Topic 9
Essentials of Negotiation
Questions to Think About:
What is the purpose of negotiation? How do you know what’s negotiable?
What are the tactics for effective negotiation?
What kind of preparation is required for a negotiation?
How do you recognize illegal practices?
How do I ensure the other party keeps its side of the negotiated agreement?
Learning Objectives:
Understand the purpose of negotiation
Understand need for the process of preparing for negotiation
Know how to prepare for negotiation
Understand tactics for effective negotiations
Learn techniques for coaching clients to negotiate
Demonstrate coaching technique
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What is Negotiation?
“…back-and-forth communication designed to reach an agreement between two
or more parties with some interests that are shared and others that may conflict
or simply be different.”
(Moffit & Bordone: The Handbook of Dispute Resolution)
“Process through which parties move from their initially divergent positions to a
point where agreement may be reached”
(Steele & Beasor: Business Negotiation – A Practical Workbook)
“Acceptable compromise by determining which needs are fixed and which
flexible for negotiators.”
(Fisher & Ury: Getting to Yes)
“Break through the barriers: your reaction, their emotion, their position, their
dissatisfaction, their power.”
(Ury: Getting Past No)
In a Nutshell:
Getting what each party wants via effective communication and compromise.
Effective Negotiation
Steps to a Successful Negotiation
1.
2.
3.
4.
Preparing
Negotiation From Position of Strength
Summarizing and Memorializing Agreement
Delivering as Agreed
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STEP 1: PREPARING – GATHER ALL NECESSARY INFORMATION
Answer the following questions:
1. What information do I need to know?
What are the accumulated late fees?
How many late payments have there been?
Has this account been negotiated before?
What is the client’s cash flow?
2. What resources do I need in order to negotiate this account on behalf of my client?
Does the creditor need a letter proving job loss?
Are there any proofs of previous payments?
Prepare all necessary documents and summarize the facts.
3. What legal rights are involved for each party?
4. Who is the other party?
Is it the creditor, a third party collector, a buyer of the account?
Is there an intermediary – A mediator, referee, another counselor, or
attorney?
5. What is the other party’s authority to negotiate?
Is this the decision maker?
If third-party collector, do they have license or required registration?
Do they have documentation of the debt?
6. What are the other party’s objectives?
What does he need to accomplish? What does he have at stake?
7. What motivates the other party?
Performances, commissions
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STEP 2: NEGOTIATING FROM POSITION OF STRENGTH
Understand negotiation strategies and tactics (the other side is using them too)
Frame and ask questions properly
Assess and evaluate the offer (go back to the list of desired outcomes from
preparation)
Negotiation Strategies and Tactics
(May be used by the counselor but collecting party may also use the same strategies)
Negotiation Decoy
o The other party negotiates first on something unimportant, e.g. late fees
Extreme Offer
o They will try to get whatever they can
Nibble
o Inch Up or Inch Down
o The other party will try to get you to agree to something. Once you agree that
you owe the principal, then they will add late fees, then interest rates, bringing
the debt up
Cherry Picking
o Identify main issue that’s most important to you and focus on that only
o i.e. From the counselor’s perspective, you may say that the only option for the
client is bankruptcy and can only afford $500 – take it or leave it
Flinch
o Make the other party feel unjust and guilty
o i.e. Client admits to owing debt, always paying on time and wanting to pay,
etc. Counselor comes in and tells party collecting the debt that it has already
received its principal; makes collector feel guilty for wanting to collect more
money from client by pointing out that anything more would be extra
Good Cop / Bad Cop
o Counselor giving something that’s the extreme and the client flinches
o Counselor takes strong position (not letting client pay, etc.) and client gets to
be good cop by saying that he/she can afford to pay more; creditor things
debtor is on their side
Limits
o Best offer, deadline; try to get the client to pay immediately
Higher Authority
Take It or Leave It
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STEP 3: SUMMARIZE & MEMORIALIZE AGREEMENT
After an agreement has been reached:
Summarize and restate terms with other party
Memorialize ASAP – Confirm by e-mail or fax
GET IT IN WRITING!!!!
STEP 4: DELIVER AS AGREED
Review the offer’s terms for amounts, deadlines, processes
Deliver as agreed in a timely and appropriate manner
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Topic 9 Exercise #1
After having the benefit of the presentation on negotiations, re-asses the
interaction that took place in the earlier exercise (see below), in which Bobby
returned the collector’s call. Is there anything that Bobby did that you would
change, and if so, what would it be and why?
Role Play
All of the credit cards are jointly held. Bobby has a 712 credit score, and Marta has a
690 score. They recently missed the monthly payment on one of the cards by 15 days,
and were charged a $39 late fee.
The credit card company for which his payment was late, called Bobby at work, and left
a message with a co-worker asking him to call their 800 number and the name of the
caller. Bobby did get the message, and the card company called again the next
morning. This time, the caller left a message saying that Bobby’s payment was overdue
with his co-worker.
Marta has a savings account with $500 that pays $1.50% per year. On April 10, Bobby’s
mother and brothers sent him $1,500 for his birthday.
© January 23, 2013
Cities for Financial Empowerment Fund
All rights reserved.
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