Negotiation and Conflict Resolution - Entrepreneurship 101 (2012/2013)

1. Negotiation and Conflict Resolution MaRS Discovery District Entrepreneurship 101 Presentation by Michael Erdle, Co-Founder Practical Resolutions Inc.

3. Introduction v  Negotiation v  Conflict Resolution

4. What is Negotiation? v  Negotiation is: v  a process. v  a structured conversation. v  a means to an end (agreement about something). v  We do it all the time, without really thinking about it.

5. Basis for Negotiation v  Interests v  Rights v  Power

6. Escalation

7. Power Power Strategies: Characteristics of Power: •  Take action unilaterally. •  Adversarial •  Win at all costs •  “Win/Lose” at best •  Attack/Defend •  Usually “Lose/Lose” •  Threaten •  Extremely expensive •  Coerce •  Negative impact on future •  Withdraw (Take the Ball and Go relationships Home) •  Physical (or verbal) violence

8. Rights Rights Strategies: Characteristics of Rights: •  Contracts (guarantee the •  Adversarial minimum) •  “Win/Lose” at best •  Policies, procedures, rules •  Often “Lose/Lose” •  Precedent •  Extremely expensive •  Past practice •  Time-consuming •  Legal action •  Impact on future relationships? •  Third-party decisions (e.g. arbitration)

9. Interests Interests Strategies: Characteristics of Interests: •  Identify what’s really important •  “Win/win” process •  Dialogue about needs and wants •  Collaborative •  Honest sharing of information •  Interdependent •  Maximize results for all parties •  Builds trust •  Help everyone explore and •  Positive impact on future understand their own interests, relationship and interests of other parties •  Needs an ongoing relationship

10. Power, Rights, Interests All out “War” Unilateral Action Power Threats, Coercion Litigation Arbitration Rights Costs Investigation/Fact Finding Go Up Conciliation Interests Mediation Negotiation Problem Solving Prevention Control Goes Up

11. The “Golden Rule”

12. De-escalation

13. Duty to Negotiate in Good Faith v  Obligation to respect the legitimate interests of other party and to deal promptly, honestly, fairly and reasonably with them. v  Shelanu Inc. v. Print Three Franchising Corp. (Ontario Court of Appeal) v  Implied in negotiation where there is an imbalance. v  Wallace v. Grain Growers (Supreme Court of Canada)

14. Duty to Negotiate in Good Faith Spectrum of contractual duties Selfish Selfless Honesty ! Good Faith Fiduciary Duty

15. Duty to Negotiate in Good Faith v  Fiduciary: v  Trustee v  Corporate Director v  Lawyer v  Good Faith: v  Professional Code of Ethics v  Contract v  Employee/Employer

16. Negotiation Steps v  Distributing Value vs. Creating Value v  Opportunistic v  Problem-solving v  Identify Issues v  What does each side want and need? v  Consider Interests v  Common v  Complementary v  Conflicting

17. Effective Negotiation v  Interests vs. Positions v  “Needs” vs. “wants” v  “Separate the People from the Problem.” v  Soft on the person v  Hard on the problem v  Consider other Options

18. Effective Negotiation v  Seek Objective Alternatives v  Determine BATNA and WATNA v  Best Alternative to Negotiated Agreement v  Worst Alternative to Negotiated Agreement v  Look for a “win-win” solution.

19. Effective Negotiation v  Successful relationships are built on communication and trust. v  Lack of trust leads to “win-lose” or “lose-lose”. v  Negotiation is one way of creating trust – or deciding whether trust is justified.

20. Multiple Negotiations v  Selfish strategy works in a “winner take all” game. v  Life is rarely like that. v  Most negotiations involve a continuing relationship. v  What happens if there’s a series of negotiations?

21. Multiple Negotiations v  “Tit-for-Tat” strategy is most successful. v  Four key conditions: v  Nice v  Retaliate v  Forgiving v  Generous

22. Multiple Negotiations 1.  The player always cooperates, unless provoked. 2.  The player always retaliates, if provoked. 3.  The player is quick to forgive –co-operate next time. 4.  The game must continue long enough for the ‘retaliation and forgiveness’ pattern to affect opponent’s behaviour.

23. Negotiation Styles v  Focus on “winning”. v  Focus on relationship.

24. Negotiation Styles Focus on Content Win - Win Win - Lose Focus on Rela,onship

25. Negotiation Styles Focus on Content Focus on Rela,onship

30. Power Ploys v  Classic “Hard Bargaining” Ploys v  Extreme claims, small concessions v  “Take or leave it.” v  Unreciprocated offers v  Threats and warnings v  Attacking the alternatives v  Good cop, bad cop

31. Ways to Respond v  Extreme claims, small concessions v  Tit for Tat – make equally small concessions. v  “Take or leave it.” v  Make a counter offer. v  Offer an alternative. v  Don’t be afraid to walk away.

