Negotiation Skills
Mar 01, 2013
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Negotiation Skills. Presenter: Jennifer Kupec, CPCM, PMP®. Goals of Negotiation. Anticipated benefits which are greater than the sacrifice, a negotiated agreement should be beneficial Limit yielding so neither party believes that concessions would be more costly than the benefits of agreement
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Presentation Transcript
Negotiation Skills Presenter: Jennifer Kupec, CPCM, PMP®
Goals of Negotiation • Anticipated benefits which are greater than the sacrifice, a negotiated agreement should be beneficial • Limit yielding so neither party believes that concessions would be more costly than the benefits of agreement • Finding ways so both parties interests are optimized
Steps to Negotiate • Prepare • Completely and thoroughly advise all parties of strengths and weaknesses of the negotiation • Know who is leading Negotiations • Determine Alternative Approaches • Know your offeror’s position (if possible) • Develop strategies • Perform Execution
Negotiation Skills Required • Communication Required - in an attempt to reach a mutually satisfactory result • Listening Required - Not one party dictating or imposing terms on another • Preparation Required - To obtain agreement, you must generally sacrifice or yield something in order to get something in return • Execution Required
Communication
Communication Is More than Verbal • Verbal exchanges account for only a fraction of the messages people send and receive • 70 - 90 percent ofthe entire communication spectrum is nonverbal
Areas of Nonverbal Communication • Body language - using facial expressions, body movements, gestures, and posture • Physical environment • Personal attributes such as: • Physical appearance • Vocal cues • Touch particularly the handshake
Cultural Differences A message that has a particular meaning in one society can have a completely different meaning in another society
Attitudes. • This illustration depicts the body language demonstrated by two negotiation teams • The nonverbal messages provide substantial information about both teams
Winning Attitude? • Positive attitudes signal a sincere effort • Speakers show respect and honesty by keeping their eyes focused on the eyes of the listeners • Confidence is often exhibited by: • Hands in pockets with thumbs out • Hands on lapel of coat • Steepled fingers or hands • Good body posture • Hands on hips
Winning Attitude? (Cont) • Interest may be exhibited by : • Tilted head toward speaker • Sitting on edge of chair • Upper body leaning in sprinter's position • Eyes focused on speaker • Careful evaluation is frequently indicated by: • Peering out over eyeglasses • Chin cupped between thumb and fingers • Putting hands to bridge of nose • Stroking chin • Eagerness is often demonstrated by: • Rubbing hands together • Smiling excessively • Frequent nodding of the head
Negative Attitudes • Deception or dishonesty is demonstrated by: • Frequent eye blinking • Hand covering mouth while speaking • Frequent coughing • Looking away while speaking • Sideways glances • Defensiveness may be indicated by: • Arms crossed high on chest • Crossed legs • Pointing
Negative Attitudes • Insecurity is often exhibited by: • Hands completely in pocket • Fidgeting • Biting fingernails • Frustration is frequently shown by: • Tightness of a jaw • Rubbing back of neck • Drawing eyebrows together • Listener boredom or indifference is generally indicated by: • Eyes not focused at speaker or looking elsewhere • Head in hand
The Effects of the Physical Environment on Negotiations Key elements of the environment: • Negotiation facility • Conference table configuration, size, and seating arrangements • Physical distance between negotiators • Relative elevation of the negotiators • Visual aids
Negotiation Table Configuration • Table arrangement transmits important conscious and subliminal messages • Winning negotiation attitudes can be promoted with table configurations that convey trust • Win/lose attitudes are created by table settings that communicate disparity or mistrust • Table should be large enough to comfortably seat all participants • Ideal place for principal negotiator is the middle seat • Central position conveys a message of authority
A: B: C: D:
Physical Distance Between Negotiators • Distance closer than 1.5 feet - intimate communication • Distance of 1.5 to 4.0 feet - close interpersonal contact • Distance of 4.0 to 12.0 feet - most business transactions or consultations • Distance beyond 12.0 feet - Communicate only briefly or formally
Personal Attributes and Negotiations • Attractive people are perceived to: • Have more self-esteem and social power • Receive preferential treatment • Height affects perceptions: • Taller people are perceived as more dominant • Body type affects perceptions: • Athletic people are more assertive and self-reliant • Less athletic looking people can be perceived as more lazy, sympathetic, and dependent • Skinny fragile looking people can be perceived as more suspicious, nervous, and pessimistic
Physical Appearance • Dress for negotiations as you would for a promotion or job interview • If you adopt more casual dress: • Advise the contractor of your intent • If wearing a uniform, wear it properly • Personal grooming • Can communicate unfavorable nonverbal messages about you or your negotiation position
