BUSINESS
NEGOTIATIONS
Leighton Wilks
HROD 493
Fall 2011
Introduction
Me!
Leighton Wilks
HROD
SH 460
[email protected]
You!
Name
Area of focus
Something interesting?
The Course
Perhaps the most useful course of your degree!
Negotiation is both an art and a science
Will discuss material but you must decide what works
best for you
Never be a good musician by studying music
Class is experiential
We will negotiate, debrief, discuss
Participation is a must (be on time, prep for negotiation)
Dont be afraid to push your comfort zone
Remember this isnt real!
The Textbook
Essentials of Negotiation
Canadian Edition
A fee of $35.00 is required
to cover copyright
Not open to negotiation
Cash only
Assignments
Class Participation (10% - 1.25% per negotiation)
Individual Assignment (30%)
Self-appraisal paper (10 pages max)
Due on December 8th
Group Project (20%)
Multimedia project & analysis paper (10 pages max)
Groups of 4-5
Paper December 8th
Midterm Exam (20%)
In class on October 20th
Final Exam (20%)
Scheduled by registrar
Admin Stuff
Office hours
Mondays (13:30 14:30)
SH 460
Or by appointment email is best!
PPT presentations will be posted on Friday prior to class
No need to read chapters or PPT prior to class
Unless otherwise stated
If you miss class it is your responsibility to contact me for
your negotiation role
I cant email or post the roles!
Negotiation
Negotiation - decision-making situations in which
two or more interdependent parties attempt to
reach agreement
All of us negotiate, almost daily
Many small negotiations, few large negotiations
Skills apply to the boardroom, personal relationships
Negotiations occur for several reasons:
To agree on how to share or divide a limited resource
To create something new that neither party could attain on his or
her own
To resolve a problem or dispute between the parties
Characteristics of a Negotiation
Two or more parties
Conflict of interest
between two or more
parties
Parties negotiate
because they think they
can get a better deal
than by simply accepting
what the other side
offers them
Parties expect a give
and take process
Negotiation Exercises
Present the opportunity to:
Practice and assess your negotiation behavior in a safe
environment
Examine the behaviors of others and see how they react
to you
Get feedback on your interaction with others
Experiment with various negotiating strategies
Compare the success of your strategy to those used by
others
Understand that there is no cookbook solution
Negotiation Time! (almost)
The Negotiators Code
I will always be prepared
I will not change facts that alter power
I will not show others my role
I will treat my role seriously
(professionally)
I will wait to discuss my negotiation in the
debrief
I will be honest and forthcoming in the
debrief
Class discussion stays in class
NEGOTIATION BASICS
And I mean the basics
Negotiation Characteristics
Successful negotiation involves:
Management of tangibles
Price
Terms of Agreement
Timing
Resolution of intangibles
Need to win or beat the other party
Need to look important or tough
Need to appear fair and honorable
Need to defend an important position
Interdependence
In negotiation, parties need each other to achieve
their preferred outcomes or objectives
This mutual dependency is called
interdependence
Interdependent parties are characterized by interlocking
goals
Having interdependent goals does not mean that
everyone wants or needs exactly the same thing
A mix of convergent and conflicting goals
characterizes many interdependent relationships
Interdependence, Processes &
Outcomes
Interdependence (convergent and conflicting
goals) and the structure of the situation shape
processes and outcomes
This results in two types of negotiation
Distributive one winner
Integrative mutual gains (all parties win)
Distributive Negotiation
Also known as fixed pie, zero
sum, win-lose
One persons gain is the others
loss
Directly conflicting interests
Each person is trying to maximize
his/her share of the payoff (pie)
Value claiming!
Distributive Negotiation
Total Value
Integrative Negotiation
Also known as non-
zero-sum or win-win
Finding ways to
increase the amount of
pie on the table
Finding solutions that
are of value to both
parties
Value creation (and
claiming)!
Integrative Negotiation
Total Value
Value Claiming and Value Creation
Most actual negotiations are a combination of
claiming and creating value processes
Negotiators must be able to recognize situations that
require more of one approach than the other
Negotiators must be versatile in their comfort and use of
both major strategic approaches
Negotiator perceptions of situations tend to be biased
toward seeing problems as more distributive/
competitive than they really are
OTHER IMPORTANT
CONCEPTS
Chapter 1
Tangibles & Intangibles
Tangibles
Price
Financing
Terms of agreement
Intangibles
Need to look good
Need to look strong
Need to look fair
Mutual Adjustment
Continues throughout the negotiation as both parties
act to influence the other
The effective negotiator needs to understand how
people will adjust and readjust and how the
negotiations might twist and turn, based on ones
own moves and the others responses
This is the art of negotiation
Two Dilemmas in
Mutual Adjustment
Dilemma of honesty
how much of the truth to tell the other party?
Too much and they can take advantage of you
Too little and you may not identify integrative opportunities
Too little a may result in a lack of trust by the other negotiator
Dilemma of trust
How much negotiators should believe what the other party
tells them
Too much and the other party may take advantage of you
Too little and you will have difficulty reaching an agreement
Two Dilemmas in
Mutual Adjustment
Most integrative solutions will be
identified when both parties are
honest about their needs (interests)
and establish trust!
Concession Making
When one party agrees to make a change in his/her
position, a concession has been made
When a concession is made, the bargaining range is
further constrained
Concessions can signal when negotiations are
reaching a conclusion
Getting smaller, and smaller, and smaller
Never, ever, ever make two concessions in a row
Sign of a bad negotiator (negotiating with yourself)
BATNA
Best Alternative To a Negotiated Agreement
Having a BATNA gives you tremendous power!!!
Counterparts perceptions of your BATNA is very
important
A good negotiator will establish a BATNA prior to the
negotiation
A good negotiator will do everything possible to improve
his/her BATNA
A good negotiator will walk away from the negotiation
based on his/her BATNA
Know when to hold em, know when to fold em, know when to walk
away, know when to run!
Putting it Together
Buying a house
Q: Was this a distributive or integrative negotiation?
Q: Did you have a BATNA?
Four Hallmarks of Successful Negotiation
Value is created
Value is claimed
Other party feels good
Protect or enhance the negotiation
relationship
This is a very important slide!
