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Negotiation skills

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  1. 1. Negotiation Skills Welcome
  2. 2. Negotiation Skills My father said: "You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals.” J. Paul Getty
  3. 3. Why Negotiate? Gavin Kennedy in his book The New Negotiating Edge says.. ‘ Animals do not negotiate. They use violence or the threat of violence to get what they want, whether it be food, a mate or territory.’ Have you ever seen 2 dogs negotiate over a bone? ‘ Trade is the human foundation of human civilisation. It is what makes humans different from animals.’ ‘ Negotiation is anathema to tyrants, who usually want something for nothing and do not recognise a need for another person’s voluntary consent before they get what they want’
  4. 4. Negotiation – What is it? ‘ The process by which we search for the terms to obtain what we want from somebody who wants something from us’ Gavin Kennedy Confer with others to reach a compromise or agreement. Concise Oxford Dictionary To negotiate is to trade something we have for something we want. Anon ‘ Negotiation is an explicit voluntary traded exchange between people who want something from each other’ Gavin Kennedy
  5. 5. Some decision making tools for negotiation: Persuasion : Usually the first method we choose when we want something. Useful when interests or opinions are the same. Giving in: This is not the easy way out, and sometimes it’s just not worth continuing if the cost (in any terms) is too high. Coercion : This could simply be stating your options, ‘I could take my business elsewhere’. It could also be gentle reminders or unspecified consequences right up to threats. Threats are not useful in a negotiation situation as they erupt in full blown battles. Problem Solving : Works well when both parties have a strong relationship, where you trust each other, and share the problem.
  6. 6. When do we Negotiate? When we need someone’s consent When the time and effort of negotiating are justified When the outcome is uncertain Source: The Negotiate Trainers Manual 1996 p6.
  7. 7. Negotiating Behaviour <ul><li>Gavin Kennedy (The New Negotiating Edge) describes 3 types of behaviour that we can display and encounter when in a negotiating situation </li></ul><ul><li>RED BLUE PURPLE </li></ul>7
  8. 8. RED Behaviour <ul><li>Manipulation </li></ul><ul><li>Aggressive </li></ul><ul><li>Intimidation </li></ul><ul><li>Exploitation </li></ul><ul><li>Always seeking the best for you </li></ul><ul><li>No concern for person you are negotiating with </li></ul><ul><li>Taking </li></ul>People behave in this manner when they fear exploitation by the other party, but by behaving this way to protect themselves, they provoke the behaviour they are trying to avoid. 8
  9. 9. BLUE Behaviour <ul><li>Win win approach </li></ul><ul><li>Cooperation </li></ul><ul><li>Trusting </li></ul><ul><li>Pacifying </li></ul><ul><li>Relational </li></ul><ul><li>Giving </li></ul>Kennedy talks of a ‘behavioural dilemma’, do you cooperate ( blue ) or defect ( red )? Can you trust the other person? And to what extent? Trusting someone involves risk, on the one hand being too trusting is naïve and on the other, not trusting at all can create deceitful behaviour. The answer is to merge blue and red behaviour into purple . 9
  10. 10. PURPLE Behaviour <ul><li>Give me some of what I want ( red ) </li></ul><ul><li>I’ll give you some of what you want ( blue ) </li></ul><ul><li>Deal with people as they are not how you think they are </li></ul><ul><li>Good intentions </li></ul><ul><li>Two way exchange </li></ul><ul><li>Purple behaviour incites purple behaviour </li></ul><ul><li>Tit for tat strategies </li></ul><ul><li>Open </li></ul><ul><li>People know where they stand </li></ul><ul><li>Determination to solve problems by both sets of criteria of the merits of the case and/or the terms of a negotiated exchange </li></ul>To the red behaviourist the message is loud and clear, ‘You will get nothing from me unless and until I get something from you’. 10
