Negotiation workshop

Abstract

Negotiation is an important process applied in most businesses. This workshop aims to enhance the negotiation skills in the context of project management. The material presented is mainly derived from the negotiation module delivered to MBA students in both London Business School and Edinburgh Business School (EBS) by Professor Gavin Kennedy whereby I have been acting as his co-tutor in EBS over the last two years. The main topics covered are:

• Negotiation and decision making
• Negotiation from a behavioural perspective
• Red versus Blue styles
• Distributive Bargaining
• Dealing with difficult negotiator
• Four phases of Negotiation
  1. Prepare
  2. Debate
  3. Propose
  4. Bargain

Negotiation

What is Negotiation?

Negotiation is only one of the ten forms of decision making listed in Exhibit 1.

Exhibit 1

Why Do We Negotiate?

• Negotiation has developed as the process through which the activity of trading and exchanging tangible or intangible things between people is conducted.
• Its underlying principle is expressed in the statement:
  ‘Give me some of what I want and I will give you some of what you want’.
• It differs from instruction and coercion, precisely in the way that it employs the principle of voluntary exchange between two parties who cannot take what they want, unless they accommodate in some way to the wishes and desires of each other.

Distributive Bargaining (Exhibit 2)

Exhibit 2

NEGOTIATION FOUR PHASES

Introduction

• Interests (why?)
• Issues (what?)
• Positions (How much?)
• Tradables

1-Preparation Phase

• What Do We Need to Do First?
• What Are We Negotiating About?
• How Important is Each Tradable?
• What are the Negotiable Ranges for Each Tradable?

2-Debate Phase

• Debate is the act of two way communication. We send and receive messages and confirm or revise our perceptions of the other party. In the unscripted interaction of debate we decide the fate of our negotiation.
• Debate takes up the greater part of the facetoface interaction of negotiators.
• Proposing takes up about 10 per cent, and bargaining less than 5 per cent, of the time spent in direct contact between negotiators.
• Debate takes up the rest (over 80 per cent) and covers all aspects of interaction that are not specifically those of proposing and bargaining:
• Whenever we ask or answer a question we are engaged in debate; whenever we make a statement of any kind we are engaged in debate.
• In fact, debate covers such a huge proportion of the time used up in direct contact between the negotiators, and covers such a wide range of functions, that the contribution of its individual components is often obscured – truly a case of the wood getting in the way of the trees.
• If we can organise and discipline our debate behaviour we have a very good chance of quite dramatically improving our negotiating effectiveness.

Types of Debate

Destructive Argument

1. Threat
2. Attack/blame
3. Point scoring
4. Interrupt/ block
5. Assert/ assume
6. Irritate

Constructive Debate

1. Neutral statement
2. Assurance
3. Question
4. Summarise

How Not to Disagree ?

• We handle fundamental disagreements by separating the issues for negotiation from the trenchant beliefs of the negotiators.
• We try to prevent people getting in the way of the deal.
• We focus on what can be achieved – no matter how small initially – and seek to build agreement step by step.
• If we start in disagreement, how do we move towards agreement without somebody giving in?
  1. by questioning and not challenging the disagreement
  2. and taking care not to widen the issues that might be negotiable to beliefs that patently are not,
  3. We need to explore the potential for bridging the disagreement in some way that does not compromise the negotiators' wider interests.
• This requires that we discover and understand the inhibitions that prevent agreement.

What is an inhibition?

• Inhibitions are whatever motivates the other negotiators to reject our suggested solution.
• They are often hidden and require to be dug out –
• perhaps the negotiators are not sure themselves as to why they oppose our solution and prefer their own;
• perhaps they do not know how to search for their interests; perhaps they are less than candid about their inhibitions because of some shame or embarrassment in holding to their views;
• perhaps they do not understand what we are proposing.
• For you as a negotiator this situation poses some awkward questions, as well as providing a useful device to progress towards agreement.

