Mutual Gains Negotiation

Course Objective Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies, Techniques, and Purpose Develop the Ability to Apply Mutual Gains Concepts and Techniques to everyday negotiations, and Consultant Agreements G – Lead S – MGN = Process SHEG = Tool

What is Negotiation? Negotiate: To confer, bargain, discuss with a view to reaching agreement; to make agreements for; to settle; to conclude; to succeed in crossing, surmounting, accomplish Latin: Negotium-business or Negotiatus-to carry on business S – Not negotiating against companion across table; but overcoming obstacle

What is Negotiation? Negotiation = Business Negotiation can determine profitability and livelihood Negotiation protects the interests of all parties Negotiation is a critical step toward the successful completion of any project G -

Negotiation Is NOT…. A Contest or Game A method of determining a Winner and Loser A means of carrying out a personal vendetta or grudge A “one-size fits all” formula G -

Negotiations are Everywhere In everyday life with friends and family In politics and government In business In scholastics In law; in and out of the courtroom In every organization, regardless of its size or complexity G -

The Issue Negotiations fail often Mutual agreement is rarely achieved Preconceived Arguments or positions are pushed onto the issue at hand Time, efforts, and money are wasted Relationships are damaged Often parties leave in a worse position than they started S – Credibility Reputation Trustworthy Perception

Why Negotiations Fail Negotiations are viewed as a trade-off process (zero-sum) Parties give into the three “E”s: Ego, Emotion, Escalation Parties never develop a systematic, step-by-step approach to negotiation Parties never realize how their behavior will affect others We let “What we have always done” dictate what we do today. S – Star Trek? Shields up your entry position has nothing to do with your actual need loss of big picture

Three Areas of Negotiation The Process- how we go about our negotiation The Substance- what we are negotiating for; what we see as “on the table” The Relationships- often overlooked, and underestimated, and regularly the first thing sacrificed G -

Traditional Negotiations Establish Extreme Positions: Always start at one end or the other and work toward the middle Never accept or make the first offer Never tell them what you really want G -

Traditional Negotiations If you concede, concede reluctantly Always be skeptical of the other side Give them as little as possible S – opposite is to be candid and express what you want

Traditional Negotiations Usually involves “giving in” Becomes a contest of wills Strains relationships S -

Productive Negotiations Achieve Set Goals Produce Agreements that benefit all parties Improve and sustain healthy relationships G -

Goals of Negotiation Achieve an agreement that is acceptable to all- Satisfies all of our interests and enough of theirs- no one feels taken Explore all options and select the best using legitimate criteria Establish an agreement that can succeed G -

How to Achieve Goals of Negotiation Focus on Interest- not position Interest: “we have to really watch our budget” Position: “there’s no way we are going to pay more than…” Invent Options for Mutual Gain Establish legitimate Criteria for evaluating interest Determine your Best Alternative To a Negotiated Agreement S – Detail explain BATNA G – Reinforce no harm if BATNA exercised

A New Model 4 Steps to Mutual Gains PREPARE CREATE VALUE DISTRIBUTE VALUE FOLLOW-UP S -

Step 1: Prepare Determine your purpose and define your team Estimate your BATNA Try to improve your BATNA Define your Interests Try to estimate their interests Prepare options that could benefit both parties S – BATNA is not walking away; is walking to another alternative Interests = Expectations

Determine Your Purpose and Define Your Team What is my role in the negotiation, and who will assist me in the process? Who will gather what information? Who will participate in the negotiations? Who has the authority in the negotiations? S -

Focus on Interests What are Interests? Interests are the reason for positions More than one position can achieve a particular interest G – Interests = Expectations

Focus on Interests Identify the interest of all your stakeholders Analyze and Prioritize your interests Consider the other party’s interests Identify personal and professional interests Communicate interests in a clear and concise manner Identify conflicting and compatible interest to establish common ground G – List, then prioritize & categorize interests

Estimate Interests YOURS THEIRS OURS S – 3 minute exercise – 3x5’s 1 interest per card No names / affiliations Shuffle, read Identify common

Estimate Interests THEIRS YOURS OURS S -

Estimate your BATNA BATNA’s are not negative A BATNA is your best option to not agreeing Your BATNA has to be something you are willing to accept Your BATNA should not be detrimental to your business No Party should be forced into a contract they cannot live with S – First 3 G – Last 2 No hard feelings if BATNA exercised

Prepare Options for Mutual Gains Think about negotiations in a different light Brainstorm, invite outside suggestions, be creative Note the obvious without focusing on it List options with positive statements (recognize the down-side, but emphasize the up-side) G -

Step 2: Create Value Suspend criticism Discuss the interests of all parties Make suggestions without making commitments Make the pie larger G -

Suspend Criticism Listen Evaluate, without criticism Remove the person from the idea View your counterpart as a partner not an opponent Ask “Why?” S – No ego No emotion No escalation Common enemy is lack of agreement

Discuss Interest Always reveal your interest not your BATNA State what you believe their interest may be Listen, listen, listen… Take careful notes Focus on the issues, not the position Ask “Why?” S – Redefine interest vs. position

Make Suggestions Brainstorm with all parties Invent without committing- “What if we…” Propose multiple ideas together Put the extremes on the table Avoid the “Fixed Sum Game”- the “split the difference” solution Load the table with ideas S – Think outside the box Don’t make a project more complicated than it needs to be Define brainstorming

Step 3: Distribute Value Develop the relationship-build trust Establish legitimate criteria Suggest possible distributions Settle on the strongest agreement G -

Develop the Relationship Separate substantive issues from relationship issues Honesty builds trust Listen to their views and interests Clarify-restate what’s been said Recognize emotional reactions G -

Develop the Relationship Examine preconceptions and biases Attempt to identify their preconceptions Try to understand their mind set- Where are they coming from? Attempt to take a fresh approach Remember, take a partnering approach G -

Establish Criteria External standards of fairness Market value, historical data, indices, averages, etc. PennDOT Staff Hour Estimating Guide (SHEG) Develop criteria to support your interests Be open to theirs S – SHEG a living, evolving document MGN an evolving process

Suggest Possible Solutions Work to improve each suggestion Get as far away from the BATNA as possible At minimum – develop one solution that is fair to both parties S -

Step 4: Follow Up Conduct Biennial Review of SHEG Establish periodic reviews of process Ensure controls/incentives are in place Have a dispute resolution plan Improve relationships Continual metric evaluation G – First 3 S – Last 3

Strategies for Success Change the game to problem solving Reveal your interests and discuss theirs Ask why (why not) to get past positions Invent options without committing (what if) G -

Strategies for Success Analyze mutual interests and conflicting ones to strike balance Foster cooperative atmosphere Discuss process and logistics before substance Be creative S -

Strategies for Success Ensure your interests have legitimate criteria Identify examine and challenge all your assumptions Listen for their assumptions without judging Respond to reasoned arguments, never to pressure Use objective criteria S – First Two G – Last Three

QUESTIONS? DISCUSSION?