Negotiation Skills and Resolving Techniques

7/30/2019 Negotiation Skills and Resolving Techniques

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NEGOTIATION SKILLS

& RESOLVING CONFLICTS


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Introduction to Negotiation

Negotiation is a process ofcommunication in whichthe parties aim to send a

message to the otherside and influence eachother.


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Negotiation

Something that we do all the time, not only for

business purposes

Usually considered as a compromise to settle anargument or issue to benefit ourselves as much as

possible

Not always between only two people


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Example

When asked a question such as, "What kind ofsalary are you looking for?" You can respond bysaying something like, "I will consider anyreasonable offer," or "I am sure that if I do

receive an offer, it will be fair or reasonable." Ifyou are prompted to be more specific, thenprovide a salary range. The bottom of your rangeshouldn't be lower than your minimum

acceptable salary and the top should be a bithigher than your ideal salary. Never say, "I need aminimum of ___ dollars." (That's probably whatyou will end up getting.)


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Continuous Improvement

Process Thinking

-Most of the things done within an organization

are the result of processes

-Processes can be improved

Treat negotiation as a process!


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The Negotiation Process

Pre-

NegotiationsPreparation Negotiations

Agreement

or Non-

Agreement

Postmortem

Learning

Learning

Capture

Ongoing

Evaluation &

Learning

Learning Reuse


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Negotiating as an Organizational

capability


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How can organization improve its

overall negotiating skills

Provide training and preparation resources for

negotiators.

Clarify organizational goals and expectations and

when negotiators should walk away. Insist every negotiating team develop a Best

Alternative To Negotiated Agreement(BATNA) and

work to improve it.

Develop mechanism for capturing and reusing

lessons learned from previous negotiations.

Develop negotiating performance measures and link

them to rewards.


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Provide training and resources

Provide preparation checklist

Access the lessons learned from earlier negotiating

experience.

Apprentices assigned to more experienced

negotiators can participate in actual deal and sense

i.e. art of negotiating of how these things happen. Use of case studies and simulation


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Clarify goals and Expectations

Negotiators should have clear direction from

senior management

Management be clear with expectations

Negotiating goals must be aligned with

organizational goals and support with right

incentives


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Clarity Goals and Expectations

Negotiators shouldnt have to guess at

organizational goals and expectations.

Clear direction from senior management.

Ex If management is concerned with improving

profit margins but fails to communicate that goal

effectively, its field sales force may be negotiating

agreements with customers that discount pricesto win new accounts.


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Insist That Every Negotiating Team

Knows Its BATNA

Best Alternative To a Negotiated Agreement.

A strong BATNA gives negotiators bargaining

power.

Companies should insist that their

representatives have a clear understanding of

their BATNA.


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Capture and Reuse Lessons Learned

It is an essential part of the now popular field of

knowledge management.

Learning how to solve a knotty business problem or

how to apply provision of the tax code is time-consuming, costly, and subject to error.

Ex A tax accountant based in New York City is

unsure how to treat a financial transaction made by

a film producer. A search of her firms database

indicates how colleague in the Los Angeles office

have successfully handled the same type of

transaction.


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Capture and Reuse Lessons Learned

(Cont.)

When companies are systematic in recording the

outcomes of negotiations, something similar are

obtained.

As reported by Danny Ertel, One major

professional services firm is developing a

centralized database to help its project managersnegotiates scope-and-fee agreements with

clients.


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Develop Performance Measures and

Link Them to Rewards

Companies get what they measure and reward.

When companies reward their negotiators for

squeezing the lowest possible price out of

suppliers, they enjoy short term gains at the

expense of relationship values.

Their negotiators ignore win-win opportunities infavor of the zero-sum game.


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Measures for Evaluating the Success of

Negotiations


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Relationship

Communication

Interests

OptionsLegitimacy

BATNA

Commitment


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Who is a Negotiator ?

A negotiator is someone who specializes in mediatingagreements between two or more parties.

Most negotiators represent a particular partyinvolved, rather than acting as purely neutralmediators.

The goal of a negotiator is to reach an agreementwhich will be mutually agreeable and satisfactory forall parties.


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Characteristics of Effective Negotiator

Aligns negotiating goals with organizational goals.

Prepares thoroughly and uses each negotiating phase toprepare further.

Uses negotiating sessions to learn more about the

issues at stake and other sides BATNA and reservationprice.

