Now What….. I want the last remaining orange and so do you

Focus on interests, not positions: How do interests differ from positions? Behind opposed positions lie shared and/or compatible interests Each side likely has multiple interests that may be valued differently by each party Find these compatible interests and then make trade-offs Complete satisfaction for both parties

Mythical Fixed-Pie: Piece 1 Assume there can only be one winner and one loser (distributive bargaining approach) Fail to find mutually agreeable trade-offs However, only a small percentage of organizational negotiations are purely distributive, involving just one resource or just one issue Consider: Price, delivery date, financing, service, relationships

Mythical Fixed-Pie: Piece 2 The interests of the other party conflict with ours “What’s good for them must be bad for us” Our theories and assumptions about negotiation and conflict strongly impact our approaches and behaviors

SALT (U.S. & Russia) “I have had a philosophy for some time in regard to SALT, and it goes like this: the Russians will not accept a SALT treaty that is not in their best interest, and it seems to me that if it is in their best interest, it can’t be in our best interest” Floyd Spence, U.S. Congress

Who Proposed This? The same arms reduction proposal was reviewed by two groups of people in the U.S.A. Group 1: The arms reduction proposal was offered by Russian President Gorbachev How favorable was it to Russia, the U.S.? 56% said it strongly favored Russia 16% said it favored the U.S. 28% said it favored both sides equally

Who Proposed This? Group 2: The arms reduction proposal was offered by U.S. President Reagan 27% said it favored the USSR. 27% said it favored the US 46% said it favored both sides equally

Finding Compatible Interests Pairs were presented with a negotiation involving multiple issues. On two of these issues, the opposing sides had completely compatible interests (similar to an interest in the orange peel versus an interest in the fruit) What percentage of the time did the negotiators make the trade-offs? 50% Instead of realizing the gains, the other 50% typically compromised on each one

Finding Compatible Interests Two students in a library, one wants the window open, the other wants it closed. A loud argument breaks out. How might this be resolved? Fixed-pie assumptions Anger closes our minds to alternative solutions Not wanting to “give in” There may be just ONE way to satisfy a position, but there are MULTIPLE ways to satisfy interests. Inventing options for mutual gain

Dots Attempt to draw four (and only four) straight lines that connect all nine dots without lifting your pen from the paper

Theories and mindsets The assumptions we place on a problem, frame the problem and to a large part determine our behaviors and approach to solving the problem

Willingness to help the other party to achieve its goals Desire to achieve OWN goals Compromising Negotiation & Conflict- handling Styles CollaborationCompetition AccommodationAvoidance Low High

Common Negotiation Styles Competing (distributive mind-set) Your gain is my loss Compromising (the middle ground) “Let’s split the difference” Seems like a good strategy: Isn’t it better than no deal at all? However, the middle ground results in incomplete satisfaction for both parties “Leaving money on the table”

Negotiation Mindsets Integrative Distributive Integrative Characteristics BargainingBargaining Available resources: Primary MINDSET: Primary interests: View of relationships: Fixed amount of resources to be divided I win, you lose Opposed to each other Short term Variable amount of resources to be divided I win, you win Convergent with each other Long term

The Negotiation Process and Preparation BATNA Interests Sitting down at the negotiation table Convey your interests effectively Emotional Strategy Where do you start? Defusing the “Company Policy” argument

Preparation for Negotiation BATNA Best alternative to a negotiated agreement Develop alternatives so you know at what point to stop negotiating Prevents you from entering an agreement you may regret The lowest acceptable value to an individual for a negotiated agreement If we cannot receive an offer of X-amount for the house, then what will you do? Rent it out?

Focus on interests, not positions Do you know your interests? Identify and value your interests Ranking process is one way to start Consult with team to help valuation process

Sitting down at the table Perceive yourself working side by side with the other party to resolve the issue Separate the people from the problem Resist the temptation to “attack” people Where do you sit? Sit on the same side of the table Together we can attack this problem

Presentation Approaches Option 1: “I want that orange because I am interested in baking an orange cake and I need the peel” Option 2: “I am interested in baking an orange cake and I need the peel, that’s why I want that orange” How are these options the same? Different? Is one approach better than another? Why? Why not?

Find out the other party’s interests and preferences Ask questions Listen to the response!

Concessions Find an issue of lower value to you and offer a concession on that issue Other party will typically reciprocate Contingent concessions I can give here if you can give on that issue

Make multiple offers simultaneously Each is different, yet results in the same level of profitability for you

Where do we start? A. Start with the easy issues first! B. Start with the most difficult ones first! C. Either A or B: It depends D. Start with all of the issues at once

Emotional Strategy Benefits of a good mood More creative, more ideas Found most trade-offs for joint gain Highest level of value Detriments of anger Found fewest trade-offs Least value

Expressing positive emotion “Put on a happy face” Your smile is often reciprocated by the other side in terms of: Positive feelings and behaviors Finding trade-offs Offering concessions

Policy “It’s company policy – there is nothing I can do” Two volunteers to read an example?

Insist on objective criteria Search for a standard such as market value, expert opinion, law This way, neither party is “giving in” to the other and a fair agreement is possible We are asking for $200,000 in fees How did you arrive at that figure?

Conclusions Most negotiations don’t fully maximize value Fixed-pie assumptions are prevalent Assume it is all or nothing Assume our interests conflict with the other side Too quick to compromise

Reaching agreement without giving in To maximize value for you and the other party adopt an integrative mindset Interests, not positions Develop your BATNA Adopt a problem-solving approach

Short & Long Term Benefits A collaborative approach may seem counter-intuitive, but it is often more effective Consider joint gains and positive word of mouth Better over the long run