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Negotiation skills

Negotiation skills. Haiti Emergency Response Office Advocacy Team - April 2011. Negotiator’s Dictionary. Primary need: must be met or satisfied to achieve the outcome you need; Secondary need: should be met , but can be postponed/ delayed or compromised to meet your primary need;

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Negotiation skills

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  1. Negotiation skills Haiti Emergency Response Office Advocacy Team - April 2011

  2. Negotiator’s Dictionary Primary need: must be met or satisfied to achieve the outcome you need; Secondary need: should be met, but can be postponed/ delayed or compromised to meet your primary need; Currency:resource controlled by one party that can be exchanged to satisfy the need of the other party; Prime currency: the explicit basis of conflict, i.e. why the negotiation takes place. There can be one or two in a negotiation (e.g. transaction: money and goods/services purchased are primary currencies); Alternative currencies: can be exchanged as a substitute for the prime currency; Elegant currency:resource which is a low cost to you as a giving party, but high value for the receiving party; Psychological currency: intangible resource that draws value from the nature of the relationship between parties e.g. respect/friendship/reputation; Settlement Range: range of settlements that are acceptable to you as an outcome of the negotiation using the currencies you possess;

  3. Strategies • Strategy = overall approach to deal with the conflict situation; • Once selected, this strategy should not be abandoned unless there is a significant change in conditions, or strong evidence that the strategy is not working. First strategic decision: to engage or not to engage How to assess whether or not to engage? Benefits of obtaining an agreement compared to what it will cost; Direct benefits: e.g. satisfaction of your needs; Indirect benefits: e.g. enhancing your reputation; Costs: e.g. resources required, opportunity costs. Do NOT engage if the same benefits can be obtained by dealing with a second party at a lower cost

  4. Strategies # 2: BARGAINING Positions are based on the prime currency only; Agreement is reached by adjusting the amount of prime currency exchanged; Relatively time efficient, but more time-consuming than “take it or leave it”; Risks of deadlock is more likely: both parties accept a compromise, but not both parties’ needs are fully satisfied; # 1: TAKE IT OR LEAVE IT Inflexible position: the other party either accepts or rejects; Attractive strategy if you have high currency power (e.g. company with a unique product/rare commodity); Low cost in terms of time/ involvement; High risks: damaged relationships/ disengagement from other party.

  5. # 3: NEGOTIATION • Positions are based on a combination of prime and/ or alternative currencies; • Prime and alternate currencies are adjusted until an agreement is reached; • High costs: most complex and time-consuming strategy; • High benefits: need satisfaction and relationship building; • Requires both parties to have the ability/ willingness to modify their initial positions; Choose it when you have low prime currency power, because you can increase your power by identifying hidden needs/ alternative currencies

  6. Power in Negotiation Power balance affects negotiation strategy and tactics;High quality negotiation = good understanding and use of power Currency power Personal power • Your ability to provide currencies that meet the needs of the other party (the other party’s capacity to meet your needs gives them power) • E.g. supply-demand: controlling a ready supply of a scarce commodity needed by another party gives you power in the negotiation • Knowledge of the negotiation process/ relevant information; • Your influencing skills; • Your reputation as a negotiator, and the other’s expectation of your ability; • Your confidence. A skilled negotiator with little currency power is usually an even match for an unskilled negotiator with high currency power

  7. How to Increase your Power • Provide a variety of currencies that satisfy several needs; • Identify hidden needs and provide currencies to satisfy them (the other party is unlikely to give you this information: you have to research); • Enhance your currencies: heighten the attractiveness/ value of your currencies and show how they satisfy the other party’s needs; • Find alternative currencies: you have prime currencies and alternative currencies – if you can find alternative currencies to satisfy the other party’s needs, you do not have to give up as much prime currency; • Reduce your dependency: if you have other options, you reduce the other party’s currency power.

