Friday, February 22, 2008

Better Win Win Result

Achieving a Win/Win Outcome

The best outcome for almost all negotiations is win/win, when both parties walk away with a positive feeling about achieving their goals. But how do you accomplish this ideal situation?
There are four keys:
1. Avoid narrowing your negotiation down to one issue. When you focus on just one issue, there can be only one winner. A common example is arguing over the price of something. To avoid creating a win/lose outcome, you can bring other factors into the negotiation, such as delivery fees, timing, quality, supplemental goods and services, and so on.

2. Realize that the other party does not have the same needs and wants you do. If you think the other person’s goals are exactly the same as yours (for instance, a "good" price, which may mean different things for the two of you), you will have the attitude that the other party’s gain is your loss. With that attitude, it is virtually impossible to create a win/win outcome.

3. Don’t assume you know the other party’s needs. Negotiators often think they know what the other party wants. Salespeople may assume that buyers want to pay the lowest possible price for a product. But many buyers have other needs that may influence their decision to buy. By asking questions, a skilled salesperson may find, for example, that a buyer's biggest concern is not that she pays the lowest price, but that her boss perceives the purchase decision as a good one. This knowledge allows the salesperson more negotiating room.

4. Believe point number two in your heart. Most novice negotiators acknowledge that the other party probably does not have the same goals they do, but once the actual negotiation commences, this acknowledgement vanishes from their mind.

Negotiation Style

The Bully Style
An easily identifiable style is that of the bully. He is powerful, commands attention and has a high energy level. His modus operandi is to push for action, is usually loud, and is confrontational. He is totally insensitive to the feelings and needs of others, wanting to attain his own outcomes at all cost.The advantages of this style are that he commands attention for a key point, and that negotiation can be brought to a rapid close.
Unfortunately, this style of negotiator will miss subtle points in the negotiation which could adversely affect the outcome, and has an: it is my way or the highway attitude.
Nonverbal characteristics of this type are an exaggerated posture of leaning forward, excessive use of pointing, and very direct eye contact.
This style is very limited in its usefulness, and certainly does not encourage a win/win outcome.

The Manipulator
Although not lacking in empathy as much as the Bully, the Manipulator still has a disregard for the feelings of others. He has a low level of energy, largely keeping a low outer profile, speaking in a careless-type of voice, almost condescending.
His modus operandi is to manipulate the other party to expose their weaknesses and get them to concede to his desired outcomes. He plays a cat and mouse game and is sly.
The Manipulator quickly draws attention to real threats that could affect an agreement, and can surreptitiously provoke debate.
On a negative side, he may distort information or bend the truth while exploiting the weaknesses of the other party.
Nonverbal characteristics include, slouching or leaning back with hands behind his head, and using fleeting eye movements as he surveys the group, both his team and the opponents.

The Confident Style
This is your people-person. He gives equal attention to the relationship of those present as he does to the issue under investigation. He exudes high energy and is always looking for better ways to have all parties work collaboratively.
He usually finds it easy to focus on the key points, and likes to openly discuss possible options. His negotiating style is flexible and he adapts it to the situation as required.
He will work at achieving a win/win situation at best and a compromise at worst. His voice is pleasant.
Although he wins people over, he can appear aggressive, and because of his enthusiasm, he may fail to listen properly.
His nonverbal characteristics include an erect or only slightly forward leaning posture whether sitting or standing, lots of hand movements, and good eye contact.

Power Up Your Negotiation

Many negotiation gurus are so successful in their negotiations because of the key habits that they develop over a long period of time. I spent most of my week reading and researching into the key habits of great negotiators. Some of them have a few recurring key habits.

Your goal is to become a negotiation guru. Learn the habits from the great negotiators. Apply them into your life and see how the habits will work for you. Keep experimenting with them.
These are the 4 key habits that they have:
1. Prepare, Prepare, Prepare
You would not go ski-ing or sky diving without first preparing for it. Similarly, you should not enter a negotiation without having done enough preparation. Without spending adequate time on the preparation process, your negotiation success rate will drop dramatically.
Good negotiators spend a large amount of time preparing for their negotiation. They are not afraid to admit that they do not know everything . One way to prepare for their negotiation is to keep asking questions and finding out the interest of the other party.
2. Expect the best
"Expect the best. Prepare for the worst. Capitalize on what comes." - Zig Ziglar
All of us tend to make superficial and premature judgments about ourself and the other party. Wanting to protect ourselves, we focus exclusively on the failures. And all too often, our expectations come true . Since our expectations are coming true anyway, why not expect the best?
Engaging your negotiation with an expectation of the best will yield a much better result. This has been proven many time over by power negotiators. In other words, great negotiators' expectations had improved the performance of their negotiation. Where they had expected success, they found it .
3. Listen, Listen, Listen
"If A equals success, then the formula is A equals X plus Y and Z, with X being work, Y play, and Z keeping your mouth shut." - Albert Einstein
Listening is the only way to get information. It is found that all great negotiators are great listeners too. Active listening or reflective listening is a way to build mutual trust and understanding. It is an all-important skill as it enables us to receive the information accurately.
4. Never compromise on integrity
Integrity is the single most important quality that you can develop to enhance every single part of our life, including negotiation. Integrity is the essential quality of a successful and healthy relationship. Having integrity meant that the other party is able to be completely honest with you.
Your integrity is evidenced in your willingness to hold on to your own values. It is easy for us to make promises. Keeping to promises is the hard part. When you act with integrity in everything you do, you will find that the other party will trust you more. You slowly build a reputation for yourself. You will find that as people trust you more, the more you win in a negotiation (provided you don't break the trust).