  11. 11. The Four Phases of Negotiation PLAN DEBATE PROPOSE BARGAIN 11
  12. 12. PLAN <ul><li>When you have no time to prepare for a negotiation, do you: </li></ul><ul><li>a. Rely on your experience of similar situations? </li></ul><ul><li>b. React to what the other person has said? </li></ul><ul><li>c. Listen to them and adjourn at the first opportunity? </li></ul><ul><li>a . This might be tempting on the grounds that it is all you have time for and could become a habit of this is how you prepare for all other negotiations – even when you do have time. </li></ul><ul><li>b. This is the limit of preparation for some people, and is a sign of reactive management. </li></ul><ul><li>c. The best response. If are thrown in the deep end and do not have any preparation time. </li></ul>12
  13. 13. <ul><li>You are depending on winning a contract and are the preferred bidder. A problem has come up that could jeopardise your preferred bidder status and therefore winning the contract. Do you: </li></ul><ul><li>a. Ensure that the client’s interests take precedence over yours? </li></ul><ul><li>b. Put your interests before those of the client? </li></ul><ul><li>c. Judge the importance of each party’s interest on their merits? </li></ul><ul><li>a. Most likely to be necessary – if you do not meet the client’s interest you are unlikely to remain the preferred bidder. </li></ul><ul><li>b. Not a sensible option. If you put your interests first, she doesn’t get what she wants and therefore will not give you what you want. </li></ul><ul><li>c. Address the other party interest first. You cannot compare the merits of each party’s interest. </li></ul>PLAN 13
  14. 14. <ul><li>What do I want? </li></ul><ul><li>What do they want? Try to judge the objective they will want, what arguments are they going to use to support their objective and how will you counter them? </li></ul><ul><li>What will/can I trade? </li></ul><ul><li>Explore all the available options of the trade </li></ul><ul><li>Explore long and short term implications of each option for all parties involved </li></ul><ul><li>Set objectives in terms of acceptable limits and that you have a realistic chance of achieving. </li></ul><ul><li>Visualise possible gains, not losses. </li></ul><ul><li>Be aware that the opposition might have a hidden agenda </li></ul>PLAN 14
  15. 15. <ul><li>Identify your supporting arguments that justify your objectives and the arguments that the other party may use against them. How will you counter their arguments? </li></ul><ul><li>What strengths and weaknesses do you take to the negotiating table? How can you maximise your strengths and minimise your weaknesses? </li></ul><ul><li>What are the strengths and weaknesses of the other party? </li></ul><ul><li>What will be your opening gambit and how will you present it? </li></ul><ul><li>Timescale – how much time is there to negotiate how imperative are deadlines? </li></ul><ul><li>What will be your opening position, your fall back position and your final fall back position beyond which you will refuse to do business. </li></ul>PLAN 15
  16. 16. <ul><li>You are negotiating with a colleague over parking spaces for your teams, and he makes a factually incorrect statement about your entitlement to parking places. Do you: </li></ul><ul><li>a. Stop him right there to correct the error? </li></ul><ul><li>b. Shake your head vigorously, indicating disagreement but say nothing until he finishes or gives way? </li></ul><ul><li>c. Say and do nothing until he is finished? </li></ul><ul><li>a. Nobody likes being interrupted and it does not help if a negotiator does so. </li></ul><ul><li>b. Body Language that is visually interruptive is still an interruption. </li></ul><ul><li>c. Yes. If the case is built on the factual error it will disintegrate more quickly if you wait to reveal the truth. </li></ul>DEBATE 16