Vocal Cues • Loudness • Changes in pitch • Rate of speech • Quality • Rhythmic voice pattern • Speaking clearly • Correct sounds and emphasis • Silence
Handshake Cues • Firm - conveys positive attributes • Loose - may send unflattering messages • Vice-like grip - rarely sends a positive message • Smile and look person in the eye • Prolonging the handshake
Preparation
Negotiator's Preparation • Many negotiators do not understand the importance of preparation • Preparation is everything from conducting market research to conducting exchanges • Poor preparation leads to poor contracts that require constant clarification, modification, and more negotiation • Use 90% of your time in preparation • Detailed preparation produces substantial rewards, including: • Fewer contract modifications • Better technical performance • Cost estimates closer to actual costs
Be Prepared • Successful negotiators are generally the best prepared • No amount of negotiator experience, skill, or persuasive ability can fully compensate for the absence of preparation • Other bargaining rules can not be entirely effectivewithout preparation
Preparation Dividends • Adequate preparation includes a careful study of the strengths and weaknesses of both positions • No other aspect of negotiation continually pays better returns
Contract Risks • Every contract involves risks • One negotiator may gain power by reducing the risk exposure perceived by the other party • It can be reduced or controlled but cannot be eliminated completely
Issues • Issues are the basis for the differences between negotiation positions • Identify the key issues before you developyour objectives
Must Bargaining Give Avoid Negotiation Priorities • Prioritize Issues - Rank potential negotiation issues in relative order of importance • Determine whether each issue is a: • Must point - Nonnegotiable issues • Give point - Issues open to concession • Avoid point - Issues to avoid during negotiations • Bargaining point - Issues open to bargaining
Cost or Price Objectives • Technical, rates and factors issues will eventually effect cost and price objectives • Without an overall price objective, negotiations can result in settlements that can’t be explained or defended • Negotiating cost element by cost element can be risky • Price objectives should be planned in terms of a definite dollar amount
Contractor Approach to Negotiation Key Questions to consider: • What objectives and priorities has the contractor probably established? • How will the contractor's general business objectives and priorities affect the negotiation? • How will the individual objectives and priorities of the contractor's negotiator affect negotiations? • What negotiation styles and tactics will the contractor's negotiator likely use? • What pressures and constraints will affect the contractor's approach to negotiations?
Negotiation Plan • Draft a negotiation plan • The plan should include information such as: • Background • Issues & objectives • Review the plan with the negotiation team • Revise the plan as necessary • Define the role each team member will play in putting the plan into action • Priorities and positions • Approach
Bargaining Techniques
Aim High • Expectations influence behavior which influences the outcome of the bargaining session • You have a better chanceat success if you thinkyou will do well
Aim High(Cont) • Sellers who expect to receive more for their product generally receive a higher price • Pressures and limitations affect expectations • Develop positive assumptions • Have high expectations on price and non-price issues • Quality • Timely delivery • Long term relationship • Negotiating a price that is not fair and reasonable will likely result in a win/lose or lose/lose outcome
Leave Room to Compromise • Choose opening that allows compromise • State initial position below expected price • Contractors normally ask for more than what they expect • Based on one objective, the contractor will never fully understand your compromises Contractor expects compromise • When you fail to offer compromise, the negotiator's expectations are lowered • Never establish an unreasonable position just to give yourself room to compromise • Opening position should be your minimum position
Pressure the Contractor • Believe that there are unknown pressures • Identify specific pressure elements • Refer to potential alternatives: • Canceling and re-soliciting • Changing product requirements • Changing terms and conditions • Investing in new source development • Using in-house resources • Do not let artificial pressures increase the negotiating pressure • If contractor's negotiator is a company vice-president, it should not be any more stressful than if you were negotiating withany other salesman • Do not allow certifications adorning walls or on business cards intimidate you
Do Not Volunteer Weaknesses • Never volunteer information that would weaken your position • Respond to questions without telling falsehoods or volunteering information • Carefully word statements or, if needed, avoid a direct response to a direct question
