Project Management Institute

Negotiating the right decision

by Andre Long

AS HIGH-LEVEL DECISION-MAKERS, project managers don't usually see themselves as negotiators. That's usually contract management's job. Yet, in fact, successful project managers are artful negotiators. They use dissent to search for alternatives and bargain among groups and individuals with diverse and sometimes conflicting interests to achieve consensus and commitment. For them, negotiation is not a process of giving in or of compromising in order to secure an agreement but a method of obtaining resolution of a complete problem or project.

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Individuals and groups bargain with project managers all the time. The Integrated Product Team (IPT) is, in its very essence, participative management. The collective decision-making and shared responsibilities of an IPT in many ways limits the project manager's authority by what the IPT and other subordinates are willing to accept. In making the trade-offs and reaching the right decisions, a typical project manager spends more time negotiating in his or her daily work than contract managers ever do. One could argue that successful project managers spend so much time harmonizing or reconciling needs that they have to be naturally gifted with an intuitive understanding of people and persuasion.

Clash and Conflict. Management theorist Peter Drucker said that “the right decision grows out of the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives.” Unlike attitudes, opinions are only a temporary way of perceiving something and should be susceptible to change by convincing arguments. Drucker believed that most people approached a problem with preconceived opinions before searching for the facts. He felt that this is normal since people experienced in an area should be expected to have an opinion. Yet if you ask them to search for facts first, they will often look for the facts that fit the conclusion they have already made.

As individuals concerned with the “big picture,” project managers must think through and challenge opinions. Limited resources, diverse personalities, complicated issues, and other variables can make reaching the right decision a difficult challenge. When department heads beg for their engineering design and make promises of a financial or delivery nature based upon assumptions, project managers must test these needs and assumptions against reality. This process of examining, studying, and testing is in actuality a complex negotiation where the players argue, document, and consider alternatives. In project management there are always competing interests and stakeholders. For example, in the construction of a building, one functional area of an IPT may want a more novel elevation design while another in a conflicting functional area, such as financial management, may feel it is not worth the extra time and cost involved in improving the foundation to accommodate the design. The two engage in a bargaining process eventually including the project manager.

To negotiate successfully, project managers must understand the bargaining process and how it is used by individuals and groups to get what they want. Motivation plays a large part in this since it is driven by personal needs. These needs can be ranked from highest to lowest priority starting with physiological, safety, social, and self-esteem needs and ending with self-actualization, which concerns the need for personal success. As these various hierarchical needs are satisfied, their power to motivate is diminished.

For example, let's consider socialization needs. Most managers are concerned with how they are perceived by their superiors. If taken to the extreme, this kind of manager will always agree with proposals that are perceived as having the backing of his or her superiors. His or her socialization needs will prevent the manager from considering other alternatives that may be unpopular or controversial with the boss or peers. However, effective project managers must be able to counter this by testing opinions against facts and encouraging debate based upon merit. This requires project managers who do not have a need to be liked by everyone, but who are not loners. They must be team players who are not afraid of exercising independence from the group or individual department heads in order to meet team objectives.

In persuading others and reaching the “right decision” effective project managers must understand why there is disagreement and what the other party's argument is really all about. Maybe the other party sees a different reality or is concerned with a different problem. Unfortunately, we cannot understand issues until we have first heard them stated. There is much truth to the adage that “we hear only half of what is said to us, understand only half of that, believe only half of that, and remember only half of that.” Good listening skills cannot be overemphasized, especially in the field of project management where problems can be extremely complex. However, once they are mastered, good listening can also become contagious since people tend to listen better when they feel they are understood. It is natural to feel that a person who understands you is intelligent and sympathetic and may themselves have opinions worth listening to. A genuine understanding of another's perspectives, feelings, opinions, and attitudes helps release the productive potential inherent in people.

In Search of Something Better. The reason for negotiating is to get something better than we would have been able to get if we did not negotiate. While some project managers have complete responsibility with no direct authority, most have some authority to impose their decisions on various engineering/design activities. However, project managers negotiate with their subordinates and other functional groups to obtain worthwhile solutions and secure their participation in executing whatever was agreed to.

Those with higher aspirations in life often end up with better results, and it is the same in negotiations. Our personal level of aspiration is a yardstick by which we measure ourselves. The more successful we are, the more we aspire. In negotiations, high demands and hard-fought concessions can lower the other side's aspiration level and also give a project manager or team more room to negotiate. However, being unreasonable, unrealistic, and unconvincing is also a formula for losing your credibility and influence. While it is common practice to give concessions on minor issues or in areas that are not important to you but are to the other party, demands and concessions are most effective when they are less predictable. Avoid tit-for-tat concessions. This does not mean that one should be arbitrary: cooperation, not arbitrary behavior, will lead to better project decisions.

