How to Train Business People on a Large
(or Small Breakdown Group) Setting in a Few Hours
The
Negotiation Process: Four Simple Steps
• Step One: Preparing your strategy
• Step Two: Exchanging information
• Step Three: Opening and making
concessions
• Step Four: Closing and getting
commitment
Step One: Preparing your Strategy
- Assess the situation
- What is the perceived importance of the future relationship between the parties? (A)
- What is the perceived conflict over stakes? (B)
·
Balanced Concerns (business
partnership, joint venture or merger) -- Collaboration
(problem solving) and compromise
• Relationships (work team, marriage) -- Accommodation, problem solving and compromise
• Transactions (divorce, house sale, market
transaction) --Competition, problem
solving and
compromise
• Tacit coordination (street intersection) -- Avoidance, accommodation and compromise.
·
Consider:
Your GOAL
·
Consider:
Your BATNA
·
Consider:
Your counterpart’s goal
·
Consider:
Your counterpart’s BATNA
·
Address:
Standards and
norms—market information; items of higher and lower value to use for logrolling.
Step Two: Exchanging Information
·
Establish rapport
o The
importance of networking, small talk and “schmoozing”
o Obtain
info on the other side’s interests, issues and perceptions- ASK QUESTIONS!
o Look
for interests behind positions
o Signal
your own expectations and strengths (gently)
·
Common mistakes:
o Assuming
the other party has the same style as you do
o Rushing
through (“skimming”) the information gathering component
o Assuming
you already know the other side’s goals, concerns, and interest
o Failing
to signal your own interests and expectations
o Forgetting
to ask questions
Step
Three: Opening and Making Concessions
·
Issue: Should you make the opening
offer?
·
Many “experts” claim you should avoid
making the opening offer
·
However sometimes that might not be
correct since each case is different
·
Should the opening be “optimistic”
(slightly aggressive but passes the red face test) or “fair and reasonable”?)
·
Context matters
o In
a relationship negotiation, a fair or even accommodating opening can be the
right one
o In
a Transactional negotiation, a more optimistic opening is more likely to lead
to your best outcome
·
Remember who’s on the other side— e.g.
competitors tend to star with optimistic openings
·
Concessions are the language of
cooperation
·
Concessions patterns matter just as
much as the opening
Step
Four: Closing & Getting Commitment
·
Agreement without commitment isn’t
enough
·
Classic endgame issues
o Time
pressure
o Splitting
the difference
o Threats/walkouts
o Nibbling
(asking for little last minute concession)
Consideration:
Six Ways to Build Trust in Negotiations
1.
Speak their language
o Take
the time to understand the other’s history, culture, perspective
o Be
sensitive to word choice and the other’s level of experience
o Early
preparation can lessen the impact of gaffes: state at the outset you’ve worked
on understanding the other party’s perspective, needs, and interest but you
recognize that a lot of learning will take place as the negotiation moves
forward and the relationship builds.
o Work
on building an environment that encourages questions and acceptance of the
natural process of mistakes occurring.
2. Manage your reputation
o Your
reputation precedes you
o A
bad reputation can be a deal killer from the start; a great will help
o Reputation
as a tool, not a backdrop
o Provide
references from mutually trusted third parties that vouch for your character
o If
appropriate, a third party can communicate with the other side prior to the
negotiation, or even serve as an intermediary during it.
o Offer
other forms of evidence of past successes in similar relationships, such as
media or trade reports
3. Make dependence a factor
o Consider
the Stockholm syndrome: hostages become psychologically dependent on their
captors’ statements and demands more than those of the officials who are
attempting to negotiate their release.
o We
tend to cope with psychological discomfort associated with dependence by
believing in trustworthiness of those upon whom we depend.
o In
negotiation, when both parties believe that they need each other to achieve
their individual goals and that their options are limited, trust between
parties will increase.
o Highlight
unique benefits you can provide and empathize the damage that might results
from an impasse
o This
technique can be useful when a stalemate looms large and alternatives to
agreement appear painful or costly.
o In
such situations, a negotiator who senses he has no other recourse may come to
trust even his “enemy.”
4.
Make unilateral concessions
o A
careful unilateral concession conveys to the other party that you consider the
relationship to be a friendly one.
o Requires
no commitment or concession from the other party
o Come
at little cost or risk to the provider, but is of high benefit to the recipient
o Demonstrates
competence by portraying you as someone who understands the other side.
5.
Explain your demands
o Make
a strong case for your moves in a negotiation and provide the other party with
explanations of your demand
o An
offer that is explained and justified will probably preserve trust and may
enhance it
o
6.
Maximizing joint gain
o Believing
the other party is competent and has character allows negotiators to take the
risks that are necessary to achieve mutually beneficial outcomes
What To Do From Here?
·
Observe how people behave during
negotiations each day
·
Be aware of what you’re doing in
negotiations—being conscious is the first and most important step to being
effective
·
Read more about these issues in Suggested Readings:
o Martha
Legace of Harvard Business School “Negotiating
in Three Dimensions” http://hbswk.hbs.edu/item/5497.html
o Deepak
Malhorta of Harvard Business School “Six Ways to Build Trust in Negotiations,” http://hbswk.hbs.edu/item/4033.html
o Richard
Shell, Bargaining For Advantage
o Stone,
Patton, and Heen, How to Discuss What
Matters Most.
References:
Legace,
Martha, Harvard Business School Working Knowledge, “Negotiating in Three
Dimensons,” <http://hbswk.hbs.edu/item/5497.html>
August 7, 2013
Malhotra,
Deepak Harvard Business School Working Knowledge, “Six Ways to Build Trust in
Negotiations”, < http://hbswk.hbs.edu/item/4033.html>August
7, 2013
Alvarez
and Kennedy, “Negotiation Theory & Practice”, Stanford, <http://med.stanford.edu/careercenter/management/Negotiation_Skills_MA_JMK_2_16_06.pdf
> 2013.
Pruitt and Kim, “Social Conflict: Escalation, Stalemate and Settlement:
“Dual Concerns Model”, McGraw-Hill, 1994.
Shell, R.G. (2006). Bargaining for
advantage. New York, NY: Penguin Books
Photo Credit
See image: Mobius, <http://www.mobiusnz.com/resources>
August 7, 2013.
