PRINCIPLED NEGOTIATION1. Introduction: the basic conceptsPrincipled negotiation is the name given to the interest-based approach to negotiation set out in the best-known conflict resolution book, Getting to Yes, first published in 1981 by Roger Fisher and William Ury. The book advocates four fundamental principles of negotiation: 1) separate the people from the problem; 2) focus on interests, not positions; 3) invent options for mutual gain; and 4) insist on objective criteria. Separating the people from the problem means separating relationship issues (or "people problems") from substantive issues, and dealing with them independently. People problems, Fisher, Ury and Patton observe, tend to involve problems of perception, emotion, and communication. (1991, p. 22) Perceptions are important because they define the problem and the solution. While there is an "objective reality," that reality is interpreted differently by different people in different situations. When different parties have different understandings of their dispute effective negotiation may be very difficult to achieve. (This is what we have been calling framing problems.) Fisher, Ury and Patton suggest seven basic strategies for handling problems of perception. (Click here for a description of these strategies.)People problems also often involve difficult emotions fear, anger, distrust and anxiety for example. These emotions get intertwined with the substantive issues in the dispute and make both harder to deal with. Fisher, Ury and Patton suggest five tactics for disentangling and defusing emotional problems in the negotiation process. (Click here for a description of these tactics.)Fisher, Ury and Patton consider communication problems to be "people problems" as well. They list three types of communication problems. First, disputants may not be talking to each other. While their comments are formally addressed to the opponent, they are actually addressing some outside audience. They are grandstanding, or playing to the crowd. A second communication problem arises when parties are not listening to each other. Rather than listening attentively to the opponent, parties may instead be planning their own response, or listening to their own constituency. Finally, even when parties are both listening and talking to each other, misunderstandings and misinterpretations may occur. Fisher, Ury and Patton suggest techniques for minimizing communication problems. (Click here for a description of these techniques.)Negotiating about interests means negotiating about things that people really want and need, not what they say that want or need. Often, these are not the same. People tend to take extreme positions that are designed to counter their opponents positions. If asked why they are taking that position, it often turns out that the underlying reasons--their true interests and needs--are actually compatible, not mutually exclusive. By focusing on interests, disputing parties can more easily fulfill the third principle--invent options for mutual gain. This means negotiators should look for new solutions to the problem that will allow both sides to win, not just fight over the original positions which assume that for one side to win, the other side must lose.The fourth rule is to insist on objective criteria for decisions. While not always available, if some outside, objective criteria for fairness can be found, this can greatly simplify the negotiation process. If union and management are struggling over a contract, they can look to see what other similar companies have agreed to use as an outside objective criteria. If people are negotiating over the price of a car or a house, they can look at what similar houses or cars have sold for. This gives both sides more guidance as to what is "fair," and makes it hard to oppose offers in this range.Lastly, Fisher, Ury, and Patton counsel negotiators to know what their alternatives are. If you dont know what your alternatives to a negotiated agreement are, you might accept an agreement that is far worse than the one you might have gotten, or reject one that is far better than you might otherwise achieve. For this reason, Fisher, Ury, and Patton stress the importance of knowing and improving your BATNA before you conclude negotiations. (Click here for more information on BATNAs.)In Getting to Yes, Fisher, Ury, and Patton argue that almost all disputes can be resolved with principled negotiation. They reject the notion that some conflicts are inherently win-lose or that positional bargaining is ever a superior approach. Other theorists, however, disagree--as do we. Principled negotiation is an excellent tool to use in many disputes, but we have found that it needs to be supplemented with other approaches in the case of intractable conflicts. It also is more attuned to U.S. and Western European cultures which emphasize rational cost-benefit analysis, and de-emphasize the importance of relationships and emotions. Cultures which see relationship issues as central aspects of the conflict may find principled negotiation less useful. (Click here to read about the limits to principled or interest-based negotiation.) Elements of principled negotiation: 1. Separate the people from the problem check the personalities at the door this is not personal; 2. Focus on interests rather than positions your position may be you want a $10K salary increase but your interest is in fair compensation; 3. Generate a variety of options before settling on an agreement this may even result in growing the deal; 4. Insist that the agreement be based on objective criteria ie. criteria that are measurable with the parties responsible and accountable.

There are 3 phases to successful win-win negotiating: Phase 1: Before the negotiation: You cant win if you dont play! This phase is part of the science of negotiating this is the preparation and planning step when you: Gather the facts and do the math; Do your SWOT analysis and consider the other partys interests as well; Anticipate the other partys issues and style; Identify your dealbreakers so that you know what you cant live without and if the deal goes there, youll be prepared to walk away.

