Putnam 2011


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  • Films Wall Street with Michael Douglas (Before I get angry Managing the other personk
  • Negotiating Team if any Who should be present? What is each person’s role? Key decision-makers
  • What will we present? Facts Documents Interests Proposal or Demand Who will be our presenters?
  • Fortune Cookie with Walter Matthau- bargaining aganst themselves; forced other guy to open We tend to focus too much on our own goals or some of us focus too much on the other’s goals and forget about our own
  • Key is to find out what the problem really is Often different from what you think Get at the individual interest Great negotiators have a note on their pad that says “is this their real interest”
  • Ransom with Mel Gibson We often underestimate leverage We should sit in their chair and imagine how they would feel if you walked away
  • Open ended questions Avoid leading questions; avoid blaming; avoid making people feel you are analyzing them Op
  • Putnam 2011

    1. 1. Negotiations: Ed Wertheim Putnam Investments, February-March 2011 <ul><li>“ Every human interaction is a negotiation.” </li></ul><ul><li>“ I have one thing that’s not negotiable. I demand that we meet your interests. The reason we need to meet your interests is that if we don’t meet your interests, you won’t meet mine. And I’m a real selfish guy…I want my interests met.” </li></ul><ul><li>Bob Woolf, late great Sports Agent and Negotiator </li></ul>
    2. 2. A negotiation is… <ul><li>An attempt to influence or persuade someone to think or act differently: </li></ul><ul><ul><li>At least two parties </li></ul></ul><ul><ul><li>Making decisions about </li></ul></ul><ul><ul><li>Interdependent objectives </li></ul></ul><ul><ul><li>Peacefully </li></ul></ul><ul><ul><li>Without knowing the outcome in advance </li></ul></ul><ul><ul><li>from Moshe Cohen </li></ul></ul>
    3. 3. Dispute Resolution Spectrum Party Control Third Party Control Negotiate Mediate Arbitrate Litigate
    4. 4. Negotiating Styles Concern for Other person Concern for self Avoiding Compromising Competing Collaborating Problem solving Yielding/ Accomodating High Low Low High Assertion
    5. 5. Points to remember <ul><li>At various times we use all the styles at different times (depending on your skill, the situation, experience) </li></ul><ul><li>Be aware of your “default” style; we tend to rely on one style more than others </li></ul><ul><li>Each approach has a time and place; know when </li></ul><ul><li>Try to get a sense of your counterpart’s style </li></ul><ul><li>Think about how the two styles interact </li></ul>
    6. 6. When we use each stle <ul><li>Competing : when quick action needed, when unpopular actions needed; when you know you are right; to protect yourself from others who might take advantage of you </li></ul><ul><li>Accommodating: when you know you are wrong; when issue more important to other; to build social credit; preserve harmony; help other learn by experience </li></ul><ul><li>Avoiding: when you need more time; when potential damage outweighs benefits of resolution; when issue is trivial to you; allows others to cool down </li></ul>
    7. 7. When a style might be used <ul><li>Collaborating : when both sides’ interests are too important to be compromised or overridden; to gain commitment; create value, make pie bigger, to learn </li></ul><ul><li>Compromise : when goals are moderately important but not worth effort to be more assertive; when two sides committed to mutually exclusive goals; when collaboration fails; expediency </li></ul>
