BUILDING NEGOTIATION SKILLS

“Negotiation involves two or more parties with competing or conflicting interests or needs, working towards an agreement on how they will cooperate.” - Tillett

Negotiation is a process of finding a point of balance between your objectives and that of the other party.

“Negotiation can be defined as any form of direct or indirect communication whereby parties who have opposing interests discuss the form of any joint action which they might take to manage and ultimately resolve the dispute between them. A negotiator should advance the interests of the party that he or she represents in order to obtain an optimal outcome for that party.”

- Scottish Public Services Ombudsman

Characteristics of a Good Negotiator

• Assertive• Patient• Open-Minded• Careful Listener• Self-Disciplined• Creative• Flexible• Highly Ethical

• Persuasive• Decisive• Confident• Considerate• Prudent• Respect for Others• Ability to Handle Pressure

Factual Negotiator

Features• Knows all facts related to the issues• Asks factual questions• Ensures that no fact is left out• Provides information

Problem

Tendency to leave emotional issues aside while focusing on details and make the other party hostile

Relational Negotiator

Features• Establishes relationships with the other party• Builds trust• Is sensitive to the other party’s emotional issues• Perceives the position of the other party

Problem

Propensity to concentrate on building relationships and lose sight of the reason for negotiation

Intuitive NegotiatorFeatures• Able to proffer unexpected solution• Able to separate key issues from others• Visualizes implications of proposal• Accurately guesses the progress of negotiation• Sees the picture

Problem

This may be dangerous because of wildness and lack of discipline

Logical Negotiator

Features• Sets rules of negotiation• Develops an agenda• Argues logically• Adapts position to meet changing situation

Problem

Likely to see the process as being more important that content or outcome

The Lead Negotiator

This coordinates all the other roles and decides appropriate strategy to apply.

Negotiation Approaches• Competition: In this approach, a party just try to maximize

benefits accruable without consideration for the other. This is focused on win/lose.

• Collaboration: This approach is based on belief that it’s possible to reach a solution wherein both parties would derive benefit i.e. win/win.

• Avoidance: If a party identifies the matter at stake to be of low importance, it may decide to avoid negotiation, thus leading to lose/lose situation. This approach can be adopted to give room for further research or change of strategy.

• Accommodation: This involves giving concession to the other party. It may be viewed as Achilles' heel or benevolence.

• Compromise: In this case, both parties are expected to sacrifice some elements of their demands, in order to arrive at a middle ground.

Bargaining Styles

• Compromisers• Problem Solvers• Accommodators• Competitors• Avoiders

Nemawashi

To dig around a root before transplanting it

Applied as “groundwork laid inconspicuously in advance.

Naniwabushi Strategy

This comprises three parts as follows: Kikkake: General background of story Seme: Account of critical events Urei: Expression of pathos and mourning for

what happened

Seven Elements of Negotiation

Interests: What do the parties want? Options: What are likely areas of agreement? Alternatives: What if we don’t agree? Legitimacy: How persuasive is each party? Communication: Are both parties willing to discuss and

listen? Relationship: Are both parties ready to establish operational

relationship? Commitment: What’s the structure of commitment from both

parties.

Functions of Nonverbal Communication

Accent: Punctuating or drawing attention to a verbal message

Complement: Expressions/gestures that support but could not replace verbal message

Contradict: Expressions or gestures that convey meaning opposite to that of verbal message

Regulate: Expressions or gestures that control the pace or flow of communication

Repeat: A gesture or expression that can be used alone to send the same meaning as verbal message