Phase 2: During the negotiation: If you want something, ASK! This phase is the art of negotiating: Set the tone a principled negotiator is fair, honest, creative, collaborative; Explore underlying needs including actively listening for facts and reasons behind the other partys interests so you can try to develop creative alternatives without losing the win-win focus; Be prepared to refine and craft an agreement listen for new ideas, think creatively to handle conflict, build a cooperative environment; After reviewing and recapping the issues, formalize the agreement with a written contract.

Phase 3: After the negotiation: Youve made your bed, now youll have to lie in it! This phase is the post-mortem where we return to the science of negotiating weve learned something from the quality assurance movement: Review the negotiation with your team to identify lessons learned on how to achieve a better outcome; Ask what went well? and What could be improved for the next time?

To conclude, in the art and science of win-win principled negotiating, the product of the negotiation isnt a document; its the value produced once the parties have done what they agreed to do. Negotiators who understand that the outcome is what matters prepare differently than deal makers do. They dont ask: What might they be willing to accept? but rather How do we create value together?

References: K. G. Allred andIntroductionNegotiation can be defined as: "To communicate with theobjective of reaching an agreement by means, where appropriate,of compromise."CIPS believes that negotiation is a key skill of the purchasingand supply management professional. The ability to negotiateeffectively is so fundamental, that without it, an effectivepurchasing and supply management service cannot be provided.Although some people have a natural flair for negotiationit is a skill which not only needs to be learned throughprofessional training, coaching and experience but requiresrefresher training at, at least, five year intervals.Purchasing and supply management professionals shouldundertake, or lead, any significant negotiation with suppliersrequired by their organisation. Where someone else is toundertake a negotiation, it is the responsibility of the purchasingand supply management professional to ensure thatthey are properly trained and prepared for the experience.CIPS believes there are reputational risks for the organisationwhen an untrained individual undertakes a complex commercialnegotiation. Negotiation should be part of most procurementexercises especially those which are of high value, highrisk or are complex. In some cases, negotiation with approvedsuppliers is preferable to inviting bids such as whenthe requirement is difficult to specify.CIPS Positions on Practice CIPS views, opinions and beliefs are stated throughout thedocument; however the broad practice statements whichunderpin the text are as follows: CIPS firmly believes that negotiation is a key skill requirementfor purchasing and supply management professionalsand is one moreover which requires refresher trainingon at least a five -yearly basis CIPS believes that purchasing and supply managementprofessionals should be involved either by leading, supportingor facilitating, on behalf of their organisation, thestrategy and process for any negotiations with suppliers CIPS advocates the use of cross-functional teams whensignificant negotiations are involved; these should be ledby purchasing and supply management professionals CIPS emphasises the criticality of planning the negotiationwhich should include, for instance researching the background,identifying roles, setting objectives, factors fortrade, potential concessions and a fall back position orposition at which the buying organisation is prepared towalk away from the negotiation. In the negotiation process, CIPS believes that ideally purchasingand supply management professionals should aimfor win-win outcomes (which as explained below - neednot necessarily represent ideal outcomes) for both parties.Advantages and Disadvantages ofNegotiationThe advantages of negotiation include: It is a relatively expedient method of obtaining a value-formoneysolution It is a useful method of maintaining value for money in asingle source situation i.e. where there is no real competition It is useful when the requirement is difficult to specify It is relatively inexpensive to undertake It is flexible and not prescriptive It should be confidentialUndertaking NegotiationPurchasing and supply management professionals often leadcross-functional teams when undertaking complex procurementnegotiations. It is imperative that those parties undertakingthe negotiation are empowered to make decisions soas to bring discussions to an effective conclusion.CIPS encourages purchasing and supply management professionalsto understand and appreciate the importance of theuse of emotion and body language in negotiations, in orderthat all messages given directly or indirectly by the supplier(s)can be interpreted appropriately.To be successful, the purchasing and supply managementprofessional should ensure that the negotiation is properlyplanned. The extent of the planning should be a function ofvalue and risk. The planning process should include: A diagnosis of the situation An accurate appraisal of the buying organisation's expectations An assessment of both parties' bargaining power The setting of objectives for the negotiation e.g. the ideal,realistic and fall back positions need to be identified andagreed The development of a strategy for the negotiation i.e. approach,style, communication, concessions, baseline evenvenue e.g. a neutral venue may prove more appropriatethan the offices of one of the parties to the negotiation The factors to be traded need to be identified i.e. thosethings which the buying organisation can trade for thingsthey would like to obtain from the supplier and thosethings which can be conceded etc. It is advisable to try toanticipate the suppliers' perception of such factors.Tel +44(0)1780 756777 Fax +44(0)1780 751610 Email ckw@cips.org Web www.cips.orgDuring the negotiation, the strategy must be implementedand in addition: The needs of both parties should be explored Movement needs to be maintained Objectives may need to be reviewed Tactical ploys may need to be used Concessions may need to be given from both sides Settlement needs to be recognised and agreed Closure needs to happen The agreement needs to be documentedIssues to ConsiderCIPS believes that purchasing and supply management professionalsshould aim for a mutually acceptable solution forboth parties where appropriate. There will rarely be occasionswhen the benefits of the negotiation are equally balancedbut if suppliers feel they have "lost", this may adverselyaffect their attitude to the relationship making anynegotiated gains by the purchasing and supply managementprofessional short-term triumphs.In some cases e.g. when negotiating with an ad-hoc supplier,as opposed to one with whom the buying organisation is tohave a longer term relationship, it is appropriate for thebuyer to drive as hard a bargain as possible.Negotiation is particularly difficult where there is little competitionin the marketplace. This strengthens the supplierposition and correspondingly weakens that of the buyer. Thepurchasing and supply management professional must identifyalternatives as part of the negotiation strategy and have aposition with which they are prepared to walk away from thenegotiation (for this position Fisher and Ury coined the term"Best Alternative to a Negotiated Agreement or BATNA".ConclusionNegotiation is a skill which must be learned, and refreshedperiodically. Purchasing and supply management professionalsshould be responsible for determining when negotiationswith suppliers are appropriate and ensuring that these areundertakeWhat BATNAs AreBATNA is a term coined by Roger Fisher and William Ury in their 1981 bestseller, Getting to Yes: Negotiating Without Giving In.[1] It stands for "Best ALTERNATIVE TO a negotiated agreement." Said another way, it is the best you can do if the other person refuses to negotiate with you--if they tell you to "go jump in a lake!" or "Get lost!" So it is not necessarily your ideal outcome--unless your ideal outcome is something you can get without the cooperation of the other person. It is the best you can do WITHOUT THEM.

