Negotiation and Conflict Resolution - Entrepreneurship 101 (2013/2014)

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The art of negotiation touches every aspect of our lives — we routinely negotiate with our spouses, our children, our landlord, our employer, and so on. It is equally important in business — we negotiate with our customers, our suppliers and our investors. Case studies focus on situations most entrepreneurs will face: research projects, starting a business venture, obtaining investors and licensing a product or invention.

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Negotiation and Conflict Resolution - Entrepreneurship 101 (2013/2014)

  1. 1. Negotiation and Conflict Resolution MaRS Discovery District Entrepreneurship 101 Series February 12, 2014 Presentation by Michael Erdle Practical Resolutions Inc.
  2. 2. Introduction   Negotiation   Conflict Resolution
  3. 3. What is Negotiation?   Negotiation is:   a process.   a structured conversation.   a means to an end (agreement about something).   We do it all the time, without really thinking about it.
  4. 4. Basis for Negotiation   Interests   Rights   Power
  5. 5. Escalation
  6. 6. Power Power Strategies: Characteristics of Power: •  •  •  •  •  •  •  •  •  •  •  Take action unilaterally Win at all costs Attack/Defend Threaten Coerce Withdraw (Take the Ball and Go Home) •  Physical (or verbal) violence Adversarial “Win/Lose” at best Usually “Lose/Lose” Extremely expensive Negative impact on future relationships
  7. 7. Rights Rights Strategies: Characteristics of Rights: •  Contracts (guarantee the minimum) •  Policies, procedures, rules •  Precedent •  Past practice •  Legal action •  Third-party decisions (e.g. arbitration) •  •  •  •  •  •  Adversarial “Win/Lose” at best Often “Lose/Lose” Extremely expensive Time-consuming Impact on future relationships?
  8. 8. Interests Interests Strategies: Characteristics of Interests: •  •  •  •  •  •  •  •  •  •  Identify what’s really important Dialogue about needs and wants Honest sharing of information Maximize results for all parties Help everyone explore and understand their own interests, and interests of other parties •  Needs an ongoing relationship “Win/win” process Collaborative Interdependent Builds trust Positive impact on future relationship
  9. 9. Power, Rights, Interests All out “War” Unilateral Action Threats, Coercion Power Litigation Costs   Go   Up   Arbitration Investigation/Fact Finding Conciliation Mediation Negotiation Problem Solving Prevention Control  Goes  Up   Rights Interests
  10. 10. The “Golden Rule” “The Wizard of Id”, B. Parker, J. Hart
  11. 11. De-escalation
  12. 12. Duty to Negotiate in Good Faith   Obligation to respect the legitimate interests of other parties and to deal promptly, honestly, fairly and reasonably with them.   Shelanu Inc. v. Print Three Franchising Corp. (Ontario Court of Appeal)   Implied in negotiation where there is an imbalance.   Wallace v. Grain Growers (Supreme Court of Canada)
  13. 13. Duty to Negotiate in Good Faith Spectrum of contractual duties Selfish Selfless Honesty                          Good  Faith                            Fiduciary  Duty  
  14. 14. Duty to Negotiate in Good Faith   Fiduciary:   Trustee   Corporate Director   Lawyer   Good Faith:   Professional Code of Ethics   Contract   Employee/Employer
  15. 15. Negotiation Steps   Distributing Value vs. Creating Value   Opportunistic   Problem-solving   Identify Issues   What does each side want and need?   Consider Interests   Common   Complementary   Conflicting
  16. 16. Effective Negotiation   Interests vs. Positions   “Needs” vs. “wants”   “Separate the People from the Problem.”   Soft on the person   Hard on the problem   Consider other Options
  17. 17. Effective Negotiation   Seek Objective Alternatives   Determine BATNA and WATNA   Best Alternative to Negotiated Agreement   Worst Alternative to Negotiated Agreement   Look for a “win-win” solution
  18. 18. Effective Negotiation   Successful relationships are built on communication and trust.   Lack of trust leads to “win-lose” or “lose-lose”.   Negotiation is one way of creating trust – or deciding whether trust is justified.
  19. 19. Multiple Negotiations   Selfish strategy works in a “winner take all” game.   Life is rarely like that.   Most negotiations involve a continuing relationship.   What happens if there’s a series of negotiations?
  20. 20. Multiple Negotiations   “Tit-for-Tat” strategy is most successful.   Four key conditions:   Nice   Retaliate   Forgiving   Generous
  21. 21. 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.
  22. 22. Negotiation Styles   Focus on “winning”   Focus on relationship
  23. 23. Focus  on  Content   Negotiation Styles Win - Win Win - Lose Focus  on  Rela5onship  
  24. 24. Focus  on  Content   Negotiation Styles Focus  on  Rela5onship  
  25. 25. Focus  on  Content   Negotiation Styles Focus  on  Rela5onship  
  26. 26. Focus  on  Content   Negotiation Styles Focus  on  Rela5onship  
