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  • MY business: fairness; equity; autonomy (not being extorted); revenge; reconciliationCOME BACK TO THIS
  • We value money more as it relates to our relative position than to an absolute number; sense of equity so strong even animals demand it; Capuchin monkey will “strike” when the “CEO” monkey is being paid for the “worker” monkey’s efforts when the differential in “pay” (cucumbers) reaches 5 to 1 or where the quality of the compensation (CEO gets grapes and “worker” monkey only cucumbers). Worker will deprive himself of compensation if that degree of unfairness is allowed to prevail
  • Three levels of agreement
  • Any reason is better than no reasonNo rationale: 60%Meaningless rationale: 93%Logical rationale: 94%
  • Negotiation101

    1. 1. Negotiation 101 with an Emphasis on Women<br />
    2. 2. In 2000, 76.8 percent of women aged 25 to 54 worked outside the home. <br />Women's earnings relative to men's have stagnated at 73.2 percent.<br />2.5 x > more women than said they feel "a great deal of apprehension”<br /> Men initiate negotiations about four times as often as women.<br /> will pay as much as $1,353 to avoid negotiating the price of a car<br /> typically ask for and get less when they do negotiate—on average, 30 percent less than men.<br />20 percent of adult women say they never negotiate at all<br />
    3. 3. lose more than $500,000 by age 60 if don’t negotiate first salary<br />eight times as many male MA’s from Carnegie Mellon negotiated their salaries..<br />women who consistently negotiate salary increases earn a $1 million more during their careers than women who don't.<br /> Women own 40 percent of all businesses in the U.S. but receive only 2.3 percent of the available equity capital. Male-owned companies receive the other 97.7. percent.<br /> Women report salary expectations between 3 and 32 percent lower than those of men for the same jobs<br />men expect to earn 13 percent more than women during their first year of full-time work and 32 percent more at their career peaks.<br />
    4. 4. Male Bargaining Advantages<br />Feel bargaining advantage<br />Feel entitled to more rewards<br />Less likely to back down<br />Use more distributive tactics<br />Feel entitled to information<br />Seen as stronger speakers than women <br />Seek more power<br />Intimidate<br />
    5. 5. Female Bargaining Advantages<br />more likely to follow a set of rules or steps to get to a final outcome<br />take a broad or 'collective' perspective<br /> view elements in a task as interconnected and interdependent<br /> see the big picture and come up with a systematic plan on how to solve it.<br />work through steps by sharing experiences while figuring out what both sides can gain to achieve an integrated outcome.<br />more concerned about how problems are solved than merely solving the problem itself<br /> Instead of concentrating on what they want or need to get out of the negotiation women focus on what both sides need and how both parties can get what they want<br />
    6. 6. That whole mars/venus thing<br />
    7. 7. Identify Value = precedent, relationships, reputation, political appearance, fairness, profit, future opportunities, survival, praise, fulfillment (personal or corporate)<br />Create value by locating and identifying all of your own and your bargaining partner’s interests (preferences, priorities, needs, desires, fears)<br />Claim value by making a case for your entitlements, trading differences, finding commonalities<br />Reap value by crafting durable agreements<br />OptimalNegotiated Outcome<br />
    8. 8. Relative Benefits v. Absolute Numbers<br />
    9. 9. Agreement possible<br />Better than walking away<br />BATNA<br />Achieved through compromise<br />“Win win”<br />Meets interests of both parties better than compromise would<br />Achieved through identifying interests, identifying and/or creating value<br />Pareto-optimal<br />Best possible negotiated outcome for both<br />
    10. 10. Distributive Bargaining<br />The process by which the parties distribute between themselves what they believe to be a fixed “pie” of money, goods or services<br />A Zero Sum exchange in which whatever one side gains, the other side loses<br />Parties move toward resolution through a series of concessions<br />
    11. 11. <ul><li>Positions
    12. 12. What you want
    13. 13. best goods, price, service
    14. 14. close deal, future business, successful partnership
    15. 15. Interests
    16. 16. Why you want it
    17. 17. Make more money; acquire customers; drive competitors out of the market
    18. 18. independence, satisfaction, adventure, creation
    19. 19. Issues
    20. 20. What you disagree about
    21. 21. Quality, price, future benefits
    22. 22. What you’re competing about/for
    23. 23. Market position, survival
    24. 24. Stakeholders
    25. 25. Everyone interested in outcome
    26. 26. Shareholders, workers, executives, customers, suppliers; family</li></ul>Grammar of Negotiation<br />
    27. 27. INTERESTS<br /><ul><li>Potential future business opportunities
    28. 28. Competitive market advantages
    29. 29. Protecting market position
    30. 30. Gaining competitive advantage
    31. 31. Acquiring a Piece of the Action
    32. 32. Securing Future
    33. 33. Avoiding Risk
    34. 34. Creating a Trading Partner
    35. 35. Gaining Synergies
    36. 36. Expanding Customer Base</li></ul>TERMS<br /><ul><li>Service/guarantees
    37. 37. third party sources of recovery
    38. 38. Timing of payments
    39. 39. Metrics for satisfactory performance
    40. 40. Method of payment
    41. 41. Exchange rates
    42. 42. Letters of credit</li></ul>Bargaining Chips<br />
    43. 43. DiagnosticQuestions<br />What are my intended outcomes and interests?<br />Preferences, priorities, needs, desires, fears, aspirations, bottom line<br />What are their possible interests and outcomes?<br />Put yourself in their shoes<br />What are the options?<br />Potential points of agreement<br />Differences that might be dove-tailed<br />
