MUTUAL GAINS NEGOTIATION. 2 Course Objective Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies,

ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES

of Pennsylvania

MUTUAL GAINS NEGOTIATIONMUTUAL GAINS NEGOTIATION


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Course ObjectiveCourse Objective

• Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies, Techniques, and Purpose

• Develop the Ability to Apply Mutual Gains Concepts and Techniques to everyday negotiations, and Consultant Agreements


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What is Negotiation?What is Negotiation?

• Negotiate: To confer, bargain, discuss with a view to reaching agreement; to make agreements for; to settle; to conclude; to succeed in crossing, surmounting, accomplish

• Latin: Negotium-business or Negotiatus-to carry on business


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What is Negotiation?What is Negotiation?

• Negotiation = Business

• Negotiation can determine profitability and livelihood

• Negotiation protects the interests of all parties

• Negotiation is a critical step toward the successful completion of any project


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Negotiation Is NOT….Negotiation Is NOT….

• A Contest or Game

• A method of determining a Winner and Loser

• A means of carrying out a personal vendetta or grudge

• A “one-size fits all” formula


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Negotiations are EverywhereNegotiations are Everywhere

• In everyday life with friends and family

• In politics and government

• In business

• In scholastics

• In law; in and out of the courtroom

• In every organization, regardless of its size or complexity


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The IssueThe Issue

• Negotiations fail often

• Mutual agreement is rarely achieved

• Preconceived Arguments or positions are pushed onto the issue at hand

• Time, efforts, and money are wasted

• Relationships are damaged

• Often parties leave in a worse position than they started


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Why Negotiations FailWhy Negotiations Fail

• Negotiations are viewed as a trade-off process (zero-sum)

• Parties give into the three “E”s: Ego, Emotion, Escalation

• Parties never develop a systematic, step-by-step approach to negotiation

• Parties never realize how their behavior will affect others

• We let “What we have always done” dictate what we do today.


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Three Areas of NegotiationThree Areas of Negotiation

• The Process- how we go about our negotiation

• The Substance- what we are negotiating for; what we see as “on the table”

• The Relationships- often overlooked, and underestimated, and regularly the first thing sacrificed


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Traditional NegotiationsTraditional Negotiations

• Establish Extreme Positions: Always start at one end or the other and work toward the middle

• Never accept or make the first offer

• Never tell them what you really want


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• If you concede, concede reluctantly

• Always be skeptical of the other side

• Give them as little as possible


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• Usually involves “giving in”

• Becomes a contest of wills

• Strains relationships


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Productive NegotiationsProductive Negotiations

• Achieve Set Goals

• Produce Agreements that benefit all parties

• Improve and sustain healthy relationships


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Goals of Negotiation Goals of Negotiation

• Achieve an agreement that is acceptable to all- Satisfies all of our interests and enough of theirs- no one feels taken

• Explore all options and select the best using legitimate criteria

• Establish an agreement that can succeed


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How to Achieve Goals of Negotiation How to Achieve Goals of Negotiation

• Focus on Interest- not position– Interest: “we have to really watch our budget”

– Position: “there’s no way we are going to pay more than…”

• Invent Options for Mutual Gain

• Establish legitimate Criteria for evaluating interest

• Determine your Best Alternative To a Negotiated Agreement


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A New ModelA New Model

4 Steps to Mutual Gains

1.PREPARE

2.CREATE VALUE

3.DISTRIBUTE VALUE

4.FOLLOW-UP


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Step 1: PrepareStep 1: Prepare

• Determine your purpose and define your team

• Estimate your BATNA

• Try to improve your BATNA

• Define your Interests

• Try to estimate their interests

• Prepare options that could benefit both parties


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Determine Your Purpose and Define Your TeamDetermine Your Purpose and Define Your Team

• What is my role in the negotiation, and who will assist me in the process?

• Who will gather what information?

• Who will participate in the negotiations?