BATNAs are critical to negotiation because you cannot make a wise decision about whether to accept a negotiated agreement unless you know what your alternatives are. If you are offered a used car for $7,500, but there's an even better one at another dealer for $6,500--the $6,500 car is your BATNA. Another term for the same thing is your "walk away point." If the seller doesn't drop her price below $6,500, you will WALK AWAY and buy the other car.

Your BATNA "is the only standard which can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept."[2] In the simplest terms, if the proposed agreement is better than your BATNA, then you should accept it. If the agreement is not better than your BATNA, then you should reopen negotiations. If you cannot improve the agreement, then you should at least consider withdrawing from the negotiations and pursuing your alternative (though the relational costs of doing that must be considered as well).Having a good BATNA increases your negotiating power. If you know you have a good alternative, you do not need to concede as much, because you don't care as much if you get a deal. You can also push the other side harder. If your options are slim or non existent, the other person can make increasing demands, and you'll likely decide to accept them--because you don't have a better option, no matter how unattractive the one on the table is becoming. Therefore, it is important to improve your BATNA whenever possible. If you have a strong one, it is worth revealing it to your opponent. If you have a weak one, however, it is better to keep that detail hidden.Guy Burgess and Heidi Burgess have adapted the concept of BATNA slightly to emphasize what they call "EATNAs"-- estimated alternatives to a negotiated agreement" instead of "best alternatives." Even when disputants do not have good options outside of negotiations, they often think they do. (For example, both sides may think that they can prevail in a court or military struggle, even when one side is clearly weaker, or when the relative strengths are so balanced that the outcome is very uncertain.) Yet, perceptions are all that matter when it comes to deciding whether or not to accept an agreement. If a disputant thinks that he or she has a better option, she will, very often, pursue that option, even if it is not as good as she thinks it is.BATNA and EATNAs also affect what William Zartman and may others have called "ripeness," the time at which a dispute is ready or "ripe" for settlement.[3] When parties have similar ideas or "congruent images" about what BATNAs exist, then the negotiation is ripe for reaching agreement. Having congruent BATNA images means that both parties have similar views of how a dispute will turn out if they do not agree, but rather pursue their other rights-based or power-based options. In this situation, it is often smarter for them to negotiate an agreement without continuing the disputing process, thus saving the transaction costs. This is what happens when disputing parties who are involved in a lawsuit settle out of court, (which happens in the U.S. about90 percent of the time). The reason the parties settle is that their lawyers have come to an understanding of the strength of each sides' case and how likely each is to prevail in court. They then can "cut to the chase," and get to the same result much more easily, more quickly, and less expensively through negotiation.On the other hand, disputants may hold "dissimilar images" about what BATNAs exist, which can lead to a stalemate or even to intractability. For example, both sides may think they can win a dispute if they decide to pursue it in court or through force. If both sides' BATNAs tell them they can pursue the conflict and win, the likely result is a power contest. If one side's BATNA is indeed much better than the other's, the side with the better BATNA is likely to prevail. If the BATNAs are about equal, however, the outcome is much less certain. If the conflict is costly enough, eventually the parties may come to realize that their BATNAs were not as good as they thought they were. Then the dispute will again be "ripe" for negotiation.The allure of the EATNA often leads to last-minute breakdowns in negotiations, particularly when many parties are involved. Disputants can negotiate for months or even years, finally developing an agreement that they think is acceptable to all. But then at the end, all the parties must take a hard look at the final outcome and decide, "is this better than all of my alternatives?" Only if all the parties say "yes," can the agreement be finalized. If just one party changes his or her mind, the agreement may well break down. Thus, knowing one's own and one's opponents' BATNAs and EATNAs is critical to successful negotiation