  8. Stages of Negotiation

  9. Planning Stage • It improves your performance and increases your probability of success • Certain types of planning are more valuable than others IF YOU FAIL TO PREPARE YOU ARE PREPARED TO FAIL

  10. Tips for Effective Planning • Consider a wide range of outcomes/ options (especially those that may be raised by the other party) • Set objectives in terms of upper and lower limits (range), NOT around a fixed point • Focus on common ground areas (not only on conflict) • Pay attention to long-term implications • Identify major issues and plan separately for each one- rather than as a fixed step in a sequence; e.g. “I will bring up A which will lead to B, and I will close with C: what if the other party begins with “C”?

  11. Tips for Effective Planning • Learn all you can about the other party to anticipate strategies and tactics e.g. needs, expectations, style, past practices, deadlines, people they must please, who makes the decisions • SEPARATE FACTS FROM ASSUMPTIONS your guesses will be tested during the negotiation – avoid wishful thinking • Identify your BATNA

  12. Best Alternative To a Negotiated Agreement • If your basic need cannot be met except by reaching an agreement, you negotiate from a low power position; • If you identify another source that will meet your need before the negotiation, you will negotiate from a higher power position. If you do not have enough information or BATNA, consider temporarily disengaging or postponing the negotiation

  13. Preliminary Stage • Goal: to create a positive climate for negotiation Negotiation is selected by all to resolve the differences Agreement is obtained on agenda and ground rules IF THE PARTIES ALREADY KNOW EACH OTHER Discuss/ explore/ resolve past resentments e.g. Disclose your feelings/ clear the air before negotiations start; Draw out any negative feelings/ concerns the other party may have IF THEY DON’T Establish rapport, Build the relationship, identify shared values e.g. Plan time for informal conversation before formal meeting/ schedule meal together prior to negotiation What are our common interests? What specific actions will help build a positive climate?

  14. What do I Ask Myself? ON ISSUES AND AGENDA What issues do I want to address? Will we want to address different issues? How would we manage this? Is there one or more issues to be resolved? If so, should I deal with them in the same negotiation or in separate discussions? Are issues interdependent? Can I make trade-offs? If so, include them on the same agenda. Is it important to me to prioritize/ order the items on the agenda? How much time for each item? Are my BATNAs clear to me if we end up in deadlock? • ON GROUND RULES • Do I want any special arrangements on location/ language/ settings of meeting, extra participants/ observers? • What form should the agreement take? (MoU? Contract? Handshake?) • How much time will the process last? (One or multiple sessions?) • Should I set a deadline/ put time pressure on the other party? • How will I manage deadline pressure/ delaying tactics by the other party? • Do I need to inform external stakeholders on status of negotiation?

  15. Tips for a Successful Preliminary Stage • Enter the negotiation emotionally centered and focused; • Clear up/ neutralize any rumors/ misinformation, without implying criticism of the other party: defuse factors that create negative climate; • Articulate shared goals/ objectives/ areas of agreement: attract the other party; • Avoid provoking/ being provoked: NO “defend/ attack spiral”; • Be clear about your values, but state them in a way that is not condescending.

  16. Tips for Successful Preliminary Stage • Get agreement on the fact that negotiation will be pursued as the process to resolve the issues; The choice not to negotiate on a certain issue should be strategic; Ensure issues you want to discuss are negotiable; Some negotiators use “non-negotiability” as a tactic to establish the importance of later concessions on the issue; • Avoid premature transition from preliminary stage; • Failure to clarify agenda/ ground rules will cost time later and may work against maintaining positive climate.

  17. Opening Stage: Goals • Define the nature and parameters of the conflict/ issue; • Identify and make public the positions and expectations of both parties; • Test the other party’s position for firmness and flexibility.