    8. 8. Tendency when faced with conflict <ul><li>Competing : likes to take charge, win, willing to lead, force; willing to sacrifice relationship </li></ul><ul><li>Accommodating/ Yielding: sensitive to feelings of others; wants to be supportive; prefers to maintain relationship </li></ul><ul><li>Avoiding: dislikes conflict; reluctant to get too involved in conflict </li></ul><ul><li>Collaborating : problem focused; likes being creative, likes working with opposing side </li></ul><ul><li>Compromising: focuses on fairness; enjoys sharing; doesn’t want to appear selfish or too one sided </li></ul>
    9. 9. We will focus on <ul><li>Integrative (win-win, cooperative, problem Solving, creating value) </li></ul><ul><li>Distributive (competitive, win-lose, claiming value) </li></ul>
    10. 10. The Competitive Bargainer <ul><li>Ask for more than you need </li></ul><ul><li>Never say yes to first offer </li></ul><ul><li>Don’t split the difference </li></ul><ul><li>Make concessions painfully </li></ul><ul><li>Use silence </li></ul><ul><li>Use authority ploy and other tactics </li></ul><ul><li>“ take it or leave it” </li></ul><ul><li>Will walk away </li></ul><ul><li>Acts as if “pie is fixed.” </li></ul><ul><li>Don’t let their tactics determine your approach </li></ul>
    11. 11. The elements of Integrative (win-win) Negotiations <ul><li>Planning </li></ul><ul><li>Goals </li></ul><ul><li>Interests </li></ul><ul><li>BATNA </li></ul><ul><li>Authoritative Standards </li></ul><ul><li>Inventing options for mutual gain (create common ground) </li></ul><ul><li>Maximize joint gain </li></ul><ul><li>Relationships </li></ul><ul><li>Leverage </li></ul><ul><li>Bargaining Styles </li></ul>
    12. 12. Keys to Win-Win negotiation <ul><li>Careful planning </li></ul><ul><li>Principled negotiations </li></ul><ul><li>Separate the people from the problem </li></ul><ul><li>Focus on interest, not rights </li></ul><ul><li>Use objective standards </li></ul><ul><li>Invent options for mutual Gain </li></ul>
    13. 13. Strategic Planning <ul><ul><li>Identify Interests: What do all parties need and want? </li></ul></ul><ul><ul><li>What do they have that we want? </li></ul></ul><ul><ul><li>What do we have that they need? </li></ul></ul><ul><ul><li>Look past hardened positions to softer underlying interests </li></ul></ul><ul><ul><li>Develop non-economic options </li></ul></ul><ul><ul><li>Creative problem-solving </li></ul></ul><ul><ul><li>BATNA and WATNA (best/worst alternative to a negotiated agreement) </li></ul></ul>
    14. 14. Strategic Planning <ul><li>What do we know? </li></ul><ul><li>What do we want to know? </li></ul><ul><li>What information can we get in advance? </li></ul><ul><ul><li>• Basic fact-gathering • Personality profiles </li></ul></ul><ul><li>Preparing for an information exchange </li></ul><ul><li>What do they need/want? </li></ul><ul><li>What are we willing to give? When? </li></ul>
    15. 15. Strategic Planning <ul><li>What is your basic style? </li></ul><ul><li>What is the basic style of the other side? </li></ul><ul><li>What approach will work best in this case? </li></ul>
    16. 16. Goals <ul><li>Enhance your skills in preparing for negotiations and conducting negotiations </li></ul><ul><li>Emphasize a joint problem solving (win-win) approach to negotiations </li></ul><ul><li>Provide opportunity to practice and evaluate your skills </li></ul><ul><li>Have some fun </li></ul>
    17. 17. Goals <ul><li>“ High Achievement comes from high aims” </li></ul><ul><li>- King Ching of Chou (1100 B.C.) </li></ul>
    18. 18. Interests <ul><li>This is the key to every negotiation </li></ul><ul><li>“ If there is one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.” </li></ul><ul><li>---Henry Ford </li></ul>
    19. 19. Interests <ul><li>Positions are what people say they want (I want six months of free service) </li></ul><ul><li>Interests are why they want what they say they want </li></ul><ul><li>( I want to make sure the system works; I want someone available to train my people and answer questions: I want to show my boss I got a good deal; I want a long term relationship with this vendor) </li></ul><ul><li>Set goals aiming at satisfying your interests, not your positions </li></ul><ul><li>Try to find your counterpart’s interests </li></ul>