Substitute: A nonverbal cue that replaces verbal message

Examples of Nonverbal Cues

Accent: Touching someone’s shoulder in empathy Compliment: Smiling in approval or frowning with

disdain Contradict: Reading paper while saying “I am

listening” Regulate: Looking confused by too much

information Repeat: A stern look or pointing along with a verbal

command Substitute: Nods and shakes of the head

Types of Nonverbal Cues

1. Facial expression

2. Eye behaviour

3. Posture

4. Gesture

5. Proxemics

6. Touch

7. Personal appearance

8. Vocal features of speech

Real Nonverbal Cues Facial Expression: Happiness, sadness, surprise, fear,

anger and disgust Eye Behaviour-Functions: Regulatory, monitoring,

cognitive and expressive Posture: Indicative of attention, involvement, relative

status and rapport Gestures: Speech related and independent Proxemics: Use space Touch: ‘of self’ indicates emotion, and ‘of others’ indicates

relationship Personal Experience: Indicators of personality, values

and lifestyle Vocal Features of Speech: Tone, stress, accent, loudness

and rate of speech

Common Signs of Deception During Negotiation

i. New body movements

ii. Touching of self/fidgeting

iii. Hesitation

iv. Blinking, eye shifting and dilation of pupils

v. Lack of spontaneity

vi. Speech errors

vii. High vocal pitch

viii. Negativity

Negotiation Process

• Prepare objectives and strategy• Discuss and exchange information• Propose solution• Bargain and review areas of concession• Conclude and draft agreement

Types of Power

Positional PowerInformation PowerControl of RewardCoercive PowerAccess to and Control of Agenda

Using Power in Negotiation

Be able to manipulate meaning and symbols Maintain a measure of flexibility Use personal power through confidence Be able to manipulate rewards Develop networks and alliances Know the area in which you intend to negotiate

“Leverage is having something that the other guy wants. Or better, need. Or best of all, simply cannot do without”

- Donald Trump

Three Positions for Decision Analysis

• Ideal Position

• Realistic Position

• Fallback Position

BATNA

The Best Alternative to a Negotiated Agreement (BATNA) provides more leverage for favourable positioning.

Identify BATNA through critical thinking, creative thinking and strategic thinking.

Approaches to Sales Negotiation

Transactional Approach: One party demands value and the other gives it up in a particular transaction.

Transformational Approach: Application of wide-ranging problem-solving techniques to surmount hitches in customer relationship, thus transforming vendor relationship to business partnership.

Sales Negotiation Process

- Elijah Ezendu, Negotiation

Identifying Buying Signal

i. Assumptive ownership

ii. Issuing instruction for delivery

iii. Concentrated attention to buying details

iv. Disappointment at lead time for possession

v. Looking intently at the product

vi. Asking questions about usage of product

Action during Sales Negotiation Be prepared for tactical response in form of flinch or silence Use open-ended questions Mention benefits the prospect would derive from product/service Don’t be hasty to fill pauses during sudden silence. Listen Be ready to change value proposition to confirm price concession Identify tracks towards agreement Conclude agreements from time to time Paraphrase client’s statements and demonstrate commitment

Action After Sales Negotiation

Do the following, if agreement is accomplished

1. State agreement verbally and in draft

2. Reinforce purchase decision of prospect/customer and express thankfulness.

Do the following, if no agreement is reached

1. Show appreciation to prospect/customer

2. Encourage the prospect/customer to try you next time.

English Auction

Dutch Auction

First-Price Sealed-Bid Auction

Vickery Sealed-Bid Auction

Auction

Auction • English Auction: In this case, the Auctioneer declares reserve

price and bidding would progress with increasing price. The last (highest bidder) wins and pays the highest valuation.

• Dutch Auction: This is characterized by a reducing bid price from a high opening bid announced by the Auctioneer. The first demand to match the descending bid price wins.

• First-Price Sealed-Bid Auction: Herein, the bids would be sealed and submitted during the bidding period; and at the resolution phase, the bids would be opened and the winner announced as the highest bidder.

• Vickery Sealed-Bid Auction: In this type of auction, the highest bidder wins at the second highest bidder’s price.

Negotiation Tactics & Ploys 1 Brooklyn Optician: This is a type of add-on ploy in which a

service/product would be ‘completely knocked down’ into components, and a prospective buyer ensnared unto a haggle circuit from one component to another. For example, “The palmtop is 180,000 Naira; if you want the ear piece, that’s 9,000 Naira; if you want the satellite control system, that’s just 15,000 Naira; there’s even a special bag, and if you want it, that’s only 5,000 Naira.”

