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Negotiation fundamentals everyone should know
- 1. Negotiation Fundamentals:- 1. Keyconcepts and core vocabulary of Negotiations process. 2. Deal Making & dispute resolutions. 3. Assumptions & biases that are barriers to effective negotiations. 4.Collaborative approaches, risk & opportunities to achieve win-win outcome
- 2. Core vocabulary ofNegotiation process Pre- Negotiation RFI-Request for Information, RFQ-Request for Quotation, RFP- Request for proposal, ITT- Invitation to Tender. Negotiating Position MDO-Most Desired out come, BPA- Best Possible Agreement, LPA-Least Possible Agreement, ZOPA- Zone of possible agreement. During the Negotiation SWOT Analysis, MOSCOW Analysis- Must Have, Should have, Could have, won’t have., CDM-Consensus decision making Ending the Negotiation MEEP-Multiple economically equivalent Proposal, MEEO-Multiple Economically equivalent offers, BAFO- Best & final offer
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- 13. Major Causes ofConflict Opposing interests (or what we think are opposing interests) are at the core of most conflicts. In a modern complex society, we confront these situations many times a day. The modern organization adds a whole new group of potential causes of conflict that are already present: • competition over scarce resources, time • ambiguity over responsibility and authority: • differences in perceptions, work styles, attitudes, communication problems, individual differences • increasing interdependence as boundaries between individuals and groups become increasingly blurred • reward systems: we work in situations with complex and often contradictory incentive systems • differentiation: division of labor which is the basis for any organization causes people and groups to see situations differently and have different goals • equity vs. equality: continuous tension exists between equity (the belief that we should be rewarded relative to our relative contributions) and equality (belief that everyone should receive the same or similar outcomes).
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- 16. The Five Modesof Responding to Conflict It is useful to categorize the various responses we have to conflict in terms of two dimensions: 1. how important or unimportant it is to satisfy our needs and 2. how important or unimportant it is to satisfy the other person's needs. Answering this questions results in the following five modes of conflict resolution. None is these is "right" or "wrong". There are situations where any would be appropriate. For example, if we are cut off driving to work, we may decide "avoidance" is the best option. Other times "avoidance" may be a poor alternative. Similarly, collaboration may be appropriate sometimes but not at other times. Competition: Distributive (win-lose) bargaining Satisfying your needs is important; satisfying the other's needs isn't important to you. Collaboration: Integrative (win-win) Satisfying both your needs and the other's needs is important. Compromising: Satisfying both your needs and the other's are moderately important Avoiding: you are indifferent about satisfying either your needs or the other's needs: no action is likely. Accommodating: simply yield (it doesn't matter to you and it matters to the other person)
- 19. Negotiation is theprocess by which people with conflicting goals try to reach agreement about how they are going to work in future. Negotiation are interdependent: what one side wants affects what the other side can have & vice versa. If you are going to negotiate globally . You have to remember culture affects negotiations. It includes tripartite way of categorizing culture:- 1.Dignity culture ( North American & European) 2.Face Culture( Generally Asian) 3.Honour Cultures( Middle eastern, North American & Latin American) Negotiation is not limited to buying & selling- Deal making negotiation. People negotiate to resolve disputes and to reach decision in teams and other multiparty environments Deal making negotiations:-
- 26. Negotiation Bargaining processbetween two or more parties to settle a matter of mutual concern or resolve a conflict
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- 40. • P. K.Jha Common Negotiation Mistakes 1. We Fail to Thoroughly Prepare to Negotiate. The top negotiation mistake business negotiators make is to rush into a negotiation without thoroughly preparing. You may think you’ve prepared thoroughly if you have strong opinions about what you want to get out of the deal, but that’s far from sufficient. Wise negotiators understand the importance of taking ample time to analyze several aspects of negotiation carefully. Start by thinking about your best alternative to a negotiated agreement, or BATNA, a term coined by Roger Fisher, William Ury, and Bruce Patton in their book Getting to Yes: Negotiating Agreement Without Giving In. Your BATNA is the best course of action available to you if you can’t reach agreement in your negotiation. It is also important to calculate your reservation value, or your walkaway point, and to try to estimate the other party’s BATNA. All of these calculations will help you make more rational decisions. 2. We Focus On Competing Rather than Collaborating. Fearful of being taken advantage of, novice negotiators (and even some experienced ones) make ambitious, even unreasonable demands and resort to threats and other coercive tactics to try to get their way. For a more effective negotiation, focus on creating and claiming value. When you take time to build rapport and trust, both sides will feel more comfortable sharing their underlying interests in the negotiation. This knowledge will allow you to identify potential tradeoffs: if there’s an issue you don’t feel strongly about, you might be willing to concede in exchange for a concession on an issue you value greatly. Smart negotiators recognize they’ll get more by looking for win-win solutions. 3. We Fall Back on Cognitive Shortcuts. In negotiation, we all rely on cognitive shortcuts, particularly when we’re unprepared and short on time, psychologists have found. We tend to be overconfident of our odds of getting our way, for instance. And we pay more attention to vivid information (such as salary in a job negotiation) than to less flashy information (such as the length of our commute) that might have a bigger impact on our satisfaction. Deepak Malhotra and Max H. Bazerman’s book Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond describes these common negotiation mistakes. We can improve our negotiation skills and reduce the pernicious effects of these biases by preparing thoroughly and taking ample time to negotiate.
