How to Use the Master Negotiators Preparation Form [MNPF]

One of the main values of preparation is determining, if in fact, negotiation is necessary or if there are any other courses of action that you can take to solve the problem. If negotiation is necessary, then being fully prepared will make you more like Master Negotiators who come to the table incredibly well prepared while their more amateur counterparts come to the table overly confident and under-prepared -- and it is much better to find out that you need to do more preparation before rather than during the negotiation. That said, no one would want to use the Master Negotiators Preparation Form (MNPF) for every negotiation they were in, as that would clearly be a great waste of time. In fact, for most negotiations, you may only need to fill in the interests, prize, options and BATNA sections in order to be as well prepared as necessary for the negotiation. For example, if negotiation is necessary and you dont have a good BATNA it can help put the importance of the negotiation into perspective. We should always be able to answer the question What will we do if we are unable to negotiate a suitable agreement? However, for your most important negotiations, not only will you want to fill the form in, you will want to go over the form with a trusted advisor(s). In fact you may even want to role-play the negotiation in order to be fully prepared. The use of the form will also help you to determine how many negotiations you may need to undertake in order to solve a problem. For example, sometimes you may have to negotiate with your boss in order to negotiate with a client. Identifying Your and the Other Partys or Parties Interests Identifying your and the other partys or parties interests is key to developing creative options and negotiating successfully. Positions are rigid and tend to be either your way or my way. While positions lead to escalation and stalemates, interests lead to creative solutions. Although identifying interests is integral to the negotiating process, one of the most common mistakes that negotiators make is not accurately or thoroughly identifying both parties interests. Interests answer the question why that particular issue is important to us. More specifically, interests are based on ones goals, expectations, aspirations, hopes, needs, and fears. Lets say that a contractor did some work on your home and you found the work less than fully satisfactory. Asking for a $400 refund would be an option and/or a position. Asking for fair compensation would be an interest. We know that fair compensation is an interest because it can be met in various ways such as a cash refund, the contractor could do additional work on the house, and/or the contractor could purchase things for us that we would need for the house at a discount, and/or the contractor could make a donation to our favorite charity.

2003, Brad McRae, McRae & Associates, Inc.

The Prize The Prize is the ultimate outcome you want from the negotiation. It is not the same as your interests, even your interests all lumped together. The prize can be at a concrete level, an abstract level, or both. For example, in the case of Andrews CD player, my concrete prize was his safety; the abstract prize is to enhance the relationship I have with my son. That is by having a creative, mutually acceptable outcome; he will feel freer to approach me with problems that will arise in the future. Also, in this particular negotiation, we had a robust outcome that can serve as a mental model of a creative solution that we can use in future negotiations. In a business, the Prize may be to become a Centre of Excellence. Therefore, you will negotiate much more proactively and purposefully by keeping this goal in mind. Options Options refer to options for a settlement at the negotiating table. Options are developed by brainstorming. The three rules for brainstorming are: 1) no criticism, 2) every option is worth considering, and 3) deciding which options are valid takes place only after the brainstorming session is completed. In many cases, seemingly unrealistic options are the catalyst for a creative and practical solution. The purpose of the Rule of Four is to generate a final solution that is robust and creative so that gains are maximized for both parties. There will also be times when neither party will be able to think of creative solutions. In cases like this, the parties can take a break from the table and/or ask for creative ideas from third parties. We have all had the experience when we thought a negotiation was hopeless, however, when we mentioned the issue that was deadlocking the negotiation to a colleague, friend or advisor, that person will come up with a creative solution that we may never have thought of in a million years. The major difference is that Master Negotiators are more likely to take timely breaks from the table and/or to ask for advice than their less successful counterparts. Standards/Objective Criteria Objective standards or objective criteria can make the negotiating process much less difficult by helping the parties look at the negotiation much more objectively. Lets suppose that you had a 1998 Honda Civic and you had decided to sell it privately and I wanted to buy it. Rather than pick a price out of thin air, we both could look up the retail value of the car and that would be one possible standard. We could also go to the classified section of our local newspaper and see what comparable cars were selling for, and/or we could go online and get an estimate of what the car was worth. And there are many other standards we could look at, such as the recommended selling price in books like Lemon Aid. These objective standards could help us determine a range in which the selling/purchase price of the car should reside. However, most sources have different prices depending on which options the car has and how good or poor shape the car is in. Therefore, many times the focus of the negotiation is how can we agree as to which 2003, Brad McRae, McRae & Associates, Inc.

