The Art of Negotiating: T. Sivasankaran

The Art of Negotiating
T. Sivasankaran
Advesh Consultancy Services
Chennai India
tss@advesh.com
Mobile: 09790971951

12/03/09 Advesh Consultancy Services 1
M aster
y
Skill
K n owledge
A w areness

B A S I C S OF
N EG O T I A T I O N

◦ We all negotiate, all the time- at home, with friends, at office, in
public
◦ These negotiations can be aboutanything
◦ Negotiation is the most effective way of resolving conflicts and
securing agreement
◦ A two way discussion to agreeterms
◦ Conferring for the purpose of mutual agreement
◦ A process of discussion aimed at reaching agreement
◦ Establishing consensus amongst two or more parties

Negotiation Is
A dialogue between two or more parties, with
the intent of coming to amutually agreed
solution, because each party has something the other
wants.
A communication process between two or more

people in which they consider alternatives to
arrive at mutually agreeable solutions or
mutually satisfactory objectives

Setting Goals
Balancing Outcome and Relationships

SETTING GOALS
BATNA
RESERVATION PRICE
ZOPA

BATNA
Best
Alternative
To a
N egotiated
Agreement

WHAT IS BATNA?
How do the proposals match your
realistic alternative if you cannot come to
a deal?
The more attractive your BATNA is
compared with the proposals you
receive, the more POWER you have; the
less attractive your BATNA is compared
to the deal on offer, the less power you
have.
BATNA
Retain the existing supplier
Go to another supplier
Strike/Lockout
Not an immediaterequirement

DEVELOPING BATNA
List what you would do if you fail to reach an
agreement
Convert the most promising options into practical
choices.
Select the single best option; that is your BATNA
Compare your BATNA to all proposals
If an offer is better than your BATNA,consider
improving or accepting it
If an offer is worse than your BATNA, consider
rejecting it
If they will not improve their offer consider exercising
your BATNA
BATNA
 Know your BATNA
 Work with all the BATNAs
 Be ready to walk

BATNA
Developed
by
Roger Fisher
and
William Ury

RESERVATION PRICE
Reservation Price
is
the least favourable point
at which
one will accept
a deal

ZOPA
ZONE OF POSSIBLE AGREEMENT
ZOPA is the area or range in which a

deal that satisfies both parties can take
place.
It is the set of agreements that potentially

satisfy both parties.

EXAMPLE
Sellers Buyers
Expectation Expectation

BATNA Exercise 1
You have agood motor cycle which is 4
years old. It gives good mileage. However
you want to replace it with anew one.
You have Rs 30000 cash in hand You
want the balance to be arranged thru
loan
You have 12% interest in your mind.
The financier is asking for 15%
What is your BATNA?
BATNA EXERCISE 3
You are attending an interview for change
of job. You are in salary negotiation stage.
You are concerned about your child’s
education. Currently you are on a
transferable job.You are demanding 30%
increase. The new company is offering the
same salary.
What is your BATNA?

BALANCING OUTCOME
A N D RELATIONSHIPS
DISTRIBUTIVE NEGOTIATION
INTEGRATIVE NEGOTIATION

Distributive Negotiation
A negotiation in which the parties
compete over the distribution of afixed
sum of value.
Key question here is “Who will claim the
most value?”
A gain by one party is at the expense of
the other.
Win-lose situation

Integrative Negotiation
A negotiation in which the parties
cooperate to achieve the maximum
benefits by integrating their interests into
an agreement.
These deals are about creating value and

claiming it.
Win-win situation.

STAGES OF NEGOTIATION
Phase 1: Preparation
Phase 2: Interacting
Phase 3:Agreement

Negotiation Process
Closing Preparation
Bargaining Opening

PREPARATION

PREPARATION
Understanding
one’s own position
and
interests of the other party or parties
the issues at stake,
and
alternative solutions.
PREPARATION
1. Consider What agood outcome would be
for you and the other side.
2. Identify potential value creation

opportunities
3. Identify your BATNA and Reservation Price

and do the same for the other side.
4. Shore up your BATNA

PREPARATION
1. Anticipate the Authority Issue
2. Learn All you can About the Other Side
3. Prepare for Flexibility in the Process
4. Gather External Standards and Criteria
Relevant to Fairness
5. Alter the process in your favour

CRITICAL ELEMENTS/DIMENSIONS OF
NEGOTIATION
Knowledge or information
Time or Deadline Pressure
Strength or Power
All the above are inter-twined

INFORMATION
More information you have, the better
you will be able to negotiate
Information and facts help you to
generate alternatives, strategies and
convince the other party
Information about the other party,
market information, trends, technologies
Published Standards, guidelines, data
equip you to put your points effectively
TIME
Time plays acritical role in Negotiation
Pareto’s Law 80/20
80% of results are generally agreed upon
in the last 20% of the time
Time / Deadline pressure weakens you /
builds tension

POWER / STRENGTH
The ability to influence / control the group and
the events
Besides the authority of your position,
knowledge is your strength
The balance of power keeps shifting from one
side to the other during the negotiation
process
Negotiation will end when -The balance of
power shifts totally to one side – aWin-Lose
situation
When the balance of powerTheisArtshared
of Negotiating
equally–
aWin-Win situation 12/03/09 Advesh Consultancy Services 31
INTERACTING

INTERACTING
Getting the other side to the Table
Getting off to agood start
Power of Anchoring
Using Concessionarymoves
Tactics for Distributive negotiation
General Tactics