- 41. • P. K.Jha Common Negotiation Mistakes 4. We Let Our Emotions Get the Best of Us. In addition to cognitive biases, negotiators are susceptible to emotional biases that can prevent them from doing their best. Of course, our emotions and those of our counterparts can provide us with valuable information about how the negotiation is going. But strong emotions can also keep us from making rational decisions—and lead to negotiation mistakes. Negotiators often don’t understand how emotions affect negotiations. Anger can lead us to make overly risky choices, for example. And sadness can lead us to overpay in negotiation, Harvard Kennedy School professor Jennifer Lerner has found. When negotiations get heated, try taking a break to let everyone cool down. When you regroup, talk about what happened, giving everyone time to air their concerns. 5. We Take Ethical Shortcuts. We tend to assume that only truly ruthless people behave unethically in negotiation. In fact, research by Harvard Business School professor Francesca Gino and others shows that most people are willing to cheat now and then in negotiation and other realms when they have a financial incentive to do so and believe they won’t be caught. We find ways to justify such behavior, whether by telling ourselves that the other party won’t feel the loss or by denying that we’ve done anything wrong. It’s important for all of us to stay attuned to ethical pitfalls in negotiation and avoid letting ourselves off the hook for even seemingly minor infractions that go against our moral code.
- 42. • P. K.Jha Overcomming Negotiation Challenges/Mistakes Complete Preparedness When negotiating with a prospective partner company, it is essential to ensure that the users are prepared comprehensively. Negotiation must be fueled from knowledge about the industry, company practices, and the current state of affairs. Entering into the negotiation process without completely understanding and analyzing the need for the contract can result in adverse results. With the contract management software, the team can streamline their activities, store essential information and ensure that the negotiation process is seamless. Understanding the Company Protocols One of the biggest reasons for contract negotiation failure is the lack of understanding of the company protocols. Every company would have their own set of terms and conditions, which are used as the basic parameter for trade and other activities. It is vital to understand the in-house rules and regulations regarding the negotiating terms since any lack of knowledge about the organization can cause confusion during the negotiation process. The enterprise contract management software is a customizable software, where the users can store information regarding the terms and conditions. It also enables the users to template the terms of contract, which can further be used to create contracts in under five minutes. Learning from Mistakes Negotiation is a process that can raise conflicts if not done in a proper manner. A difference of opinion or interests can lead to contracts being cancelled, thereby causing a lasting rift between the involved parties. Although it is not possible to resolve every conflict amicably, learning from the past mistakes can help in resolving negotiation conflicts seamlessly. It is essential to ensure that negotiations are done in a professional manner, which enables the company to conduct a prosperous business.
- 43. • P. K.Jha Overcomming Challeges / Mistakes Compromising on Terms At times, it requires a certain level of compromise to accommodate the requirements of the involved parties. It is advisable to negotiate fairly by understanding the requirements of the other party and making reservations based on goodwill and to improve business relationships. Focusing on one aspect such as the price or the benefit of the contract during the negotiation process. The contract lifecycle management software has the feature of real-time collaboration, where the involved parties can negotiate right on the document. The users can quickly verify their enterprise terms and make certain modulations to fit the requirements of the client/vendor. Importance to Finer Details A contract is an important document that has legal validity. The content in a contract must be clear and unbiased without any obscuring meanings. The negotiation process is when the content of the contract would be reviewed comprehensively. Any errors in the contract can attract flak and mistrust from the involved parties. Therefore, it is essential to be abreast of the contractual content, even before the negotiation stage.
- 44. • P. K.Jha Cause of Negotiation Fail Some Negotiations Fail • Sometimes there must be a winner •Negotiation initiated too soon/late • One person doesn’t really want to negotiate – imbalance of power • One person not prepared • Sites set too low/high • Becomes personal • Lack of trust • Impatient • Unable to move off position • Talk too much
- 45. • P. K.Jha Rules of Negotiations Primary Rules of Negotiation • Do not argue over positions. • Build trust. • Prepare to negotiate. 1. Do not argue over positions. • Bargaining over positions locks the negotiator to the position. • Look for underlying concerns • Don’t haggle. • Positional arguing is inefficient. • Positional arguing engenders ill will. 2. Build trust. • Establish trust through preparation and predictability • Build credibility. • Show genuine concern. • Develop rapport.
- 46. • P. K.Jha 3. Prepare to negotiate. • Client interview. • Investigation and research. • Scout the prosecutor. • Know your victim. • Keep a book on the judges. • Research fair standards. • Enter the negotiation with a conscious strategy.
- 47. • Negotiation :Plan, define, clarify, bargain, finalize 1. Plan and prepare • Define your goals and your BATNA • Generate a range of outcomes • Forecast the other party’s goals • Gather information • Consider strategies based on intel • Optimize your approach • Anticipate the other party’s approach • Manage the negotiation
- 48. 2. Define theground rules • Exchange initial proposals/demands • Agree on ground rules and procedures 3. Clarify and justify • Explain your original demands/position • Understand other party’s demands/position 4. Bargain and problem solve: • All items on the table • Concessions • Create new solutions 5. Finalize and implement: • Commit the agreement to a shared document
- 49. In summary… • Conflict •Multistep process that usually isn’t recognized until behavior stage • Affective or relationship-based conflict is always dysfunctional • In the setting of respect/trust, cognitive conflict improves group performance • Negotiation • Stakes vary based on interests and relationships. • You are practicing all the time. • Know your interests and match preparation effort to the stakes. • If the agreement is not in a document, it doesn’t matter
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