  18. Your “Settlement Range” Minimum acceptable amount of currency Actual amount of a currency that you expect to take from a successful negotiation Initial position on a currency /your most optimistic view of the outcome. It is usually the same as or more than your expectation Anchor Expectation Opening How to set realistic expectations? Precedents? Policy? What the other party has agreed to on similar issues in the past? How low? It should still satisfy your primary need. External factors may affect it (e.g. less of a prime currency to save time ) How high? High enough to create flexibility, and give you room to negotiate. It should be credible: you should feel comfortable defending it. They will try to influence your Settlement Range! Write yours down to avoid unnecessary concessions/maintain your position Define it in terms of prime currency Draft your Settlement Range for each highly desirable alternative currency

  19. Tips: Good Opening Position • It should not reflect compromised positions, should be clear and strong(avoid using more than one currency -it may create confusion/waste time) • Stick to your few strongest points - do not dilute (weaker points will be attacked) • Be confident (the opposite of firm is flexible, not tentative): your opening should be clear, straightforward, delivered with conviction, stated it in a language that reflects your firmness/ flexible and supported with appropriate reasoning/ evidence (rehearse until you can repeat it confidently. If you can’t, modify it so that you can. Do not use “maybe” and “perhaps”) • State it earlier, preferably before the other party (it signals that you have planned, and you are comfortable with your position, may influence the other settlement expectation, may determine their position – e.g. a buyer offering 10% less of what you have asked) • If necessary, repeat your opening, so that they know you are serious

  20. Tips: Good Opening Position • Set appropriate opening demands: if you expect more you will settle at higher levels BUT unreasonably high demands raise probability of deadlock or withdrawal by the other party; • If strengthening relationship is important to you, present a more moderate opening (it makes you friendly/ credible/ reasonable) • If you do not trust them, open higher to give extra negotiating room in case they use high-pressure tactics If you are not prepared for it (e.g. lack of necessary background information), consider NOT opening or postponing the negotiation

  21. Responding to an Opening • Establish your “walk away”: the point below which you will refuse to negotiate, as this jeopardizes the satisfaction of your primary need (e.g. they do not satisfy your need and refuse to negotiate that position) • Understand before you respond (≠ accepting) The other party’s position is: Reasonable if between your anchor and opening Unreasonable if between your anchor and your walk away Outrageous if it is beyond your walk away Walk Away Anchor Expectation Opening Outrageous Unreasonable Reasonable Reasonable

  22. Responding to an Opening • Responding to reasonable/ unreasonable positions: Test firmness: ask for justification/ evidence/ challenge questionable facts/ logic Ask to repeat the position (often unskilled/ poorly prepared negotiators lower their opening when asked to repeat) State that it is too high/ too low, and see how they respond Argue against position If you are surprised, gather more info before you continue • Responding to outrageous positions: Do not be afraid to execute your walk away Refuse to continue negotiations until they have stated a position that does not exceed your walk away Physically walk away (last resort) Remember: an outrageous position on the table builds the other party’s confidence IF THE RELATIONSHIP IS IMPORTANT TO YOU Deal patiently with unreasonable demands, avoid unproductive conflict If necessary, consider returning to preliminary stage. Do not continue negotiations with outrageous positions on the table: they will think that you are willing to make concessions to preserve the relationship. IF NOT: ask them to revise the opening as a condition for continuing the negotiation

  23. Responding to an Opening • Do not respond immediately to a proposal with a counterproposal. Immediate counterproposals are perceived as disagreements/obstacles rather than as proposals; The other party is concerned about its own proposal, and is less receptive to a new option after having suggested one • If you disagree, first give the reasons, and then state that you disagree “…and for those reasons, I must disagree with you” instead of “I disagree with you for the following reasons…”; • Do not make unilateral concessions, especially early in a negotiation;

  24. Exploring Stage: Goals To identify underlying needs (Motives behind other’s position, and relative importance of the other party’s needs) To find/ test the value of alternative currencies that may be exchanged (other means to satisfy the other/ your needs, relative value of your currencies) How to manage exploring stage effectively? • Decide what questions you want to ask • Listen carefully to responses and ask follow-up questions • Test the value of potential currencies of exchange • Do not denigrate/ devalue your own alternative currencies DO NOT ASSUME THAT THE OTHER PARTY HAS THE SAME NEEDS THAT YOU SEE OR FEEL