Has the mental dexterity to identify the interests of bothsides, and the creativity to think of value creating options

that produce win - win situations.


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Characteristics of Effective Negotiator

Can separate personal issues from negotiating issues.

Can recognize potential barriers to agreement.

Knows how to form coalitions.

Develops a reputation for reliability and trustworthiness.


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Four Step Negotiation Checklist

Step #1

Facilitate development of a negotiation plan,which includes the teams key strategies your

position going in, and your desired outcome.

Step #2 Lead the team in implementing the negotiationplan.

Step #3

Adjust strategies and methods as needed during

negotiations to achieve the desire outcome.

Step #4

Facilitate assessment of the negotiation teams

activities.


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Example of Negotiation Process

Vantage problem:

Faced with the need to cut costs, increaseproduct innovation, and improve overall

responsiveness to customer demands, a largemanufacturing company undertook a strategicsourcing initiative aimed at consolidating itssupply base, creating cross-divisional commodity

teams, putting global contracts in place with keysuppliers, and instituting standard metrics againstwhich to measure supplier performance.


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However, the company soon encountered several

challenges. Commodity managers and buyers complainedof having no leverage in negotiations, because engineers

had designed specific supplier technologies or

components into product specs. Engineers and other

end-users complained that sourcing and materials

management teams were myopically focused on price,

and often damaged relationships with critical suppliers

by negotiating too aggressively. Suppliers played one

division off against another. And to the company lacked a

systematic way to evaluate whether an agreement with a

supplier was competitive relative to market alternatives


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Solution:

Vantage, together with a core team of sourcingexecutives and business unit leaders, engaged in a rapiddiagnostic analysis to better understand the barriers to

implementing new negotiation approaches andcapabilities. Analysis highlighted the need to formallydefine a set of critical negotiation activities: settingclearly defined goals; conducting market research to helpinform negotiation strategy development; engaging in

mid-course deal reviews with cross-functional executiveteams; and conducting formal transitions fromnegotiating teams to teams responsible for working withsuppliers once contracts were signed.


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To embed common practices, tools, and skills

across the organization, negotiation training and

coaching workshops were conducted to equip all

individuals involved in interacting with supplierswith the skills to effectively prepare for and

conduct contract negotiations, as well as ongoing

(often informal) negotiations over design

changes, individual purchase orders, and scope

changes.


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The Vantage-led team also designed andimplemented an electronic workspace withinteractive negotiation job aids, dashboards toenable coordination of negotiation activities acrossteams and divisions, and a knowledge repository ofinformation about the companys suppliers andlessons learned across negotiations. A small team of

negotiation black belts were trained to serve ascoaches and change agents to drive continuousimprovement across the organization.


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Result:

Overall supply chain cost reduction of 10%

Average annual price reductions of 10-15%

Improved contract terms and reduced variability

across contracts

Identification and/or development of alternate

sources for several key commodities


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Want Collaboration

Accept- and Actively Manage Conflict


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Rising need of collaboration

The quest for harmony and common goals canactually obstruct teamwork. Managers get

truly effective collaboration only when they

realize that conflict is natural and necessary.

Challenge for senior managers how can

people in an organization work togetheracross internal boundaries.


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Why Collaboration?

To service multinational accounts, you

increasingly need seamless collaboration across

geographical boundaries.

To improve customer satisfaction, you need

collaborations among functions ranging from

R&D to distribution.

To offer solutions tailored to customers needs,

you increasingly need collaboration between

production and service groups.


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Getting Collaboration Right

There are tremendous benefits: A unified face to customers

Faster decision making

Reduced costs through shared resources

The development of more innovative products.

Using the same strategies a few company onlybenefit of this , a lot of companies still fail.

Most companies respond to challenge ofimproving collaboration in an entirely thewrong way.


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Root Cause: Conflict

Some feel significantly improving collaboration

will reduce the conflict, but examples likerestructuring initiatives produce more of it.

Executives underestimate inevitability of

conflicts and also its importance to theorganization.

Leading to:

DisagreementsCompetencies

Access to information

Clashes between parties

Methods that executed can help


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Methods that executed can help

people and their organization

Strategies for managing disagreements at the point

of conflict.

Parties involved are made to manage themselves.

Most companies leave it on their employees on how they want to

solve the problem

At last, a well defined , well designed conflict resolution method

will.

Reduce transaction cost

Reduce wastage time

Reduce ill will struggle to work through differences

Will yield the innovative outcomes.


