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Elements of Negotiation

Elements of Negotiation. Hernán Rosenberg Mexico, April 2011. Projects and Negotiation. Resources, but not just that Projects are the base of negotiation We will concentrate on negotiation This will help understanding of process, not winning every time. OUR FOCUS.

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Elements of Negotiation

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  1. Elements of Negotiation Hernán Rosenberg Mexico, April 2011

  2. Projects and Negotiation • Resources, but not just that • Projects are the base of negotiation • We will concentrate on negotiation • This will help understanding of process, not winning every time

  3. OUR FOCUS • How did you arrive at an agreement? • What ideas and actions were effective? • What preparation did you find to be useful?

  4. HOW DO WE MEASURE THE SUCCESS OF A NEGOTIATION?

  5. How do you measure success?

  6. How do you measure success? • Who conceded more? • Did you get them to “go beyond” their ultimate limit? • Did you take their last penny? • Did you end up equally bitter? • Did you avoid a conflict? • Did you come to an agreement?

  7. COMPLEX NEGOTIATIONS • Are repeated over time • Multiple issues • Multiple players • Intra-organizational • Tangible factors: • Price • Benefits • Etcetera • Intangible factors: • Confidence • Reputation • Precedence

  8. OPTIONS Proposals presented to the other party that will allow me to solve my problem or achieve my goal: In the negotiation With the cooperation and consent of the other party ALTERNATIVES Measures that I can take to resolve my problem or achieve my goal: Outside of the negotiation Without the consent of the other party, if we don’t achieve an agreement OPTIONS AND ALTERNATIVES:A KEY DIFFERENCE

  9. OPTIONS AND ALTERNATIVES:A KEY DIFFERENCE Best Alternative To a Negotiated Agreement

  10. USING THE ELEMENTS COMUNICATION COMUNICACIÓN RELATIONSHIPS INTERESTS OPTIONS No? Yes? LEGITIMACY ALTERNATIVES/ BATNA COMMITMENT

  11. 1. Better than your alternatives (BATNA)2. Interests are satisfied: - ours, in a good manner - theirs, in an acceptable manner - those of others, in a tolerable manner3. No waste: a good option4. Legitimate: you aren’t taken advantage of5. An intelligent commitment6. The process is efficient: good communication7. The process improves the relationships NEGOTIATION: A GOOD RESULT

  12. PARETO’S FRONTIER Utility of A Z UAXZ UAX X Y UBY UBX UBZ Utility of B

  13. PARETO’S FRONTIER Utility of A Y X Utility of B Option A X Y Option B

  14. QUESTIONS ABOUT THE PROCESS • Is this a negotiation? • What form does the negotiation take? • Who are the interested parties? Are they present? Absent? • What are their interests? • How to you transmit the information? • What are the personal interactions? • What role does each person play?

  15. NEGOTIATION SYSTEMS AND TACTICS

  16. SOME WAYS TO USE EACH ELEMENT ALTERNATIVES AND INTERESTS • Cheat • Hide • Neglect • Partially reveal • Completely reveal • Develop individually • Develop jointly

  17. SOME WAYS TO USE EACH ELEMENT (CONT.) OPTIONS • Find a single answer • Generate many • Mix the idea with the decision • Separate the design process with the decision process • Develop alone • Meet to brainstorm together • Look for mutual benefit • Seek personal gain

  18. SOME WAYS TO USE EACH ELEMENT (CONT.) LEGITIMACY • Criteria or standards • Focus on one • Consider various • Utilize them as justifications for previous positions • Utilize them as guides for addressing the problem together

  19. SOME WAYS TO USE EACH ELEMENT (CONT.) COMMITMENT • From the beginning/to the end/in stages • Unilateral/mutual • Sincere/insincere • Operation/without assigning specific tasks • Final agreement/ joint recommendation /list of options for future consideration/list of upcoming tasks • Tentative/final

  20. SOME WAYS TO USE EACH ELEMENT (CONT.) COMUNICATION • One-way/ Two-way • Actively listen/talk at them • Words/facts • Efficacy/without focus • Clear/confusing

  21. SOME WAYS TO USE EACH ELEMENT (CONT.) RELATIONSHIP • Denigrate/respect • Judge/accept • Force/convince • Don’t understand/understand • Cheat/be trustworthy

  22. NEGOTIATION SYSTEMS It is convenient to recognize the different systems for: • Defense • Choice • Change

  23. ADVANTAGES Easy to do Requires little preparation Easy if you have a good “bluff” Gives the impression of tenacity Play today- pay tomorrow Adequate, if you have a good “BATNA” You can be successful; very stimulating when it goes well DISADVANTAGES Focuses on obstinacy Joint gains are lost Damages relationships Can turn into an exchange of threats Puts credibility at risk Increases risk of not reaching an agreement Catastrophic if it fails Someone is discredited INTIMIDATION (“Chicken”)