  25. Tips for Successful Exploring Stage • In planning, there are estimated underlying needs: do not assume you have guessed correctly • Ask questions, test understanding and summarize frequently to reduce misunderstandings and misconceptions • Use “arbitrary mirroring”: paraphrase the other party’s statement, so that it sounds stronger, to obtain a further response - “So, do I understand you to say that this option is totally impractical?” • Disclose your needs: this will increase trust so that the other party is more likely to disclose similar information (take first step/ calculated risk to see if the other party will follow) REMEMBER: A need can be the tip of an iceberg: explore it! The need you identify may be a secondary need - anything I have missed? - Prioritize the needs - you mentioned several important needs. Which of these is the most important?

  26. Tips for Successful Exploring Stage • Alternative currencies have value to the extent that they satisfy needs: what can you exchange that satisfy your/ his/her needs? Key questions (X= other’s position): what does getting X does for you? What need does it satisfy? How does getting X help you? What problem does it solve? Asking/ listening: critical for finding/testing alternative currencies To identify and determine the value of alternative currencies - “Is X or Y more important to you?” Listen to meaning behind words, probe for underlying implications

  27. Closing Stage: Goal TO STRUCTURE AN AGREEMENT • By matching alternative currencies until one or both parties are willing to settle for less/ to give more of the prime currency; • Lingering concerns identified and resolved, potential/ existing barriers that can jeopardize implementation of the agreement are tested and resolved Potential barriers to implementation are: 1/ remaining concerns held by one party once agreement is reached; 2/ the agreement does not meet the needs; 3/ actions included in the agreement are impossible to implement. • By establishing a “contract”: testing for understanding, recording/ putting into appropriate form the agreement, planning actions required to ensure finalization/ implementation of the agreement, clarifying responsibilities, review the agreement.

  28. Closing Stage: Managing Pressure • Internal:One party may try to use deadlines/ threat of deadlocks to gain last-minute advantage. Do not let them use this as a means of coercion. • External: Find ways to manage external pressure that both parties can support. • Deadlock pressure: very powerful tactic. Protect yourself! Consider consequences of deadlock, before you face it. The better your BATNAs, the less vulnerable you are. Discuss possibility of deadlock with your management: obtain support from your hierarchy. Clarify that you never make concessions under pressure. Pressure often perceived as negative, BUT you can use it constructively if: they are using delaying tactics/ are indecisive too much time has been spent on the issue.

  29. Tips for Successful Closing Stage • Investigate ambiguities to avoid problems during implementation: if anxiety to obtain the agreement prevails, the agreement is more likely to fall apart during implementation (set aside review/ debriefing time before leaving negotiations). • Your concessional behavior influences other party’s behavior: Avoid unilateral concessions : if you give something, ask for something in return Do not rush, avoid concessions under time pressure: avoid large concessions at the end of the negotiation to meet a deadline (if you make concessions under pressure, they will apply more pressure) Do not make the first concession, especially on a major issue Make smaller concessions as the negotiation proceeds Exceptions: if the relationship is very important to you

  30. Generic Tactical Orientations Strengthening relationship is important Remember: you deal with dimensions, not fixed points! Receptive: solicit/ be open to other party’s suggestions on agenda/ ground rules/ conducting negotiations; Flexible: from the beginning, consider broad range of alternative currencies/ settlement possibilities; Disclosing: reveal info/ be open about underlying needs, alternative currencies, expectations, deadlines, cost of deadlock Withholding:Keep info High trust Low trust Believing: Accept value information provided by the other party Doubting: Accept as valid only the info that can be verified Directive:take the initiative to establish agenda/ ground rules and control the process; Firm: consider only currencies that satisfy your primary need/ are evaluated in terms of prime currency; Strengthening relationship is less important

  31. Generic Tactical Orientations Relationship is important Relationship is NOT important • Ask for other’s input on agenda/ ground rules; • Take steps to establish/ repair relationship; • Consider having separate Preliminary Stage, show willingness to consider alternatives; • Open moderately high; • Ask “big picture” questions to identify underlying needs/ alternative currencies; • Look for alternatives the other will accept; • Avoid using deadline/ deadlock pressure. • Push for agenda/ ground rules that meet your needs; • Open high; • State position in terms of currency; • Look for alternatives that you can accept; • Use deadlock/ deadline pressure if necessary to gain agreement; • Show interest in alternative currencies that relate to your primary need and are easy to evaluate.

