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The Art of Effective Negotiations

September 14, 2012 Phoenix, AZ. Steven J. Isaacs, PE, Assoc. AIA Division Manager FMI Corporation. The Art of Effective Negotiations. A Primer for Getting and Keeping Business. Goals of the session. A broader understanding of the fundamentals of Interest Based negotiations

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The Art of Effective Negotiations

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  1. September 14, 2012 Phoenix, AZ Steven J. Isaacs, PE, Assoc. AIA Division Manager FMI Corporation • The Art of Effective Negotiations A Primer for Getting and Keeping Business

  2. Goals of the session • A broader understanding of the fundamentals of Interest Based negotiations • Techniques for appropriate preparations for negotiations • Specific tools to use and barriers to overcome in all negotiations

  3. CONFLICT

  4. Conflict is a difference of interests

  5. Is conflict good or bad? Neither! It is HOWyou solve conflict that is either good or bad.

  6. Three ways to resolve conflict: avoid fight negotiate

  7. The goal of a NEGOTIATION is to satisfy [my|their|both] interests.

  8. Goals and Methods Negotiation is a dialogue for the purpose of satisfying myinterests. Method is to focus ontheir interests. A New Approach to Negotiations

  9. A Brief Survey of Negotiating Strategies Strategy No. 1 Goal: Achieve my interests Means: Defeat their interests Strategy No. 2 Goal: Achieve my interests Means: Focus on my interests only Strategy No. 3 Goal: Achieve the interests of both sides Means: Focus on the interests of both sides

  10. A Better Way to Negotiate Goal: Achieve my interests Means: Focus on their interests

  11. Key points of interest based negotiation Focus on interests, not positions

  12. How do you focus on interests?

  13. Key points of interest based negotiation Separate the people from the problem BATNA (Best Alternative To a Negotiated Agreement) Invent options for mutual gain Source: Getting to Yes, Roger Fisher, William Ury • Focus on interests, not positions

  14. ROI on negotiation preparation $30 Average Labor per hour(Raw) 3 Effective Multiplier $90 Total Average Billing Rate 10% % Profit $9 Profit per billable hour How many work hours to make $1000 profit? 111

  15. ROI on negotiation preparation What if I assured you that if you put ONE more hour into preparation, you could make $1000 in profit?

  16. Negotiation Preparation Begins at marketing Don’t make promises you cannot keep Set the stage for a successful negotiation

  17. Preparation(continued) Obtaining knowledge • Figure out your interests • Establish the BATNA • Client’s interests • Previous experience with client

  18. Preparation(continued) Prepare for the actual negotiation • Analyze what you think are the client’s interests • Discover the implications • Explore as many elements as you can think of

  19. The Actual Negotiation: Negotiating to build a lasting agreement Clarify goals and the means to achieve them: • Vigorously pursue your interests • Focus on the other party’s interests • Option hunting - based on knowledge of interests, search for opportunities for mutual gain

  20. Reaction to intractable or highly aggressive counterparts Or…The art of having the other party have it your way Don’t react Disarm your counterpart Change the game Make it easy to say “Yes” Source: Getting Past No, Roger Fisher, William Ury

  21. Personal Illusions • Winning = Excellence • Survival = Closedness • Negotiation = Competition • Negotiations require trust

  22. Psychological Roadblocks • Reactive devaluation • Attribution • Loss aversion • Certainty • Convictions of naïve realism • Dissonance

  23. Closing Reaching an agreement Do all parties have the same impression of the agreement? Reviewing the terms of the agreement

  24. Four Steps of Negotiation Step 1: Prepare, prepare, prepare • Analyze your interests • Hypothesize their interests • Decide on your BATNA • Discover the commonalities between your interests and their interests

  25. Four Steps of Negotiation Step 2: Clarify the goals and the means to achieve them • Vigorously pursue your interests • Focus on their interests • Option hunt and problem solve to achieve creative solutions • Remember to use problem-solving techniques

  26. Four Steps of Negotiation Step 3: Keep your balance • Avoid the traps that detract from your interests: • Reaction to intractable opponents • Personal illusions • Psychological roadblocks

  27. Four Steps of Negotiation Step 4: Close with Accuracy Make sure all parties agree on all elements of the solution, and make a record of negotiations.

  28. Questions?

  29. About FMI Knowledge • Expertise • Relationships Founded in 1953 by Dr. Emol A. Fails, FMI provides management consulting and investment banking for the worldwide construction industry. FMI delivers innovative, customized solutions to contractors; construction materials producers; manufacturers and suppliers of building materials and construction equipment; facility owners, managers and developers; engineers and architects; surety companies; and industry trade associations. FMI’s experienced professionals assist businesses with strategic planning, leader and organizational development, business development, research, mergers and acquisitions, peer groups, private equity placement, project execution and training. Steven J. Isaacs, P.E., Assoc. AIA Division Manager sisaacs@fminet.com Visit us at www.fminet.com

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