  27. 27. Focus  on  Content   Negotiation Styles Focus  on  Rela5onship  
  28. 28. Focus  on  Content   Negotiation Styles Focus  on  Rela5onship  
  29. 29. Focus  on  Content   Negotiation Styles Win - Win Win - Lose Focus  on  Rela5onship  
  30. 30. Power Ploys   Classic “Hard Bargaining” Ploys   Extreme claims, small concessions   “Take it or leave it.”   Unreciprocated offers   Threats and warnings   Attacking the alternatives   Good cop, bad cop
  31. 31. Ways to Respond   Extreme claims, small concessions   Tit for Tat – make equally small concessions   “Take it or leave it.”   Make a counter offer   Offer an alternative   Don’t be afraid to walk away
  32. 32. Ways to Respond   Unreciprocated offers   Don’t negotiate against yourself   Wait for a serious counter offer   Threats and warnings   Don’t make a counter-threat   Challenge the underlying assumptions
  33. 33. Ways to Respond   Attacking the alternatives   Ask for an explanation   “Why do you have a problem with…?”   Good cop, bad cop   Negotiate with the boss   Use the “good cop” to your advantage
  34. 34. Understanding Interests Common Interests   Parties want the same things   E.g. company and workers both want to avoid strikes and workplace grievances (costs them both money)
  35. 35. Understanding Interests Complementary Interests   Parties want different things, but they don’t conflict   E.g. company wants to increase productivity & profits; workers want better pensions
  36. 36. Understanding Interests Conflicting Interests   Parties want different and incompatible things   E.g. company wants to reduce labour costs; workers want to be paid more
  37. 37. Negotiation Skills   Communication is the key to effective negotiation.   Assertiveness vs. Empathy   Effective negotiator is assertive and empathetic   What you say is often less important than how you say it.   Tone   Body language
  38. 38. Negotiation Skills   Understanding and recognition do not mean compromise and concession.   “I understand” vs. “I agree”   Your own emotions and subconscious brain can hinder your ability to negotiate effectively.
  39. 39. Negotiation Skills   Listening   Develop “active listening”   Understanding   Acknowledge the other person’s perspective   Flexibility   Be open to other options   Pragmatism   Accept the best available option
  40. 40. Conflict Resolution: Match Process to Business Goals   Litigation   Mediation   Public   Private   Little control over   Cheaper and quicker time & expense   Arbitration   Private   Quicker and cheaper?   Control outcome   Facilitation   Informal   Inexpensive
  41. 41. Power, Rights, Interests All out “War” Unilateral Action Threats, Coercion Power Litigation Costs   Go   Up   Arbitration Investigation/Fact Finding Conciliation Mediation Facilitation Problem Solving Negotiation Control  Goes  Up   Rights Interests
  42. 42. Facilitation   Informal process   Parties control process and outcome   Facilitator ensures that all issues are addressed and all parties have an opportunity to be heard   Examples: partnering workshops; joint problem-solving; facilitated negotiations (re-negotiations)
  43. 43. Mediation   A more formal process of facilitated negotiation.   The Mediator guides the process and helps the parties negotiate more effectively.   The Mediator does not decide who is right or wrong.
  44. 44. Mediation   Interest-based Mediation   Mediator is a facilitator   Focus on interests, not legal rights or obligations   Options for creative solutions   Evaluative Mediation   Neutral evaluation   Based on legal rights & obligations
  45. 45. Mediation   Qualities of an effective mediator:   Subject area knowledge   Negotiation & mediation process skills   Lets parties make key decisions   Creative approach to the problem   Patience
  46. 46. Arbitration   Adversarial process.   Less formal than litigation, but need to follow procedural rules for fairness and efficiency   Not necessarily quicker or cheaper than litigation   Parties can select arbitrator with particular legal, financial or licensing expertise   Private – don’t “air dirty laundry”
  47. 47. Arbitration   Qualities of an effective arbitrator:   Subject matter expertise   Active control over process   Fairness and good judgment
  48. 48. Other Dispute Processes   Executive Committee   Formal escalation process   Risk that positions become harder as they escalate   Executives must remain engaged throughout the agreement   Project Umpire   Can facilitate or mediate resolution of project disputes   Can also provide neutral evaluation or non-binding arbitration   Umpire is engaged throughout the project   Available to deal with issues on short notice
  49. 49. Resources   Fischer, Ury and Patton: Getting to Yes, Penguin, 1991   Ury: Getting Past No, Bantam, 1993   Cohen: You Can Negotiate Anything, Bantam, 1980   Mnookin, Peppet and Tulumello: Beyond Winning, Harvard University Press, 2000   ADR Institute of Ontario (ADRIO) http://www.adrontario.ca/
  50. 50. Questions?

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