Win-Win Negotiations-Objective

Seminar Objectives:
Participants in the Win-Win Negotiations seminar will:
Develop an effective plan and strategy for any negotiation
Know when and when not to negotiate
Negotiate face-to-face, on the phone, and through e-mail
Learn to become more persuasive
Develop a common negotiating language with the other parties
Use techniques that elicit information from the other parties
Identify and work with client and employee behaviors styles to maximize closure
Recognize interests and issues to avoid unnecessary positions
Neutralize manipulative tactics
Minimize conflicts and deadlocks both internally and externally
Coordinate negotiations within client organization
Meet business objectives by focusing on planning rather than tactic

successful negotiation…

However, if you need to resolve a major disagreement, then make sure you prepare thoroughly. Using our free worksheet, think through the following points before you start negotiating:
Goals: what do you want to get out of the negotiation? What do you think the other person wants?
Trades: What do you and the other person have that you can trade? What do you each have that the other wants? What are you each comfortable giving away?
Alternatives: if you don’t reach agreement with the other person, what alternatives do you have? Are these good or bad? How much does it matter if you do not reach agreement? Does failure to reach an agreement cut you out of future opportunities? And what alternatives might the other person have?
Relationships: what is the history of the relationship? Could or should this history impact the negotiation? Will there be any hidden issues that may influence the negotiation? How will you handle these?
Expected outcomes: what outcome will people be expecting from this negotiation? What has the outcome been in the past, and what precedents have been set?
The consequences: what are the consequences for you of winning or losing this negotiation? What are the consequences for the other person?
Power: who has what power in the relationship? Who controls resources? Who stands to lose the most if agreement isn’t reached? What power does the other person have to deliver what you hope for?
Possible solutions: based on all of the considerations, what possible compromises might there be?

Elements that affect negotiation

Communications: be careful about using the phone, e-mail, and other nonvisual communication vehicles. A lack of facial expressions, vocal intonation, and other cues can result in a negotiation breakdown. Constantly reiterate your interest in the other side's concerns and your determination to find a mutually satisfactory resolution.

Personalities: be conscious of aspects of your personality such of your own needs and interpersonal style as well as the other person's personality; these factors will play a key role and understanding yourself will be an important factor

Your own personality and style: how much you trust the person; how free with your emotions; how much you want to conceal or reveal;

Physical space: sometimes where the negotiation takes place can be important; are we negotiating in a space we are uncomfortable and other is comfortable?

Past interaction: if there is a history of conflict resolution with this person, think about how this history might affect the upcoming negotiation

Time pressure: Think about whether time pressure will affect the negotiation and whether you need to try to change this variable?

Subjective utilities: be aware that people place very different values on elements of a negotiation. For example, in negotiating for a job, you may place a high value on location and relatively lower on salary; it is important to be aware of your subjective utilities and try to ascertain the other person's subjective utilities; it is difficult to know in advance or even during the negotiation what a particular outcome will mean to the other party. Finding out what is "valued" is one of the key parts of negotiation.

"win-lose" situation to a "win-win"

There are many advantages to trying to shift a win/lose situation to a win/win. Yet we will be in situations where the other person either doesn't wish to reach a "win-win" or doesn't realize it is in his or her best interest to achieve a collaborative solution. In these situations it is necessary for us to open lines of communication, and try to increase trust and cooperativeness.
Sometimes conflicts escalate, the atmosphere becomes charged with anger, frustration, resentment, mistrust, hostility, and a sense of futility. Communication channels close down or are used to criticize and blame the other. We focus on our next assault. The original issues become blurred and ill-defined and new issues are added as the conflict becomes personalized. Even if one side is willing to make concessions often hostility prevents agreements. In such a conflict, perceived differences become magnified, each side gets locked into their initial positions and each side resorts to lies, threats, distortions, and other attempts to force the other party to comply with demands.

