Negotiation Skills


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Negotiation Skills

  1. 1. Negotiation Skills By: Kunal Samani President-Business Development Rolex Lanolin Products Ltd
  2. 2. Why Negotiation?• Negotiation is needed to resolve intra-person or inter-person conflicts / disagreements / clash of interests.• Negotiation is something that we do all the time and is not only used for business purposes. The aim of negotiation is to explore the situation, and to find a solution that is acceptable to both the sides.• Only man negotiates; animals do not; when faced with larger predator, they do not ask for negotiation or justice rather just run away.• Negotiation is one of the most difficult jobs a person can do. It requires not only good business judgment but also a keen understanding of human nature
  3. 3. Negotiation Inter- personIntra-person Negotiatio Negotiation n Unplanned Planned Negotiatio Negotiatio n n Integrative Distributiv e Negotiatio Negotiatio n n Hard Soft Principled Negotiatio Negotiatio Negotiatio n n n
  4. 4. Hard Negotiation• Hard negotiation involves the negotiation of positions, rather than interests.• It is highly competitive, seeing victory as the number one goal.• Hard bargainers, see the participants as adversaries. They distrust the other side and play sneaky games to try to gain the negotiating advantage.• Hard bargainers refuse to make concessions and demand one- sided gains as the price of an agreement.• When confronted with a softer opponent, hard bargainers almost always will win. When confronted with another hard bargainer, however, it can result in no agreement, both losing.
  5. 5. Soft Negotiation• Soft negotiation also involves the negotiation of positions, rather than interests. However, it treats the participants as friends, seeking agreement at almost any cost, and offering concessions easily in the interests of preserving (or creating) a good relationship with the other side.• Soft bargainers trust the other side, and are open and honest about their bottom line.• This leaves them vulnerable to hard bargainers who act competitively–offering few, if any concessions.
  6. 6. Principled Negotiation• Principled negotiation is the interest-based approach to negotiation.• Fundamental principles of principled negotiation are:1. it separates the people from the problem;2. focuses on interests, not positions;3. insists on objective criteria of the solution.
  7. 7. Negotiation StylesAssertive Win / Lose Win / Win (Collaborating) CompromiseUnasserti Avoidance Accommodative ng Uncooperative Cooperative
  8. 8. Win – Lose Style• The win-lose is the most common style of distributive negotiation wherein a person pursues his or her own wishes at the expense of other party.• Under this style negotiation is viewed as a game to be won. Losing may be taken as failure, weakness, and a loss of status.• When engaged in this style, the parties may use different tactics to win like: persuasion, argument, power, or even threat.
  9. 9. Usefulness• A forceful position during negotiation may be appropriate when the stakes are high and costs of indecision and compromise are non-affordable.• It is useful when issues of legality and ethics are at hand.• Where you do not expect to deal with people ever again, and you do not need their goodwill.• When there is only one prize.• At management level, this style is helping when unpopular but necessary decisions must be made.• Win-lose is also a style to use when the other party has a tendency to take advantage of you.
  10. 10. Avoiding Style• Avoiding the conflict in certain situations – need of no negotiation at all – is also a negotiation.• People may physically withdraw by simply leaving the scene of conflict or they can refuse to get involved by using silence, or changing the topic of conversation.• Psychologically, avoiders can also deny the existence of conflict.• During formal negotiation, avoiding style is exercised by paying deaf ear and / or blind eye to the conflicting stimulus.
  11. 11. Usefulness Useful when:• your involvement will only result in negative outcomes for you;• issue is insignificant;• cost of challenge / cost is quite high;• there is little chance of success;• relationships are more important to be maintained;• to buy time and / or get other party cool down.
  12. 12. Accommodating Style• Accommodating style of negotiation entails giving in to the wishes of the opponent party.• Like avoidance, accommodating the other party almost in one-sided way, is also a negotiation.• Unlike avoiders, the accommodators enter into negotiation and give in a way that strengthens the relationships.• During negotiation, giving in totally / partially may be part of strategic maneuvering.
  13. 13. Usefulness• When other issues are more important that need satisfying others and maintaining cooperation.• When social credit is to be built for some latter issue.• To minimize loss when one is already losing.• When relationships are more important than the interests.• Though frequent yielding is not a virtue, a yielding to a fellow in ire, a balanced yielding among spouses, or even the frequent yielding obedience of a child to a parent or teacher is a healthy move.
  14. 14. Compromising Style• Compromising, the most common style of conflict resolution, entails splitting the differences and reaching an acceptable middle ground solution through give-and-take whereby each party should gain something and may have to lose something.• Parties under this style of negotiation, generally use techniques like trading, bargaining, smoothing over differences, and voting etc.• Most of the negotiations though start with lose-win style, do end up at the compromising style.