Fait Accompli: It’s a ploy used for shifting power to the doer and raise the stakes, if counter sanctions are applied. For example, Military officers seize a town, then offer to negotiate.

Escalator Schedule: This is a formula for increasing an agreed share or salary in uncertain future income stream, if performance reaches a particular level. For example, an employer who agrees to escalate a worker’s entitlement from a 100,000 Naira to 150,000 Naira, if his performance level increases to 40 closed deals per month.

Padding: It’s a negotiating margin set by sellers, wherefore the padded price gives them room to tackle the bargaining instinct of a prospect/customer.

Negotiation Tactics & Ploys 2 Noah’s Ark: It’s a buyer’s pressure ploy used for moving a seller to

reduce the price of a particular product. For example, “You should sell at a lower price, others have offered better than that”.

Call Girl: This involves demanding for up-front payment. For example, “I must be fully paid before I come to site”.

Bad Publicity: Lure someone to think that if he obtains his goal and some people find out, he would be widely scorned or condemned. For example, “if your Boss finds out that you refused to endorse it, you would lose credibility and your career may run amuck.”

Quivering Quill: Pause exactly at the time of endorsing a deal, and demand for extra concession. For example, “Oh! If you include the laptop bag in the deal, I would just endorse the cheque.”

Faking: Deceive the other party to believe you are who you aren't. For example, “When I was in Cape town, I led a group of professionals to the mining office and convinced the Chief Executive to implement a change that increased the firm’s productivity.”

Negotiation Tactics & Ploys 3 Nibbling: Demanding for little things one after the other so much that a

lot would be collected. For example, “Bring a pen…..and a piece of paper……oh! Just come with cold water.”

Red Herring: Set-up a false trail to mislead the other party and keep him away from what you intend to hide. For example, “the seller of a second-hand car tells a prospect to inspect its interior, emphasizing it’s the only part that require refurbishing. Meanwhile, the engine had developed a fault which would become noticeable to a layman only after the vehicle must have been driven for some months.”

Trial Balloon: This involves putting forward a suggestion as ultimate solution, and see if the other party would accept it. For example, “Let’s install this particular software in your firm, I think it would improve your performance.”

Russian Front: On deciding what to offer to the other party, present it as a second option after telling them about the first option which would be described to evoke repulsion. For example, “ The AG9T is a big engine that demands crane to move it and its cost of usage is very high; the AB4X is computerized, finer, portable and its life cycle cost is very low.”

Price NegotiationPrice negotiation is a zero-sum game - the game theory jargon

signifying that what one party gains the other loses.

The most profitable strategies in price negotiation are as follows:

1) Form one-person-queue

2) Buyers should test quantity discounts, while sellers evaluate total revenue

3) Focus on cooperative relationship

4) Deploy blue ocean strategy

5) Use add-on ploys

6) Test sensitivity of the other party

7) Focus on win-win

8) Test interest of the other party

Impasse

In negotiation, if what a party offers is less than the least which the other party will accept, then impasse may arise, unless there’s change in the standpoint of one or both.

How to Break Impasse

1. Change the subject.

2. Brainstorm together.

3. Throw some wild and crazy idea on the table.

4. Change the form of the payment.

5. Handle the emotional subject of money as quickly as possible.

6. Change the members of the negotiating team.

Adapted from Michael Lee & Sensei Tabuchi, Black Belt Negotiating

Deadlock

This occurs when concessionary impasse strains the enabling interface between the parties and mutual interests wane.

Handling Price Deadlock

Pay a fraction in cash, the rest in kind Pay more now, then less next month Pay in another way Pay in U.S Dollars or Euro Pay a quarter now, then the rest next month Split the invoice across various budgets

Handling Deadlock Across the Issues

i. Amend the specification

ii. Alter the time structure of events by using Salami.

iii. Change the responsibilities

iv. Change the nature of the business

Deadlock Ploys

They are used for inducing fear of deadlock in another party. Examples are as stated below.