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The Donts of Collaboration

Conducting teamwork training workshops

Ignoring constraints Objectives and resources

Giving incentives for collaborative activity

Just bringing people together using technology


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The Dos of Collaboration

Collaboration as a culture and not a department

A common framework of collaboration

Trade off based approach using criteria

Consider objectives of other groups and teams


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Examples

Intel

o

Clearly accept conflictso Use the common language approach

o Training sessions with case studies

o Employees exposed to various tools

o Never play the blame game


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Blue cross and blue shield

o Starting to outsource more services

o Evaluate alternatives against criteria

o Prioritize each alternative

o Use the trade off approach

o Used by all decision makerso Higher chances of a consensus


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Collaboration tool used by Blue cross and blue shield

COLLABORATION AT BLUE CROSS AND BLUE SHIELD

IMPLEMENTATION COST INTEGRATION USABILITY SCALABILITY MANPOWER

12 MONTHS 15000$ DIFFICULT MEDIUM MEDIUM MEDIUM

PARTICIPANT 1

PARTICIPANT 2


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IBM: Coaching for Conflict

If you hear someone

reporting to you that

Everyone still insists

on being a decision

maker

The problem could

be that..

The people yourreport is dealing with

remain concernedthat unless they have

a formal voice in

making the decisiontheir needs and

interests wont betaken into account.

You could say that

Are there ways tobreak this decision

apart into a series ofsub issues and assigndecision making roles

around those subissues?


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Strategies for managing conflict upon

escalation

Equipped with common conflict resolution

methods, trade off criteria and by systematic

coaching people are better able to resolve

conflict on their own. Managers must ensure that upon escalation,

conflict is resolved constructively and effectively

and in ways that model desired behaviors. Establish and enforce a requirement of joint

escalation.


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How to avoid conflict?

The best way to avoid this kind of debilitatingdeadlock is for people to present a disagreement

jointly to their bosses.

It will guarantee that the ultimate decision maker

has access to a wide array of perspectives on theconflict, its causes and the various ways it mightbe resolved.

Companies that require people to share

responsibility for the escalation of a conflict oftensee a decrease in the number of problems thatare pushed up the management chain.


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Unilateral escalations at Telus- who should be

dealing with what? Who should be talking to

whom?

They made joint escalation a central tenet of its

new organization wide protocols for conflict

resolution. Managers had to jointly describe the problem

and what had been done so far and the

solutions(requirement of systematic documents.) Send a joint write up to the bosses and be ready.


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Ensure that managers resolve escalated conflictsdirectly with their counterparts.

Example- The three salespersons conflict overpricing.

The bosses put forward a biased viewpointleaving the answer to be given by the managers.

In the end the decision was taken by the seniormanagement which brought resentment into themanagement chain.

This is disastrous for a company that needs tomove forward quickly.

So, resolve the conflict swiftly and decisively byyourself.


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The solution to these problems is Commitmentby Managers-codified in a formal policy to deal

with escalated conflicts directly with theircounterparts.

In 1990s, IBMs sales and delivery organizationbecame increasingly complex because of

reintegration of divisions. This led to the creation of Market Growth

Workshop.

(Not successful right away). This brought about frontline product specialists

to resolve cross unit conflicts.


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Make the process for escalated conflict

resolution transparent.

How was the decision made?

Based on what kinds of assumptions?

With what kind of trade offs?

A managerial black box.

Clear communication about the resolution of

the conflict can increase peoples willingnessand ability to implement decisions


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IBMs Market Growth Workshops have evolvedinto a more structured approach to manageescalated conflict known as Cross TeamWorkouts(to increase transparency).

The meetings(held for sales and delivery issues)provide a public forum for resolving conflicts overaccount strategy, solution configuration, pricing

and delivery. The most complex and strategic issues reach the

global forum.

IBM has designated a Managing Director in salesand a global relationship partner in IBM globalservices as the ultimate point of resolution forescalated conflicts.


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Tapping the learning latent in conflict

At Johnson & Johnson , conflict is recognizedas a positive aspect of cross companycollaboration.

Example- outsourcing of clinical researchservices. Trends are spotted and informationabout them is disseminated throughout J&Jmore quickly. Better to partner with suppliers

as it structures its collaboration and realizesmore value from its relationship.


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Thank You

Documents

Negotiation Skills and Resolving Techniques