Negotiation Skills

1. Negotiation Skills Presenter: Jennifer Kupec, CPCM, PMP®

2. Goals of Negotiation • Anticipated benefits which are greater than the sacrifice, a negotiated agreement should be beneficial • Limit yielding so neither party believes that concessions would be more costly than the benefits of agreement • Finding ways so both parties interests are optimized

3. Steps to Negotiate • Prepare • Completely and thoroughly advise all parties of strengths and weaknesses of the negotiation • Know who is leading Negotiations • Determine Alternative Approaches • Know your offeror’s position (if possible) • Develop strategies • Perform Execution

4. Negotiation Skills Required • Communication Required - in an attempt to reach a mutually satisfactory result • Listening Required - Not one party dictating or imposing terms on another • Preparation Required - To obtain agreement, you must generally sacrifice or yield something in order to get something in return • Execution Required

5. Communication

6. Communication Is More than Verbal • Verbal exchanges account for only a fraction of the messages people send and receive • 70 - 90 percent ofthe entire communication spectrum is nonverbal

7. Areas of Nonverbal Communication • Body language - using facial expressions, body movements, gestures, and posture • Physical environment • Personal attributes such as: • Physical appearance • Vocal cues • Touch particularly the handshake

8. Cultural Differences A message that has a particular meaning in one society can have a completely different meaning in another society

9. Attitudes. • This illustration depicts the body language demonstrated by two negotiation teams • The nonverbal messages provide substantial information about both teams

10. Winning Attitude? • Positive attitudes signal a sincere effort • Speakers show respect and honesty by keeping their eyes focused on the eyes of the listeners • Confidence is often exhibited by: • Hands in pockets with thumbs out • Hands on lapel of coat • Steepled fingers or hands • Good body posture • Hands on hips

11. Winning Attitude? (Cont) • Interest may be exhibited by : • Tilted head toward speaker • Sitting on edge of chair • Upper body leaning in sprinter's position • Eyes focused on speaker • Careful evaluation is frequently indicated by: • Peering out over eyeglasses • Chin cupped between thumb and fingers • Putting hands to bridge of nose • Stroking chin • Eagerness is often demonstrated by: • Rubbing hands together • Smiling excessively • Frequent nodding of the head

12. Negative Attitudes • Deception or dishonesty is demonstrated by: • Frequent eye blinking • Hand covering mouth while speaking • Frequent coughing • Looking away while speaking • Sideways glances • Defensiveness may be indicated by: • Arms crossed high on chest • Crossed legs • Pointing

13. Negative Attitudes • Insecurity is often exhibited by: • Hands completely in pocket • Fidgeting • Biting fingernails • Frustration is frequently shown by: • Tightness of a jaw • Rubbing back of neck • Drawing eyebrows together • Listener boredom or indifference is generally indicated by: • Eyes not focused at speaker or looking elsewhere • Head in hand

14. The Effects of the Physical Environment on Negotiations Key elements of the environment: • Negotiation facility • Conference table configuration, size, and seating arrangements • Physical distance between negotiators • Relative elevation of the negotiators • Visual aids

15. Negotiation Table Configuration • Table arrangement transmits important conscious and subliminal messages • Winning negotiation attitudes can be promoted with table configurations that convey trust • Win/lose attitudes are created by table settings that communicate disparity or mistrust • Table should be large enough to comfortably seat all participants • Ideal place for principal negotiator is the middle seat • Central position conveys a message of authority

16. A: B: C: D:

17. Physical Distance Between Negotiators   • Distance closer than 1.5 feet - intimate communication • Distance of 1.5 to 4.0 feet - close interpersonal contact • Distance of 4.0 to 12.0 feet - most business transactions or consultations • Distance beyond 12.0 feet - Communicate only briefly or formally