Use Concessions Wisely • Do not appear overly generous or rush • Concede slowly and in small amounts • Concessions too large or given too quickly may: • Unnecessarily raise expectations • Give the impression that the concessions were not that important • Leave little room for further maneuvering • Link concessions with the spirit of compromise • Never make a concession without getting, or asking for, a concession
Use Concessions Wisely(Cont) • Problems with demands for equal concessions • Only equal if both are equally far from their objective • Once you get away from the issues, it may be impossible to return • Splitting the difference is a form of the equal-concession trap • Most often offered in price negotiations • No guarantee that the price will be fair and reasonable • Avoid repetitive splitting the difference
Say it Right • Sell yourself and your Ideas • Show politeness and cordiality • Think before you speak • Anticipate negative reactions • Never use provocative terms • Negotiate from strength • Do not use a first name or nickname if that the person might be offended • Keep it simple • Never personalize differences
Say it Right (Cont) • Project strength and confidence • Do not • Sound insincere, tentative, or overly eager • Chance slighting the other negotiator • Be cautious about expressing unrelated opinions • Be calm • Penalty for not saying it right • Irrevocable harm to the process • Might set an adversarial tone • The offended negotiatormight resist every offer
Satisfy Non-Price Issues • Most negotiations will not end in agreement unless the price & non-price issues are satisfied • Successful negotiators are able to identify the non-price needs • Common non-price issues: • Technical requirements • Data requirements • Contract start • Contract type • Contract financing • Delivery • Options • Furnishedproperty Non-Price Issues
Use the Power of Patience • Use patience to: • Increase the stress of contractor • Display resolve or firmness • Dissipate emotional feelings • Extra time may translate into thousands and even millions of dollars in concessions • The best deal for both sides takes time
Be Willing to Walk Away From or Back to Negotiations • Deadlock cannot always be avoided • Good negotiators are neither afraid to walk away nor too proud to return • Willingness to deadlock when a fair deal cannot be obtained is important • Deadlocks are frequently caused by personality conflicts • A walkout or even the threat of a walkout may be used to your advantage, but not without risk
Be Willing to Walk Away From or Back to Negotiations(Cont) • When a walkout appears eminent, consider your best alternative to negotiated agreement (BATNA) • Consider questions such as: • Is your position reasonable • What is your BATNA? • What is the contractor's BATNA? • How can you make the your position stronger? • Return from a walkout • Never walkout unless other alternatives appear more attractive • Remain open to returning to the negotiation table
Negotiation Success Factors that contribute to success in any negotiation always include: • The specific circumstances surrounding each negotiation • Skill of the negotiators • Motivation and fairness of each party
Negotiator Abilities The best negotiators exhibit the ability to: • Plan carefully • Gain management support • Effectively apply bargaining techniques • Communicate effectively • Tolerate conflict while searching for agreement • Project honesty • Foster team cooperation • Apply good business judgment
Negotiation Style Great Negotiators: • Attack the problem not each other • Focus on long-term satisfaction • Consider available alternatives • Base results on objective standards • Focus on positive tactics to resolve differences • Do not rely on deceptive behavior or bargaining ploys
Negotiation Style (Cont) • Emphasize the importance of a result • Remain positive during and after negotiation • Behavior during and after negotiation is often a primary influence on the other side's perception
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COMMENTS
Negotiation skills presentation. Negotiation helps us to meet our goals and objectives, to satisfy our needs and to resolve conflicts. Really in life everything is negotiable! Also, everyone negotiates and negotiations can take place almost anywhere.
Negotiation Defined Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute.
The document outlines key aspects of negotiation including defining interests rather than positions, preparing by understanding goals, alternatives and the relationship, and focusing on integrative rather than distributive negotiations to find win-win solutions.
We’ll consider the three phases of negotiation and the skills you need to become an effective negotiator. Types of Negotiations • Integrative negotiations are based on cooperation. Both parties believe they can walk away with something they want without giving up something important.
1. Review tools and strategies for improving the quality of our negotiation communications. 2. Discuss challenges/traps in negotiations communications. 3. See tools and challenges in action. Negotiate “to confer with another so as to arrive at the settlement of some matter” Merriam-Webster. MUTUAL GAINS / INTEGRATIVE NEGOTIATION.
Steps to Negotiate • Prepare • Completely and thoroughly advise all parties of strengths and weaknesses of the negotiation • Know who is leading Negotiations • Determine Alternative Approaches • Know your offeror’s position (if possible) • Develop strategies • Perform Execution.