1. NEGOTIATIONS

2. Structure of presentation What is negotiation ? Four stages of negotiation process Styles of negotiation

3. What is negotiation ? An interactive communication process that may take place whenever you want something from somebody else or they want something from you. A field of knowledge and endeavour that focusses on gaining the favour of people from whom we want things Negotiation encompasses the life in a broader sense and not necessarily to business alone

4. Everyone is a negotiator An infant learns how to get things from her mother from the very first day Everyone is a negotiator as everyone has needs which cannot be fulfilled by himself. Interdependence is the cause of all negotiations.

5. Four Stages of Negotiation Preparation Exchanging information Opening and concession making (iterative with exchanging information) Closing and commitment

6. Preparation: Defining goals You must know clearly what you want out of a negotiation. WHAT you want to achieve out of negotiation is more critical than HOW you achieve You need to define the hierarchy of your negotiation strategy You need to define your and opponent’s BATNA before you work out your hierarchy

7. What is BATNA ? It is an acronym for “Best Alternative To a Negotiated Arrangement” In simple terms, it means what is your next best option, it this negotiation fails or you want to walk out of this negotiation It is a relative term. Your BATNA is different from the opponent’s BATNA

8. BATNA-some illustrations If you are looking for renting an apt. of your choice at a particular rent, your next best option could be to continue where you are, or rent of an alternate apt which is your next best choice If you are buying a Dell laptop, your next best option could be a Sony or Toshiba Next best option could be a superior one or an inferior one Even in a monopoly situation, you still have a BATNA of doing without it

9. Your BATNA vs Opponent’s BATNA You want to rent a particular apartment with a view to reduce your rental cost. Your current apt rent is Rs. 50K pm and you are unwilling to shift at any rent above that. Your BATNA is 50K. You may not want him to know that as you want the best deal. The landlord of that apt has another offer at 45K. So his BATNA is 45K. You may or may not be aware of that unless he mentions in the negotiation process.

10. Other concepts Bottomline: The minimum level that you want to achieve at the end of the negotiation so that you get a certain benefit over your BATNA Target: The ideal level that you want to achieve at the end of the negotiation Starting Position: The tactical level that you want to state your opening bid with some logical basis

11. YOUR BATNA YOUR BOTTOM LINE YOUR BOTTOM LINE YOUR TARGET HIS BATNA HIS BOTTOM LINE HIS BOTTOM LINE YOUR STARTING POSITION HIERARCHY OF YOUR NEGOTIATION STRATEGY

12. YOUR BATNA 50K YOUR BOTTOM LINE 49K YOUR BOTTOM LINE 49K YOUR TARGET 48K HIS BATNA 45K HIS BOTTOM LINE 46K, TGT 47K HIS BOTTOM LINE 46K, TGT 47K STARTING: YOU 45K, HE 50K HIERARCHY OF YOUR NEGOTIATION STRATEGY

13. Preparation Sequence List your issues and options Prioritise and set targets. Identify (a) deal breakers (b) important issues (c) Bargaining chips Develop your positioning story Anticipate likely response from opponents Develop plan B

14. Four Stages of Negotiation Preparation Exchanging information Opening and concession making (iterative with exchanging information) Closing and commitment

15. Exchanging information Individual negotiations vs team negotiations Internal exchange of information within your team-formally and informally including the authority levels, roles that each one will play etc. Iterative exchange of information with the other team-formally and informally with confidentiality agreements where needed Credibility in relationships is crucial for success of negotiations

16. Four Stages of Negotiation Preparation Exchanging information Opening and concession making (iterative with exchanging information) Closing and commitment

17. Opening and Concession making (the bargaining process) (a)The Three Crucial Variables to decide your tactics

18. THE THREE CRUCIAL VARIABLES 1.Power Or Leverage 2. Time 3. Information

19. 1. Power or Leverage Power is the ability or capability to get things done and to exercise control over people, events, situations and one’s own self Power by itself is not good or bad, moral or immoral, ethical or unethical. It is neutral Power is means to achieve an end and it not an end by itself

20. Power (contd..) Like in a game of cards, success derives not only from holding a strong hand, but from analysing the total situation so cards can be skillfully played. Overestimating your own power is as dangerous as underestimating your opponent’s power. Perceived power is as important as real power.

21. Sources of Power/Leverage CompetitionRewarding/punishing LegitimacyIdentification Risk-takingMorality CommitmentPrecedent ExpertisePersistence Knowledge of ‘needs’Persuasion InvestmentAttitude

22. 2. Time and deadlines Most people tend to take decisions when they are near their deadline. Try to understand your opponent’s deadlines. Try not to reveal your real deadlines. Even when your opponent pretends to be cool and serene, remember he still has his deadline. Deadlines are not always inflexible Delay tactics can help in tiring the other side out sometimes

23. The Tactic called ‘nibble’ In some situations, extensive spending of time through ‘nibble’ pays rich dividends It helps you in tiring out the opponents This is quite useful in labour negotiations. In India, we have seen minor coalition partners using this to get more ministerial berths It is more relevant when the opponent’s BATNA is far worse than yours

24. 3. Information can unlock the doors of success Early mover gets more benefits Information gathering process starts well before bargaining process Develop the art of listening and questioning in order to extract more information Ensure that the other side does not easily get information on your side. Some red herrings as diversionary tactics useful. So is a poker face. Adversary’s competitors are good source of information. So is internet.