18. Personal Attributes and Negotiations • Attractive people are perceived to: • Have more self-esteem and social power • Receive preferential treatment • Height affects perceptions: • Taller people are perceived as more dominant • Body type affects perceptions: • Athletic people are more assertive and self-reliant • Less athletic looking people can be perceived as more lazy, sympathetic, and dependent • Skinny fragile looking people can be perceived as more suspicious, nervous, and pessimistic

19. Physical Appearance • Dress for negotiations as you would for a promotion or job interview • If you adopt more casual dress: • Advise the contractor of your intent • If wearing a uniform, wear it properly • Personal grooming • Can communicate unfavorable nonverbal messages about you or your negotiation position

20. Vocal Cues • Loudness • Changes in pitch • Rate of speech • Quality • Rhythmic voice pattern • Speaking clearly • Correct sounds and emphasis • Silence

21. Handshake Cues • Firm - conveys positive attributes • Loose - may send unflattering messages • Vice-like grip - rarely sends a positive message • Smile and look person in the eye • Prolonging the handshake

22. Preparation

23. Negotiator's Preparation • Many negotiators do not understand the importance of preparation • Preparation is everything from conducting market research to conducting exchanges • Poor preparation leads to poor contracts that require constant clarification, modification, and more negotiation • Use 90% of your time in preparation • Detailed preparation produces substantial rewards, including: • Fewer contract modifications • Better technical performance • Cost estimates closer to actual costs

24. Be Prepared • Successful negotiators are generally the best prepared • No amount of negotiator experience, skill, or persuasive ability can fully compensate for the absence of preparation • Other bargaining rules can not be entirely effectivewithout preparation

25. Preparation Dividends • Adequate preparation includes a careful study of the strengths and weaknesses of both positions • No other aspect of negotiation continually pays better returns

26. Contract Risks • Every contract involves risks • One negotiator may gain power by reducing the risk exposure perceived by the other party • It can be reduced or controlled but cannot be eliminated completely

27. Issues • Issues are the basis for the differences between negotiation positions • Identify the key issues before you developyour objectives

28. Must Bargaining Give Avoid Negotiation Priorities • Prioritize Issues - Rank potential negotiation issues in relative order of importance • Determine whether each issue is a: • Must point - Nonnegotiable issues • Give point - Issues open to concession • Avoid point - Issues to avoid during negotiations • Bargaining point - Issues open to bargaining

29. Cost or Price Objectives • Technical, rates and factors issues will eventually effect cost and price objectives • Without an overall price objective, negotiations can result in settlements that can’t be explained or defended • Negotiating cost element by cost element can be risky • Price objectives should be planned in terms of a definite dollar amount

30. Contractor Approach to Negotiation Key Questions to consider: • What objectives and priorities has the contractor probably established? • How will the contractor's general business objectives and priorities affect the negotiation? • How will the individual objectives and priorities of the contractor's negotiator affect negotiations? • What negotiation styles and tactics will the contractor's negotiator likely use? • What pressures and constraints will affect the contractor's approach to negotiations?

31. Negotiation Plan • Draft a negotiation plan • The plan should include information such as: • Background • Issues & objectives • Review the plan with the negotiation team • Revise the plan as necessary • Define the role each team member will play in putting the plan into action • Priorities and positions • Approach

32. Bargaining Techniques

33. Aim High • Expectations influence behavior which influences the outcome of the bargaining session • You have a better chanceat success if you thinkyou will do well

34. Aim High(Cont) • Sellers who expect to receive more for their product generally receive a higher price • Pressures and limitations affect expectations • Develop positive assumptions • Have high expectations on price and non-price issues • Quality • Timely delivery • Long term relationship • Negotiating a price that is not fair and reasonable will likely result in a win/lose or lose/lose outcome

35. Leave Room to Compromise • Choose opening that allows compromise • State initial position below expected price • Contractors normally ask for more than what they expect • Based on one objective, the contractor will never fully understand your compromises Contractor expects compromise • When you fail to offer compromise, the negotiator's expectations are lowered • Never establish an unreasonable position just to give yourself room to compromise • Opening position should be your minimum position