    20. 20. Interests: the “Iceberg” Positions Issues Interests
    21. 21. BATNA <ul><li>B est A lternative t o a N egotiated A greement </li></ul><ul><li>Be clear on what your alternatives are if this negotiation breaks down </li></ul><ul><li>Try to improve your alternatives before the negotiation </li></ul><ul><li>It is a backup plan, not a fallback option </li></ul><ul><li>A benchmark, not a bottom line </li></ul><ul><li>Empowerment for you, not punishment for them </li></ul><ul><li>Brainstorm many alternatives, develop a few, select one </li></ul><ul><li>Develop sequence of BATNA’s from intermediate to ultimate </li></ul><ul><li>Look for creative alternatives (e.g. mediation) </li></ul>
    22. 22. Know their BATNA <ul><li>what is the worst they can do to you </li></ul><ul><li>Take away their stick </li></ul>
    23. 23. Inventing options for Mutual Gain <ul><li>Options are possible deals or arrangements that both parties can agree to </li></ul><ul><li>Generate a number of options </li></ul><ul><li>During the negotiation, try to generate options together based on interests </li></ul><ul><li>Try Reframing, Benchmarking </li></ul><ul><li>Identify creative use of money </li></ul><ul><li>Ask questions to elicit options…“what if…?” </li></ul><ul><li>“ Under what circumstances could you agree….?” </li></ul><ul><li>Ask for Advice: “How would you solve this problem?” </li></ul><ul><li>Don’t reject….redirect </li></ul>
    24. 24. Authoritative (legitimate) Standards <ul><li>“ The first duty of a wise advocate is to convince his opponents that he understands their arguments” </li></ul><ul><li>Prepare in advance; be open to reason; </li></ul><ul><li>Perception of fairness is often critical </li></ul><ul><li>Find out what the other side thinks is fair and use their standard </li></ul><ul><li>Ask other party for objective criteria </li></ul><ul><li>Independent Standards for deciding what is fair </li></ul><ul><li>No matter how integrative the discussion the “pie” still must be divided </li></ul><ul><li>Present logic before position/price </li></ul><ul><li>Use as anchors </li></ul><ul><li>Examples: industry standard, proposals from other vendors, advice from 3 rd party expert, precedent, market value, law, costs, fairness, equality, science </li></ul>
    25. 25. Relationships <ul><li>“ If you treat people right, they will treat you right-at least 90% of the time” F. D. Roosevelt </li></ul><ul><li>Be clear about what you would like the relationship to be in the future </li></ul>
    26. 26. Communication <ul><li>Inquire about the other’s interests at every opportunity </li></ul><ul><li>Everything you do conveys a message </li></ul><ul><li>Ask questions constantly </li></ul><ul><li>“ what do you do normally to ensure…” </li></ul>
    27. 27. Commitment <ul><li>Make sure the agreement is understood, that there is commitment that both parties will carry it out </li></ul>
    28. 28. Leverage <ul><li>“ Every reason that the other side wants or needs an agreement is your leverage-provided you know those reasons.” </li></ul><ul><li>If you have leverage, you don’t need to be a great negotiator </li></ul><ul><li>Whichever party thinks they have the least to lose from “no deal” has the most leverage </li></ul><ul><li>Whichever party thinks they have the most to lose have the least leverage </li></ul><ul><li>If you can’t walk, you can’t negotiate </li></ul>