It is not easy to shift this situation to a win-win but the following lists some techniques that you might use:
1.reduce tension through humor, let the other "vent," acknowledge the other's views, listen actively, make a small concession as a signal of good faith

2.increase the accuracy of communication; listen hard in the middle of conflict; rephrase the other's comments to make sure you hear them; mirror the other's views

3.control issues: search for ways to slice the large issue into smaller pieces; depersonalize the conflict--separate the issues from the people

4.establish commonalities: since conflict tends to magnify perceived differences and minimize similarities, look for greater common goals (we are in this together); find a common enemy; focus on what you have in common

5.focus less on your position and more on a clear understanding of the other's needs and figure out ways to move toward them

6.make a "yesable" proposal; refine their demand; reformulate; repackage; sweeten the offer; emphasize the positives

7.find a legitimate or objective criteria to evaluate the solution (eg. the blue book value of a car)

Win-Win Bargaining:

Keys to Integrative Bargaining

Orient yourself towards a win-win approach: your attitude going into negotiation plays a huge role in the outcome
Plan and have a concrete clear on what is important to you and why it is important
Know your BATNA (Best Alternative to a Negotiated Alternative)
Separate people from the problem
Focus on interests, not positions; consider the other party's situation:
Create Options for Mutual Gain:
Generate a variety of possibilities before deciding what to do
Aim for an outcome based on some objective standard
Pay a lot of attention to the flow of negotiation;
Take the Intangibles into account; communicate carefully
Use Active Listening Skills; rephrase, ask questions and then ask some more

Kinds of Bargaining/Negotiation

The Two Most Important Kinds of Bargaining:

Distributive (win-lose) vs. Integrative (win-win)

Distributive (also called competitive, zero sum, win-lose or claiming value).
one side "wins" and one side "loses."
there are fixed resources to be divided so that the more one gets, the less the other gets.
one person's interests oppose the others.
the dominant concern in this type of bargaining is usually maximizing one's own interests.
dominant strategies in this mode include manipulation, forcing, and withholding information.

Integrative (collaborative, win-win or creating value).
there is a variable amount of resources to be divided and both sides can "win."
dominant concern here is to maximize joint outcomes.
dominant strategies include cooperation, sharing information, and mutual problem solving. This type is also called "creating value" since the goal here is to have both sides leave the negotiating feeling they had greater value than before.

Global Challenge-Negotiating

When considering negotiations it is my feeling that most people from North America would consider themselves to be upright in their core values. This is good when we are negotiating amongst our own kind or with those who hold the same core values and ideals as we do. However this is not a perfect world and I believe we can set our sights toward the Middle East and the conflicts that are taking place in the world to realize that. Not everyone thinks the way you do.

In my mind negotiation as an exchange of different objectives with the goal of finding a common ground or a mutually acceptable compromise, is something that should be workable for both parties. Anything beyond that is not negotiation rather a flaunting of might. Negotiation requires mutual respect not mutual trust; trust is something that is gained through negotiation not integral to it. Trust only comes through interaction. In my view if we feel that we should trust our opponent from the beginning then we are being trite.

Many times, we may see a thread of puritan ideals, when trying to realize a perfect world in which everyone should be "good" and at the same time be proud it. Don't get me wrong, I am in the same group, I was only fortunate enough to survive twenty years living in a culture that was in no way similar to that which I was born into. I learned, with great hardship, that the rest of the world does not see "good" in the same light that I do, in fact some people's good may not be good by my ideals. This is simple reality in a global village.

Negotiating is influenced and affected by one's base cultural values, which are made up from our religious and social ideals. What if we grew up in a Communist country? Would we not have values and ideals different from those of a Capitalist country; therefore we would see reality much differently from the environment that we were nurtured in.

From my personal experience of living in China I had to learn to accept things that were sometimes unacceptable in light of my upbringing and cultural value-set and ideals. However, by looking beyond my own limitations I began to see opportunities and possibilities that never occurred to me before. This took years and many a frustrated night contemplating and trying to understand what was wrong. Finally, I would realize that the problem was me; the way I think. And I think the way I was taught to think but that is not the way the rest of the world thinks. We need to allow room for other ways of thinking in a world where my culture is the youngest one around.

In your mind, place yourself at a table with two Chinese negotiators. You should have your strategies set strong in your value set, you know what you have to offer and you know what you want. You put everything you have on the table and say "this is all I can offer". What will you do when the Chinese negotiating team all of the sudden brings something new to the table when they said that they had nothing new to offer previously? Would they be considered as dishonest? Would they be seen as lying? Now, stop and ask yourself how they may view the negotiators from your side when you refuse to bring anything new to the table. Will they view you as being dishonest? Would you be seen as lying? This is a mixing of cultures and what is acceptable in one culture may not be acceptable in the other. So how do we deal with these issues in a global economy and in order to maintain peace in a world that is nearing turmoil?

