This document provides an overview of key concepts and strategies for effective negotiation. It discusses the importance of understanding interests rather than positions, discovering common and differing interests, and creating value through innovative options. It also covers preparation, alternatives to no deal, standards and criteria, communication, perceptions, sources of power, and dealing with difficult negotiators. The overall message is that negotiation requires flexibility, active listening, understanding multiple perspectives, and finding solutions that satisfy all parties.

1. Negotiating at a Glance
INTRODUCTION
By Timothy M. Dayonot
In negotiation, there is no single best approach or fool-proof
strategy. Every action or strategy has advantages and
corresponding downside risks. Negotiation is about persuading
the other side to say yes to something that both sides can live
with. Hence, their "problem" is your problem. Persuasion can be
accomplished through integrative and/or distributive moves. In
large part, effective negotiating involves the effective
management of the tension between moves to claim and create
value. Preparation is key to successful negotiations.
INTERESTS
Dig for underlying wants, needs, concerns and fears: 1) Focus
on interests, not positions; 2) Carefully think about the full range
of interests of all parties; 3) Many interests are hidden and must
be surfaced; 4) A position is how people think their interests will
be satisfied. Interests are the motivations behind positions; 5)
Carefully consider what your opponents interests might be; 6)
Focus on why they say "no", and seek to "solve" their problem.
Uncovering Interests: 1) Imagine yourself in their shoes; 2)
Ask them; 3) Ask others; 5) Do research; 6) Brainstorm a list.
Priority and importance: In most cases, a person will have
multiple interests of different importance. Interest can often shift
in respect to importance in the course of a negotiation.
Common Underlying Interests: 1) Reducing risk; 2)
Precedents (avoid or set); 3) Saving face; 4) Approval; 5) To
impress; 6) To matter; 7) Reward/punish behavior; 8) Feel
competent; 9) Desire to help; 10) Fair treatment; 11) Be proven
right; 12) Desire for a bargain; 13) Joy; 14) Time; 15)To be
respected; 16) Reputation and legacy; 16) To teach a lesson;
17) Create a deterrent; 18) Desire for closure.
Value Creation: Joint gains are a product of the identification of
interests that are used as a basis for fashioning options that are
attractive to both sides. You must actively surface interests to
achieve this and more time will be needed when negotiating.
NO AGREEMENT ALTERNATIVES (BATNA)
The best of your no-deal alternqtives. The standard by which
any proposed agreement should be measured. Generally
speaking, the better your BATNA, the stronger your position.
1) Carefully evaluate your BATNA, failure to do so is essentially
negotiating blindly. To "do nothing" may be your/their BATNA.
2) It's often not the reality but the perception of your BATNA that
gives you strength. But, a truly strong BATNA will give you more
confidence and you will tend to be more assertive.
The BATNA Game.1) Ask: Do you/they have a BATNA? Is
your/their BATNA strong /weak? Has the perception of your/their
BATNA been manipulated? What will trigger you/them to take
BATNA? What's the impact of time on your/their BATNA?
2) Diplomatically disclose your BATNA if strong, (inform, not
warn) . Don't disclose if your BATNA is weak.
3) Carefully consider your opponents BATNA. If they appear to
over estimate their BATNA, you may want to lower their
expectations. Where appropriate, consider ways to strengthen
your BATNA and weaken theirs.
Reservation Value (RV): Initial amount or set of circumstances
that triggers one to take their BATNA. Set this value in advance,
but be open (but cautious) to adjusting it as circumstances
require. RV's are usually confidential and highly guarded.
STANDARDS & CRITERIA
Use standards and principles to help strengthen your arguments
and proposals. Creating your own standards in absence of any
can be useful.
Note: They can be a form of an anchor.
Suggestions:
1) Have some standards in mind before hand
2) Speculate on what standards they might use
3) Think about how to challenge detrimental standards offered
4) Anticipate dueling standards and what your response will be
5) Where two competing but legitimate standards exist, offering to
split the difference may be justified.
Examples of Standards/Criteria:
1) Market Value; 2) Precedent; 3) Scientific judgment;
4)
Professional standards; 5) Moral standards; 6) Equal treatment; 7)
Tradition/custom; 8) Industry standards: 9) Self-created, but
rationally based. Dueling standards between parties is common.