  17. 17. <ul><li>The other negotiator is quite angry and winds up her tirade of a clear threat of what she will do if she does not get her way. Do you: </li></ul><ul><li>a. Ignore her threats and concentrate on rebutting her claims? </li></ul><ul><li>b. Demand that she withdraw her threat if you are to continue negotiating? </li></ul><ul><li>c. Counter her threat with one of your own? </li></ul><ul><li>a. Better to ignore the threats. </li></ul><ul><li>b. It’s pointless, and unlikely she will withdraw. </li></ul><ul><li>c. No. This could spark of a cycle and end up in a fight. </li></ul>DEBATE 17
  18. 18. The other negotiator makes a statement with which you profoundly disagree. Do you: a. Tell him that he is mistaken and explain why? b. Ask him why he believes that his statement is true? a. He won’t listen. He will be constructing his counter argument. b. Yes. The best way to handle disagreement is to question the person with whom you disagree. DEBATE 18
  19. 19. DEBATE <ul><li>Positive Powerful opening – confident body language, tone and words </li></ul><ul><li>Break the ice and discuss neutral topics and build rapport </li></ul><ul><li>Cover: Why we are here, what we are going to do, how long it will take </li></ul><ul><li>Emphasise the need for agreement at the outset </li></ul><ul><li>Listen to what the other party say and how they say it </li></ul><ul><li>Observe non-verbal signals </li></ul><ul><li>Sit where you can see everyone </li></ul><ul><li>If you are with one other person sit apart – so you are 2 voices. </li></ul>19
  20. 20. <ul><li>Give your general views on the broad field to be covered. </li></ul><ul><li>Look together at the possibilities for joint advantage – emphasise areas of agreement </li></ul><ul><li>Never pass over something you don’t completely understand. </li></ul><ul><li>Don’t feel intimidated – both sides are under pressure. The person under the greatest time pressure loses – so don’t reveal your deadlines. </li></ul><ul><li>Always maintain walk away power </li></ul><ul><li>Exchange information through statements. Explain and explore the differences that prompt the search for a negotiated solution. </li></ul>DEBATE 20
  21. 21. <ul><li>Deliver the statements in a neutral tone. Deliver it in a hostile tone and you can predict the effect and response. </li></ul><ul><li>Reinforce your tone with your behaviours. You want a solution to meet both parties needs. </li></ul><ul><li>Give assurance, i.e. you are in the ‘solution business’, and any current difficulties are problems to be jointly overcome. </li></ul><ul><li>Disclaim any intention of acting negatively towards the other party. </li></ul><ul><li>Use questions to elicit information not to fuel argument. Questioning is an important negotiating skill, and demonstrates your willingness to understand the other negotiators interests </li></ul><ul><li>Actively listen, don’t pretend to listen and don’t wait to speak – give the speaker your full attention. </li></ul><ul><li>Summarise their views too their satisfaction to demonstrate you have understood. </li></ul>DEBATE 21
  22. 22. <ul><li>A union leader interviewed on television made a passionate case that if only the management would return to the negotiation table and ‘show some flexibility’, he had no doubt that the bitter strike ‘would be settled in a matter of hours’. Did he mean that: </li></ul><ul><li>The union was ready to make some concessions? </li></ul><ul><li>The management must make some concessions? </li></ul><ul><li>If the management made some concessions then the union would too? </li></ul><ul><li>Unlikely. The union has to keep the spirits of it’s members high and show they are doing their best to find a settlement. Usually they mean what they say, the return to work is conditional on the management showing some flexibility and conceding the union’s claim. </li></ul><ul><li>Yes. </li></ul><ul><li>Unlikely. If movement was possible if reciprocated, the union would be unlikely to use a public forum. </li></ul>PROPOSE 22
