CHAPTER 1 Negotiations Negotiation Unlocked: Chapter 1 Related Terms Collective Bargaining Mediation Arbitration Lobbying Facilitation Talks In management, we have to “work with and through others to achieve organizational objectives in a changing environment.” Negotiation is… • Your key communication and influence tool. • An interpersonal decision-making process necessary whenever we cannot achieve our objectives singlehandedly. • Not just about resources – it is equally about relationships and trust. THE MIND AND HEART (1 OF 4) • Across the sections of The Mind and Heart of the Negotiator, we focus on the mind of the negotiator as it involves the development of deliberate, rational, and thoughtful strategies for negotiation. • We also focus on the heart of the negotiator, because ultimately we care about relationships and trust. • We base all our teaching and best practices on scientific research in the areas of economics and psychology, reflecting the idea that both the bottom line and our relationships are important. THE MIND AND HEART Relationship vs. Economics • Economic value (money and scarce resources) • People (Relationships and Trust) • Many people think you focus either on being liked or getting what you want… THE MIND AND HEART Satisficing vs. Optimizing • Satisficing refers to doing just enough to reach one’s minimum goals, not pushing to maximize one’s potential gains. • Optimizing negotiators capture all of the potential gain in a situation. • Acceptance of mediocrity will lead to long-term failure (think recruitment, selection of course, partner arguments ) THE MIND AND HEART (3 OF 4) Short vs . Long-Term Relationships • Negotiators often struggle with which strategy they should use in a single-shot negotiation versus negotiations that could potentially recur with the same party again in the future. • All negotiators should assume that the details of their negotiation will be accessible for anyone to view and that all negotiations have long-term implications. • Social Media has changed this perception. THE MIND AND HEART (4 OF 4) Intra- vs. Inter-Organizational Negotiation • At first view, it would seem that internal negotiations might go more smoothly and collaboratively than external negotiations. • However, envy and internal competition may in fact loom larger when people negotiate internally versus externally. THE MIND AND HEART Low- vs. High-stakes Negotiation • Low stake - not committed to win-win • High-stakes - committed to win-win WIN-WIN, WIN-LOSE, AND LOSE-LOSE • Win-Win Negotiations • …are also known as integrative agreements (Salary negotiations) • Win-lose negotiations (one party prevails over the other) • Lose-Lose negotiations. (Both parties lose-unfair dismissal) Key reasons effective negotiation skills are important: • The knowledge economy-the nature of knowledge work changes over the years-managers constantly negotiate on matters involving skills, professional id, moving new jobs and entering new markets • Specialized expertise-This means there is interdependence across fields, and incentive structures force managers to promote their own interests while creating joint value for the organisation • Information technology- availability means people can always negotiate, tech has made it faster, and requires more responsiveness • Globalization– Managers need to develop negotiation skills that can be employed across the globe, nationalities, contexts, cultures. NEGOTIATION TRAPS • The four major shortcomings between disputants in a negotiation: • Leaving money on the table-lose lose negotiators fail to recognize and capitalize on a situation • Settling for too little- “winner’s curse”- making too large a concession and getting too small a slice of the pie • Walking away from the table- rejecting an offer that is demonstrably better than any other option (pride) • Settling for terms that are worse than your best alternative- “agreement bias” negotiators feel the need to agree/reach an agreement even if it’s worse than other alternatives BECOMING AN EFFECTIVE NEGOTIATOR Investigations of contract negotiations consider four key objectives when assessing the quality of contracts: • What is the likelihood of reaching a good agreement? • Does the agreement fulfill its intended purpose? • Will the agreement last? • Will the agreement lead to subsequent negotiations? BECOMING AN EFFECTIVE NEGOTIATOR Exhibit 1-1 Evaluating the Success of Negotiation Prior to Negotiation Initiate negotiation Preparation • Planning worksheet • Assess BATNA • Develop reservation price • Develop target price (aspiration) Negotiation Strategy • Opening • First offer(s) • Counter-offers • Substantiation and persuasion • Concessions Agreements • Efficiency • Economic value • Individual gain • Joint gain Relational value • Satisfaction • Fairness Post-Negotiation Post-deal implementation Durability Reputation Willingness to negotiate again Trust BECOMING AN EFFECTIVE NEGOTIATOR There are three key elements to improving your negotiation skills: • Diagnostic feedback- allows you to learn from experience • Strategy- Analysis of success/failure of negotiation • Focused behavioral practice- practice vs simulation DEBUNKING NEGOTIATION MYTHS Myth 1: Negotiations are fixed sum. It’s not purely combative parties who work together can create more joint value Myth 2: You need to be either tough or soft. Negotiators must be principled. Leverage power while still cooperating and working effectively with others. Myth 3: Good negotiators are born with the skill.These can be learned/taught. Good negotiations involve engage with people on a daily. Practice and feedback feed negotiations Myth 4: Good negotiators rely on their intuition. Negotiation must be systematic, research-driven and deliberate.(no guts no glory will be your detriment) SUMMARY • Improve your ability to negotiate successfully. • Form your general strategies for successful negotiations. • Pursue negotiations from an enlightened model which assumes that the other person you are negotiating with is every bit as motivated, intelligent, and prepared as you are.