Additional insights into BATNA are offered by Beyond Intractability project participants.

Determining Your BATNABATNAs are not always readily apparent. Fisher and Ury outline a simple process for determining your BATNA:1. develop a list of actions you might conceivably take if no agreement is reached;2. improve some of the more promising ideas and convert them into practical options; and3. select, tentatively, the one option that seems best.[4]BATNAs may be determined for any negotiation situation, whether it be a relatively simple task such as finding a job or a complex problem such as a heated environmental conflict or a protracted ethnic conflict.Fisher and Ury offer a job search as a basic example of how to determine a BATNA. If you do not receive an attractive job offer by the end of the month from Company X, what will you do? Inventing options is the first step to determining your BATNA. Should you take a different job? Look in another city? Go back to school? If the offer you are waiting for is in New York, but you had also considered Denver, then try to turn that other interest into a job offer there, too. With a job offer on the table in Denver, you will be better equipped to assess the New York offer when it is made. Lastly, you must choose your best alternative option in case you do not reach an agreement with the New York company. Which of your realistic options would you really want to pursue if you do not get the job offer in New York?More complex situations require the consideration of a broader range of factors and possibilities. For example, a community discovers that its water is being polluted by the discharges of a nearby factory. Community leaders first attempt to negotiate a cleanup plan with the company, but the business refuses to voluntarily agree on a plan of action that the community is satisfied with. In such a case, what are the community's options for trying to resolve this situation? They could possibly sue the business based on stipulations of the Clean Water Act. They could contact the Environmental Protection Agency and see what sort of authority that agency has over such a situation. They could lobby the state legislature to develop and implement more stringent regulations on polluting factories. The community could wage a public education campaign and inform citizens of the problem. Such education could lead voters to support more environmentally-minded candidates in the future who would support new laws to correct problems like this one. It might also put enough public pressure on the company that it would change its mind and clean up voluntarily.In weighing these various alternatives to see which is "best," the community members must consider a variety of factors. Which is most affordable and feasible? Which will have the most impact in the shortest amount of time? If they succeed in closing down the plant, how many people will lose their jobs?These types of questions must be answered for each alternative before a BATNA can be determined in a complex environmental dispute such as this one.BATNAs and the Other SideAt the same time you are determining your BATNA, you should also consider the alternatives available to the other side. Sometimes they may be overly optimistic about what their options are. The more you can learn about their options, the better prepared you will be for negotiation. You will be able to develop a more realistic view of what the outcomes may be and what offers are reasonable.There are also a few things to keep in mind about revealing your BATNA to your adversary. Although Fisher and Ury do not advise secrecy in their discussions of BATNAs, according to McCarthy, "one should not reveal one's BATNA unless it is better than the other side thinks it is."[5] But since you may not know what the other side thinks, you could reveal more than you should. If your BATNA turns out to be worse than the opponent thinks it is. Then revealing it will weaken your stance.BATNAs and the Role of Third PartiesThird parties can help disputants accurately assess their BATNAs through reality testing and costing. In reality testing, the third party helps clarify and ground each disputing party's alternatives to agreement. S/he may do this by asking hard questions about the asserted BATNA: "How could you do that? What would the outcome be? What would the other side do? How do you know?" Or the third party may simply insert new information into the discussion...illustrating that one side's assessment of its BATNA is likely incorrect. Costing is a more general approach to the same process...it is a systematic effort to determine the costs and benefits of all options. In so doing, parties will come to understand all their alternatives. If this is done together and the parties agree on the assessment, this provides a strong basis upon which to come up with a negotiated solution that is better than both sides' alternatives. But if the sides cannot come to such an agreement, then negotiations will break down, and both parties will pursue their BATNA instead of a negotiated outcome. The Best Alternative to a Negotiated Agreement (BATNA)i BATNAs are elegantly simple in concept, but notoriously difficult to execute. A BATNA is the option a negotiating party might execute should the negotiations fail. The key is that the BATNA must be executed without the involvement of the opposite. A BATNA is not the negotiations bottom line a BATNA is something you may wish to do if an acceptable bottom line cannot be achieved during the negotiations. You should always know and update your BATNA and always estimate (and update) the opposites BATNA. Seek ways to improve your BATNA and make the opposites BATNA less valuable. There are three keys to determining a valid BATNA: 1. It must be an option that you can execute unilaterally (without any action or interaction with the other negotiating party). A BATNA is not a BATNA if it requires the participation of the opposite. 