    29. 29. Social Influences on Negotiation <ul><li>Our negotiations are surrounded by cultural norms that influence what we do; these may vary by culture </li></ul><ul><li>Norm of reciprocity </li></ul><ul><li>Consistency rule </li></ul><ul><li>Commitment ploy </li></ul><ul><li>Physical attraction and likability </li></ul><ul><li>Similarity (we tend to agree with people who are like us) </li></ul><ul><li>Authority: </li></ul>
    30. 30. Preparing to negotiate <ul><li>Set goals around each of the elements </li></ul><ul><li>Gather information on each element; what information are you missing </li></ul><ul><li>Develop a strategy </li></ul><ul><ul><li>How to begin the negotiation </li></ul></ul><ul><ul><li>Which interests to reveal </li></ul></ul><ul><ul><li>What questions to ask </li></ul></ul><ul><ul><li>What messages to convey </li></ul></ul><ul><ul><li>What options to advance and when </li></ul></ul><ul><ul><li>How to support options with objective criteria </li></ul></ul>
    31. 31. Preparation pointers <ul><li>Setting Goals </li></ul><ul><ul><li>Make sure your goals represent your interests, not positions </li></ul></ul><ul><ul><li>Prioritize interests </li></ul></ul><ul><li>Gathering information </li></ul><ul><ul><li>Be clear on BATNA, alternatives </li></ul></ul><ul><ul><li>Objective criteria </li></ul></ul><ul><ul><li>Other parties: their interests, expectations, BATNA </li></ul></ul><ul><li>How to Gather information </li></ul><ul><ul><li>Ask questions and do research </li></ul></ul>
    32. 32. Developing a Strategy <ul><li>Questions </li></ul><ul><ul><li>What information are you missing </li></ul></ul><ul><ul><li>How well do you know the other side </li></ul></ul><ul><ul><li>Do their expectations match yours </li></ul></ul><ul><ul><li>Are your standards of fairness persuasive; what might they consider fair </li></ul></ul>
    33. 33. Thinking about Relationships <ul><li>What is the current relationship </li></ul><ul><li>What would you like it to be </li></ul><ul><li>What messages should you convey </li></ul>
    34. 34. Thinking about Interests and Options <ul><li>Set their expectations </li></ul><ul><li>Generate some options </li></ul><ul><li>Think about framing your proposals </li></ul><ul><li>Make your standards of legitimacy and fairness clear </li></ul><ul><li>Try to improve your BATNA </li></ul><ul><li>Be clear on your WALKAWAY and criteria for accepting an option </li></ul>
    35. 35. Negotiating Behaviors <ul><li>Be open to information; let go of your assumptions </li></ul><ul><li>Let your interests and goals guide your behavior, not the tactics of the other party </li></ul><ul><li>Ask open ended questions </li></ul><ul><li>Active listening: acknowledge the other’s responses; check for understanding </li></ul><ul><li>Listen for interests; reflective responses </li></ul>
    36. 36. Example of open ended questions <ul><li>Open: “what would you like to see happen as a result of this meeting” </li></ul><ul><li>Closed: you really don’t want this sale to go through, do you?” </li></ul><ul><li>Open: “What did you discuss with my client?” </li></ul><ul><li>Closed: Are you trying to steal this client?” </li></ul>
    37. 37. Active Listening <ul><li>Make sure you look like you are paying attention </li></ul><ul><li>When the other is finished paraphrase back to them what you think you heard </li></ul><ul><li>Don’t assume you understand them; don’t cut them off </li></ul><ul><li>Be respectful and validate what the other said even if you disagree </li></ul>
    38. 38. Negotiation Psychology-biases <ul><li>Information Biases </li></ul><ul><li>Biased assimilation </li></ul><ul><ul><li>We hear what we want to hear </li></ul></ul><ul><li>Reactive Devaluation </li></ul><ul><ul><li>“ If the other side proposed that, something must be wrong.” </li></ul></ul><ul><ul><li>“ If they want Jim as mediator, we don’t.” </li></ul></ul><ul><li>Commitment </li></ul><ul><ul><li>“ We have already spent that much on discovery.” </li></ul></ul><ul><li>Consistency </li></ul><ul><ul><li>“ We said we wanted $ 1MM. We can’t settle for a penny less” </li></ul></ul>
