1. Coffee Contract Role of seller Role of buyer
Anderson Coffee
Role of buyer
Statler Hotel, Cornell University
10 minutes to read materials
20 minutes to negotiate

2. Slicing the Pie How do you get the biggest piece? Preparation Offers
Alternatives
Concessions

3. Offers Folklore says to let the other party make the first offer
Is that a good idea?
Anchoring
People tend to focus heavily on the first offer
First offer correlates .85 with the final price

4. Offers (continued) What if the other party makes the first offer?
Immediate counteroffer
Take away the psychic hold of the 1st offer

5. Offers (continued)
How do you feel when the other party accepts your first offer?
I should have asked for more
Maybe I just got into a bad deal
Less satisfaction
Do not accept first offers
They are just that – an opener
Expectation to negotiate

6. BATNA Best Alternative to a Negotiated Agreement
The lowest acceptable value to an individual for a negotiated agreement
Develop alternatives so you know at what point to stop negotiating
Gives you the POWER to walk away
If we cannot receive an offer of X-amount for the house, then what will you do?
Rent it out?

7. What’s your bottom line?
“Tell me the bare minimum you would accept and I’ll try and throw in something extra”
“Why don’t you tell me the very maximum you are willing to pay, and I’ll try and I’ll see if I can shave off a bit”

8. Concessions Need some cushion (Target price versus reservation price)
Make the first concession
Why?
Norm of reciprocity
Positive feelings
Magnitude of concessions
Less and less to signal you are reaching the end

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

10. Principled Negotiation
Getting to Yes: Negotiating Agreement Without Giving In
Fisher & Ury
Principled Negotiation Strategies
Integrative negotiations
MIND-SET

11. 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

12. “Let’s Compromise” 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”

13. 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
Salary, bonuses, flexible scheduling, location, vacation, moving expenses

14. Negotiation Approaches
Distributive Integrative
Characteristics Bargaining Bargaining
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

15. Integrative Negotiation Process and Preparation
BATNA
Determining & Valuing Interests
Objective Criteria
Sitting down at the negotiation table
Convey your interests effectively
Emotional Strategy
Where do you start?

16. 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
Complete satisfaction for both parties
There may be only one way to satisfy a position, but there are multiple ways to satisfy interests

17. Preparation: 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

18. Logrolling Approach Trade-off on issues that are valued differently
Concessions
Concede on issue that is valued lowest to you – it may be of higher value to the other
Salary versus moving expenses

19. 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

20. 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

21. Finding Compatible Interests Can Be Difficult
Pairs were presented with a negotiation involving multiple issues regarding a job offer.
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%
Left money of the table ½ the time

22. Ways to find out the other party’s interests and related values
Ask questions
Listen to the response!

23. Contingent concessions
I can give here if you can give on something
Make multiple offers simultaneously
Each is different, yet results in the same level of profitability for you

24. Neutral Party
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

25. 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
Typically sit across from the other

26. The Same Side Try sitting on the same side of the table
Together we can attack this problem

27. 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 different?
Which one better ensures the other knows your interests?

28. Approaching the Issues: 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

29. Emotional Strategy Poker face Positive
Tough: Negative, Angry & Forceful

30. For Integrative Bargaining…
Positive is best
More creative, more ideas
Found most trade-offs for joint gain
Highest level of value
Detriments of anger
Found fewest trade-offs
Least value

31. 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

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

33. 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?

34. Conclusions Most negotiations leave money on the table
Too quick to compromise
Fixed-pie assumptions are prevalent
Assume it is all or nothing
Assume our interests conflict with the other side

35. 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

36. 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