How to negotiate with success October 2011

How to negotiate with success by Toronto Training and HR October 2011

3-4 Introduction to Toronto Training and HR 5-7 Preparing to negotiate 8-9 The negotiation formula 10-11 Core concerns of negotiation 12-18 Negotiating with the public sector 19-20 Pinpoint a strategy 21-22 Establishing price targets 23-24 Leaders and negotiations 25-29 Ethics and negotiating 30-34 Constraints and guidelines 35-37 Winning at auctions 38-40 Proposals 41-44 Win-win scenarios 45-46 Typical negotiation mistakes 47-48 Negotiating effectively 49-50 Drill 51-52 Conclusion and questions Contents

Introduction to Toronto Training and HR Toronto Training and HRis a specialist training and human resources consultancy headed by Timothy Holden 10 years in banking 10 years in training and human resources Freelance practitioner since 2006 The core services provided by Toronto Training and HR are: ,[object Object]

Training course delivery- Reducing costs ,[object Object]

Improving employee engagement & morale

Services for job seekers,[object Object]

Preparing to negotiate 1 of 2 THE OTHER PARTY’S POWER SOURCES Knowledge Competition Performance and reputation Patience

Preparing to negotiate 2 of 2 QUESTIONS TO ASK What is it that they want? What is important to the other side? Why are they willing to negotiate? What does the other side bring to the equation? What resources do they have?

The negotiation formula

The negotiation formula Recognizing conflict Stating claims Conceding points

Core concerns of negotiation

Core concerns of negotiation Autonomy or a person’s freedom to make decisions for himself Appreciation or having actions acknowledged Affiliation or being treated as a colleague Status or feeling that others respect one’s standing Having roles and activities that are fulfilling

Negotiating with the public sector

Negotiating with the public sector 1 of 6 POWER SOURCES Monopoly Privilege and immunity The public interest Protocol

Negotiating with the public sector 2 of 6 POWER TOOLS The power of precedent The power of “no surprises” The power of relationships

Negotiating with the public sector 3 of 6 USEFUL THIRD PARTIES Government affairs departments Lobbyists Lawyers PR experts Technical experts Other governments

Negotiating with the public sector 4 of 6 THE GOVERNMENT AS GHOST NEGOTIATOR To what extent does the government have an interest in our deal? How might the government intervene to protect its interest?

Negotiating with the public sector 5 of 6 PROTECT YOUR ORGANIZATION AGAINST CORRUPT OFFICIALS Research what is legal in the country or region where you will be negotiating If your company has a code of business ethics, offer it to your counterpart as part of your introductory material prior to or at the start of talks When faced with a demand for a bribe, explain that you respect your counterpart but that you would risk prosecution under the Foreign Corrupt Practices Act if you were to make illegal payments.

Negotiating with the public sector 6 of 6 PROTECT YOUR ORGANIZATION AGAINST CORRUPT OFFICIALS Try to deflect a demand for a bribe by making a donation to a local charity—as long as you can be sure that the payment reaches the intended destination. If corruption is pervasive within an organization, you may need to walk away from the deal. If it is not pervasive, try to involve more honest individuals in the negotiation process.

Pinpoint a strategy Anchoring Framing

Establishing price targets

Establishing price targets BEFORE THE NEGOTIATION An asking price, that as the starting point for negotiation, is the highest possible price that may be expected A price that would be extremely favourable A price that would be favourable A price below which the deal would be unacceptable

Leaders and negotiations

Leaders and negotiations Recognize that negotiation is not just an individual skill, but an organizational capability Specify the criteria that define a successful negotiation Embrace negotiation as a core capability Create opportunities—through coaching, training, and leadership development experiences—for your people to confront their own emotional barriers to conflict Recognize that negotiations are a potent source of feedback regarding strategy

Ethics and negotiating

Ethics and negotiating 1 of 4 IDENTIFY YOUR OWN ETHICAL LAPSES Creating value at the expenses of outsiders Stereotyping some, favouring others Ignoring a conflict of interest

Ethics and negotiating 2 of 4 IDENTIFY THE ETHICAL LAPSES OF OTHERS Overlooking behaviour that would harm us if exposed Excusing those who delegate unethical behaviour Judging outcomes rather than processes

Ethics and negotiating 3 of 4 GUIDELINES FOR MORE ETHICAL NEGOTIATIONS Weigh benefits achieved at the table against harms inflicted on outsiders Accept that we’re all susceptible to stereotypes, and don’t give favours to insiders Speak up against policies that implicitly promote or condone unethical behaviour When negotiating as an agent, try to align your incentives with your client’s

Ethics and negotiating 4 of 4 GUIDELINES FOR MORE ETHICAL NEGOTIATIONS Don’t excuse unethical behaviour that’s been delegated to another party Hold negotiators accountable for their decisions, not just their results

Constraints and guidelines

Constraints and guidelines 1 of 4 Never accept the first offer (regardless of how good you may feel about it). Go through a process to make the other side feel good about the final agreement. Always ask for something in return for any concession offered and make a “big deal” out of any concession. Never “gloat” over a concession given to you. Instead congratulate the other side for hard bargaining to make them feel good.

Constraints and guidelines 2 of 4 Never disclose your time requirements but find out their time constraints. When possible, invoke “The Power of the Pen” to record negotiation results. Play the “Reluctant” party by never appearing enthusiastic about trade-offs. Make the other party feel a win. Ask for far more than what you expect. Concessions will set it up for the other to win within your threshold. Apply flexibility to have a reason to continue.

Constraints and guidelines 3 of 4 Concentrate on the real interests. Do not react to emotional behaviour. Maintain a professional approach and stick to the real issues. Maintain a perspective. Don’t be greedy regardless of the power you may have. When you lack a power position, set up the concession to make the other party feel good. Do not just give away.

Constraints and guidelines 4 of 4 Negotiate small deals before large ones. Keep the option open to walk away. Deal with minimum acceptable, not ego! Express in writing. Written words are often more believable than verbal. Offer reasonable concessions up front then follow with smaller. Create the feeling of being pushed as far as you can go.

Winning at auctions 1 of 2 Determine what kind of asset is being auctioned Figure out if you have “an edge” Look forward and reason back

Winning at auctions 2 of 2 AVOIDING THE WINNER’S CURSE Analyzewhether the asset has a common-value element. If so, bid with caution. Assess your capabilities and compare them with those of other bidders. Before placing each bid, pause to consider how you would feel if you won the auction.

Proposals 1 of 2 Don’t overwhelm them Make several offers Be willing to be rejected Leverage the status quo Use social proof

Proposals 2 of 2 STRATEGIES FOR WINNING OFFERS Resist the temptation to offer an abundance of choices Issue a few slightly different but equivalent offers at the same time Make relatively aggressive offers to increase the appeal of moderate ones Rather than requiring others to act, set defaults that match your goals Demonstrate how others have benefited from your assets or services

Win-win scenarios 1 of 3 A win-lose approach focuses on obtaining power over the opposing party. Both parties treat the other as an enemy and try to use power to bully other side into a losing position. This is not so bad if you ‘win’ but at least 50% of all parties in a disputed negotiation lose. Sometimes everyone loses. A win-win approach focuses on good communication to develop more value, and hence the interests of both parties can be satisfied. Value negotiations focus on creating value and away from power. Focusing on gaining power will not guarantee value whereas creating value will.

Win-win scenarios 2 of 3 A MOMENTUM-BUILDING EXERCISE I start persuading you little by little by example, and leading by my own behaviour that you don’t have to fear me. Therefore, you don’t have to defend yourself because I’m not attacking you.

Win-win scenarios 3 of 3 A MOMENTUM-BUILDING EXERCISE Therefore you don’t have to resist and you don’t have to bring your power to the table because I’m not bringing mine. It’s not that we don’t have the power; we’re just not bringing it to the table. If we don’t have to fight over power, we can cooperate to create a valuable outcome for both of us.

Typical negotiation mistakes

Typical negotiation mistakes Lack of trust Value proposition is not understood Giving” without “Getting” Inability to check your emotions at the door Focus on Position vs. Outcome Lack of preparation

Negotiating effectively

Negotiating effectively Always ask Know what you want Prepare for the type of negotiating you will be doing Understand cultural differences Practice, practice, practice

How to negotiate with success October 2011

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