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7/30/2019 Negotiation Skills and Resolving Techniques
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NEGOTIATION SKILLS
& RESOLVING CONFLICTS
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Introduction to Negotiation
Negotiation is a process ofcommunication in whichthe parties aim to send a
message to the otherside and influence eachother.
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Negotiation
Something that we do all the time, not only for
business purposes
Usually considered as a compromise to settle anargument or issue to benefit ourselves as much as
possible
Not always between only two people
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Example
When asked a question such as, "What kind ofsalary are you looking for?" You can respond bysaying something like, "I will consider anyreasonable offer," or "I am sure that if I do
receive an offer, it will be fair or reasonable." Ifyou are prompted to be more specific, thenprovide a salary range. The bottom of your rangeshouldn't be lower than your minimum
acceptable salary and the top should be a bithigher than your ideal salary. Never say, "I need aminimum of ___ dollars." (That's probably whatyou will end up getting.)
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Continuous Improvement
Process Thinking
-Most of the things done within an organization
are the result of processes
-Processes can be improved
Treat negotiation as a process!
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The Negotiation Process
Pre-
NegotiationsPreparation Negotiations
Agreement
or Non-
Agreement
Postmortem
Learning
Learning
Capture
Ongoing
Evaluation &
Learning
Learning Reuse
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Negotiating as an Organizational
capability
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How can organization improve its
overall negotiating skills
Provide training and preparation resources for
negotiators.
Clarify organizational goals and expectations and
when negotiators should walk away. Insist every negotiating team develop a Best
Alternative To Negotiated Agreement(BATNA) and
work to improve it.
Develop mechanism for capturing and reusing
lessons learned from previous negotiations.
Develop negotiating performance measures and link
them to rewards.
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Provide training and resources
Provide preparation checklist
Access the lessons learned from earlier negotiating
experience.
Apprentices assigned to more experienced
negotiators can participate in actual deal and sense
i.e. art of negotiating of how these things happen. Use of case studies and simulation
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Clarify goals and Expectations
Negotiators should have clear direction from
senior management
Management be clear with expectations
Negotiating goals must be aligned with
organizational goals and support with right
incentives
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Clarity Goals and Expectations
Negotiators shouldnt have to guess at
organizational goals and expectations.
Clear direction from senior management.
Ex If management is concerned with improving
profit margins but fails to communicate that goal
effectively, its field sales force may be negotiating
agreements with customers that discount pricesto win new accounts.
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Insist That Every Negotiating Team
Knows Its BATNA
Best Alternative To a Negotiated Agreement.
A strong BATNA gives negotiators bargaining
power.
Companies should insist that their
representatives have a clear understanding of
their BATNA.
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Capture and Reuse Lessons Learned
It is an essential part of the now popular field of
knowledge management.
Learning how to solve a knotty business problem or
how to apply provision of the tax code is time-consuming, costly, and subject to error.
Ex A tax accountant based in New York City is
unsure how to treat a financial transaction made by
a film producer. A search of her firms database
indicates how colleague in the Los Angeles office
have successfully handled the same type of
transaction.
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Capture and Reuse Lessons Learned
(Cont.)
When companies are systematic in recording the
outcomes of negotiations, something similar are
obtained.
As reported by Danny Ertel, One major
professional services firm is developing a
centralized database to help its project managersnegotiates scope-and-fee agreements with
clients.
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Develop Performance Measures and
Link Them to Rewards
Companies get what they measure and reward.
When companies reward their negotiators for
squeezing the lowest possible price out of
suppliers, they enjoy short term gains at the
expense of relationship values.
Their negotiators ignore win-win opportunities infavor of the zero-sum game.
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Measures for Evaluating the Success of
Negotiations
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Relationship
Communication
Interests
OptionsLegitimacy
BATNA
Commitment
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Who is a Negotiator ?
A negotiator is someone who specializes in mediatingagreements between two or more parties.
Most negotiators represent a particular partyinvolved, rather than acting as purely neutralmediators.
The goal of a negotiator is to reach an agreementwhich will be mutually agreeable and satisfactory forall parties.
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Characteristics of Effective Negotiator
Aligns negotiating goals with organizational goals.
Prepares thoroughly and uses each negotiating phase toprepare further.
Uses negotiating sessions to learn more about the
issues at stake and other sides BATNA and reservationprice.
Has the mental dexterity to identify the interests of bothsides, and the creativity to think of value creating options
that produce win - win situations.
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Characteristics of Effective Negotiator
Can separate personal issues from negotiating issues.
Can recognize potential barriers to agreement.
Knows how to form coalitions.
Develops a reputation for reliability and trustworthiness.
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Four Step Negotiation Checklist
Step #1
Facilitate development of a negotiation plan,which includes the teams key strategies your
position going in, and your desired outcome.
Step #2 Lead the team in implementing the negotiationplan.
Step #3
Adjust strategies and methods as needed during
negotiations to achieve the desire outcome.
Step #4
Facilitate assessment of the negotiation teams
activities.
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Example of Negotiation Process
Vantage problem:
Faced with the need to cut costs, increaseproduct innovation, and improve overall
responsiveness to customer demands, a largemanufacturing company undertook a strategicsourcing initiative aimed at consolidating itssupply base, creating cross-divisional commodity
teams, putting global contracts in place with keysuppliers, and instituting standard metrics againstwhich to measure supplier performance.
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However, the company soon encountered several
challenges. Commodity managers and buyers complainedof having no leverage in negotiations, because engineers
had designed specific supplier technologies or
components into product specs. Engineers and other
end-users complained that sourcing and materials
management teams were myopically focused on price,
and often damaged relationships with critical suppliers
by negotiating too aggressively. Suppliers played one
division off against another. And to the company lacked a
systematic way to evaluate whether an agreement with a
supplier was competitive relative to market alternatives
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Solution:
Vantage, together with a core team of sourcingexecutives and business unit leaders, engaged in a rapiddiagnostic analysis to better understand the barriers to
implementing new negotiation approaches andcapabilities. Analysis highlighted the need to formallydefine a set of critical negotiation activities: settingclearly defined goals; conducting market research to helpinform negotiation strategy development; engaging in
mid-course deal reviews with cross-functional executiveteams; and conducting formal transitions fromnegotiating teams to teams responsible for working withsuppliers once contracts were signed.
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To embed common practices, tools, and skills
across the organization, negotiation training and
coaching workshops were conducted to equip all
individuals involved in interacting with supplierswith the skills to effectively prepare for and
conduct contract negotiations, as well as ongoing
(often informal) negotiations over design
changes, individual purchase orders, and scope
changes.
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The Vantage-led team also designed andimplemented an electronic workspace withinteractive negotiation job aids, dashboards toenable coordination of negotiation activities acrossteams and divisions, and a knowledge repository ofinformation about the companys suppliers andlessons learned across negotiations. A small team of
negotiation black belts were trained to serve ascoaches and change agents to drive continuousimprovement across the organization.
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Result:
Overall supply chain cost reduction of 10%
Average annual price reductions of 10-15%
Improved contract terms and reduced variability
across contracts
Identification and/or development of alternate
sources for several key commodities
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Want Collaboration
Accept- and Actively Manage Conflict
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Rising need of collaboration
The quest for harmony and common goals canactually obstruct teamwork. Managers get
truly effective collaboration only when they
realize that conflict is natural and necessary.
Challenge for senior managers how can
people in an organization work togetheracross internal boundaries.
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Why Collaboration?
To service multinational accounts, you
increasingly need seamless collaboration across
geographical boundaries.
To improve customer satisfaction, you need
collaborations among functions ranging from
R&D to distribution.
To offer solutions tailored to customers needs,
you increasingly need collaboration between
production and service groups.
