Negotiation basics webinar


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Negotiation basics

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Negotiation basics webinar

  1. 1. Negotiation Basics
  2. 2. Introduction • Negotiation involves: • two or more parties in a process of exploration and exchange • process must assure that the implementation phase will observe the conditions agreed • correct contents and clear objectives • ethics and credibility
  3. 3. Concepts • exchanging values between the parties • money, intangible assets, etc. • weekly, monthly or annual bases, continuously or on-the-spot • buyers and sellers, family members, competitors or cooperators • It is a proposal debate. It is not an argument dispute. (Harvard Field Guide) • “we require”, “we need”; Is not an argumentation session, “we would like”, “we feel”, “we hope”
  4. 4. Want or need Maslow's Theory defines five levels of needs. Human needs start with basic survival demands and end with high level attitudes. The higher levels can only be accessed if the previous ones are satisfied.
  5. 5. Perception Perception is a human mechanism used to individually interpret reality. It starts by offsetting the sensorial human processes, adding some rational thoughts, seeking protection and acquiring explanations.
  6. 6. Objectives Priority Want Do not want Need Do not need 1 2 3 Need Value Period Present Value * Total= First of all, clarify what you want, need, do not want and do not need. Calculate the present value of the needs, based on expected values, periods and interest rate.
  7. 7. Information and action Each step includes actions and results, which are parts of a practical process. The same happens the other way around, from the top to the bottom: directions can be transformed into decisions, into information and finally into data.
  8. 8. Variables, concessions and influences List and prioritize the variables involved in your business. Insert them in a spreadsheet and understand each one, their benefits, the cost of fault and the alternatives.
  9. 9. Lognormal Select what are the significant points for your deal and solve them first. Remember that if you have more than three points that you consider as a priority, you must revise them and select only three.
  10. 10. Boundaries BATNA is the alternative for your side if an agreement becomes impossible and some other way has to be found. BATNA increases in importance as the position moves away from ZOPA.
  11. 11. Example of BATNA If you need a transportation service between your home and your office everyday, and you are negotiating with a driver providing such transportation, in case you do not reach a satisfactory result, the following alternatives will be available: Taxicab Subway Walking
  12. 12. Skills Positions are more related to lose-lose processes. Interests normally produce more chance to win-win situations.
  13. 13. Roles Leader Spokesperson “Constructive” Controversial Script actor Each member of a team should be assigned a different role in a negotiation. Some suggestions for a good relationship among negotiation teams are: appropriate dressing, adopting simple attitudes, talking between the members, looking at each other frequently, taking notes and being supportive with the colleagues.
  14. 14. Types of arguments (University of Maryland) • Aristotelian Argument = confirm a position or hypothesis or to refute an existing argument; persuade the reader to a particular point of view; uses logic, appeals to the rational in the audience, and provides empirical and common sense evidence to persuade the audience members to change their beliefs, attitudes, and actions. • Rogerian Argument = develop consensus among readers rather than establish an adversarial relationship; winning situation for everyone; avoiding all emotionally sensitive language, the writer phrases statements in as neutral a way as possible to avoid alienating readers by minimizing threat and establishing trust; resolution that recognizes the interests of all interested parties.
  15. 15. To propose or not propose There is no clear rule to define if you can move first or if you should wait for the other party’s proposal. It depends on perception and intuition. The confidence level decreases with excess or lack of smoothness.
  16. 16. Answering You do not need to answer questions immediately. Wait and think before responding. You do not need to follow the other side’s speed, mode or reaction. Ask for clarifications and do not show impatience or limitations.
  17. 17. Bahavior Depending on how much you are interested in keeping a good relationship and in holding on to the negotiation substance, there are four possible attitudes.
  18. 18. Conflict style It is important to anticipate these symbols in order to prevent unwanted reactions or to use the best constructive mode in a good sense.
  19. 19. Checking the tone First of all, listen to what the other party has and does not have to say, capturing both the actual information and the words hidden by signals and attitudes. Check what he/she expects from you, based on your intuition.
  20. 20. Body language Normally people are not able to dissimulate their emotions and a few provocative expressions can bring reality onto the table.
  21. 21. Employability Employability increases when you try to use win-win negotiations.