standard or standards should be applied in this particular negotiation. Many negotiations can be more effectively and efficiently resolved once the parties can agree on external criteria or on a method or process to measure the potential cost savings to one or more parties. BATNA (Best Alternative To a Negotiated Agreement) Your BATNA is your walk away alternative. Your BATNA is what you will do if you cant reach agreement. One good way to put your BATNA into perspective is to imagine the worst case scenario. For example, suppose my spouse and I need to sell our house because my spouse has been transferred to another city. We then subsequently found and purchased the house of our dreams in the city we are moving to. Lets further assume that the bottom suddenly drops out of the housing market in the city in which we currently reside, and you, as an astute negotiator know we are desperate to sell our current home because we can not afford to pay mortgage, heat and insurance on two houses. You also know that we have not received any other offers on our current house and you make an offer that is substantially below the fair market value for our home. If I didnt have an alternative, you would be able to purchase the house at a great discount, but since we live across the street from the local university; my BATNA would be to rent the house until the housing market improved. However, just because you have a BATNA, does not mean that you should use it. If fact, if both partys BATNAs are clearly unattractive, you may have a WATNA. WATNA (Worst Alternative To a Negotiated Agreement) Your WATNA is a powerful technique to get the parties back to the table and bargain in good faith because the WATNA is a clearly unattractive outcome for all of the parties, and by helping the participants see how attractive it is to have a negotiated, mediated, or arbitrated outcome. Trade offs/Concessions Negotiations are often about trade offs and concessions. By writing down your trade offs/concessions you will be more likely to make sure that you have at least four options, it forces you to think of the correct priority in which you should offer your trade offs/concessions, and it protects you from putting offers on the table prematurely and/or being overly generous. For example, if I am negotiating with Mark, and we suddenly have a breakthrough in the negotiations because Mark puts a creative solution on the table, if I reward Mark by putting a concession on the table, and then realize that I was being too generous, it is very difficult to take that concession off of the table. Lastly, when you prepare with advisor(s), they may see a concession that you could make that would be of great benefit to the person(s) you are negotiating with and of little cost to

2003, Brad McRae, McRae & Associates, Inc.

you, or a trade off/concession that the other party(s) could make that would be of great benefit to you at little cost to your negotiation partner(s). What Type of Relationship would I like to have with my Partner during the Negotiation and long-term? The answer to this question will help us look at the negotiating process more proactively. And in fact, the more I study the negotiation process and Master Negotiators, the more long-term my outlook has become. In fact, one of the things that the Master Negotiators I interviewed said again and again, was to be very careful about burning our bridges because we never know when we will need to drive over that bridge again. One other expression that is relevant here is that, We can all learn to disagree without being disagreeable. We can enhance our relationship with our negotiating partner(s) by being courteous, respectful, listening attentively, and being open to persuasion. In fact one of the best ways to get the other party to be open is to be open to persuasion ourselves. What is My Partners Negotiation Style in This Particular Negotiation? Master Negotiators assess their partners negotiation style as early as possible in the negotiation. Diagnosing your partners negotiating style is critically important because you will then be able to chose your style, and the elements therein, in a more strategic and proactive manner than in a reactive manner. Muscle Level Muscle Level is how much power or force you need to bring to the negotiating table. There are two mistakes with muscle level: too much too soon and too little too late. Therefore one of the best things you can do is write down how much force or power you are going to use and the order in which you are going to use it. This is especially true if you find that you are getting angry. An example of writing down what you would do at each Muscle Level is: 1. Muscle Level I is a polite request: Id like you to let us know when you cant come to a steering committee meeting. 2. Muscle Level II is a request that is stronger in word choice, voice characteristics and body language: When you dont let us know that youre going to miss a meeting, we sometimes end up meeting without a quorum, which is useless. I need to know when you cant make a meeting. 3. Muscle Level III is a statement of consequences if the behaviour doesnt change: If you cant let us know when youll miss a meeting, we will have to ask you to resign from the committee.

