1 Negotiation Dynamics in The Executive Seminar

What were each side’s alternatives?What were each side’s alternatives? –Maxwell’s? –Williams’? 2

3 Negotiation Dynamics? $2.5K $5K $7.5K $10K $12.5K $15K $17.5K Zone of Agreement Williams would do it for nothing (but agent won’t) Maxwell would pay 20K or more

Lesson one A bad alternative does not necessarily equal a bad outcome…A bad alternative does not necessarily equal a bad outcome… –Why would Maxwell not push Williams as far as it could? –Why wouldn’t Williams squeeze Maxwell if s/he could? Other forces often drive dealsOther forces often drive deals –Wish for a relationship, interests, principles –Their bad alternative If one side has strong leverage and is willing to use it…it is often decisiveIf one side has strong leverage and is willing to use it…it is often decisive But remember: there’s a reason they are at the tableBut remember: there’s a reason they are at the table 4

5 Others may consider them primary, especially in other culturesOthers may consider them primary, especially in other cultures Likely to make fairness much more importantLikely to make fairness much more important How to establish/enhance?How to establish/enhance? – Stress similarities, connections –ID a mutual friend or other stake in being trustworthyUse gifts as a signal Distinguish working from personal relationshipsDistinguish working from personal relationships The impact of relationships

Principles What principles had an impact here?What principles had an impact here? –For Williams? –For Maxwell? 6

7 Objective Standards for Compensation? $0K $2.5K $5K $10K $12.5K $15K $17.5K $20K $22.5K What Maxwell is willing to pay: $20K + Two days + prep at Williams’ top rate $15K Original speaker’s fee + exps Williams fee plus social hour $10K+ Williams’ UK rate w/small expenses $10K Original speaker fee/Williams’ top rate 0 What Williams would be willing to take 12K+ $2.5 to 3K What a junior faculty member would be paid

8 Impact of principles Principles are important – They influence both us and opponents – We want to be, and appear, consistent Principles are useful –Legitimize your position –Minimize emotional reactions –Substitute for relying on alternative –Give basis for asking for information –Allow moving w/o slippery slope

Selecting an effective principle Should not be under your influence Consider industry customs, model clauses, cases, well-known organizations, tradition OK to use a standard that benefits you, if a neutral person might accept it Best to use standard that other side has already accepted: this creates “normative leverage” If you can ID a principle to justify a concession, easier for them to move

10 Integrative (“Win-Win”) Bargaining Good negotiators change style to fit the situation, but integrative bargaining is preferable.Good negotiators change style to fit the situation, but integrative bargaining is preferable. Key: What does a party want other than or in addition to money? The answer is its interests.Key: What does a party want other than or in addition to money? The answer is its interests. Faced with a position, ask why do they want that?Faced with a position, ask why do they want that? Easier to divide a large pie than a small oneEasier to divide a large pie than a small one

11 What matters, other than money? Personal interests: Being treated with respect, valued as a person Personal interests: Being treated with respect, valued as a person Process interests: Telling my story, using fair, predictable rules Process interests: Telling my story, using fair, predictable rules Economic interests: Getting the best possible value from the deal Economic interests: Getting the best possible value from the deal External interests: Issues from a context outside the negotiation External interests: Issues from a context outside the negotiation

12 Interests: what mattered to each side other than salary? Dean: What mattered to Williams?Dean: What mattered to Williams? Agent: What seemed important to Maxwell?Agent: What seemed important to Maxwell?

13 Compare $10K in cash $0 in special advertising $10K total cost to Maxwell to $7.5K in cash Intro to press and access to attendee list $7.5K total cost to Maxwell

14 How To Prepare? ID your own interests clearly, and rank your preferencesID your own interests clearly, and rank your preferences Ask yourself what their interests may be: use role reversalAsk yourself what their interests may be: use role reversal Ask whose interests? Those of bargainer and client may differ: e.g., agents vs. clientsAsk whose interests? Those of bargainer and client may differ: e.g., agents vs. clients ID contrary interests: Why might they say no?ID contrary interests: Why might they say no? Ask: how can I satisfy their goals at a low cost?Ask: how can I satisfy their goals at a low cost?6

Copyright 2006 Dwight Golann15 How to bargain with interests? Competitive: Haggle, often focusing on one issue at a timeCompetitive: Haggle, often focusing on one issue at a time Alternative:Alternative: – ID range of issues – Exchange info re: relative importance to each side – Propose packages – Offer adjustments + trade groups of issues – Continue to Seek out more informationSeek out more information Work to be creative; don’t rush just to be friendlyWork to be creative; don’t rush just to be friendly

16 What solutions in Executive Seminar? Maxwell? Pay -- How Much? On what criteria? Assistance with marketing Williams: Advertising – What will it say? Advertising – What will it say? Access to clients, alumni Access to clients, alumni Relationship with press Relationship with press Future engagements Relationship with University?

17 Why Is It Hard? We instinctively view the world from our own lens:We instinctively view the world from our own lens: –they want what we want. –“Fixed pie bias”: more for you means less for me Bargaining fosters competitiveness: We want to “win”Bargaining fosters competitiveness: We want to “win” Openness can hurt youOpenness can hurt you