  24. ADVANTAGES Allows for unequal agreements Allows for long-term agreements Can foster a relationship DISADVANTAGES Can result in the poor understanding of: The reality or The magnitude of the favor Requires clear communication Can damage a relationship Ignores the merits of the case The parties may change FAVORS AND ACCOUNTS

  25. ADVANTAGES Promotes the relationship Paves the way for substantial discussion Maintains flexibility Can facilitate negotiation DISADVANTAGES May confuse the relationship with the substance It may seem like you are buying the relationship Exchange substance for the relationship Can reward bad behavior Requires skill to avoid misunderstandings COURTSHIP

  26. ADVANTAGES Can be efficient Allows for quick communication Operational Convenient for sole treaties Suitable if you have a good “BATNA” Sometimes customs don’t allow for another form of communication DISADVANTAGES Rewards deceit and stubbornness Joint gains are lost It is likely to have arbitrary results It can take longer in complex situations Can damage the relationship NEGOTIATIONS BASED ON POSITION

  27. ADVANTAGES Better communication and understanding Facilitates joint gains Legitimate results Allows you to stay strong and flexible Improves the relationship Consistently achieves better results DISADVANTAGES The preparation takes longer May require more skill The other party may misunderstand your openness as a weakness The other party may feel uncomfortable You may feel uncomfortable NEGOTIATIONS BASED ON PRINCIPLE

  28. ELECTING A SYSTEM • Study the arguments for and against each system: • The nature of the problem • Is it important to avoid an arbitrary result? • Are there different available patterns? • How important is the outcome as a precedent? • Consequences of the relationship • Consequences for your reputation • Magnitude of what is at stake

  29. ELECTING A SYSTEM (CONT.) • Consider the cost in changing the system: • What do they expect? • How much has been invested in the current system? • What is your “BATNA”?

  30. CHANGING THE SYSTEM USE THE SYSTEM Negotiate directly regarding the procedure Change the participants or Beat them at their own game

  31. IF YOU WANT TO CHANGE THE SYSTEM THEY ARE USING FOR ONE BASED ON PRINCIPLE NEGOTIATIONS Add elements that the system they are using overlooks. Negotiations based on positions emphasize: • Exchange of commitments • Your “BATNA” To change the game, consider: • Interests • Options • Objective criteria • Their “BATNA” • The relationship

  32. IF YOU WANT TO CHANGE THE SYSTEM THEY ARE USING FOR ONE BASED ON PRINCIPLE NEGOTIATIONS (Cont’d) Favors and accounts emphasize: • Interests • Options • Relationship To change the game, consider: • Objective criteria

  33. PRACTICAL RULES FOR CONDUCTING NEGOTIATIONS

  34. SOFT “We have to talk” Insist on maintaining the friendship Start with a reasonable position Make concessions in order to cultivate the relationship Offer HARD “We don’t need to talk” I insist on my position Start with an extreme position Demand concessions as a condition of the relationship Threat A COMMON DILEMMA

  35. Soft Sometimes, we should talk The relationship is important Being reasonable is powerful It is good to be flexible It is good to offer Hard Sometimes, it’s best to leave The substance is important It’s powerful to be ‘anchored’ in your position It’s good to be firm It’s good to indicate limits EVERYONE IS RIGHT

  36. COMMON ERRORS • Ignoring alternatives • Assuming that you have to choose: relationship or substance • Centering only around the positions, ignoring the interests • Mixing the process of generating ideas with the process of deciding between them; restricting options • Not giving importance to legitimacy: What should the parties do? • One-way communication: Talking at them • Committing yourself before listening fully

  37. GENERAL RECOMMENDATIONS 1. DEVELOP YOUR “BATNA”; CONSIDER THEIRS 2. DEAL WITH THE RELATIONSHIP AND THE SUBSTANCE: • Soft with people, hard with the problem • Distinguish their humanity from the reasons behind their behaviors and opinions • Speak for yourself, not for others • Consider whether you should consult before deciding 3. CLARIFY THE INTERESTS, NOT THE POSITIONS

  38. GENERAL RECOMMENDATIONS(CONT.) 4. GENERATE BETTER OPTIONS: • Separate the design process from the decision process • Look for options with mutual gain 5. MAXIMIZE THE LEGITIMACY: • Use different patterns • Consider the test of reciprocity • Stay open to reason 6. PAY ATTENTION TO THE COMMUNICATION: • Listen actively and show that you have listened 7. COMMIT CAREFULLY, AFTER DOING RESEARCH AND CONSIDERING ALL OF THE OPTIONS

  39. FRAMEWORK FOR NEGOTIATIONS USE THE SEVEN ELEMENTS FOR: 1. Preparing yourself for a negotiation 2. Negotiating 3. Reviewing and analyzing negotiations

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