• Who has the authority in the negotiations?


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Focus on InterestsFocus on Interests

What are Interests?

• Interests are the reason for positions

• More than one position can achieve a particular interest


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Focus on InterestsFocus on Interests

• Identify the interest of all your stakeholders

• Analyze and Prioritize your interests

• Consider the other party’s interests

• Identify personal and professional interests

• Communicate interests in a clear and concise manner

• Identify conflicting and compatible interest to establish common ground


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Estimate InterestsEstimate Interests


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Estimate InterestsEstimate Interests

OURSOURS


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Estimate your BATNAEstimate your BATNA

• BATNA’s are not negative

• A BATNA is your best option to not agreeing

• Your BATNA has to be something you are willing to accept

• Your BATNA should not be detrimental to your business

• No Party should be forced into a contract they cannot live with


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Prepare Options for Mutual GainsPrepare Options for Mutual Gains

• Think about negotiations in a different light

• Brainstorm, invite outside suggestions, be creative

• Note the obvious without focusing on it

• List options with positive statements (recognize the down-side, but emphasize the up-side)


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Step 2: Create ValueStep 2: Create Value

• Suspend criticism

• Discuss the interests of all parties

• Make suggestions without making commitments

• Make the pie larger


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Suspend CriticismSuspend Criticism

• Listen

• Evaluate, without criticism

• Remove the person from the idea

• View your counterpart as a partner not an opponent

• Ask “Why?”


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Discuss InterestDiscuss Interest

• Always reveal your interest not your BATNA

• State what you believe their interest may be

• Listen, listen, listen…

• Take careful notes

• Focus on the issues, not the position

• Ask “Why?”


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Make SuggestionsMake Suggestions

• Brainstorm with all parties

• Invent without committing- “What if we…”

• Propose multiple ideas together

• Put the extremes on the table

• Avoid the “Fixed Sum Game”- the “split the difference” solution

• Load the table with ideas


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Step 3: Distribute ValueStep 3: Distribute Value

• Develop the relationship-build trust

• Establish legitimate criteria

• Suggest possible distributions

• Settle on the strongest agreement


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Develop the RelationshipDevelop the Relationship

• Separate substantive issues from relationship issues

• Honesty builds trust

• Listen to their views and interests

• Clarify-restate what’s been said

• Recognize emotional reactions


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Develop the RelationshipDevelop the Relationship

• Examine preconceptions and biases

• Attempt to identify their preconceptions

• Try to understand their mind set- Where are they coming from?

• Attempt to take a fresh approach

• Remember, take a partnering approach


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Establish CriteriaEstablish Criteria

• External standards of fairness

• Market value, historical data, indices, averages, etc.

• PennDOT Staff Hour Estimating Guide (SHEG)

• Develop criteria to support your interests

• Be open to theirs


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Suggest Possible SolutionsSuggest Possible Solutions

• Work to improve each suggestion

• Get as far away from the BATNA as possible

• At minimum – develop one solution that is fair to both parties


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Step 4: Follow UpStep 4: Follow Up

• Conduct Biennial Review of SHEG

• Establish periodic reviews of process

• Ensure controls/incentives are in place

• Have a dispute resolution plan

• Improve relationships

• Continual metric evaluation


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Strategies for SuccessStrategies for Success

• Change the game to problem solving

• Reveal your interests and discuss theirs

• Ask why (why not) to get past positions

• Invent options without committing (what if)


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• Analyze mutual interests and conflicting ones to strike balance

• Foster cooperative atmosphere

• Discuss process and logistics before substance

• Be creative


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• Ensure your interests have legitimate criteria

• Identify examine and challenge all your assumptions

• Listen for their assumptions without judging

• Respond to reasoned arguments, never to pressure

• Use objective criteria


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QUESTIONS?QUESTIONS?

DISCUSSION?DISCUSSION?

Documents

MUTUAL GAINS NEGOTIATION. 2 Course Objective Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies,