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Mutual Gains Negotiation. Course Objective. Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies, Techniques, and Purpose Develop the Ability to Apply Mutual Gains Concepts and Techniques to everyday negotiations, and Consultant Agreements. - PowerPoint PPT Presentation
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ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
MUTUAL GAINS NEGOTIATIONMUTUAL GAINS NEGOTIATION
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
2
Course ObjectiveCourse Objective
• Gain a useful and practical understanding of Concepts of the Mutual Gains Negotiation Process, Strategies, Techniques, and Purpose
• Develop the Ability to Apply Mutual Gains Concepts and Techniques to everyday negotiations, and Consultant Agreements
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
3
What is Negotiation?What is Negotiation?
• Negotiate: To confer, bargain, discuss with a view to reaching agreement; to make agreements for; to settle; to conclude; to succeed in crossing, surmounting, accomplish
• Latin: Negotium-business or Negotiatus-to carry on business
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
4
What is Negotiation?What is Negotiation?
• Negotiation = Business
• Negotiation can determine profitability and livelihood
• Negotiation protects the interests of all parties
• Negotiation is a critical step toward the successful completion of any project
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
5
Negotiation Is NOT….Negotiation Is NOT….
• A Contest or Game
• A method of determining a Winner and Loser
• A means of carrying out a personal vendetta or grudge
• A “one-size fits all” formula
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
6
Negotiations are EverywhereNegotiations are Everywhere
• In everyday life with friends and family
• In politics and government
• In business
• In scholastics
• In law; in and out of the courtroom
• In every organization, regardless of its size or complexity
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
7
The IssueThe Issue
• Negotiations fail often
• Mutual agreement is rarely achieved
• Preconceived Arguments or positions are pushed onto the issue at hand
• Time, efforts, and money are wasted
• Relationships are damaged
• Often parties leave in a worse position than they started
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
8
Why Negotiations FailWhy Negotiations Fail
• Negotiations are viewed as a trade-off process (zero-sum)
• Parties give into the three “E”s: Ego, Emotion, Escalation
• Parties never develop a systematic, step-by-step approach to negotiation
• Parties never realize how their behavior will affect others
• We let “What we have always done” dictate what we do today.
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
9
Three Areas of NegotiationThree Areas of Negotiation
• The Process- how we go about our negotiation
• The Substance- what we are negotiating for; what we see as “on the table”
• The Relationships- often overlooked, and underestimated, and regularly the first thing sacrificed
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
10
Traditional NegotiationsTraditional Negotiations
• Establish Extreme Positions: Always start at one end or the other and work toward the middle
• Never accept or make the first offer
• Never tell them what you really want
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
11
Traditional NegotiationsTraditional Negotiations
• If you concede, concede reluctantly
• Always be skeptical of the other side
• Give them as little as possible
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
12
Traditional NegotiationsTraditional Negotiations
• Usually involves “giving in”
• Becomes a contest of wills
• Strains relationships
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
13
Productive NegotiationsProductive Negotiations
• Achieve Set Goals
• Produce Agreements that benefit all parties
• Improve and sustain healthy relationships
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
14
Goals of Negotiation Goals of Negotiation
• Achieve an agreement that is acceptable to all- Satisfies all of our interests and enough of theirs- no one feels taken
• Explore all options and select the best using legitimate criteria
• Establish an agreement that can succeed
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
15
How to Achieve Goals of Negotiation How to Achieve Goals of Negotiation
• Focus on Interest- not position– Interest: “we have to really watch our budget”
– Position: “there’s no way we are going to pay more than…”
• Invent Options for Mutual Gain
• Establish legitimate Criteria for evaluating interest
• Determine your Best Alternative To a Negotiated Agreement
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
16
A New ModelA New Model
4 Steps to Mutual Gains
1.PREPARE
2.CREATE VALUE
3.DISTRIBUTE VALUE
4.FOLLOW-UP
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
17
Step 1: PrepareStep 1: Prepare
• Determine your purpose and define your team
• Estimate your BATNA
• Try to improve your BATNA
• Define your Interests
• Try to estimate their interests
• Prepare options that could benefit both parties
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
18
Determine Your Purpose and Define Your TeamDetermine Your Purpose and Define Your Team
• What is my role in the negotiation, and who will assist me in the process?