32. Ways to Respond v  Unreciprocated offers v  Don’t negotiate against yourself. v  Wait for a serious counter offer. v  Threats and warnings v  Don’t make a counter-threat. v  Challenge the underlying assumptions .

33. Ways to Respond v  Attacking the alternatives v  Ask for an explanation. v  “Why do you have a problem with…?” v  Good cop, bad cop v  Negotiate with the boss. v  Use the “good cop” to your advantage.

34. Understanding Interests Common Interests v  Parties want the same things. v  E.g. company and workers both want to avoid strikes and workplace grievances (costs them both money).

35. Understanding Interests Complementary Interests v  Parties want different things, but they don’t conflict. v  E.g. company wants to increase productivity & profits; workers want better pensions.

36. Understanding Interests Conflicting Interests v  Parties want different and incompatible things. v  E.g. company wants to reduce labour costs; workers want to be paid more.

37. Negotiation Skills v  Communication is the key to effective negotiation. v  Assertiveness vs. Empathy v  Effective negotiator is assertive and empathetic v  What you say is often less important than how you say it. v  Tone v  Body language

38. Negotiation Skills v  Understanding and recognition do not mean compromise and concession. v  “I understand” vs. “I agree”. v  Your own emotions and subconscious brain can hinder your ability to negotiate effectively.

39. Negotiation Skills v  Listening v  Develop “active listening”. v  Understanding v  Acknowledge the other person’s perspective. v  Flexibility v  Be open to other options. v  Pragmatism v  Accept the best available option.

40. Conflict Resolution: Match Process to Business Goals v  Litigation v  Mediation v  Public v  Private v  Little control over v  Cheaper and quicker time & expense v  Control outcome v  Arbitration v  Facilitation v  Private v  Informal v  Quicker and v  Inexpensive cheaper?

41. Power, Rights, Interests All out “War” Unilateral Action Power Threats, Coercion Litigation Arbitration Rights Costs Investigation/Fact Finding Go Up Conciliation Interests Mediation Facilitation Problem Solving Negotiation Control Goes Up

42. Facilitation v  Informal process v  Parties control process and outcome v  Facilitator ensures that all issues are addressed and all parties have an opportunity to be heard v  Examples: partnering workshops; joint problem-solving; facilitated negotiations (re-negotiations)

43. Mediation v  A more formal process of facilitated negotiation. v  The Mediator guides the process and helps the parties negotiate more effectively. v  The Mediator does not decide who is right or wrong.

44. Mediation v  Interest-based Mediation v  Mediator is a facilitator. v  Focus on interests, not legal rights or obligations. v  Options for creative solutions. v  Evaluative Mediation v  Neutral evaluation. v  Based on legal rights & obligations.

45. Mediation v  Qualities of an effective mediator: v  Subject area knowledge v  Negotiation & mediation process skills v  Lets parties make key decisions v  Creative approach to the problem v  Patience

46. Arbitration v  Adversarial process v  Less formal than litigation, but need to follow procedural rules for fairness and efficiency v  Not necessarily quicker or cheaper than litigation v  Parties can select arbitrator with particular legal, financial or licensing expertise v  Private – don’t “air dirty laundry”

47. Arbitration v  Qualities of an effective arbitrator: v  Subject matter expertise v  Active control over process v  Fairness and good judgment

48. Other Dispute Processes v  Executive Committee v  Formal escalation process v  Risk that positions become harder as they escalate v  Executives must remain engaged throughout the agreement v  Project Umpire v  Can facilitate or mediate resolution of project disputes v  Can also provide neutral evaluation or non-binding arbitration v  Umpire is engaged throughout the project v  Available to deal with issues on short notice

49. Resources v  Fischer, Ury and Patton: Getting to Yes, Penguin, 1991 v  Ury: Getting Past No, Bantam, 1993 v  Cohen: You Can Negotiate Anything, Bantam, 1980 v  Mnookin, Peppet and Tulumello: Beyond Winning, Harvard University Press, 2000 v  ADR Institute of Ontario (ADRIO) http://www.adrontario.ca/

50. Questions?

Negotiation and Conflict Resolution - Entrepreneurship 101 (2012/2013)

Negotiation and Conflict Resolution - Entrepreneurship 101 (2012/2013)

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