OPTION BUILDING and VALUE CREATION
When appropriate, seek to generate creative ideas that can satisfy
the interests of both sides, i.e. , create joint gains or pie expanding
solutions. Value-create to bridge any value gaps between the
parties. Try not to leave any potential value on the table (i.e.,
unclaimed). Seek to reach Pareto Optimality. Brainstorm ideas.
Build rapport and then invent, then decide, when brainstorming
Formulas for Value Creation
1) Look for differences in the value of resources {low cost, high
benefit exchanges) and consider the use of logrolling.
2) Look for differences in the value of time {short term vs. long
term , such as installment or phase-in agreements).
3) Look for differences in how parties forecast the future using
contingency agreements (e.g. if X happens, then Y occurs).
4) Look for difference in aversion to risk (e.g., agreements where
a party who takes the greater risks is rewarded).
· 5) Look for complementary exchange of goods or skills.
6) Look for opportunities to increase value through economies of
scale (i.e., do things together to save money and resources).
PREPARATION
Adequately prepare for your negotiations (in writing), in proportion
to importance of the outcome. Failure to prepare adequately is a
major reason for poor outcomes. Preparation is one of the
phases in a negotiation that you can control-so take advantage
of this. Ask: a) What are my/their interests (and order of
importance); b) What are my/their non-interests; c) What are
my/their no-deal alternatives and which is my/their BATNA and is
it strong or weak? d) What standards can 1
/they use?; e) What is
my/their initial reservation value? ; f) What ideas can I use to
create joint gains?; g) What info do I want to Give, Get or Guard?
2. If multiple persons are negotiating on your side, prepare as a
group if possible and determine roles and responsibilities.
3. Ask yourself: What is my general strategy? Collaborative?
Distributive? Tone? Probe for interests early? Anchoring early?
Are long term relationships important? What is the impact of time?
TRAITS & PERSONALITY
Be aware of your default style and tendencies. Understand the
implications of particular behavior patterns. Alter or modify your
approach as strategic and appropriate. A very effective
negotiating style is being collaborative (someone who is both
assertive and cooperative). If you tend to have an unassertive
personality, don't give up too easily. If you tend to be overly
aggressive, seek to be more collaborative.

2. USING AGENTS I ACTING AS AN AGENT
DISTRIBUTIVE BARGAINING (Value Claiming)
Many negotiations employ the use of an agent or third party.
Challenge: Interests of agent and principle are not always in
alignment. Role of Agent: 1) Agent to Agent; 2) Agent to
Principle; 3) Agent as mediator (between client and other agent
or principle; 4) Principle who fakes agent status.
Most negotiations have elements of claiming and creating
value. Tricks and ploys are viewed by some as useful in
non-complex negotiations, one time negotiations (nonrepeating), where your BATNA is strong and transaction
time is limited. Be aware that distributive tactics impair
efforts to create value, can be hard on relationships, and can
leave value unclaimed (i.e., non-Pareto optimal deals).
Why agents used: 1) Expertise; 2) Detachment; 3) Tactical
Flexibility; 4) Time; 5) Ego; 6) Emergency; 7) Escape pain.
When using or acting as an agents, clarify: 1) Authority; 2)
Interests; 3) Bargaining range; 4) BATNA; 5) Expectations (If
possible, prepare a detailed preparation outline together) .
COMMUNICATIONS
The life blood of all negotiations. Frequently plagued by
misunderstandings. Your ,one" is critical. Suggestions.
1) Aim for 2-way communications; 2) Treat people respectfully
(build rapport); 3) Use active listening (repeat what they say
and test for understanding); 4) Use questions more frequently;
5) Listen, listen, listen. Poor listening skills contribute to a large
number of ineffective negotiations. People are often too
preoccupied with what they are saying and neglect to listen
attentively. Use •r statements rather than ')'ou" statements.
Common Distributive Ploys: 1) Deceptive devaluation
(bogey); 2) Artificial concession; 3) Good guy/bad guy; 3)
Entrapment; 4) Ambiguous authority; 5) Extreme opening
demands; 6) Hardhearted partner/superior; 7) Hardship to
generate sympathy; 8) Fake or exaggerated BATNA; 9)
Delay tactics; 10) Artificial deadlines; 11) Take it or leave it;
Changing negotiating styles; 12) Insults/outbursts; 13)
Praise; 14) Playing dumb; 15) Silence; 16) Deception or
false facts;17) Lack of capacity;18) Impossibility (tied hands)
PERCEPTIONS
Patterns of Concessions Strategy in distributive
bargaining. 1) Seek to control bargaining range; 2) Anchor
high (ambitious but defendable); 3) Attempt to dislodge their
anchors (filches); 4) Make gradually decreasing concessions
and only if you have to; 5) Remember that there is an
expectation by many that some back and forth should occur
and failure to do this can result in non-optimal outcomes.
