The fundamentals of negotiation
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The basics of negotiation: evaluating sources of power, analyzing the situation, preparing for a negotiation, and conducting the negotiation. Whether you are negotiating the purchase of a car or a house, or a job offer. Or whether you are negotiating a large international deal, you need to understand these basics.
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The fundamentals of negotiation
- 1. International Negotiation Techniques Session 1: The fundamentals of negotiation Pat Brans: pdbrans@gmail.com
- 2. Agenda • Sources of power • The situation • Preparation • The negotation process • Negotiation outcomes • Negotiation ploys
- 3. Sources of power • Reward/punishment • Age • Hierarchy • Credentials • Expertise • Indifference • Having few needs • Popularity • Morality • Resolve
- 4. The situation • Public versus private • Their place versus your place • Time and schedules • Physical discomfort • Animosity or goodwill • Long term relationship, or one-time negotiation • The number of people involved in the negotiation.
- 5. Preparation Always prepare for a negotiation ! What to prepare: • Evaluate your needs • List your priorities • Inventory your alternatives • Research the other party’s needs • List their priorities (as you understand them) • Estimate their alternatives (as you understand them) • Look for objective measures of results
- 6. Preparation Identify: • Your target • Your minimum • Your initial offer Think of « currency »: • Things you can easily give, and that are valuable to the other side. • Things the other side can easily give, and that are valuable to you.
- 7. The negotiation process Should you make the first offer? x If you haven’t studied the market, no. You have no idea if it’s reasonable; and it’s hard to ask for more later. If you have studied the market, yes. By making the first offer, you anchor the reference point for the negotiation.
- 8. The negotiation process Think about time and silence.
- 9. Time and expectations If you have bad news, give the other side time to accept it. They will. Remember that over time, peoples’ expectations change, including your own.
- 10. Time and expectations Slow down the discussion when you want to lower the other side’s expectations.
- 11. Time and expectations Speed up the discussion when you don’t want to give the other side time to change their mind.
- 12. Time and silence Always hesitate a little before accepting an offer. If you accept too fast, the other side will think they could have gotten a better deal.
- 13. Time and silence Use silence to make the other side talk. Use silence to lower the other side’s expectations and make them question the strength of the relationship.
- 14. The negotiation process Think about deadlines and other time pressures.
- 15. Deadlines If they have a deadline and you don’t, use their time pressure to your advantage.
- 16. Deadlines If you’re the one with the deadline, look for: • Flexibility in your deadline. • Intermediate solutions.
- 17. The negotiation process Think about objective criteria.
- 18. Objective criteria • Is there an independent standard you can use to measure results? • Can you compare your deal with other deals as a benchmark?
- 19. The negotiation process Think about differences in beliefs, values, and priorities.
- 20. Beliefs, values, and priorities Their values are probably different from yours. Try to understand their values and see where you can find win/win.
- 21. The negotiation process Think about procedures.
- 22. Procedures If you get stuck on some of the substantive issues, think about the flexibility you might in other areas – for example, in procedures.
- 23. Procedures • Sometimes procedures are the most important part of the agreement. • For example, in the Iran Nuclear agreement, how to check for compliance is a major issue in the agreement. • Procedures may also be negotiable.
- 24. The negotiation process Think about negotiation ploys.
- 25. Negotiation ploys • Good cop / bad cop • Emotional outbursts • The higher authority • Sign now or you’ll never get the same deal • Nibbling • Splitting the difference • It’s beyond my control
- 26. Negotiation outcomes Lose / lose
- 27. Negotiation outcomes Win / lose
- 28. Negotiation outcomes Win / Win
- 29. Getting to win-win Win/win can usually be achieved if you can establish a trusting relationship where the two sides freely exchange ideas.
- 30. International Negotiation Techniques Session 1: The fundamentals of negotiation
Editor's Notes
- Reward/punishment: If one side has the power to reward or punish the other side, they have power over the other side. Age: In most cultures, older people are more respected than younger people. Some cultures take this to an extreme. Hierarchy: At work, your boss has power over you. Credentials: University degrees and other certifications give you some power. Expertise: If people consider you an expert, you have some power. Indifference: If you don’t need to be liked, you have some power over people who do need to be liked. Few needs: If you don’t need much, or if you have strong alternatives to what is being negotiated, you have power over the other person. Popularity: If the other person perceives you as being liked more by other people, you have some power over the other person. Morality: If you are perceived as doing the right thing morally, you may have some power over the other person. On the other hand, if you are perceived as somebody who breaks all moral rules (i.e. a little crazy), you may also have some power over the other person. Resolve: If you have a stronger will, you may have power over the other person.
- The situation plays a big role in negotiation: If the negotiation takes place in public, both sides will make statements and take positions to please the public. If it is in private, people may give more concessions. If the negotiation takes place at their place, they may do things to make you feel uncomfortable. If you are in a hurry, but they aren’t, the negotiation is different than if you are both on the same schedule. If there is a deadline to finish the negotiation, the negotiation is different. If you are suffering from physical discomfort (for example, it’s too cold, too hungry, or the sun is in your eyes), your priorities will change. If there is animosity between you and the other person, you will probably get into « point-scoring mode. » If you have to negotiate with several people, the process is different. If you have several people on your side, it’s also different.
- Good cop / bad cop: There are two people on the other side. One is really hard on you. The other comes along and acts like your friend. You have been so abused by the first one, that you open up to the second one. Emotional outbursts: The other side jumps up and down and screems in reaction to your offer. Their reaction is designed to make you think you made a ridiculous offer. Don’t be intimidated by their emotions. The higher authority: You are negotiating a car price. When you think you’ve reached an agreement, the sales person says he can’t make the decision. He has to check with his boss. So you have been giving away your best offers, but he is now free to have his boss start the process again. Sign now or you’ll never get the same deal: If you buy now you get a special deal. But tomorrow the offer is no longer valid. This is usually not true. You can almost always come back the next day and get the same deal. To get out of this ploy, just tell the other side you never make this kind of decision without going home to think about it. Nibbling: After you have agreed to terms, the other side tries to get you to accept several smaller things. This happens for example, when you buy a car. After you have agreed to the price, the sales person will try to sell you insurance, a warrantee, and special coating to protect the car from rust. Splitting the difference: You are low and the other side is high. The other side suggests you split the difference and meet at the mid point. The trouble is, you don’t know if he was way too high, which makes the middle point too high. It’s beyond my control: The other side says their company has a standard contract and there’s nothing they can do to change it. Usually the contract can be changed