When bargaining, it is common for parties to take and argue for positions, use tactics to seek a competitive advantage, and make concessions to reach a compromise. Tactics are nothing more than procedures, some ethical and some not, that assist a negotiator in gaining an advantage. This type of negotiation is often referred to as “positional” but is also known as “competitive” negotiation. It is often characterized by parties attempting to maximize their own gain, sometimes at the expense of others. The initial position for each party is usually to get everything and give up nothing. During the negotiation, information that does not promote a side's position is usually not disclosed. An arsenal of tactics are used to get large concessions while conceding as little as possible. This methodology has been successfully applied for thousands of years and is almost human nature to many people and cultures.

However, positional bargaining can severely impede IPTs because the focus is on positions, such as “I want a higher-grade steel” and not on meeting the underlying concerns, such as “why do you think you need a higher-grade steel?” Project managers are supposed to be searching for optimal solutions but positional bargaining often results in a minimally acceptable compromise or mechanical splitting of the difference rather than a win-win solution.

“Interest based” negotiations involve separating the underlying needs of the parties from their position. By knowing each other's interests, the negotiating parties can develop creative solutions that meet their legitimate needs. Instead of being a contest of wills and power, the process becomes a problem-solving endeavor where the give and take is based on merit. The results are outcomes produced efficiently and amicably. The method involves four essential points: separate the people from the problem, focus on interests and not positions, invent options for mutual gain, and use objective criteria or a fair standard to determine the outcome.

However, not all people communicate in such an open fashion. This is especially true of professional negotiators, who by their very nature are competitive people. For example, contract negotiators are usually selected for competitiveness and driven to win. Sharing their own personal or corporate interests would be tantamount to suicide when dealing with another competitive negotiator.

Interest-based advocates argue that unless interests are discovered the parties are only dividing up the pie instead of enlarging the pie before it's cut. Most experienced negotiators believe that the less they talk the better off they are. Since negotiations usually consist of a mix of common and conflicting interests, a competitive negotiator will look behind positions for the information and interests that are driving the positions being taken. This enables the negotiator to better meet his or her needs and also harmonize or reconcile the needs of the other party, when necessary or appropriate.

While some negotiations, such as the purchase and sale of a home, involve a short-term relationship with unrelated interests, IPTs present a different situation. A large turnkey construction project may span many years and require cooperative problem-solving at all levels within the organization and with the client. Project managers and IPTs cannot afford to become polarized. They must build trust and gain commitment from each other through their mutual dependence. They must demonstrate high integrity and dependability and expect the same from others. The more confidence you place in others, the more they will justify your faith. Without trust and a good working relationship, it is unrealistic to expect participants to lay all their cards on the table.

When project managers and IPT members do not have trust and confidence in one another, they are more prone to use tactics that finesse or manipulate the situation to their advantage. Take the use of time constraints as an example. The amount of time available to each party is one of the most significant factors affecting a negotiation. Time tactics can provide an enormous amount of leverage even when the time limitations are not real. However, if an IPT does not have enough time to plan, prepare and negotiate, the negative affects can be absolutely disastrous. For example, project managers have been known to use artificial deadlines, such as funding and fiscal year pressure, to push IPTs into yielding favorable decisions.

It is not unusual during any bargaining to have items that are valuable to one side while unimportant to the other. For example, a mechanical engineer may intentionally include inflated hours to install the ventilation system when the real intention is to require a more rigorous design spec. The engineer may argue at length to support the need for the additional hours only to later concede the issue in exchange for the improved design spec. These are called straw issues and must be distinguished from the genuine needs of the party.

Another tactic example is the use of threats. All threats are bluffs unless the negotiator issuing the threat is prepared to carry it out. It makes no sense to threaten unless you are reasonably sure that the other party believes you will follow through. By its very nature, negotiation involves various degrees of threats. The simple possibility of a project manager imposing his or her decision on the team constitutes a type of threat. Beware, however, that direct threats can inflame a problem and invite retaliation.

IN GENERAL, ANY TACTIC employed must be used carefully and judiciously. If poorly conceived or executed, it can be counterproductive and damaging. The best approach relies not on slick maneuvers but instead depends on collaborative problem-solving, where parties share their needs and work together in good faith.

Note: The negotiation method detailed here is derived in part from the “principled negotiation” model developed by the Harvard Negotiation Project and detailed in the best-selling book, Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher and William Ury (Penguin 1991). ■

Andre long is an assistant professor at the School of Systems and Logistics, Air Force Institute of Technology. He has also authored Negotiation of Government Contracts and developed a negotiation course for George Washington University Law School Government Contracts Project.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • December 1997

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