  22. 22. Ploys • Using possibilities to create false perceptions • Delegating decision-making to superiors • Transferring your problem to the other party • Splitting the difference after giving a big number • Starting off with a high price or difficult condition • Offering a small price on a confused time basis • Offering other providers to request a price • Always holding on to the chance to walk away • Starting off with some pre- condition imposing rules • Generating bad feelings with personal attacks • Focusing on weaker persons of the other team • Paying attention to different issues other than the negotiation subject • Inducing the other party to declare himself incompetent • Informing that you gave a wrong number and coming up with a bigger (or smaller) amount • Adding new numbers after closing the deal • Giving up a position, in order to make the other party ask for returning • Forcing the other party to become more flexible by delaying time • Forcing the understanding of unimportant issues
  23. 23. Explore, exploit Explore everything before move, do not firm anything before know all variations possible
  24. 24. Moving Move fast when decisions are easily reversible.
  25. 25. Implementing issues Before closing the deal, the main controls must be discussed and agreed upon between the parties.
  26. 26. FLOW The four following elements are considered fundamental to obtain a good negotiation process:
  27. 27. Mediation, Arbitration, Justice Best choice here … Pray to do not enter here …
  28. 28. Terms and conditions • The contract language • Confidential information • Contract documents • Contract price, milestones and payments • Contractor's representative • Force majeure • Subcontractor’s procedures • Work schedule • Work site • Billing and payment • Emergencies • Weather delays • Company-caused delay • Shutdown due to non- compliance with the contract • Shutdown without cause • Indemnity • Liability coverage • Warranties • Security • Taxes • Mediation, arbitration, jurisdiction • Liquidated damages • Reimbursement of expenses • Audit • Legal compliance • Health, safety and environment compliance • Patents and intellectual property
  29. 29. Pre-negotiation checklist • Identify people • List interests • Describe BATNA • Identify ZOPA • Identify the opening proposal • Questioning strategies • Pricing strategies • Total cost verification • Concession strategies • Bargaining strategies • Payment terms • Volume discounts • Guarantees • Delivery conditions • Installation • After-sales assistance • Training • Back-up plan, contingencies
  30. 30. Closing • Take in consideration that assumptions and conclusions are different things. • Use the natural order and go straight to the point. • Keep the introduction phase short. • Bring up representative examples and counterexamples. • Mention sources of thinking. • Make correlations between causes and results. • Ask in different ways. • Introduce business dilemmas. • Show the 360-degree view of an issue. • Develop complete business arguments. • Clarify everything that may be questionable, using different terms each time the same issue comes up again. • Understand that holding an argument may help, but negotiations are related to trading, not to arguing. • Define variables, ranges and weights, with time relations. Each variable and value should be combined with clear timelines. • Analyze the total cost including the long term approaches, considering not only the apparent price, but the real benefit of all variables together. • Be careful with money values and be explicit with how much, when, who pays, who receives, confirmations, etc. • There should be no concessions, only exchanges. For each concession you may put up a need and obtain in exchange something useful for your team. • Negotiate item by item, but close a package deal at the end. • Analyze terms and conditions and be careful with details and the fine print. • Make sure that the negotiated points will not be brought back to be re-discussed. • Summarize what was agreed and check that the other party understands everything the same way as you do.
  31. 31. Post-negotiation checklist • Was there enough preparation? • Did you estimate good BATNA, ZOPA? • Was the negotiation successful for both parties? • Did you obtain what you established as objectives? • Were the steps followed as planned? • Who made the first offer? • What tactics were employed? Were they appropriate? • How were the concessions made? • How far the result is from ZOPA? • What would you do differently if you could repeat the same event?
  32. 32. Final words • Never accept simple numbers from your team, always ask for comments and opinions; • Ask your team for deep explanations and details; • Take care not to be too aggressive and create avoidance from the other side; • Take care not to be too smooth and lose opportunities for your team; • Keep documentation safe and available; • Be careful with people with whom you have good relationship, they must be honored and must keep their credibility; • Never lose your fair play; • Move fast with reversible decisions; • Do not mix up best practices with best theories; • Verify if “the ideal” is being implemented; • Make everything simple; • Keep everything simple; • Finally, you will be ready for shaking hands.