    44. 44. A good hockey player plays where the puck is.<br />A great hockey player plays where<br />the puck is going to be. <br /><ul><li>Know
    45. 45. Competitor’s strengths, weaknesses
    46. 46. motivations, concerns, preferences, desires, needs, priorities, risk tolerance, optimism/pessimism about the future
    47. 47. Your Best Alternative to a Negotiated Agreement (“BATNA”)
    48. 48. Plan
    49. 49. Opening Offer/Demand
    50. 50. Number of Bargaining Moves (concessions) you’re willing to make in Advance </li></li></ul><li><ul><li>Dance ends at Midpoint Between First Two Reasonable Offers
    51. 51. Each Concession tends to be half the size of the previous concession and takes twice as long to be made
    52. 52. short-circuit dance &your bargaining partner will use mid-point offer to claim more value
    53. 53. Extreme Offers
    54. 54. Make them soft
    55. 55. Monitor response
    56. 56. Anticipate making concessions
    57. 57. Reasonable offer
    58. 58. Demonstrate commitment
    59. 59. Make only modest concessions
    60. 60. Stress merit</li></ul>TheDance<br />
    61. 61. A Reason and a Number<br />Resource Materials Part I, page 49<br />
    62. 62. ANCHORING<br />The party making the first reasonable offer should prevail over his bargaining partner who must respond in the range set by that party.<br />
    63. 63. Set false anchor<br />Frame the “deal”<br />Nature of problem deal is capable of resolving<br />Characterize deal in way favorable to your strengths<br />Routine extension of old rather than new “deal”<br />View sale of biz as stand-alone vs. synergy created by acquisition by buyer<br />Focuses on future rather than present<br />Focuses on value to BOTH parties<br />Lax & Sebenius 3-D Negotiation at 199-201<br />Using, Resisting & Creating (Meta) Anchors<br />
    64. 64. Framing<br /><ul><li>Present Losses as Gains
    65. 65. Strong tendency to prefer avoiding losses over acquiring gains
    66. 66. competitor’s deal would be a loss because – mired in bureaucracy; can afford to fail; product not as good
    67. 67. Use language that emphasizes your position & frames information in your favor
    68. 68. fewer rather than greater – greater attention to needs; partner in place; more dedicated, motivated, faster </li></li></ul><li>Competitive Bargaining<br /><ul><li>make high initial demands
    69. 69. maintain those high level demands throughout the course of the negotiation
    70. 70. make few (and small) concessions
    71. 71. adhere to a high level of aspiration for one's own "side."
    72. 72. obtain as much information from the other side as possible
    73. 73. give as little information about one's own position away
    74. 74. bluff
    75. 75. mislead
    76. 76. threaten retaliatory action if the other side does not comply. </li></li></ul><li>Concessions & Reciprocity<br /><ul><li>Make contingent concessions, i.e., we’ll drop price to $1.9 million if you provide letter of credit or increase initial payment, etc.
    77. 77. Creates appearance of increase in their number
    78. 78. Almost risk free
    79. 79. Label concessions & demand reciprocity
    80. 80. Stress difficulty in making concession
    81. 81. This will cut our profit razor thin
    82. 82. If we make this concession, you should be willing to pay in dollars rather than yen (or every 30 rather than 60 days or with interest)</li></li></ul><li>McNamara’s First Rule of War<br />Empathize with your enemy<br />The man able to put himself into Kruschev’s shoes was the only one able to suggest a way for Kruschev to back down AND save face, i.e., ignore the second hard-line message and respond to the first.<br />Cooperative Responses to Competitive Bargainer<br /><ul><li>sub-divide concessions by dividing issues into smallest parts & offer concessions only on sub-parts;
    83. 83. make hypothetical offers that can be disowned later;
    84. 84. demand principled justifications for positions; and,
    85. 85. respond tit-for-tat, i.e., to intransigence with intransigence and cooperation with cooperation.</li></ul>Mutual problem-solving inquiries include: <br /><ul><li>what the parties believe would be a "fair" solution to the problem;
    86. 86. whether the parties can agree on criteria for a "fair" settlement;
    87. 87. and, what priorities each party has, i.e.,
    88. 88. which issues are most important to each party and
    89. 89. which unimportant. </li></li></ul><li>"When others sense your willingness to <br />walk away, your hand is strengthened. <br />Sometimes you are better off not getting to yes.“<br />Robert Rubin, Chairman of Citigroup Executive Committee, former Secretary of the Treasury<br />
    90. 90. Distributive vs. Integrative Bargaining <br />Dividing Fisher and Ury’s Famous Orange<br /> Interest Based Solution<br />Distributive Solution<br />
    91. 91. Creating Value<br />Compatibility (identifying issues for which parties don’t have a conflict of interest)<br />logrolling, or trading off concessions on low-priority issues for gains on higher priority issues<br /> trading differential time preferences, or allocating more initial outcomes to the more impatient party and greater profits over a longer period to the more patient party<br />adding issues, or adding to the agreement issues not inherent in the initial negotiation framework<br />contingent contracts, or bets based on different expectations regarding a future event.<br /> Research reveals that negotiators often fail to implement these strategies and to reach integrative agreements<br />
    92. 92. The Central Question<br />How can we address our interests<br />While at the same time addressingyour interests<br />in a way that satisfies? our common interests<br />With thanks to mediator Sam Imperati<br />