Essential steps for Negotiation

Negotiation is not a process by which you try to destroy the other party. Rather, it is a process by which you reach a certain result. Good negotiation occurs when all parties are truthful, and they connect and interact successfully with each other. Good negotiation cannot happen if either party is trying to boost their ego in the process. People can win while helping the other person get what they want.

We were born to negotiate just as we were born to walk. You may not even realize that you are negotiating when you talk to business associates, friends, children, and anyone in your communication realm. Some people think negotiation is confrontational. Good negotiation is not confrontational, and you really can negotiate “win-win” results.

Preparation is the key to being a good negotiator. If you are not prepared, you may not be able to explain the results you want, you may not be able to evaluate all the issues and alternatives, and you may give up too soon. There are certain essential steps that prepare you for the negotiation:

1) Set clear expectations and clear goals;
2) Identify any undisputed points;
3) Anticipate the counter-offers you could make or receive;
4) Know every detail and every issue;
5) Anticipate what the other party wants;
6) Decide what is the highest/lowest you will give or take; and
7) Be ready to explain why this the highest/lowest you will give or take

When the negotiation starts, state that it is your objective to reach a win-win result. Keep your goal in mind and listen carefully to what is important to the other party. Take notes if necessary. Be calm, courteous, unemotional, and relaxed. Isolate the points of disagreement and try to find solutions for each of them.

Ask “what,” “how,” and “why” questions to better understand the other person’s values and what is important to them. Continue to isolate the points of disagreement and find solutions for them. Acknowledge the points of agreement that you have reached up to this point.

Repeat the process, moving each party closer to the other until you have full agreement. If you cannot reach a result that is mutually agreeable, agree to disagree at that moment, give yourselves time to think about it, and schedule another meeting. It may take time and work, but you can negotiate a win-win result.

Win-Win Negotiations

Win-Win Negotiations

Negotiation is a science that requires preparation if you are to have any chance of succeeding. To realize your part of a win-win outcome in every negotiation, identifying your project cost and profit margin is essential. Knowing these two components of a project fee will help ensure the desired outcome.Before a client ever receives your fee proposal, most have already established a specific fee amount they are willing to pay for your services. If your proposal should exceed that threshold, you’ll have to negotiate to get your fee.What's the best way to prepare for such a negotiation? The most critical piece of information to identify in a negotiation would be the estimated project cost, exclusive of profit, to complete the project. This figure is otherwise known as the project "break-even" cost.You can determine this cost in several ways, and you would do well to investigate and compare the results of each method. One of the best methods is to review projects of similar type and of comparable size and complexity. If you have kept accurate project cost accounting records, you will have an excellent resource to evaluate and help you build the fee you may need to negotiate. You will need to determine the actual, final percentage of profitability for these projects to ascertain whether the fees were adequate to complete the project(s) and still earn a "reasonable" profit. Two other useful methods to define the break-even cost of project delivery are the "top-down" fee budgeting approach (for public-sector projects) and the "bottom-up" approach (for private-sector projects).Public-sector project fees are usually fixed, up front, as a percentage of the owner’s construction budget. On public-sector projects, therefore, the top-down method helps you to define whether the fee given is sufficient to provide the required scope of services and the defined deliverables.

Working down through this process will provide you with an estimate of the hours the given fee will accommodate. If your calculations indicate that the fee will not provide an adequate number of hours to provide the services required, before declining the project you could negotiate for a reduced scope of services to match the available hours within the given fee. To determine the scope the given fee will support, you need to determine your break-even cost. Because the top-down method uses "billing" rates (profit included), you will need to then switch to the bottom-up method to calculate your break-even cost.Even though the bottom-up method is applicable primarily to private-sector projects, it’s also a useful tool for defining the break-even cost of delivering a public-sector project for a given fee. This method uses "break-even" rates (exclusive of profit) to determine the actual project cost. With the bottom-up fee budgeting method, the profit is added as the last step in defining the total fee to be negotiated.

In other words, you get to establish the percentage of profit to be added to the break-even cost.Beginning a negotiation with knowledge of the project break-even cost and profit margin gives you the power to "control" the negotiation. The control I refer to is the power to make an informed decision at each stage of the negotiation. For instance, if the client’s offer is less than your calculated fee, you have several options. You can negotiate for a reduced scope. You can reduce the percentage of your profit. You could ask for time to discuss the offer with your key team members. Or you can, as a final resort, say, “Thanks, but no thanks” and terminate the negotiation. Whether both parties make an informed decision to accept the terms of the scope and fee amount negotiated or whether they "shut down" the negotiation, any one of these options would result in a win-win outcome.Some circumstances could lead you to accept a fee with a reduced profit, but I cannot understand why anyone would agree to a fee with a zero profit or one that is less than their project break-even cost. Negotiating a fee without the above preparation and knowledge, however, increases the chances are that such a possibility could occur.