T HE P OWER OF P ERFORMANCE 51 TH A NNUAL C ONFERENCE M AY 22-25, 2018 O RLANDO , F LORIDA Conducting a Successful Negotiation Keri Kozlowski J.D., M.P.H.
A BOUT M E Attorney Chief Performance Officer UCF College of Business Faculty Executive Coach, Leadership Development Speaker, & Mediator
N EGOTIATION A discussion between two or more parties (each with its own aims, needs, and viewpoints) seeking to discover common ground and reach an agreement on a matter of mutual concern or to resolve a conflict .
N EGOTIATION We begin negotiating when we are very young People negotiate every day Every time you ask for something you are actually negotiating
W HY D O P EOPLE N EGOTIATE ? To resolve a problem / dispute between parties To agree on how to share / divide a limited resource To create something new that neither party could attain on his or her own When we believe we can achieve more cooperating with others then without
N EGOTIATION M YTHS AND F ACTS Myths Facts 1. Good negotiators 1. They are self-made are born 2. Good negotiators 2. They carefully consider take risks risks & potential benefits 3. Good negotiators 3. They rely on preparation rely on intuition
N EGOTIATION M YTHS AND F ACTS 4. Negotiations are 4. A vast majority can always win-lose be win-win 5. The only negotiations 5. Far more negotiations are formal or explicit take place informally negotiations every day
N EGOTIATOR S HORTAGE • Many Master Contract Negotiators in both the public and private sectors have retired or became retirement eligible in 2012 • During the past 10 years, there has been an increase in the complexity of contracts, making it harder to negotiate a good deal at a fair price • U.S. Government Procurement Policies are placing more financial risk on government prime contracts and subcontractors • In the next 3-5 years, “Negotiation Skills” will grow as a key personnel performance indicator
S UCCESSFUL C ONTRACT N EGOTIATORS : • Master the art and science, or soft and hard skills , required to become a master negotiator • Are able to and adapt strategies , tactics, and counter tactics in a dynamic environment • Communicate ideas clearly and effectively • Understand their own negotiation style (and others) • Know their products and services, desired terms and conditions, and pricing strategy • Can successfully lead a diverse multi-functional team • Calmly and deal with high stress situations
P LANNING F AILURES 46% of contract managers enter negotiations not knowing what they really want. No clear objectives set D on’t understand strengths and weaknesses of own and other position (can’t develop persuasive arguments) D on’t explore opportunities for value creation Depend on being “quick and clever”
T HE E SSENCE OF P REPARATION The foundation for negotiating Adequate preparation leads to beneficial outcomes Preparation & the 80-20 rule: 80% of your efforts should be devoted to preparation 20% should be devoted to the actual negotiation
T HE P REPARATION P ROCESS • What do you want or need? 1 • How do you intend to get it? 2 • What are your alternatives if no acceptable agreement 3 is reached? • What does the other party want or need? 4 • What alternatives do the other side(s) have if no 5 acceptable agreement is reached?
T HE P REPARATION P ROCESS Bargaining Mix BATNA Reservation Prices Bargaining Power Analyzing the Other Party
T HE B ARGAINING M IX The bargaining mix is the package of issues up for negotiation. Each item in the bargaining mix , can have its own starting, target and resistance point. Prioritize Issues !!
D EFINING THE S ITUATION What will you be negotiating? All of the issues that must be addressed to produce the desired outcome Your goals/objectives
D EFINING THE S ITUATION Kickoff meetings help make sure all players have complete information
E STABLISHING G OALS What do you want? What the other party wants? Goals can be: Substantive Price, terms, contract language, … Relationship Short vs. long term !!
R ELATIONSHIP
T ARGET P OINTS What you realistically hope to achieve for each issue Determining target points What is required to satisfy your interests and set that as your target Setting targets should be based on research Justify and quantify
B EST A LTERNATIVE TO A N EGOTIATED A GREEMENT (BATNA) The basic test of any proposed agreement Whether it offers greater value than your best course of action without the other party When preparing to negotiate Identify and analyze your best no-agreement alternatives “What would be my best course of action if I can’t reach an agreement?”
W HY BATNA IS IMPORTANT ? The goal of a negotiation is NOT to make any deal The goal of a negotiation is to make a “good” deal: One that is better than each party’s respective BATNA
BATNA Assessment requires three steps : Identify all the plausible alternative options you might pursue if you are unable to reach an agreement with the other party Estimate the value associated with each alternative Select the BEST alternative — this is your BATNA
C ALCULATE R ESERVATION P RICE (RP) Your reservation price is your walk-away point ; the point at which you pursue other options (i.e. your breakeven point) Define your reservation price before negotiating Learn your opponents ’ reservation price, if possible
Z ONE OF P OSSIBLE A GREEMENT Seller’s Resistance Price Seller’s Target Price Seller Settlement Range ZOPA Buyer Settlement Range Buyer’s Resistance Price Buyer’s Target Price ZOPA is Positive Positive Bargaining Zone Exists
Z ONE OF P OSSIBLE A GREEMENT Seller’s Target Price Seller’s Resistance Price Seller Settlement Range ZOPA Buyer Settlement Range Buyer’s Target Price Buyer’s Resistance Price ZOPA is Negative No Possible Agreement
L EARN A BOUT O PPONENTS ’ RP Estimate the other party’s: Definition of the situation Goals, issues, interests BATNA, reservation prices
L EARN A BOUT O PPONENTS ’ RP Exhaust pre-negotiation sources of information Consulting company reports (e.g. Hoovers) News Article, Press Releases, Job Boards Contact your sources within that industry Determine their strategic goals See what you can learn from any member of the negotiating team though informal discussions or slips of the tongue at the table Examine your assumptions Ask direct questions; watch for non-responses
L EARN A BOUT O PPONENTS ’ RP Often people have a singular goal of convincing other side to accept a certain kind of deal or demand Prepare by: Determining what I want and identifying a host of reasons why the other side should agree to give it to me. What we learn is limited by what we allow ourselves to learn . We often erect barriers to learning simply by the way we negotiate.
R APPORT B UILDING Negotiators who chat for 5-10 min, even about unrelated issues: Share more information Make fewer threats Develop more trust and respect than pairs who do not Efforts to analyze the other party involve making estimates , assumptions , educated guesses or even hunches
A NALYZING THE O THER P ARTY The dilemma of trust The other party may take advantage if you believe too much of what he or she tells you But you may not be able to reach an agreement if you believe too little The dilemma of honesty The other party may take advantage if you share too much information But you may not be able to reach an agreement if you share too little
W HAT IF THEY ASK TOUGH QUESTIONS ? You need to prepare in advance for tough questions. Helps you avoid lying Helps you avoid giving up too much information Helps you reclaim control of the conversation (and framing)
R UG E XERCISE
V ALUE C LAIMING AND V ALUE C REATION Value differences that exist between negotiators include: Differences in interest Differences in judgments about the future Differences in risk tolerance Differences in time preferences
N EGOTIATION S TRATEGIES Characteristics Distributive Integrative Available resources Fixed amount of Variable amount of resources to be divided resources to be divided Primary MINDSET I win, you lose I win, you win Primary interests Opposed to each other Convergent with each other View of relationships Short term Long term
D ISTRIBUTIVE B ARGAINING Positions ( not issues ) are the primary focus Reservation prices / resistance points set limits Target points are what you realistically hope to achieve Offers & counteroffers define the process Alternatives (BATNAs) define your resistance points and your power
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