  23. 23. <ul><li>In an effort to conclude the negotiations, the seller offered to cut her prices by 10% and drop the pre-payment demand. Which statement would most likely to achieve her objective? </li></ul><ul><li>‘ Ok. We’ll cut our prices by 10% but we must be paid after 30 days delivery’ </li></ul><ul><li>‘ If we drop our prices by 10% and allow 30 days credit, can you confirm the order of 1000 units?’ </li></ul><ul><li>‘ If you confirm the order of 1000 units, we will reduce prices by 10% and allow you 30 days credit’ </li></ul><ul><li>a) Deceptively ok, except that it is an unconditional offer requiring nothing to be offered in return by the buyer. A free-gift concession, not a trade. </li></ul><ul><li>A question-proposal which is weaker than a statement proposal </li></ul><ul><li>Yes, much better. The bargain is conditional and the condition (demand for 1000 units) is stated first, followed by the offer (10% price cut and 30 days credit) </li></ul>PROPOSE 23
  24. 24. PROPOSE <ul><li>Decide whether you will speak your proposal first or respond to the proposal from the other party. </li></ul><ul><li>Put forward your proposal with as little emotion as possible. </li></ul><ul><li>Leave room for manoeuvre in your proposal </li></ul><ul><li>Full Disclosure – really means 90%. You may not know or are unwilling to disclose 100% of your position. This can be very productive – reaching out to the other party can be a strong positive behaviour builder, however, both parties must want to negotiate towards agreement. </li></ul><ul><li>Be assertive remember PURPLE . (Not RED or BLUE ) Use ‘ If you…Then I’ not ‘If we… will you’ this avoids a question proposal. </li></ul>24
  25. 25. Examples of Proposals 25 Submissive Assertive 1. How about we make it 10%? 2. No Problem. 3. I hope you can meet that deadline. 4. We were hoping to include a liquidated damages clause. 5. It’ll be tough to meet that deadline but ok we’ll give it a go
  26. 26. Examples of Proposals 26 Submissive Assertive 1. How about we make it 10%? If you make it a 10% discount, then we will order in lots of 100,000. 2. No Problem. If you pay our costs then we could consider uplifting it ourselves. 3. I hope you can meet that deadline. If you meet that deadline then we can consider giving you the work 4. We were hoping to include a liquidated damages clause. If you include a liquidated damages clause then you are eligible to be awarded the contract 5. It’ll be tough to meet that deadline but ok we’ll give it a go If you pay our premium hourly overtime rates then we’ll go for that deadline.
  27. 27. <ul><li>Avoid – ‘wish’, ‘hope’, ‘would like’ – this is not assertive </li></ul><ul><li>When you make and consider proposals it means you are moving towards a jointly agreed solution. </li></ul><ul><li>Proposals consist of 2 elements: the condition plus the offer and can be best presented with the ‘If ….Then’ technique. </li></ul><ul><li>Both the condition and the offer can be couched vaguely. But it is better to state your condition first. </li></ul><ul><li>Example 1: ‘If you change your terms of business, then I could consider some amendments to our payment schedule.’ </li></ul><ul><li>Is example 1: A. Vague-vague (vague in condition and offer) </li></ul><ul><li>B. Specific-vague (specific in condition and vague in offer) </li></ul>PROPOSE 27
  28. 28. Answer: Vague-Vague. Vague in the condition and offer. The proposal isn’t specific about the changes in the terms of business nor in what amendments could be made to the payment schedule. Example 2: ‘If you amended the penalty period from 14 to 7 days then I could consider some amendments to our payment schedule’ Is example 2: A. Vague-vague (vague in condition and offer) B. Specific-vague (specific in condition and vague in offer) PROPOSE 28
  29. 29. <ul><li>Answer: Specific-Vague. </li></ul><ul><li>Specific in the condition, but vague in their offer. </li></ul><ul><li>Being vague in the offer is a sign of proposal. </li></ul><ul><li>It isn’t an exact science and you don’t have to follow a set pattern, but research shows that effective negotiators do move from vague to specific in their proposal. </li></ul><ul><li>Being vague gives you some leeway, as you don’t know how near or far you are from the point of settlement, and prevents you from getting to an impasse. </li></ul><ul><li>By being vague instant rejection and instant acceptance is not appropriate. How can you accept something that isn’t specific? </li></ul><ul><li>Conditions can be vague or specific. </li></ul><ul><li>You can have specific proposals, but beware of being hasty. </li></ul>PROPOSE 29