36. Pressure the Contractor • Believe that there are unknown pressures • Identify specific pressure elements • Refer to potential alternatives: • Canceling and re-soliciting • Changing product requirements • Changing terms and conditions • Investing in new source development • Using in-house resources • Do not let artificial pressures increase the negotiating pressure • If contractor's negotiator is a company vice-president, it should not be any more stressful than if you were negotiating withany other salesman • Do not allow certifications adorning walls or on business cards intimidate you

37. Execution

38. Do Not Volunteer Weaknesses • Never volunteer information that would weaken your position • Respond to questions without telling falsehoods or volunteering information • Carefully word statements or, if needed, avoid a direct response to a direct question

39. Use Concessions Wisely • Do not appear overly generous or rush • Concede slowly and in small amounts • Concessions too large or given too quickly may: • Unnecessarily raise expectations • Give the impression that the concessions were not that important • Leave little room for further maneuvering • Link concessions with the spirit of compromise • Never make a concession without getting, or asking for, a concession

40. Use Concessions Wisely(Cont) • Problems with demands for equal concessions • Only equal if both are equally far from their objective • Once you get away from the issues, it may be impossible to return • Splitting the difference is a form of the equal-concession trap • Most often offered in price negotiations • No guarantee that the price will be fair and reasonable • Avoid repetitive splitting the difference

41. Say it Right • Sell yourself and your Ideas • Show politeness and cordiality • Think before you speak • Anticipate negative reactions • Never use provocative terms • Negotiate from strength • Do not use a first name or nickname if that the person might be offended • Keep it simple • Never personalize differences

42. Say it Right (Cont) • Project strength and confidence • Do not • Sound insincere, tentative, or overly eager • Chance slighting the other negotiator • Be cautious about expressing unrelated opinions • Be calm • Penalty for not saying it right • Irrevocable harm to the process • Might set an adversarial tone • The offended negotiatormight resist every offer

43. Satisfy Non-Price Issues • Most negotiations will not end in agreement unless the price & non-price issues are satisfied • Successful negotiators are able to identify the non-price needs • Common non-price issues: • Technical requirements • Data requirements • Contract start • Contract type • Contract financing • Delivery • Options • Furnishedproperty Non-Price Issues

44. Use the Power of Patience • Use patience to: • Increase the stress of contractor • Display resolve or firmness • Dissipate emotional feelings • Extra time may translate into thousands and even millions of dollars in concessions • The best deal for both sides takes time

45. Be Willing to Walk Away From or Back to Negotiations • Deadlock cannot always be avoided • Good negotiators are neither afraid to walk away nor too proud to return • Willingness to deadlock when a fair deal cannot be obtained is important • Deadlocks are frequently caused by personality conflicts • A walkout or even the threat of a walkout may be used to your advantage, but not without risk

46. Be Willing to Walk Away From or Back to Negotiations(Cont) • When a walkout appears eminent, consider your best alternative to negotiated agreement (BATNA) • Consider questions such as: • Is your position reasonable • What is your BATNA? • What is the contractor's BATNA? • How can you make the your position stronger? • Return from a walkout • Never walkout unless other alternatives appear more attractive • Remain open to returning to the negotiation table

47. Negotiation Success Factors that contribute to success in any negotiation always include: • The specific circumstances surrounding each negotiation • Skill of the negotiators • Motivation and fairness of each party

48. Negotiator Abilities The best negotiators exhibit the ability to: • Plan carefully • Gain management support • Effectively apply bargaining techniques • Communicate effectively • Tolerate conflict while searching for agreement • Project honesty • Foster team cooperation • Apply good business judgment

49. Negotiation Style Great Negotiators: • Attack the problem not each other • Focus on long-term satisfaction • Consider available alternatives • Base results on objective standards • Focus on positive tactics to resolve differences • Do not rely on deceptive behavior or bargaining ploys

50. Negotiation Style (Cont) • Emphasize the importance of a result • Remain positive during and after negotiation • Behavior during and after negotiation is often a primary influence on the other side's perception