1. Getting to Win-Win in Negotiation Government Finance Officers Association Art Hinshaw Director, Lodestar Dispute Resolution Program Sandra Day O’Connor College of Law Arizona State University August 8, 2007 © 2007 Arizona State University College of Law

2. Agenda Background Background Interest Based Negotiation Interest Based Negotiation Nuts and Bolts Nuts and Bolts Exercise Exercise

3. Negotiation – Background Info Problem Solving Problem Solving Context Matters Context Matters Words and Deeds Words and Deeds Reputation Reputation Social Activity Social Activity The Right Way The Right Way Comfort Level Comfort Level Uncertainty Uncertainty Misteaks Misteaks

4. Primary Negotiation Strategies Adversarial / Position Based Adversarial / Position Based Problem Solving / Interest Based Problem Solving / Interest Based

5. A Few Adversarial / Position Based Negotiation Tactics Extreme claims with later small concessions Extreme claims with later small concessions Take it or leave it offers Take it or leave it offers Personal insults and feather ruffling Personal insults and feather ruffling False demands False demands Threats and warnings Threats and warnings Good cop, bad cop Good cop, bad cop

6. Problem Solving / Interest Based Strategy Separate people from the problem Separate people from the problem Focus on Interests, not Positions Focus on Interests, not Positions Invent options for mutual gain Invent options for mutual gain Insist on objective criteria Insist on objective criteria From - R. Fisher, W. Ury, and B. Patton, Getting to Yes (1991)

7. Interests Instead of Positions The purpose of negotiation is to serve your interests The purpose of negotiation is to serve your interests Positions are what people say they want Positions are what people say they want Interests are needs underlying the position Interests are needs underlying the position Ask why and why not Ask why and why not Basic needs are powerful interests - security, control of one’s life, recognition Basic needs are powerful interests - security, control of one’s life, recognition

8. Types of Interests Substantive Substantive Procedural Procedural Psychological Psychological

9. Justification Questions What works for you in this proposal? What works for you in this proposal? Why are you upset with the current situation? Why are you upset with the current situation? What would about the current situation would you like to be different? What would about the current situation would you like to be different? If you get what you ask for, what problem would that solve? If you get what you ask for, what problem would that solve? What in this option does not work for you? What in this option does not work for you?

10. Interest Based vs. Position Based When you are trying to be interest based and the other is not, what do you do? 1. Suspend your reaction 2. Defuse hostile emotions 3. Look for their interests 4. Ask why and why not 5. Educate

11. Best Alternative to a Negotiated Agreement (BATNA) Standard against which to judge any proposed agreement Standard against which to judge any proposed agreement BATNA equates to power in negotiations BATNA equates to power in negotiations

12. A Successful Negotiation Better than your BATNA Better than your BATNA Satisfies interests Satisfies interests Yours – well Yours – well Theirs – acceptably Theirs – acceptably Others - tolerably Others - tolerably Legitimate Legitimate Fairness Fairness Commitments Commitments Well planned and realistic Well planned and realistic Otherwise walk to BATNA Otherwise walk to BATNA

13. “It’s All About Money” Reflects interests Reflects interests Reflects BATNA Reflects BATNA Is a language Is a language Is symbolic Is symbolic Is certain and immediate Is certain and immediate Can mean many things at once Can mean many things at once

14. Nuts and Bolts

15. Negotiation Preparation No such thing as too much preparation No such thing as too much preparation Interests Interests BATNA BATNA Setting goals Setting goals Criteria Criteria Offer and Concession strategies Offer and Concession strategies Negotiate the process? Negotiate the process?

16. Distributive Issues Caution - Too soon? Caution - Too soon? Offers and responses Offers and responses First offer First offer Concession strategies Concession strategies Credibility Credibility Language Language Agreement – are we done? Agreement – are we done?

17. First Offers Advantages Advantages Set expectations Set expectations Elicit genuine reaction Elicit genuine reaction Strategic advantage Strategic advantage Timing, BATNA, Information Timing, BATNA, Information Disadvantages Disadvantages Lack of info to appropriately set Lack of info to appropriately set Other side gains info Other side gains info Bracketing Bracketing

18. First Offers – contd. Determining the offer Determining the offer Your original goal Your original goal Most aggressive, yet reasonable point Most aggressive, yet reasonable point Give yourself room to move Give yourself room to move Expectation for the dance? Expectation for the dance? Analyze other’s interests, BATNA, negotiation style, etc. Analyze other’s interests, BATNA, negotiation style, etc.

19. First Offers – contd. When you should make them When you should make them Sophisticated parties w/ substantial access to information Sophisticated parties w/ substantial access to information Complex non-price issues Complex non-price issues Technically detailed agreements Technically detailed agreements You have more info, defined standards, or a strong BATNA You have more info, defined standards, or a strong BATNA

20. Making Offers and Concessions Be specific and detailed Be specific and detailed Explain offer’s rationale Explain offer’s rationale Tie it to standards Tie it to standards Before stating the offer Before stating the offer Use an air of finality & increasing rigidity Use an air of finality & increasing rigidity Avoid ranges Avoid ranges Be ready to react Be ready to react

21. Specific Language Tips Significant flexibility Significant flexibility “My asking price is” “My asking price is” “I’m looking to get” “I’m looking to get” NOT NOT “first offer” “non-negotiable” “bottom line” “first offer” “non-negotiable” “bottom line” Middle flexibility Middle flexibility “Because of... I’m willing to...” “Because of... I’m willing to...” “This is fair and reasonable because...” “This is fair and reasonable because...” NOT NOT “bottom line” “final offer “bottom line” “final offer

22. Specific Language Tips – contd. Total inflexibility Total inflexibility “I’ve given this a great deal of thought, and it’s the best I can do” “I’ve given this a great deal of thought, and it’s the best I can do” “If I move any more, it’s not worth it for me” “If I move any more, it’s not worth it for me” NOT NOT “take it or leave it” “frankly” “take it or leave it” “frankly” Reaction to an offer Reaction to an offer “I’m disappointed with your offer. It builds in a 30% profit margin and that’s out of line in this market” “I’m disappointed with your offer. It builds in a 30% profit margin and that’s out of line in this market”

23. Closing the Deal Focus on the other’s gains, not their loss Focus on the other’s gains, not their loss Beware of “nibbling” Beware of “nibbling” Watch the “take away” Watch the “take away” Make the last concession Make the last concession Even if it is small Even if it is small

24. Blast Exercise

25. More Practical Advice Getting to Yes by Fischer, Ury and Patton Gain the Edge! Negotiating to Get What You Want by Martin E. Latz

26. Questions and Answers