,
        • harmless puffing or bluffing
  • 103. ABA Model Rules
    • lawyer shall not knowingly
    • make false statements of material fact or law
    • fail to disclose material facts when necessary to avoid assisting a criminal or fraudulent act
    • posturing or exaggeration
    • Statements regarding a party's
      • negotiating goals or its willingness to compromise,
      • as well as statements that can fairly be characterized as negotiation ‘puffing,'
    • ordinarily are not considered ‘false statements of material fact ‘within the meaning of the Model Rules.
  • 104. ABA Advice
    • understate willingness to make concessions
    • exaggerate strengths; minimize weaknesses
    • make estimates of price or value
    • intentions re acceptable settlement
    • withhold existence of an insurance policy—unless required by law
    • fail to correct the other party's misunderstanding, based on information from third parties, of the finances of the lawyer's client.
  • 105.
    • An attorney should avoid negotiating tactics that are
    • abusive
    • not made in good faith
    • threaten inappropriate legal action
    • not true
    • set arbitrary deadlines
    • intended solely to gain an unfair advantage or take unfair advantage of a superior bargaining position; or
    • do not accurately reflect the client's wishes or previous oral agreements.
    California Attorney Guidelines of Civility and Professionalism
  • 106.