    39. 39. psychology <ul><li>Be aware of the psychological impact of …. </li></ul><ul><li>Anchors </li></ul><ul><li>Framing </li></ul>
    40. 40. Your sources of power <ul><li>Balcony: Power of Perspective </li></ul><ul><li>Side: Power of diplomacy </li></ul><ul><li>Interests: Power of Understanding </li></ul><ul><li>Options: Power of Creativity </li></ul><ul><li>Criteria: Power of legitimacy </li></ul><ul><li>BATNA: power of Alternatives </li></ul><ul><li>Bridge: Power of Persuasion </li></ul>
    41. 41. Avoiding Impasse <ul><li>Take breaks or adjourn </li></ul><ul><li>View from the balcony </li></ul><ul><li>Use mediators </li></ul><ul><ul><li>Transactional mediation </li></ul></ul><ul><ul><li>Pre-dispute mediation </li></ul></ul><ul><ul><li>Litigation mediation </li></ul></ul>
    42. 42. Don’t <ul><li>Don’t get intimidated </li></ul><ul><li>Don’t make concessions too quickly </li></ul><ul><li>Don’t surprise the other side </li></ul><ul><li>Don’t assume the other side sees “fairness” the same way you do </li></ul>
    43. 43. Practice good etiquette <ul><li>Avoid things which irritate the other side </li></ul><ul><li>Avoid getting into the attack defend spiral </li></ul><ul><li>Give one or two strong reasons rather than many little ones </li></ul><ul><li>Check for understanding and summarize frequently </li></ul><ul><li>Constantly seek more information </li></ul><ul><li>Reflect how they are thinking or feeling </li></ul><ul><li>Best negotiators are good listeners, not talkers; be attentive, empathize, paraphrase </li></ul><ul><li>Nothing is just “their problem” </li></ul><ul><li>Be patient; </li></ul><ul><li>Make hypothetical proposals (“what if”) </li></ul><ul><li>Manage expectations; lower those of others so your proposal can be accepted </li></ul>
    44. 44. Review the Negotiation <ul><li>Evaluate the outcome </li></ul><ul><li>Evaluation your preparation </li></ul><ul><li>Evaluate the process </li></ul><ul><ul><li>What did you do that was effective </li></ul></ul><ul><ul><li>What did the other side do </li></ul></ul><ul><ul><li>What would you do differently next time </li></ul></ul><ul><li>Learn from your negotiations </li></ul><ul><li>What surprises </li></ul><ul><li>What worked </li></ul><ul><li>What didn’t work </li></ul><ul><li>What would I do Differently </li></ul><ul><li>Ways to Improve the Agreement </li></ul><ul><li>Skills to work on </li></ul>
    45. 45. Suggested Readings <ul><li>Getting to Yes , Fisher, Ury, Patton) </li></ul><ul><li>Getting Past NO , Ury </li></ul><ul><li>Influence: The Psychology of Persuasion , Cialdini </li></ul><ul><li>Getting Together , Fisher and Brown </li></ul>
    46. 46. Resources <ul><li>Getting to Yes: Negotiating Agreement Without Giving In </li></ul><ul><ul><li>-Roger Fisher, William Ury, Bruce Patton (Penguin Books, 1991) </li></ul></ul><ul><li>Getting Past No: Negotiating with Difficult People </li></ul><ul><ul><li>-William Ury (Bantam Books, 1991) </li></ul></ul><ul><li>Bargaining for Advantage: Negotiation Strategies for Reasonable People </li></ul><ul><ul><li>-Richard Shell (Penguin Putnam, 1999) </li></ul></ul><ul><li>The Art and Science of Negotiation </li></ul><ul><ul><li>-Howard Raiffa (Harvard University Press, 1996) </li></ul></ul>
    47. 47. Final Advice <ul><li>Be principled </li></ul><ul><li>Make reasoned arguments </li></ul><ul><li>Be patience; use silence </li></ul><ul><li>Listen; ask questions, paraphrase </li></ul><ul><li>Let them save face; don’t corner an opponent </li></ul><ul><li>Always consider your BATNA; be prepared to walk </li></ul><ul><li>Look for the positive; don’t just rebut </li></ul>
    48. 48. <ul><li>I wish you much success in your negotiations </li></ul>