  15. 15. Usefulness It is useful:• when two parties have relatively equal power and have mutually exclusive goals;• when time is not available to solve problems that are complex and require a great deal of effort to sort out all the issues;• to allow for a temporary solution until more time could be devoted to unravel and analyze the complexities; and• when competition or collaboration fails to lead to a solution.
  16. 16. Collaborating (Win-Win) Style• Collaborating is based on a willingness to accept other party’s needs while asserting your own needs as well.• It assumes that there is some reasonable chance that a solution can be found to satisfy both parties in conflict without losing much.• Such solution, most of the time, is not possible but a collaborator believes that it is worth trying to find that.
  17. 17. Illustrative Story• Two brothers had an orange. Each of them wanted to have it.• Ultimately they resolved the conflict through splitting the orange into two halves, one half for the each.• Elder brother ate the pulp and threw the peeling.• The younger brother who did not have an innate liking for the oranges and just wanted the peeling as a recipe ingredient, used the peeling and discarded the pulp.
  18. 18. Your Comments…What negotiation style(s) the twobrothers adopted to resolve the conflict?Offer your comments over degree ofusefulness of the style(s) used in thissituation.
  19. 19. Preparing for NegotiationThe “Es” of Negotiations:1. Establish GOAL2. Establish TRUST3. Establish RULES4. Establish TRADE5. Establish ALTERNATIVES
  20. 20. Establish GOAL
  21. 21. Establish TRUST
  22. 22. Establish RULES
  23. 23. Establish TRADE
  24. 24. Establish ALTERNATIVES
  25. 25. At the Table………• Negotiation Strategies• Communication Skills
  26. 26. Negotiation StrategiesAhmad and Hassan decided to purchase an office for their newly started business three months ago. Their first choice was an office located in a new development, and priced Rs. 500, 000 (about Rs. 25,000 above their limit). Ahmad thought they could get the price down through negotiation with the salesman Mr. Sheikh around their limit while Hassan was less optimistic in that regard.
  27. 27. Ahmad conducted some research on the development and learned that several of theoffices including the one they liked had been on the market almost a year. Though the house they liked was their first choice, otheroffices were also quality offices and could be accepted as a second choice. Ahmad met the other salesman, Mr. Agha and learned that the prices of those offices were also within their limit. With this homework done,he made an appointment with Mr. Sheikh and decided to meet him alone.
  28. 28. Approach StrategyAhmad informed the LOWBALLsalesman he really VINEGAR-HONEYliked the office andmight be sincerely He was going for theinterested at a lower lowest possibleprice such as Rs. price.450,000.
  29. 29. Approach StrategyThe salespersonsounded shocked and PINPOINT THE NEEDsaid, “That isimpossible, we wouldnot even consider it”. It had beenAhmad anticipated that established that theresponse, and asked, seller would take“If you would not accept less than the askingRs. 450,000, what will price but not ask?” 450,000. The task then was to pinpoint how much less than
  30. 30. Approach StrategyThe salesperson did some CHALLENGEfiguring before he said “Rs.490,000”. Ahmad was A strategy designedprepared for this responsewho tried another strategy to put the othersaying, “Mr. Agha has party on therecently sold two office of defensive in ansimilar stature for Rs. effort to win some470,000, and several concessions. Addedothers are available withhim. Why would not you do to the Pinpoint, thethe same for me?” Need strategy assists in determining what
  31. 31. Approach StrategyThe salesperson said,“That house wentcheaper, anyway perhapsI could trim the price toRs. 485,000 but you willhave to pay 20% cashdown and the rest withinone week.” Ahmadguessed the salesmanhas a room to treaddownward and said,
  32. 32. Approach Strategy“Down payment is not the FEINTINGproblem but I cannot paythe rest before three This strategy givesweeks.” “It is impossible”, the impression onesaid the salesman, “ourcompany rules do not thing is desiredpermit it”. Ahmad replied, whereas primary“But I cannot pay at least objective is reallythis much within this something else.period of time.”
  33. 33. Approach StrategyPoliticians use avariation of this This plannedstrategy to test action isreceptivity by the “leaked” by apublic to something “reliablethey plan to do. resource” to test acceptability before final action is taken.
  34. 34. Approach Strategy LIMITED AUTHORITY“I do not think I could makefurther concession”, said Limited authority is anthe salesman. “Ok! Let me attempt to postpone theconsult my business decision on a pretext topartner since final decision get approval from awill only be after our competent consensus”, said Whereas the real aim isAhmad and left the to gain time forsalesman’s office. reconsideration, and / or keeping the opponent under pressure for a possible negotiation breakage.
  35. 35. Approach StrategyNext day, Ahmad appeared inthe salesman’s office againalong with Hassan, hisbusiness partner and reiteratedhis yesterday’s position thatthey could not pay Rs. 485,000at least within one week. “Itseems difficult to give anyfurther concession withoutconsulting the builder”, said thesalesman.
