 Eli Broad Graduate School of Management, 2005 Negotiating for Results John T. Delaney October 21, 2005

 Eli Broad Graduate School of Management, Rule One: Know Yourself What Kind of Bargainer am I? What style or approach do I like? –do I avoid or embrace conflict? –do I enjoy or avoid risk? Do I prepare? Do I know what I want? Do I ask for what I want?

 Eli Broad Graduate School of Management, Basics: Elements of a Negotiation (1) Interests –What do people really want? identify the relevant parties clarify the interests probe for underlying interests (2) Options –What are possible agreements or pieces of agreements? create options to meet interests find ways to enlarge joint gains

 Eli Broad Graduate School of Management, Elements of a Negotiation (3) Alternatives –What will I do if we do not reach agreement? think of your alternatives to a negotiated agreement select and improve your BATNA identify alternatives open to the other side estimate the other side’s BATNA

 Eli Broad Graduate School of Management, Elements of a Negotiation (4) Legitimacy –What criteria will persuade us that we are not being ripped off? use external standards as sword and shield use the fairness of the process to persuade offer them an attractive way to explain their decision

 Eli Broad Graduate School of Management, Common Negotiation Problems Irrational Escalation of Commitment –Continuing a course of action even after it no longer makes sense –Looking for victory at any cost Assuming Your Gain Comes at the Expense of the Other Party –Most negotiations end in compromise –This inhibits creative problem solving

 Eli Broad Graduate School of Management, Common Negotiation Problems Fixing on Their Initial Offer (or Your Initial Demand) –Initial positions often become anchors –You need to focus on the process of negotiation to avoid positional bargaining Not Considering the Other’s Perspective –Frequently, one side has better information than the other –Put yourself in the other person’s shoes to determine how to negotiate

 Eli Broad Graduate School of Management, Using the Elements to Succeed: Principled Negotiation Separate the People from the Problem –Be soft on the people and hard on the problem Focus on Interests, Not Positions –Interests define the problem –Ask “why” to uncover interests Invent Options for Mutual Gain –Think about solving their problem Identify your BATNA –Improve your BATNA

 Eli Broad Graduate School of Management, Rule Two: Know the Details You must do your homework Many resources are available for the data you need It is up to you to find the information you need

 Eli Broad Graduate School of Management, Know Your Stuff: Broad Salary Data YearAvg. SalaryAvg. BonusPct. Bonus 2000$73,047$9,04973% 2001$77,529$12,93181% 2002$74,133$11,47474% 2003$75,536$9,28362% 2004$76,313$9,73252% 2005$79,576$10,50264%

 Eli Broad Graduate School of Management, What Details Matter? With Whom do you Negotiate and When? –Timing is critical What is Negotiable? –Deadline for Acceptance –The Job –Location –Starting Date –Salary –Bonuses (including signing bonus) –Stock Options –Benefits

 Eli Broad Graduate School of Management, More Details What is Negotiable? –Relocation Package –Spousal Assistance –First Salary Review Date –VISA Help Offer and Acceptance –Never Lie –Don’t Discuss Details of Other Offers –Accept Written Offer Before Declining Others –Decline Other Offers Graciously (It’s a small world)

 Eli Broad Graduate School of Management, Rule Three: Only You Can Decide How will I know if I should accept an offer? How will I know if I got enough in the negotiations? Should I negotiate in every case? What if I love the company/job/location, but don’t like the offer? How can I avoid having second thoughts?

 Eli Broad Graduate School of Management, Salary Negotiation Problems Lack of Preparation –Not knowing what you want –Not telling them what you want –Assuming you know what they want test your assumptions Not Knowing Your BATNA Underestimating Your Power Agreeing too Quickly Not Emphasizing the Relationship

 Eli Broad Graduate School of Management, Conclusion and Questions Achieve the results you desire Feel Great! QUESTIONS?