  32. Generic Tactical Orientations High trust Low trust Be relatively open about: • Your chain of command; • Your underlying needs; • The value you place on alternative currencies; • Your settlement expectations; • Your real deadlines; • The real cost of deadlock to you; Accept information from the other party Be cautions about revealing: • Your chain of command; • Your underlying needs; • The value you place on alternative currencies; • Your settlement expectations; • Your real deadlines; Verify info received Look for hidden information.

  33. “It takes two to tango” Three levels of difficulty in negotiation management • Level one: other party is knowledgeable and cooperative (negotiation should be successful); • Level two: other party is cooperative but unfamiliar with process/ inexperienced/has no road-map to follow; • Level three: The other party is familiar with process/ has a road map, but is adversarial (more difficult level)

  34. Level 2: other party is cooperative but unfamiliar/ inexperienced • Other party lacks a plan/ act intuitively: behavior is difficult to predict – you dance with a proud partner who does not know the steps/ may be reluctant to take direction from you • Other party will follow you if they are convinced that following your lead is not to his/her disadvantage. How? • Sell you value/ approach (share guidelines you would like to follow, and resulting benefits for both parties; extend preliminary stage; share optimism/knowledge without patronizing/ threatening; • If inexperienced/timid party is uncomfortable with conflict: convince them that negotiators are expected to have conflicting positions, “roles dictates positions” (there are no good/bad people in a negotiation, just people with different needs); • Adopt (not accept) their perspective: If I were in your position, I imagine I would ask for…

  35. Level 3: experienced and adversarial counterpart OPTIONS: • Adopt the other party’s strategy (be adversarial too): when deadlock approaches, “why don’t we try another approach?”, and the other party may be more receptive. • Refuse to pursue the other party’s strategy: • Refuse to begin negotiations until you are happy with ground rules; • Stop negotiating when other party’s behavior is unacceptable to you; • Apply deadlock pressure: you will not come to an agreement unless they change their approach; • Disengage; • Involve a third party as mediator/ consultant

  36. Tips for all stages • Avoid using words/ phrases that cause irritation and do have negligible value in persuading the other party (e.g. “my generous offer”, “my reasonable proposal”); • Approach the problem collaboratively: give positive information and explanations about your motives; • Use a constructive body language; • Listen and understand: do not interrupt, show that you are pro-actively listening; • Avoid “attack/ defense spiral” and escalation: take a break if the tension is rising; • Be culturally sensitive; • Consider underlying issues/ perceptions related to social/ economic status.

  37. Don’ts of Negotiation • Do not try to foolor trick: tricky tactics rarely fool the other party, but are likely to make you lose your credibility; • Don’t bad-mouth: you can criticize arguments, but getting personal does not work; • Don’t mask your position (pretending disinterest to get a better deal) if you deal with experienced negotiators; • Don’t get straight to the point – do not miss opportunity to enhance relationships, you can spend this when the major issue is raised – it is harder to create a positive climate once major issues are on the table; • Don’t try to plan and argue for both sides – it’s better to allow the other side to define their own interests and for you to concentrate on yours.

  38. Don’ts of Negotiation • Don’t discount “odd” possibilities – sometimes it takes creativity to get results: don’t dismiss strange ideas without putting them to the test, they might work. • Don’t seek the perfect solution: if only perfection is adequate, nothing gets done – you can never know when you have made the “best” possible bargain, so work for the best deal obtainable. • Don’t go into “might have been”: after an agreement is made, avoid “what if” on the concessions made, there is no point. • Don’t assume that the agreement is the end of the conflict: the agreement should be monitored, and tracked.

  39. Questions?

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