  36. 36. Approach Strategy“I told you not to approach this When bad guy steps outagency, you could never concludeany deal with them”, growled for a few minutes, theHassan and stepped out of the good guy offers the dealoffice. that under the“You are spoiling almost a circumstances seems tooconcluded deal. I offer Rs. good to refuse. Bad guys475,000 though I am not sure usually comprisemy partner will agree to it. A slight spouses, lawyers etc.budge from your position can bringthe deal back on track”, murmuredAhmed to the salesman in confidingstyle.
  37. 37. Approach Strategy“By the time you bringyour partner back, I call GOOD GUY / BAD GUYto the builder for hisopinion. I think it is The good guy /possible to reach a deal”, bad guy is ansaid the salesman while internationallydialing a telephone used strategy. Onenumber when Ahmad member of a teamwalked out of his office takes a hard lineto trace his “estranged” approach whilebusiness partner. other member is friendly and easy
  38. 38. Approach StrategyAfter few minutes Ahmadentered the salesman’s officealong with Hassan. “The builder has not been around, but I have availed my own limit and reduced the price to Rs. 482,000 provided you could give us your offer in writing today with the 20% deposit.”
  39. 39. Approach StrategyAhmad sensing they wereclose to their goal replied, DEFER“We really do like thisoffice, but it is still more Deferringthan we want to pay. strategy allowsPlease excuse us while wediscuss ways in which we the negotiatorsmight increase our offer. time toWould you please reevaluate theirreevaluate your position positions.too? Deferring a decision to make
  40. 40. Approach StrategyAhmad and Hassanreturned in an hourand offered Rs.478,000.The salesperson toldthem,I called the builder whileyou were away. He gavealittle, but Rs. 478,000justwon’t do.
  41. 41. Approach StrategyHowever, if you would bewilling to split the differences,and make it Rs. 480,000, we SPLIT THE DIFFERENCEcan make a deal, providing yousign the paper and put downyour 20% cash today. Ahmad and Hassan looked towards each other and accepted with pleasure.
  42. 42. Communication Skills• Oral Communication• Non-verbal Communication
  43. 43. Oral Communication • Phrase the words properly; it delivers.o priests were so addicted to smoking that theysperately needed to puff on cigarettes even when they prayeoth decided to ask their superior for permission to smoke.e first asked if it was okay to smoke while praying?rmission was denied. The second priest asked if he wasowed to pray while he was smoking. His superior found hisdication admirable and immediately granted his request.
  44. 44. • Use simple language instead of complex terminology. However use frequent jargons when negotiating with your professional counterpart.• Be as descriptive as possible. Avoid generalities.
  45. 45. Listening: a strong negotiation tool!• Perhaps the best strategy to adopt while the other side lets off steam is to listen quietly without responding to their attacks.• You often get more through listening by finding out what the other person wants than you do by clever arguments supporting what you need.• Standard techniques of good listening are to pay close attention to what is said, to ask the other party to spell out carefully and clearly exactly what they mean, and to request that ideas be repeated if there is any ambiguity or uncertainty.
  46. 46. Non-verbal Communicatio n Feelings and emotions received from others through their body Symbolic Vibes actions Paralanguage Kinesics How something is Facialsaid instead of what is said i.e. volume, rate expressions, body and rhythm, silent gestures, dress
  47. 47. Body Language What it could meanAvoiding eye contact Lack of confidence in bargaining positionMaking excessive eye Trying to bully or intimidatecontactFiddling with objects such Lack of confidence in bargainingas hair, pencils, or papers positionCrossing and uncrossing Impatient – wants to cut a dealthe legs quicklyKeeping legs and arms Not receptive to your bargainingcrossed position
  48. 48. careful, actions speak louder than the words… • When we do not know others, there body language remains the first source of building image about them. • What people say may be reinforced or contradicted by the non-verbal cues. • When there is no congruence between the verbal and non-verbal communication, reliance is placed on the non-verbal aspect that creates a credibility gap on part of the speaker labeled as the “non- verbal liar”.
  49. 49. Negotiation Tips1. Do not underestimate your power.2. Do not assume that other party knows your weaknesses.3. Don’t be intimidated by status.4. Don’t be intimidated by statistics, precedents, principles, or regulations.5. Most negotiation will require some concession making.6. It is a mistake to assume you know what the other party wants.7. Never accept the 1st offer.8. Don’t fear to negotiate.
  50. 50. Common mistakes to be avoided1. Inadequate Preparation2. Ignoring the give/get principle3. Use of intimidating behavior.4. Impatience.5. Loss of temper.6. Talking too much, listening too little, and remaining indifferent to body language.7. Arguing instead of influencing.8. Ignoring conflict.