• Who will gather what information?
• Who will participate in the negotiations?
• Who has the authority in the negotiations?
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
19
Focus on InterestsFocus on Interests
What are Interests?
• Interests are the reason for positions
• More than one position can achieve a particular interest
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
20
Focus on InterestsFocus on Interests
• Identify the interest of all your stakeholders
• Analyze and Prioritize your interests
• Consider the other party’s interests
• Identify personal and professional interests
• Communicate interests in a clear and concise manner
• Identify conflicting and compatible interest to establish common ground
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
Estimate InterestsEstimate Interests
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
Estimate InterestsEstimate Interests
OURSOURS
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
23
Estimate your BATNAEstimate your BATNA
• BATNA’s are not negative
• A BATNA is your best option to not agreeing
• Your BATNA has to be something you are willing to accept
• Your BATNA should not be detrimental to your business
• No Party should be forced into a contract they cannot live with
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
24
Prepare Options for Mutual GainsPrepare Options for Mutual Gains
• Think about negotiations in a different light
• Brainstorm, invite outside suggestions, be creative
• Note the obvious without focusing on it
• List options with positive statements (recognize the down-side, but emphasize the up-side)
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
25
Step 2: Create ValueStep 2: Create Value
• Suspend criticism
• Discuss the interests of all parties
• Make suggestions without making commitments
• Make the pie larger
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
26
Suspend CriticismSuspend Criticism
• Listen
• Evaluate, without criticism
• Remove the person from the idea
• View your counterpart as a partner not an opponent
• Ask “Why?”
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
27
Discuss InterestDiscuss Interest
• Always reveal your interest not your BATNA
• State what you believe their interest may be
• Listen, listen, listen…
• Take careful notes
• Focus on the issues, not the position
• Ask “Why?”
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
28
Make SuggestionsMake Suggestions
• Brainstorm with all parties
• Invent without committing- “What if we…”
• Propose multiple ideas together
• Put the extremes on the table
• Avoid the “Fixed Sum Game”- the “split the difference” solution
• Load the table with ideas
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
29
Step 3: Distribute ValueStep 3: Distribute Value
• Develop the relationship-build trust
• Establish legitimate criteria
• Suggest possible distributions
• Settle on the strongest agreement
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
30
Develop the RelationshipDevelop the Relationship
• Separate substantive issues from relationship issues
• Honesty builds trust
• Listen to their views and interests
• Clarify-restate what’s been said
• Recognize emotional reactions
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
31
Develop the RelationshipDevelop the Relationship
• Examine preconceptions and biases
• Attempt to identify their preconceptions
• Try to understand their mind set- Where are they coming from?
• Attempt to take a fresh approach
• Remember, take a partnering approach
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
32
Establish CriteriaEstablish Criteria
• External standards of fairness
• Market value, historical data, indices, averages, etc.
• PennDOT Staff Hour Estimating Guide (SHEG)
• Develop criteria to support your interests
• Be open to theirs
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
33
Suggest Possible SolutionsSuggest Possible Solutions
• Work to improve each suggestion
• Get as far away from the BATNA as possible
• At minimum – develop one solution that is fair to both parties
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
34
Step 4: Follow UpStep 4: Follow Up
• Conduct Biennial Review of SHEG
• Establish periodic reviews of process
• Ensure controls/incentives are in place
• Have a dispute resolution plan
• Improve relationships
• Continual metric evaluation
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
35
Strategies for SuccessStrategies for Success
• Change the game to problem solving
• Reveal your interests and discuss theirs
• Ask why (why not) to get past positions
• Invent options without committing (what if)
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
36
Strategies for SuccessStrategies for Success
• Analyze mutual interests and conflicting ones to strike balance
• Foster cooperative atmosphere
• Discuss process and logistics before substance
• Be creative
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
37
Strategies for SuccessStrategies for Success
• Ensure your interests have legitimate criteria
• Identify examine and challenge all your assumptions
• Listen for their assumptions without judging
• Respond to reasoned arguments, never to pressure
• Use objective criteria
ACEC/PAA C E CM ERICAN OUN CIL OF NGINEERING OMPANIES
of Pennsylvania
QUESTIONS?QUESTIONS?
DISCUSSION?DISCUSSION?