  30. 30. Responses to a Proposal <ul><li>If you don’t agree, avoid ‘amateur dramatics’, slamming the table, storming out etc. This is typical RED behaviour. </li></ul><ul><li>Purple behaviour, means responding positively. Welcome the fact a proposal has been made, you don’t have to agree with the content – this is what you are around the negotiating table for, to improve on the initial proposal to achieve a mutually acceptable solution. </li></ul><ul><li>If agreement is hard to find keep looking for a solution until one is found or, it is clear that one doesn’t exist. </li></ul><ul><li>You then have to either agree to disagree and call a halt to negotiations or, if the consequences or alternatives are not acceptable then negotiation has to continue. </li></ul>30
  31. 31. <ul><li>How might the following proposals be amended to make them assertive? </li></ul><ul><li>‘ If we agreed to foreign rights, would you accept this on a licence-only basis?’ </li></ul><ul><li>‘ Your fee is slightly more than I was expecting, so could we pay it in monthly instalments?’ </li></ul><ul><li>‘ Would it be ok if we used our own transport?’ </li></ul><ul><li>‘ If you accepted this on a licence-only basis then we would agree to foreign rights’ </li></ul><ul><li>‘’ If we pay in monthly instalments, then we might accept your fee.’ </li></ul><ul><li>c) ‘Would it be ok if we used our own transport?’ </li></ul>BARGAINING 31
  32. 32. <ul><li>How would you amend the following proposals into a bargain format? </li></ul><ul><li>‘ If you agree to some form of bonus, then we will raise the productivity by 5%’ </li></ul><ul><li>‘ If we secure and fence the site, will you expedite the purchase date by 90 days?’ </li></ul><ul><li>‘ If we receive assurances, then we will pay £100,000 against your outstanding debts.’ </li></ul><ul><li>‘ If you agree to a 20% bonus then we will raise productivity by 5%.’ </li></ul><ul><li>‘ If you expedite the purchase date by 90 days, then we will secure and fence the site.’ </li></ul><ul><li>‘ If we receive the appropriate assurances as detailed in our letter of 12 August, then we will pay £100,000 against your outstanding debts.’ </li></ul>BARGAINING 32
  33. 33. BARGAINING <ul><li>A bargain is the conclusion of the negotiation. In Scotland solicitors close a negotiation by announcing ‘a bargain is concluded’. </li></ul><ul><li>Phrases like: </li></ul><ul><li>‘ So, what you are offering is…’ </li></ul><ul><li>‘ Ok I get the picture…’ </li></ul><ul><li>‘ Let me be clear, you want x for y’ </li></ul><ul><li>‘ Here’s how I see it….’ </li></ul><ul><li>‘ To sum up, in return for x I’ll agree to y’ </li></ul><ul><li>Show that the two parties are moving towards each other and the negotiation is coming to agreement. </li></ul>33
  34. 34. <ul><li>Be prepared to make concessions, offer the smallest concessions first – you may not need to go any further. </li></ul><ul><li>Compromise without losing face. If you have had to backtrack on a point you had as your final position you could say ‘Since you have changed your position on… I may be able to change mine on…’ </li></ul><ul><li>Make eye contact to emphasise that each concession is a serious loss for you. </li></ul><ul><li>Do not ignore issues in order to speed up negotiations. </li></ul><ul><li>Record fully all agreements finalised at the negotiations close. </li></ul>BARGAINING 34
  35. 35. Closing the Negotiation <ul><li>Summary Close Summarise the details of the conditions and the offer, and ask for agreement. </li></ul><ul><li>Adjournment Close Useful where there remains some small differences. It gives both parties time to consider the final agreement. </li></ul><ul><li>Final Final offer close Make it clear that this is your final final offer by choosing the right words, tone and body language. Create an atmosphere of decisiveness, gather your papers together as though getting ready to leave. </li></ul>35