Introduction of phoney deadlines. Exhibit false temper. Become unavailable. Emphasize the dilemma of reaching an agreement. Accuse the other party of not being interested in agreement State final offer Express great pessimism Act as if you intend to go off in a huff.

Reason Versus Influence

Where a party resolutely refuse to understand or admit reason, then influence would be an alternative façade for progress.

Had your organization or department faced such situation?

How was it handled?

An Influencing Agenda For Potential Allies

IdentifyPotential

Ally

AnalysePotential

Ally’sInterests

Assess YourResourcesRelevant to

Potential Ally

Diagnose Your

Relationship with Potential

Ally

Select Influencing Approach

Execute and Monitor Your

Approach

- Gavin Kennedy, Influencing For Results

Goals of Lease Negotiation

• Gain reduction in rent, repairs, permission or allowances.

• Sustaining congenial relationship with the lessor

Strategies for Lease Negotiation

1. Emphasize existence of competition.

2. Using applicable information.

3. Enhancing collaboration by focusing on mutual benefits.

4. Take advantage of defects and demand for reduction .

5. Paint a picture of insufficient fund.

6. State whatever input you may need to bring into the equipment or house, using that as a ploy for reduction.

7. Establish lines of agreement systematically.

8. Identify areas you would readily concede and areas of no-concession. Then use areas of concession to gain areas of no-concession.

Basic Rules in Collective Bargaining Negotiations

• Seek common grounds• Use listening ability for indicating intention to

understand the other party.• Build your case in a logical sequence, gaining

agreement at each stage.• Use counter proposals when necessary for realigning

position.• Invite the other party to look at the problem from the

opposite perspective.• Avoid declaring that an area is non-negotiable.• Use analytical questioning technique to shift the other

party.

Pre-Negotiation Preparation in Collective Bargaining

Identify objectives in terms of keeping wage increases below level of productivity increases and within inflation rate.

Organize a Negotiation Team and clarify the roles of each member.

Conduct extensive research concerning economic impact of demands, comparative occurrence in the industry, and identify demands which are important to the other party as well as your core demands.

Initial response should be in writing A wide-range of alternatives should be invented A negotiation strategy should be adopted.

Dr Elijah Ezendu is Award-Winning Business Expert & Certified Management Consultant with expertise in HR, OD, Competitive Intelligence, Strategy, Restructuring, Business Development, Sales & Marketing, Interim Management, CSR, Leadership, Project & Programme Management, Cost Management, Outsourcing, Franchising, Intellectual Capital, eBusiness, Social Media, Software Architecture, Cloud Computing, eLearning & International Business. He holds proprietary rights of various systems. He is currently CEO, Rubiini (UAE) and Hon. President, Worldwide Independent Inventors Association. He functioned as Chair, International Board of GCC Business Council (UAE); Senior Partner, Shevach Consulting, Nigeria; Chairman (Certification & Training), Lead Assessor & Council Member, Institute of Management Consultants, Nigeria; Lead Resource, Centre for Competitive Intelligence Development; Lead Consultant, JK Michaels; Technical Director, Gestalt; Chief Operating Officer, Rohan Group; Director, Fortuna, Gambia; Director, The Greens; Director of Programmes & Council Member, Institute of Business Development, Nigeria; Member of TDD Committee, International Association of Software Architects, USA; Member of Strategic Planning and Implementation Committee, Chartered Institute of Personnel Management of Nigeria; Adjunct Faculty, Regent Business School, South Africa; Adjunct Faculty, Ladoke Akintola University of Technology, Nigeria; Editor-in-Chief, Cost Management Journal; Council Member, Institute of Internal Auditors of Nigeria. He holds Doctoral Degree in Management, Master of Business Administration and Fellowship of Several Professional Institutes in North America, UK & Nigeria. He is an author & widely featured speaker in workshops, conferences & retreats. He was involved in developing Specialist Master’s Degree Course Content for Ladoke Akintola University of Technology (Nig) and Jones International University (USA). He also works as Adjunct & Visiting Professor of Universities and holds Interim Management Assignments on Boards of Companies.

Thank You