2003, Brad McRae, McRae & Associates, Inc.

4. Muscle Level IV is the application of the consequences stated in Level III: Since you have not been keeping us informed about your attendance, I will have to ask you to leave the committee. (Negotiating and Influencing Skills: The Art of Creating and Claiming Value, 1998, pp 58-59) Note that by writing down what you will do at each Muscle Level, you are more likely to escalate consciously and pro-actively rather than unconsciously and reactively. One sign that you should call a time out in the negotiation is if you find that you are becoming overly angry. During the time out, you can write down what you would do at Muscle Level I, II, III, IV, etc. on the MNPF or on a separate piece of scrap paper. My Opening Statement Your opening statement is critical to the success of your negotiation for two reasons. First, your opening statement sets the tone and tenor for the entire negotiation. Secondly, 90% of the way a negotiation turns out depends on how it begins. It is for these reasons that both parties should prepare a good opening statement. For example, imagine that a private practitioner in staff training and development experienced a dispute with their client regarding the late cancellation of a course. He hopes to negotiate a settlement with the Director of Training as compensation for lost revenues/opportunities. Imagine now that you are that Director of Training. How would you respond to the following opening statements made by the trainer? Trainer: I have a problem with the late cancellation of the course, but enjoy teaching for your organization. Id like to talk about getting this problem resolved. Chances are you wouldnt respond very well to this negative approach. Thats because the dispute is framed as the foreground and the fact that you like teaching for the X corporation is in the background. Now what would your response be to this opening statement? Trainer: Thanks for making the time to see me today. I enjoy working for the X corporation because you are well organized, treat both myself and the participants with respect and as a result, I am free to concentrate on getting to know the participants and would like to discuss the late cancellation of the most recent course. This opening statement puts the working relationship with the X corporation in the foreground and the late cancellation in the background. In sum, what you chose to put in the foreground and the background and the specific and precise language that you use will go a long way in setting the tone and tenor of that negotiation. The reason that both parties want to carefully prepare their opening statements is that if the other party opens with an opening statement that sets a poor tone, you can then use your opening statement to set a better tone.

2003, Brad McRae, McRae & Associates, Inc.

The Master Negotiators Preparation Form

Interests Our Interests 1. 2. 3. 4. 1. 2. 3. 4. Their Interests

The Prize: The Ultimate Outcome from the Negotiation Our Prize Their Prize

Options at the Table Our Options 1. 2. 3. 4. 1. 2. 3. 4. Their Options

2003, Brad McRae, McRae & Associates, Inc.

Standards/Objective Criteria (Objective standards or objective criteria help the parties look at the negotiation much more objectively and make it easier to reach an agreement) 1. 2. 3. 4.

Offers Aspire to? (The best arrangement you could get) Content with? (Satisfactory) Live with? (Acceptable minimal settlement)

BATNA (Best Alternative To a Negotiated Agreement) Our BATNA Their BATNA

2003, Brad McRae, McRae & Associates, Inc.

Leverage Our Leverage Their Leverage

Possible Trade Offs/Concessions Our Trade Offs/Concessions Their Trade Offs/Concessions

Type of relationship I would like to have during and after the negotiation

2003, Brad McRae, McRae & Associates, Inc.

My Partners Negotiation Style is?

The style I will use in this negotiation is?

Muscle Level: The amount of Power or Force I will bring to the table 1. 2. 3. 4. Our Opening Statement

Dr. Brad McRae, President, McRae & Associates, Inc. 5880 Spring Garden Road, Suite 400, Halifax, NS, B3H 1Y1 Telephone: (902) 423-4680 Fax: (902) 484-7915 E-mail: brad@bradmcrae.com Website: www.bradmcrae.com 2003, Brad McRae, McRae & Associates, Inc. 9