Be aware that your perception of the other side is often
distorted by several dynamics. Be alert to: 1) Affiliation bias; 2)
Advocacy bias; 3) Partisan perceptions; 4) Na'ive realism; 5)
Selective perception; 6) Attributional distortion; 7) Reactive
devaluation; 8) Advocacy bias.
BATNA Weakening:
1) Consider weakening (real or
perceived) their BATNA; 2) Manipulate their perception of
their and your BATNA; 3) In conflict situations, work to
reduce the attractiveness of there "do-nothing" alternative,
including punishing or rewarding behavior.
Note: When in doubt, we tend to assume the worst; Our fears
often translate into their intentions-guard against this .
SOURCES OF POWER (influence and persuasion)
Process Manager. View yourself as a "fly on the wall" and
monitor the process from an outside point of view. Move
between viewing the world from their point of view, your point of
view and the view of a "fly on the wall".
INTERNAL ORGANIZATIONAL NEGOTIATIONS
Internal negotiations have special dynamics because of the
higher level of interdependence and the inability to choose not
to negotiate. Parties BATNA are typically weak. Suggestions:
1) Don't be blind sided, negotiations are taking place all the
time; 2) Authority by itself does not guarantee solutions; 3)
Technical solutions don't always address political problems; 4)
Negotiate on all points on the compass; factor-in all the
stakeholders in the situation; 5) Build coalitions incrementally
and carefully; 6) Be alert to blocking coalitions; 7) Because of
unavoidable long-term relationships in internal negotiations, be
hard on the problem and soft on the people and seek solutions
that create joint gains.
PROCESS MANAGEMENT
The following should take place in most negotiations: 1) Clarify
issues; 2) Clarify facts; 3) Check for authority; 4) Check for time
limits; 3) Build rapport (put parties at ease); 5) Probe for
underlying interest; 6) Probe for strength of their BATNA; 7)
Use active listening; 8) Invent, then decide; 9) Carefully record
agreements in writing; 10) If possible, do shared note taking.
RELATIONSHIPS
The nature of your relationship frequently will impact the
substance of your negotiation. Some risk must be taken to build
trust. There are risks involved when surfacing underlying
interest in order to create value. Trust lost, is extremely difficult
to rebuild. Don't lose sight of opportunities for long term versus
short lived gain. Be hard on the problem, soft on the people.
There are a number of sources of power (influence) when
negotiating. Having multiple sources can give you more
power. Sources of power include:
..
1) A good alternative (BATNA); 2) Power to weakening
attractiveness of no agreement alternatives; 3) Ability to
' reward/punish behavior; 4) Skill & knowledge; 5) Good
relationship; 6) Elegant solution; 7) Standards & criteria; 8)
Building coalitions; 9) Controlling the process; 10)
Controlling the flow of key information; 11) Ability to skillfully
execute distributive ploys.
DEALING WITH THE HARD BARGAINER
Defined: 1) Refuses to negotiate; 2) inflexible/ridged; 3)
Non-communicative; 4) Offensive or hostile; 5) Employs
tricks and ploys.
Traditional Approac"-: 1) Recognize the tactic; 2) Ignore
the tactic; 3) Expose the tactic; 4) Negotiate about the rules
of the negotiation.
William Uty •s Additional Suggestions. Don't:: 1) React;
Go to the Balcony; 2) Argue; Step to their side; 3) Reject;
Reframe; 4) Push; Build them a golden bride; 5) Escalate;
Use power to educate. Note: Asking for advice can be
disarming.
ATTRIBUTIES OF AN EFFECTIVE NEGOTIATOR
They include: 1) Flexibility on means, firmness on goals; 2)
Ability to have empathy 3) Inventive/creative; 4) Patience; 5)
Tenacity; 6) Well prepared; 7) Good listener; 8) Hard on the
problem, soft on the people; 9) understands the implications
of focusing on power, rights and interests when negotiating.
Complied by Timothy Dayonot, Fall 2012, U.C. Berkeley, Haas School of Business. &
Goldman School of Public Policy. Copyright 2012