Signalling

• The signal indicates an invitation to explore other possibilities.
• It is the weakest and therefore the safest commitment to a move.
• There is absolutely no danger of giving in because it invites the other negotiator to move – by following the signal – without commitment on the part of the signaler
• Signals are something like a ‘safe conduct pass' that protects the bearer from molestation which he otherwise might experience.
• There is a close affinity between inhibitions and signalling – the one usually identifies the other
• A signal is only an indicator of a potential solution and an inhibition is an indicator of a potential problem.
• To state an inhibition explicitly is in effect to signal along the lines of: ‘address this inhibition and I can consider coming to an agreement'.
• Hence, spotting an inhibition is a clue as to a possible solution.
• The signal is in effect a bridge to a possible proposal, though the negotiator must be wary as to what the proposal might contain until he is sure that he is addressing the right problem.

3- PROPOSAL PHASE

What is a Proposal?

• Where signaling is a tentative hint at the possibility of movement, proposing is a tentative suggestion of what form that movement could take.
• A proposal is a tentative suggestion that builds on a signal sent or one received.
• It is not a final solution (that is the role of a bargain).
• Tentativeness is its own protection. (IF..THEN..) Format
• Effective proposals consist of two parts: the condition and the offer.
• Ineffective proposals only consist of offers
• The language of a proposal is always tentative.

How to Make Proposals?

• The first and early proposals are likely to be vague in both the condition and offer.
• It is not difficult to be credible with a degree of vagueness covering the detailed content of what is on offer.
• Negotiators can only make sensible proposals when all the issues are on the table.
• It makes little sense to make conditional proposals when you do not know enough about the other negotiator's attitude towards, or his perceptions of, the issues to judge the price you could get (i.e. your conditions) for whatever it is you perceive they want (i.e. your offer).
• Proposals should emerge from debate (via signals) and by their nature – vagueness – cannot be settled without moving
• Proposals, like humour, gain from brevity.
• Language is all. The tone is significant. It has a purpose.

To make an effective proposal, three main ‘rules’ should be practised:

• It should be conditional.
• It should be presented unadorned, without explanation.
• On completing the proposal you should go silent.

How to Receive a Proposal?

• Questioning to clarify, or to invite an extension of a proposal, is the most effective response you can make.
• All other reactions break up the momentum towards a settlement and can set back the debate phase – even into deadlock – for little gain.
• Consider what the proposer is telling you about the scope for a deal on the issues he has raised.
• If there are other issues under discussion be noncommittal (by verbal devices illustrated above) and seek proposals on these issues.
• The principle that ‘nothing is finally agreed until everything is finally agreed' is one that you would always want to establish and maintain throughout any negotiation.
• Apply all the sensible points that are effective in debate: statements, assurances, questions, summaries and signals (SAQSS)).

4- BARGAINING PHASE (Exhibit 3)

• A proposal is not a bargain.
• A proposal is a tentative solution.
• A bargain is a specific conclusion.
• The distinction is more than pedantic.
• The language of proposing is critically different in one crucial respect from that of bargaining. In a proposal the conditional offer is nonspecific; in the bargain the conditional offer is always specific.
• The two essential ingredients of effective bargaining are: all bargains are explicitly conditional and all offers are explicit.
  • If you do such and such, then I will do so and so.

Exhibit 3

Linked Trading

• We negotiate because we value things differently,
• It is in the bargaining phase that we focus on the differing valuations.
• Nothing, absolutely nothing, should be given away, no matter how little it is worth to you.
• The paradox of bargaining is that those things that are worth little, or less, to you in themselves, could be worth a great deal to you in the bargaining phase if they are worth more to the other negotiators.
• The form of the bargain is the conditional offer, and the tradables available to the negotiators are the potential content of the conditional offers.

Bargaining to Close the Deal

• There is nothing more to discuss once a bargain has been accepted because the terms of the bargain are an explicit condition attached to an explicit offer.
• Negotiators engage in what has been described as a ‘negotiation dance'.

The Agreement

• The outcome of a negotiation is a decision and that decision is either an agreement or a failure to agree.