Achieving Negotiation Success

1. Achieving Negotiation Success Professor Laura Kray 2010

2. Negotiations and Conflict Resolution, MBA 257 Professor Laura Kray kray@haas.berkeley.edu Office: F591 Meeting times: Tuesday & Thursday, 2-4/4-6 Office hours: Wednesday, 2-3 or by appt Professor Laura Kray 2010

3. Welcome! • You are about to embark on a journey of self-discovery • Challenge assumptions • Navigate tricky situations • Develop skills • Gain experience • Give and receive feedback • Increase confidence Professor Laura Kray 2010

4. About the course • Fast paced • Limited time for discussion relative to other classes • Take offline some pressing questions/comments (index cards, office hours, email) • Experiential and interactive • Other students highly dependent on your attendance and preparation • Need reflection to reap the benefits of experiences • Feedback intensive • You are strongly encouraged to think through how you approach a wide variety of conflicts in life • Ultimately what you get out of it is up to you! Professor Laura Kray 2010

5. Negotiating is like… Professor Laura Kray 2010

6. Goals for the course • Learn to depersonalize and enjoy conflict • Overcome common negotiator traps • Cognitive biases • Ethical traps • Develop a framework for approaching any negotiation • Transactional • Dispute resolution • Multi-party • Take risks to facilitate learning • Improve communication skills • Have fun! Professor Laura Kray 2010

7. About your professor • Beginning my 9th year at Haas • Psychologist (social, non-clinical) • How do thoughts, goals, and emotions influence behavior? • Primary research and consulting areas: • Negotiations • Gender stereotypes • Growth versus fixed mindsets • Reflection on past experiences • Analytical problem solving • Meaning construction • Learning Professor Laura Kray 2010

8. Course assignments • Preparation and participation (30%) • Participation in debriefing discussions • Remember you must be present to participate! (2 absence max) • Negotiation journal entries (20%) • Two entries submitted for grading • Reflect on in class negotiation, readings and course themes • Peer feedback and self-analysis (20%) • Online surveys after each negotiation to provide feedback • Self-analysis of feedback received • Real world negotiation (20%) • Apply course concepts to negotiate something of real value to you • Red paper clip option • Negotiation cheat sheet (10%) • Development of your own personal toolkit Professor Laura Kray 2010

9. Negotiation exercises • Provide safe environment to experiment • Compare and contrast your behavior with the behavior of your classmates • Understand that there is no “cookbook” solution • Expect reputational consequences for your actions • Get feedback on your interactions with others Professor Laura Kray 2010

10. Miscellaneous course details • Volunteers for course representative? • Green class: no printouts of slides • Slides will be posted on bspace AFTER lecture • Use of phones and internet in class is prohibited • Laptop use discouraged generally; prohibited with guest lecturers • Individual assignments should be done independently Professor Laura Kray 2010

11. Negotiations • A decision making process by which 2 or more parties agree how to allocate scarce resources • Information exchange, not debate • Satisfy other party’s interests to improve your own outcome • Both an art and a science • Art: a soft skill influenced by relationship building • Science: develop an analytical framework to devise a strategy and apply tactics Professor Laura Kray 2010

12. The defining characteristics of a negotiation situation • Belief that conflicting interests exist • Communication between parties is possible • Intermediate solutions/compromises are possible • Offers and proposals don’t determine outcomes until accepted by both parties • Parties have incomplete knowledge about each other’s interests • Parties seek to maximize their utility Professor Laura Kray 2010

13. Competitive Market • The market has roughly an even number of buyers and sellers. • You can complete as many transactions as possible in 30 minutes. • You can only complete one transaction with any given party. • You must complete an agreement form for each completed transaction before proceeding to the next transaction. • Your goal is to earn as much profit as possible. • Make contact with a negotiating partner in the market area (front of room near chalkboard) and then proceed to negotiating area (student seat area). • You are free to share information verbally about your profit schedule, though under no circumstances should you physically show your counterpart your profit schedule. Professor Laura Kray 2010

14. Good luck! • 5 minutes preparation • 30 minutes to negotiate • Submit all agreements after market closes • Reflection • How to gauge negotiation success? • What factors contribute to success? • What types of issues exist in negotiations? Professor Laura Kray 2010

15. Competitive Market • Maximum individual gain: $8,600 • Model: $800 • Delivery/Financing: $5,600 • Volume Discount: $2,400 • Maximum joint gain: $11,200 • Model: $800 X 2 = $1,600 • Delivery/Financing: $4,000 X 2 = $8,000 • Volume Discount: $2,400 Professor Laura Kray 2010

16. Types of negotiation issues • Compatible issue: • Both parties want the same thing • Distributive issue: • Zero sum, win/lose • Parties have opposing preferences and care equally about issues • Integrative issues • Parties have opposing preferences but different strength of preferences (priorities) Professor Laura Kray 2010

17. Model Professor Laura Kray 2010

18. Volume Discount Professor Laura Kray 2010

19. Delivery Time & Financing Professor Laura Kray 2010

20. How to measure negotiation success? • Performance • Individual gain • Joint gain • Effect on relationship • Transaction costs • Will the deal stand the test of time? Professor Laura Kray 2010

21. What makes a good negotiator? • Preparation and planning skill • Knowledge of subject matter being negotiated • Ability to think clearly and rapidly under pressure and uncertainty • Ability to express thoughts verbally • Listening skill • Judgment and general intelligence • Integrity • Ability to persuade others • Patience • Decisiveness Laura Kray, Haas School of Business (c)