25. LISTENING Listening includes observing and hearing Listen with your ‘third ear’ and observe with your ‘third eye’ Look for verbal clues, non-verbal clues and unintentional clues Develop the art of ‘reading between the lines’ Watch your listen-talk ratio

26. Non-verbal clues Studies have shown that only 7% of communication happens through words 38% of communication happens through tone of voice and 55% through body language People tend to have one dominant state of communicating from three states: visual, auditory and kinesthetic. Once you understand that and mirror their state in your response, you will build a faster rapport that can elicit more information for you

27. BARRIERS TO EFFECTIVE LISTENING The urge to talk to score a point The urge to react to what is being said The urge to counter a view that is being expressed The urge to share our own knowledge The desire to impress others The desire to win approval and affection from others The desire to lead others

28. THE ART OF ASKING QUESTIONS If you don’t ask questions, you don’t get answers. Quality answers come from quality questions The masters of the art of asking questions are kids.. Learn from them Questions help us to shift focus, challenge our own presumptions and help to reframe the problems Open-ended questions help us a lot in eliciting much more information Words like ‘what’, ‘for what purpose’ and ‘what if’ help us get better answers

29. Opening and Concession making (the bargaining process) (2) Common mistakes that negotiators make

30. Guard yourself against Neglecting the other side’s problems Focussing only on price and neglecting other important variables Adamantly sticking to positions taken beyond a point Working too hard for a compromise solution Neglecting your BATNAs Being inflexible on your strategy when it requires revisiting in course of negotiation

31. Four Stages of Negotiation Preparation Exchanging information Opening and concession making (iterative with exchanging information) Closing and commitment

32. Even if you have scored a major victory in the negotiation, you should not show it on your faces or in your behaviour Importance of reducing the detailed understanding in writing to avoid misunderstandings and backtracking Use of minutes, MOU and legal agreements Internal documentation of learnings for future use

33. Styles of Negotiation Collaborator (problem Solver) Accommodator (smoothing) Competitor (forcing) Conflict Avoider (withdrawal) NeedFor Others’ApprovalNeedFor Others’Approval Need For Others’ Approval High Low Degree of Asssertiveness High Low

34. The Competitive Negotiator He sees almost everything as a constant struggle of winning or losing Is a tough battler who seeks to win at any cost Plays for “I win, you lose” His style is more useful in a one-off negotiation where stakes are high, time is limited and bluffing is possible than the one which requires long-term relationship building

35. How does the competitive negotiator operate ? Extreme initial position Limited authority Emotional tactics Views of opponent’s concessions as a weakness rather than accommodation Stingy in his own concessions Ignores deadlines

36. The collaborative negotiator Goes for an outcome which provides acceptable gains for all parties Views conflicts as problems to be resolved to find creative solutions Plays for “win-win” His style is more useful where long- term relationships are crucial

37. How does the collaborative negotiator operate ? Uses negotiation process as a tool to meet needs of both sides rather than a technicality to achieve his own ends Works towards harmonising or reconciling needs of both sides, building trust and gaining commitments Seeks to go beneath the surface of the conflicts in order to resolve them Demonstrates to the other side how they have achieved their goals while achieving his own goals

38. The accommodating negotiator He seeks to achieve his goals by seeming to accommodate to the opponent. Gets more satisfaction from solving other people’s problems Can be seen as a weak negotiator by a competitive opponent and a friendly negotiator by a collaborative opponent Often tends to be manipulative to mask his weakness for accommodation

39. The ‘conflict-avoiding’ negotiator Has a personality that tends to avoid conflict. Does not feel comfortable to handle conflict situations or has the fear of confrontation Tends to be manipulative or surrenders easily or walks away easily Is different from the collaborative negotiator who seeks to resolve conflicts by going to the depth of the issue without indulging in escapism

40. Be Yourself “Everyone has his or her own negotiating style, and the worst thing you can do is to adopt a negotiating technique that does not feel comfortable because credibility, based on evident sincerity, is the most important single asset of a good negotiator.” -James C. Freund (Anatomy of a merger)

41. How to handle negotiating styles Important to understand your own style and the opponent’s style as early as possible You should then tailor your moves accordingly. e.g. If you are dealing with a competitive opponent, don’t be in a hurry to make concessions Try to be unpredictable to opponents by adopting different styles in different situations Develop versatility in adopting multiple styles

42. Selecting the right Style Joint ventures/Mergers Collaborator (problem Solver) Relationships (marriage, Friendships) Accommodator (smoothing) Transactions (divorce, Property sale) Competitor (forcing) Tacit coordination (airline seat) Conflict Avoider or accommodator NeedFor Others’ApprovalNeedFor Others’Approval Perceived Imp. of Long term relations High Low Perceived conflict over stakes High Low

43. The Old Book on Negotiation “win-win” negotiations are the good ones “win-lose” negotiations are the bad ones “lose-lose” negotiations are the tragedies

44. The New book on Negotiation Everyone negotiates for one and only one reason: to achieve their goals. No one ever does anything that is against their interests or perceived interests.

45. Reference books “Getting to Yes”- Roger Fisher, Bill Urly and Bruce Patton “Bargaining for Advantage”- G. Richard Shell “The Negotiating Game”- Chester L Karrass “Unlimited Power”- Anthony Robbins (for non-verbal clues, rapport building etc.)