  36. 36. <ul><li>Intimidation </li></ul><ul><li>Domineering </li></ul><ul><li>Bullying </li></ul><ul><li>Threats </li></ul><ul><li>Focusing on their own interests and not yours </li></ul><ul><li>These are typical RED behaviours. </li></ul><ul><li>Be careful to distinguish those who always behave in a RED way, to those who are just having a bad day. </li></ul>Dealing with Difficult Negotiators. 37
  37. 37. <ul><li>The man you are negotiating with has a bombastic and rude manner. He interrupts constantly and loudly and at a pace that does not allow interruptions to his flow. He is emphatic and threatening and shows no interest in your point of view. Do you: </li></ul><ul><li>a. Retaliate in kind with matching behaviour? </li></ul><ul><li>b. Wait for an opening to say your piece? </li></ul><ul><li>c. Agree to what he wants. </li></ul><ul><li>Retaliation is a challenge. He is not intimidating you enough – he will put on more pressure. </li></ul><ul><li>Yes. But only if you are clear that his behaviour will not affect your focus on the outcome. </li></ul><ul><li>Never! Do not give him the satisfaction, by giving into a bully and their intimidation. </li></ul>Dealing with Difficult Negotiators. 38
  38. 38. <ul><li>The financial director of a large customer is an abusive and domineering person, who has a repertoire of swear words and will not accept ‘No’ for an answer. She expects you to sit there and take it and theatrically waves her arms about and throws papers around when she wants to make a point. Do you: </li></ul><ul><li>a. Behave in a contrasting manner and keep your cool? </li></ul><ul><li>b. Agree to what she wants? </li></ul><ul><li>c. Wait to say your piece? </li></ul><ul><li>To contrast her behaviour only shows her that her behaviour is working, she’ll put on more pressure until you give in. </li></ul><ul><li>Never! Do not give in to her intimidation. </li></ul><ul><li>Yes, but only if you are sure her behaviour will not affect the outcome. </li></ul>Dealing with Difficult Negotiators. 39
  39. 39. <ul><li>So what can you do about it? </li></ul><ul><li>Do not let their behaviour affect the outcome – that is what they want. They know if they behave in this way they will get what they want because the other party will back down. </li></ul><ul><li>Do not react to their behaviour- that is what they want. </li></ul><ul><li>You need to ignore their behaviour, this is what they choose – not you. Be focused on the outcome and do not let their behaviour influence you away from this. </li></ul>Dealing with Difficult Negotiators. 40
  40. 40. <ul><li>Focus on the merits of both cases </li></ul><ul><li>Consider what ‘trades’ you are going to make. What you give up reflects consideration of the merits of their case, in exchange for what you insist on getting from them. </li></ul><ul><li>This shows and forces them to give recognition to the merits of your case. </li></ul><ul><li>In short, continue with your PURPLE behaviour, using the condition and offer, ‘If … then’ strategy. </li></ul><ul><li>DO NOT LET THEM GET TO YOU!! </li></ul>Dealing with Difficult Negotiators. 41
  41. 41. Negotiation Check List 42 Good Practice Avoid <ul><li>Actively listen </li></ul><ul><li>Question for clarification </li></ul><ul><li>Summarising </li></ul><ul><li>Test commitment </li></ul><ul><li>Seeking & giving information </li></ul><ul><li>Encourage two way conversation </li></ul><ul><li>State and plan your proposal – then summarise </li></ul><ul><li>Use the ‘if you ….then we’ll’ principle </li></ul><ul><li>Interrupting </li></ul><ul><li>Attacking </li></ul><ul><li>Blaming </li></ul><ul><li>Talking too much </li></ul><ul><li>Sarcasm </li></ul><ul><li>Threats </li></ul><ul><li>Taking it personally </li></ul><ul><li>Closed body language </li></ul>
  42. 42. Any Questions?
  43. 43. Thank You!
  44. 44. References <ul><li>The New Negotiating Edge. The Behavioural Approach for Results and Relationships by Gavin Kennedy. </li></ul><ul><li>Essential Managers Negotiating Skills by Tim Hindle </li></ul>44