2. It must be a real option. It must be something you can and would want to do (have the time, resources, and will to execute). 3. Finally, it must be perceived as credible by the opposite. You may believe you will execute your BATNA, but unless the opposite also believes your BATNAs credibility, it is useless. As an example, if you are negotiating with other base personnel on an office move, and it is getting nowhere, a strong BATNA would be that your current office space is adequate to do the mission, and it is available for the foreseeable future. A weak BATNA would be that your current office area is cramped, the electrical system unsafe, and it is due to be demolished in three weeks. A useless BATNA is telling the other side your current office space is adequate to do the mission, and they know the contract to demolish your building was just awarded and begins in 14 days. BATNAs may change during the negotiation as information and conditions change. For example, you may be looking for a new car with a good BATNA (your current car is in excellent condition). However, your BATNA would change considerably if your car got sideswiped in tomorrows commute. BATNA is brought up here before the detailed discussion of the five negotiating strategies because it is a useful tool in four of the five strategies (Insist, Evade, Settle, Cooperate but not Comply). Of note, in the Cooperative Negotiating Strategy (CNS) there is an extra effort to identify and manage both sides BATNAs. Additionally, since CNS has relatively more engagement (in both depth and duration) than the other strategies, there is an opportunity within CNS to better manage BATNAs (i.e. work conditions to strengthen your BATNA or weaken the opposites BATNA. In short, BATNA has applicability in many negotiating strategies, but can be exercised to its fullest potential using the CNS.integrative bargaining, the parties perceive that they might be able toincrease the resource pie by trying to come up with a creative solution to the conflict.They do not view the conflict competitively, as a win-or-lose situation; instead,they view it cooperatively, as a win-win situation in which all parties can gain.Integrative bargaining is characterized by trust, information sharing, and the desireof all parties to achieve a good resolution of the conflict.39 For the BC NursesUnion and the hospital administrators to show a commitment to integrative bargaining,each side would need to figure out ways to address some of the needs ofthe other, rather than simply taking an adversarial position.There are five strategies that individuals can rely on to increase the odds of awin-win solution:40 Emphasize the big-picture goals. This reminds individuals that they are workingtogether for a larger purpose or goal despite their disagreements. Focus on the problem, not the people. All parties to a conflict need to keep focusedon the source of the conflict and avoid the temptation to discredit each other bypersonalizing the conflict. Focus on interests, not demands. Demands are what a person wants, and interestsare why the person wants them. When two people are in conflict, it is unlikelythat the demands of both can be met. Their underlying interests often can bemet, creating a win-win solution. Create new options for joint gain. Rather than having a fixed set of alternatives fromwhich to choose, the parties can come up with new alternatives that might evenexpand the resource pie. Focus on what is fair. Emphasizing fairness will help the parties come to a mutualagreement about what is the best solution to the problem.

*Original publication date June 2003; reviewed and updated in July 2012 by Heidi Burgess

[1] In 2011, Fisher and Ury published a 3rd Edition of Getting to Yes. The updated edition was edited by Bruce Patton and incorporates Fisher and Ury's responses to criticisms of their original 1981 book.[2] Roger Fisher and William Ury. Getting to Yes: Negotiating Agreement Without Giving In, 3rd ed. (New York: Penguin Books, 2011). .[3] I William Zartman, Ripe for Resolution, (New York: Oxford, 1985/1989). .[4] Roger Fisher and William Ury. Op.cit, 108.[5] William McCarthy, "The Role of Power and Principle in Getting to Yes," in Negotiation Theory and Practice, Eds. J. William Breslin and Jeffery Z. Rubin. (Cambridge: The Program on Negotiation at Harvard Law School, 1991), 115-122. .

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