Seven Strategies for Better Negotiation & Better Results Michael T. Colatrella, J.D., LL.M Director Center for Dispute Resolution & Conflict Management at Southern Methodist University ©2008

2 Common Negotiating Mistakes Leaving value on the table: Failing to recognize value creating trade-offs Leaving value on the table: Failing to recognize value creating trade-offs Settling for too little: Making unnecessary or inappropriately large concessions Settling for too little: Making unnecessary or inappropriately large concessions Walking away from the table: Rejecting an offer better than their alternative Walking away from the table: Rejecting an offer better than their alternative Settling for terms worse than their alternative: Accepting terms less favorable than alternative Settling for terms worse than their alternative: Accepting terms less favorable than alternative

3 Preparation Preparation The Parties’ Interests The Parties’ Interests Identifying Your Goals Identifying Your Goals Leverage Leverage Alternatives Alternatives Reciprocity Reciprocity Manage the Pattern of Concessions Manage the Pattern of Concessions The 7 Foundations of Effective Negotiating

4 1. PREPARATION Preparation is the most important part of the negotiation process. More than anything else it will determine your success as a negotiator. Prepare! Prepare! Prepare!

5 Preparation: Your preparation should be: Simple—so you can remember it Simple—so you can remember it Specific—because it’s more likely to be attained Specific—because it’s more likely to be attained Flexible—to adapt to new information Flexible—to adapt to new information

6 Preparation Process You prepare for a negotiation by considering each of the other foundations of effective negotiation. You prepare for a negotiation by considering each of the other foundations of effective negotiation. You should view the first part of a negotiation meeting as a continuation of the preparation process. You should view the first part of a negotiation meeting as a continuation of the preparation process.

7 2. IDENTIFYING THE PARTIES’ INTERESTS Interests define the negotiation: Interests define the negotiation:  Positions are what you want.  Interests are why you want it. What are your interests? What are your interests? What are the other party’s interests? What are the other party’s interests?

8 Identifying Interests: Qualities of Effective Negotiators: They develop an ability to see the world from the other side’s perspective. They develop an ability to see the world from the other side’s perspective. They ask twice as many questions as an average negotiator. They ask twice as many questions as an average negotiator.

9 3.IDENTIFYING YOUR GOALS Set an optimistic, but justifiable, goals. Set an optimistic, but justifiable, goals. Be specific. Be specific. Carry a summary of your goals and expectations into the negotiation. Carry a summary of your goals and expectations into the negotiation.

10 4. LEVERAGE “You can get much further with a kind word and a gun than you can with a kind word alone.” --Attributed to American gangster Al Capone

11 Leverage is your power to reach an agreement on your terms. Leverage is your power to reach an agreement on your terms. Donald Trump says, “Leverage is having something the other guy wants. Or better yet needs. Or best of all, simply cannot do without.” Donald Trump says, “Leverage is having something the other guy wants. Or better yet needs. Or best of all, simply cannot do without.” Leverage Defined

12 Types of Leverage Positive Leverage : Having something the other side wants or needs. Positive Leverage : Having something the other side wants or needs. Normative Leverage : Objective sources that legitimize your position. (precedent, market value, professional standards, expert opinion, etc.) Normative Leverage : Objective sources that legitimize your position. (precedent, market value, professional standards, expert opinion, etc.) Negative Leverage : Having the power to take something away from the other side that they already posses. Negative Leverage : Having the power to take something away from the other side that they already posses.

13 “Best Alternative to a Negotiated Agreement (BATNA)” BATNA refers to how you will satisfy your needs if no deal is reached with this party. “The better your BATNA, the greater your power.” (*From the book “Getting To Yes” by Roger Fisher, William Ury and Bruce Patton) (*From the book “Getting To Yes” by Roger Fisher, William Ury and Bruce Patton) 5. ALTERNATIVES IF NO DEAL IS REACHED

14 Alternatives: Improve Them Explore and invent as many alternatives as possible. Explore and invent as many alternatives as possible. Improve them, if possible. Improve them, if possible. Consider what the other side’s BATNA may be. Consider what the other side’s BATNA may be.

15 6. RULE OF RECIPROCITY “I am obligated to give back to you the form of behavior you give to me.”

16 RECIPROCITY: You Can’t Beat Mother Nature Reciprocity is found in every human society because those early human cultures that followed the “norm of reciprocity” obtained an enormous advantage. Reciprocity is found in every human society because those early human cultures that followed the “norm of reciprocity” obtained an enormous advantage.

17 Reciprocity: The Secret of its Success When you operate under a system of reciprocity, you feel free to provide others with time, energy and resources because you don’t give it away. When you operate under a system of reciprocity, you feel free to provide others with time, energy and resources because you don’t give it away. Instead, you get it as credit. Instead, you get it as credit.

18 Reciprocity: The Power of Obligation You create an obligation You create an obligation The obligated party will not just want to help, but will be waiting to help The obligated party will not just want to help, but will be waiting to help The obligation lasts until fulfilled The obligation lasts until fulfilled

19 7. Managing the Pattern of Concessions The “pattern of concessions” refers to the incremental, and often alternating, concessions parties make in some mediations to reach agreement The “pattern of concessions” refers to the incremental, and often alternating, concessions parties make in some mediations to reach agreement Parties often fail to reach agreement because they mismanage the concession-making process Parties often fail to reach agreement because they mismanage the concession-making process

20 Concessions are Communication The nature of concessions says something about a party’s future ability and willingness to concede: The nature of concessions says something about a party’s future ability and willingness to concede:  Magnitude of concessions  Timing of concessions

21 Three Rules to Remember in Managing Pattern of Concessions Make opening offers that leave room for concessions. Make opening offers that leave room for concessions. Explain the reasons for concessions. Explain the reasons for concessions. Reciprocate concessions. Reciprocate concessions.

22 Capitalizing on “No’s” “If someone says “no” to you and you retreat from the situation you lose, but if you retreat in the situation you win.” ~Robert Cialdini, Ph.D Influence