Getting the other side to the Table
Offer incentives
Put aprice for on the status-quo
Mobilise Support

Express respect for the other side’s

experience and expertise
Frame the task positively, asajoint
endeavour
Emphasise your openness to the other
side’s interests and concerns.
Start with the agenda

Some tips
“Breaking Bread” Have coffee, snacks or
light drinks available.
Use small talk to dispel tension
If the other side is very formal, don’t

speak casually. If the other side is
decidedly informal, speak in amore casual
way.
H IG H
A CCOM M OD A TE COLLABORATE
Problem solved creatively, aiming for win-win
Build friendly relationship
Characteristics:
Characteristics:
Search for commoninterests
Promote harmony
Problem-solving behaviours
Avoid substantive differences
Recognising both parties’ needs
Give into pressure to save relationship
Synergistic solutions
Place relationship above fairness of C O M P R O M IS E
C O N C E R N FOR RELATIONSHIP
Win-win becomes the main purpose of the

the outcomes negotiator
Split the difference
Characteristics:
Meeting half way
Look for trade offs
AVOID Accept half-way measures D EFEA T
Take whatever you can get/Inaction
Be a winner at any cost/Competitive
Aims to reduce conflict rather than problem solve
Characteristics:
synergistically Characteristics:
Feeling of powerlessness Win-Lose competition
Indifference to the result
Pressure/Intimidation
Resignation, surrender
Adversarial relationships
Take what the other party is willing to
Defeating the other becomes a goal for the
concede
negotiator
Withdraw & remove = behaviour of
negotiator
C O N C E R N FOR SU B ST AN C E
LO W H IG H

Distributive Negotiations
Win-Lose Negotiations
Anchoring is an attempt to establish a
reference point around which
negotiations will make adjustments.
When should you anchor
Counter anchoring
Be prepared for concessionary moves

Integrative Negotiations
Slower and more explorative opening
Don’t start with numbers.
Making agood start is critical
Ask open ended questions Probe the other side’s willingness
to trade off one thing for the other.
Inquire about the other party’s underlying interests
Listen closely
Be an active listener
Express empathy
Work to create atwo-way exchange of information
Continue relationship building efforts
Refrain from personal attacks.
Maintain asense of humour

The Art of Listening

N O N V ER B A L
BEHAVIOUR
What is going on
in the inside
shows
on the outside

Face and Head
Broken Eye Contact(Hide)
Looking pat you(Bored)
Piercing(Angry)
Steady(Honest)
Head Turned slightly(Evaluating you)
Tilted Head(Uncertain about what you said)
Nodding(In agreement)
Smiling(Confident)

Arms and Hands
Arms folded tightly(not receptive)
Arm over the back of the chair(need for
dominance or negative reaction)
Open palms(Positive)
Hands clasped behind head(Need for
dominance)
Steeling of the fingers(Need to control
negotiation)
Hand wringling(Nervousness)
Self touching(General nervousness)
Legs
Crossing your legs has adevastating
effect
Out of 2000 videotaped sales meetings,
not one sale was made by people who
had their legs crossed
Source How to Read aPerson like a
Book by Gerard I. Nirenberg and Henry
H. Calero

Dominance/Power
Making piercing eyecontact
Putting hands behind head or neck
Placing hands on hips
Standing while counterpart is seated
Steepling

Submission/Nervousness
Fidgetting
Making minimum eye contact
Touching hands to face , hairetc
Using briefcase to “guard” body
Clearing throat

Disagreement/Anger
Getting red
Pointing afinger
Squinting
Turning body away
Crossing arms or legs

Boredom and Lack of Interest
Failing to make eye contact
Playing with objects
Staring blankly
Picking at clothes
Looking at watch/door

Uncertainty/Indecision
Cleaning glasses
Looking puzzled
Putting fingers to mouth
Biting lip
Tilting head

Suspicion/Dishonesty
Touching nose while speaking
Covering mouth
Avoiding eye contact
Crossing arms/legs
Moving body away

Evaluation
Nodding
Maintaining good eye contact
Tilting head slightly
Stroking chin
Touching index finger to lips

Confidence, Cooperation and
Honesty
Leaning forward
Keeping arms and palms open
Maintaining great eye contact
Placing feet flat on floor
Sitting with legs uncrossed
Smiling

Challenges & Obstacles

TACTICS REGARDING PRICE
Should I ever state my acceptable range?
Should I ever tell the other side my

bottom line?
Suppose that the other side opens with

an incredibly unreasonable number,
should I counter with an equally
unreasonable number, or decline to
counter at all? The Art of Negotiating
TACTICS REGARDING PROCESS
Is it acceptable to make two moves at a
time?
Is it smart or fair to bluff?
In acomplex deal, is it better to reach
agreement issue by issue or wait until the
end?
Is it better to deal with difficult or easy
issues first?

TACTICS REGARDING
PEOPLE
Collaborative negotiator vs. positional hard
bargainer?
How should I react if the other side seeks to
change something in its offer after a deal has
been reached?
What should I do when the negotiator on the
other side has atemper tantrum?
I don’t believe in what the other side says.
Is it essential to negotiate face to face?
How should I react when the other side
challenges my credentials, status or authority to
make adeal?

C LO SU R E

Closing
Be Prepared to Concede
Begin with those of Low
Priority and seek High
Priority Items
Never Concede on More
than possible by your
Brief
Use your Concessions
Wisely
Don’t just give these away
expect and receive
something in return

Being Confident
Being Prepared
Being Willing to WalkAway

Convince
Collaborate
Create


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