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NEGOTIATION TERMINOLOGY NEGOTIATION

NEGOTIATION TERMINOLOGY NEGOTIATION. A process where two or more parties work to reach a joint agreement on issues of common concern. WHY NEGOTIATE?. TO GET A BETTER DEAL THAN HAD YOU NOT NEGOTIATED ( e.g., pay the asking price or seek a lower one). NEGOTIATE WHEN:.

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NEGOTIATION TERMINOLOGY NEGOTIATION

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  1. NEGOTIATION TERMINOLOGYNEGOTIATION A process where two or more parties work to reach a joint agreement on issues of common concern

  2. WHY NEGOTIATE? • TO GET A BETTER DEAL THAN HAD YOU NOT NEGOTIATED • (e.g., pay the asking price or seek a lower one)

  3. NEGOTIATE WHEN: • Am I comfortable negotiating in this particular situation? • Will negotiating meet my needs? • Is the expenditure of time and energy is worth the benefits that I could receive as a result of negotiation?

  4. THRU NEGOTIATION PARTIES: • identify issues they differ on • educate each other about needs and interests • generate/consider options • reach agreement on terms

  5. WHAT IS A CONTRACT? • “ a promise, or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty” • Williston on Contracts

  6. A CONTRACT IS A LEGALLY ENFORCEABLE AGREEMENT

  7. ELEMENTS OF A CONTRACT • MAY BE WRITTEN OR ORAL, FORMAL OR INFORMAL • OFFER • CONSIDERATION - the offer induced the party to do, or refrain from doing, something they are not legally required to do • ACCEPTANCE - the party knows of the offer and accepts it

  8. NEGOTIATION TERMINOLOGYEMPLOYMENT CONTRACT A mutual agreement between two or more qualified persons that spells out some or all of the terms and conditions of employment Negotiation of an employment contract presents opportunities to set forth expectations and establish rules for a productive working relationship

  9. INDEPENDENT CONTRACTOR • not an employee • may perform work similar to that done by an employee • whose method of working is not dependent upon the person for whom the work is performed • EMPLOYEE • a person who works for salary or wages • is subject to direction by the person for whom the work is performed (including work to be done, as well as methods and means to do work) • may be defined by statute

  10. TYPICAL TERMS IN EMPLOYMENT CONTRACTS • Parties • Duties • Pay and Benefits • Terms • fixed Vs. indefinite • Job Security • at will Vs. for cause • dispute resolution • severance pay • Vested Rights • pension contributions • accrued benefits

  11. FACTORS TO CONSIDER IN USING ADR PROCESSES • Selection is voluntary • Employee knowingly & willingly enters the ADR process • Remedial authority is similar as a court • Scope of dispute is clearly stated • Employer pays full cost • Process is neutral • Balance of costs to employee (attorney fees)

  12. POSITION one party’s solution to an issue; how to resolve the issue INTEREST one party’s concern need, or desire around a given issue; why the issue is important NEGOTIATION TERMINOLOGYPOSITIONSANDINTERESTS

  13. POSITIONAL Involves bargaining over positions, each side takes a position, argues for it Make gradual modifications to reach a compromise Attack individuals, discredit them to discredit their position INTEREST BASED Prior to formulating positions, each side seeks to understand and explore all interests Open to possibilities, find a solutions that satisfy all interests Attack the problem, not the people NEGOTIATION STRATEGIES

  14. POSITIONAL Extreme initial positions Emotional tactics Concessions viewed as weaknesses Deadlines ignored INTEREST BASED Building trust Gaining Commitment of people close to the other side Managing opposition NEGOTIATION STRATEGIES

  15. NEGOTIATION TERMINOLOGYTHE BOTTOM LINE THE WORST ACCEPTABLE OUTCOME

  16. ADVANTAGES easier to resist pressure and temptations limits the authority of agents DISADVANTAGES may be set too high limits flexibility limits creativity BOTTOM LINE

  17. NEGOTIATION TERMINOLOGYTRIP WIRE An early warning system to alert negotiators to stop, step back and reexamine the situation before reaching final agreement Trip wires are positions that are close to, but better than the BATNA

  18. NEGOTIATION TERMINOLOGYB A T N A Best Alternative To ANegotiatedAgreement (the true source of negotiating power)

  19. BATNA ADVANTAGES • prevents negotiating in the dark • protects you from accepting terms that are too unfavorable and from rejecting terms that are in your interest to accept • forces negotiators to realistically evaluate their position and options

  20. GUIDELINES FOR DEVELOPING A BATNA • List actions you might take without an agreement • Improve on some of the more promising ideas • Convert actions into practical alternatives • Select the best alternative

  21. SELLING YOUR HOUSE YOUR HOUSE AS YOU SEE IT AS A BUYER SEES IT

  22. WHAT’S YOUR BATNA? • PURCHASED FOR $100,000 • IMPROVEMENTS $25,000 • EQUITY $25,000 • MARKET VALUE $250,000

  23. WHAT’S YOURBATNA • CURRENT SALARY: $______ • WORKING CONDITIONS: • BENEFITS: • COMPARABLE SALARIES: $ _______ • OTHER FACTORS

  24. ABOUT BATNAs • The better your BATNA, the greater your negotiating strength • If a party’s BATNA is better than a possible agreement, there is little incentive to reach agreement • Disclose your BATNA to the other side when it is extremely good • Don’t disclose your BATNA when it’s worse than what the other side thinks

  25. WHICH STRATEGY WOULD YOU USE? • The other side has a much better BATNA or is more powerful • Both sides have equal BATNAs • You have a superior BATNA • You are not sure what the other side’s BATNA is ? ? ? ? ? ? ? ? ? ? ? ?

  26. TYPES OF AGREEMENT • No dispute over substance - communication is key • By integration - sacrifices interest of neither party • One party changes position - face saving inducements • Trade offs - issue of importance to one side not as important to another • Major concessions - 5 stages of grief: denial, rage, attempt to bargain, depression, acceptance • No agreement - BATNAs, deadlines

  27. TOP TIPS FOR NEGOTIATORS • EMPLOY TIME WISELY • TAKE RISKS • MAKE ‘EM LIKE YOU • DO YOUR HOMEWORK • USE YOUR LEVERAGE • COMMUNICATE, THAT MEANS LISTEN

  28. BARGAINING TOOLS KNOW AS MUCH AS YOU CAN ABOUT YOUR SUBJECT AND THE OTHER SIDE GAIN THE COMMITMENT OF YOUR NEGOTIATING TEAM BE WILLING TO TAKE RISKS PROVIDED YOU CAN AFFORD DEFEAT

  29. BARGAINING TOOLS2 USE WEAKNESS AS STRENGTH “…I don’t know please help me…” BE PERSISTENT USE ACTIVE LISTENING SKILLS MAKE ‘EM LIKE YOU, TRY TO CONVINCE THE OTHER SIDE THAT YOU CAN HELP THEM (or might hurt them)

  30. BARGAINING TOOLS3 DON’T REVEAL YOUR DEADLINE TO THE OTHER SIDE, AND NEVER BLINDLY FOLLOW A DEADLINE FOLLOW YOUR BATNA, USE YOUR LEVERAGE NEGOTIATE MUST DIFFICULT SUBJECT LAST, e.g. $$$

  31. BARGAINING TOOLS4 USE ULTIMATUMS ONLY AT THE END OF NEGOTIATIONS. THE OTHER SIDE MUST HAVE NO CHOICE, OR HAVE SUCH AN INVESTMENT IN TIME THAT THEY CAN’T WALK AWAY

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