IM NE6e C12

Chapter 12

Best Practices in Negotiation

Overview

In this final chapter we reflect on negotiation at a broad level by providing 10 “best practices” for negotiators who wish to continue to improve their negotiation skills.

Learning Objectives

1.      Ten best practices to improve negotiation skills.

I.       Be Prepared

A.    Negotiators who are better prepared have numerous advantages, including the ability to analyze the other party’s offers more effectively and efficiently, to understand the nuances of the concession-making process, and to achieve their negotiation goals.

B.     Preparation should occur before the negotiation begins so that the time spent negotiating is more productive.

C.     Good preparation means understanding one’s own goals and interests as well as possible and being able to articulate them to the other party skillfully.

D.    Good preparation includes being ready to understand the other party’s communication in order to find an agreement that meets the needs of both parties.

E.     Good preparation also means setting aspirations for negotiation that are high but achievable. Negotiators should prepare by understanding their own strengths and weaknesses, their needs and interests, the situation, and the other party as well as possible so that they can adjust promptly and effectively as the negotiation proceeds.

F.      Negotiators need to consider how these broad contextual factors will influence the negotiation.

II.    Diagnose the Fundamental Structure of the Negotiation

A.    Negotiators should make a conscious decision about whether they are facing a fundamentally distributive negotiation, an integrative negotiation, or a blend of the two and choose their strategies and tactics accordingly.

B.     Negotiators also need to remember that many negotiations will consist of a blend of integrative and distributive elements and that there will be distributive and integrative phases to these negotiations.

C.     There are also times when accommodation, avoidance, and compromise may be appropriate strategies.

III.  Identify and Work the BATNA

A.    The best alternative to a negotiated agreement (BATNA), is especially important because this is the option that likely will be chosen should an agreement not be reached.

B.     Negotiators need to be vigilant about their BATNA. They need to know what their BATNA is relative to a possible agreement and consciously work to improve the BATNA so as to improve the deal.

C.     Negotiators also need to be aware of the other negotiator’s BATNA and to identify how it compares to what you are offering.

D.    There are three things negotiators should do with respect to the other negotiator’s BATNA:

1.      Monitor it carefully in order to understand and retain your competitive advantage over the other negotiator’s alternatives;

2.      Remind the other negotiator of the advantages your offer has relative to her BATNA; and

3.      In a subtle way, suggest that the other negotiator’s BATNA may not be as strong as he or she thinks it is.

IV.  Be Willing to Walk Away

A.    Strong negotiators remember this and are willing to walk away from a negotiation when no agreement is better than a poor agreement or when the process is so offensive that the deal isn’t worth the work.

B.     It is important to continue to compare progress in the current negotiation with the target, walkaway, and BATNA and to be willing to walk away from the current negotiation if their walkaway or BATNA becomes the truly better choice.

V.    Master the Key Paradoxes of Negotiation

      Five common paradoxes that negotiators face:

A.    Claiming value versus creating value.

1.      Typically, the value creation stage will precede the value claiming stage, and a challenge for negotiators is to balance the emphasis on the two stages and the transition from creating to claiming value.

2.      Negotiators need to manage the transition tactfully to avoid undermining the open brainstorming and option-inventing relationship that has developed during value creation.

B.     Sticking by your principles versus being resilient to the flow.

1.      Effective negotiators are thoughtful about the distinction between issues of principle, where firmness is essential, and other issues where compromise or accommodation are the best route to a mutually acceptable outcome.

C.     Sticking with strategy versus opportunistic pursuit of new options.

1.       The challenge for negotiators is to distinguish phantom opportunities from real ones; developing the capacity to recognize the distinction is another hallmark of the experienced negotiator.

2.      Strong preparation is critical to being able to manage the “strategy versus opportunism” paradox.

D.    Honest and open versus closed and opaque.

1.      Negotiators face the dilemma of honesty: how open and honest should I be with the other party?

2.      The challenge of this paradox is deciding how much information to reveal and how much to conceal, both for pragmatic and ethical reasons.

E.     Trust versus distrust.

1.      Negotiators face the dilemma of trust: how much to trust what the other party tells them.

2.      Negotiators should remember that negotiation is a process that evolves over time. Trust can be built by being honest and sharing information with the other side, which hopefully will lead to reciprocal trust and credible disclosure by the other side.

VI.  Remember the Intangibles

A.    Intangibles frequently affect negotiation in a negative way, and they often operate out of the negotiator’s awareness.

B.     The best way to identify the existence of intangible factors is to try to “see what is not there.”

C.     Often negotiators do not learn what intangible factors are influencing the other negotiator unless the other chooses to disclose them. Negotiators can “see” their existence, however, by looking for changes in the other negotiator’s behavior from one negotiation to another, as well as by gathering information about the other party before negotiation begins.

D.    There are at least two more ways to discover intangibles that might be affecting the other.

1.      One way to surface the other party’s intangibles is to ask questions.

2.      A second way is to take an observer or listener with you to the negotiation.

E.     Negotiators also need to remember that intangible factors influence their own behavior.

VII.    Actively Manage Coalitions

A.    Negotiators should recognize three types of coalitions and their potential effects:

1.      Coalitions against you,

2.      Coalitions that support you, and

3.      Loose, undefined coalitions that may materialize either for or against you.

B.     It is important to recognize when coalitions are aligned against you and to work consciously to counter their influence.

C.     Strong negotiators need to monitor and manage coalitions proactively, and while this may take considerable time throughout the negotiation process it will likely lead to large payoffs at the implementation stage.

VIII.  Savor and Protect Your Reputation

A.    Starting negotiations with a positive reputation is essential, and negotiators should be vigilant in protecting their reputations.

B.     Rather than leaving reputation to chance, negotiators can work to shape and enhance their reputation by acting in a consistent and fair manner.

C.     Strong negotiators also periodically seek feedback from others about the way they are perceived and use that information to strengthen their credibility and trustworthiness in the marketplace.

IX.  Remember That Rationality and Fairness Are Relative

A.    People tend to view the world in a self-serving manner and define the “rational” thing to do or a “fair” outcome or process in a way that benefit themselves.

B.     Negotiators can do three things to manage these perceptions proactively.

1.      First, they can question their own perceptions of fairness and ground them in clear principles.

2.      Second, they can find external benchmarks and examples that suggest fair outcomes.

3.      Finally, negotiators can illuminate definitions of fairness held by the other party and engage in a dialogue to reach consensus on which standards of fairness apply in a given situation.

X.    Continue to Learn from the Experience

A.    The best negotiators take a moment to analyze each negotiation after it has concluded, to review what happened and what they learned.  We recommend a three-step process:

1.      Planning a personal reflection time after each negotiation.

2.      Periodically “taking a lesson” from a trainer or coach.

3.      Keeping a personal diary on strengths and weaknesses and developing a plan to work on weaknesses.

B.     This analysis should happen after every negotiation, however, and it should focus on what and why questions:

1.      What happened during this negotiation?

2.      Why did it occur?

3.      What did I learn?