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Getting Collaboration Right
There are tremendous benefits: A unified face to customers
Faster decision making
Reduced costs through shared resources
The development of more innovative products.
Using the same strategies a few company onlybenefit of this , a lot of companies still fail.
Most companies respond to challenge ofimproving collaboration in an entirely thewrong way.
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Root Cause: Conflict
Some feel significantly improving collaboration
will reduce the conflict, but examples likerestructuring initiatives produce more of it.
Executives underestimate inevitability of
conflicts and also its importance to theorganization.
Leading to:
DisagreementsCompetencies
Access to information
Clashes between parties
Methods that executed can help
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Methods that executed can help
people and their organization
Strategies for managing disagreements at the point
of conflict.
Parties involved are made to manage themselves.
Most companies leave it on their employees on how they want to
solve the problem
At last, a well defined , well designed conflict resolution method
will.
Reduce transaction cost
Reduce wastage time
Reduce ill will struggle to work through differences
Will yield the innovative outcomes.
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The Donts of Collaboration
Conducting teamwork training workshops
Ignoring constraints Objectives and resources
Giving incentives for collaborative activity
Just bringing people together using technology
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The Dos of Collaboration
Collaboration as a culture and not a department
A common framework of collaboration
Trade off based approach using criteria
Consider objectives of other groups and teams
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Examples
Intel
o
Clearly accept conflictso Use the common language approach
o Training sessions with case studies
o Employees exposed to various tools
o Never play the blame game
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Blue cross and blue shield
o Starting to outsource more services
o Evaluate alternatives against criteria
o Prioritize each alternative
o Use the trade off approach
o Used by all decision makerso Higher chances of a consensus
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Collaboration tool used by Blue cross and blue shield
COLLABORATION AT BLUE CROSS AND BLUE SHIELD
IMPLEMENTATION COST INTEGRATION USABILITY SCALABILITY MANPOWER
12 MONTHS 15000$ DIFFICULT MEDIUM MEDIUM MEDIUM
PARTICIPANT 1
PARTICIPANT 2
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IBM: Coaching for Conflict
If you hear someone
reporting to you that
Everyone still insists
on being a decision
maker
The problem could
be that..
The people yourreport is dealing with
remain concernedthat unless they have
a formal voice in
making the decisiontheir needs and
interests wont betaken into account.
You could say that
Are there ways tobreak this decision
apart into a series ofsub issues and assigndecision making roles
around those subissues?
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Strategies for managing conflict upon
escalation
Equipped with common conflict resolution
methods, trade off criteria and by systematic
coaching people are better able to resolve
conflict on their own. Managers must ensure that upon escalation,
conflict is resolved constructively and effectively
and in ways that model desired behaviors. Establish and enforce a requirement of joint
escalation.
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How to avoid conflict?
The best way to avoid this kind of debilitatingdeadlock is for people to present a disagreement
jointly to their bosses.
It will guarantee that the ultimate decision maker
has access to a wide array of perspectives on theconflict, its causes and the various ways it mightbe resolved.
Companies that require people to share
responsibility for the escalation of a conflict oftensee a decrease in the number of problems thatare pushed up the management chain.
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Unilateral escalations at Telus- who should be
dealing with what? Who should be talking to
whom?
They made joint escalation a central tenet of its
new organization wide protocols for conflict
resolution. Managers had to jointly describe the problem
and what had been done so far and the
solutions(requirement of systematic documents.) Send a joint write up to the bosses and be ready.
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Ensure that managers resolve escalated conflictsdirectly with their counterparts.
Example- The three salespersons conflict overpricing.
The bosses put forward a biased viewpointleaving the answer to be given by the managers.
In the end the decision was taken by the seniormanagement which brought resentment into themanagement chain.
This is disastrous for a company that needs tomove forward quickly.
So, resolve the conflict swiftly and decisively byyourself.
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The solution to these problems is Commitmentby Managers-codified in a formal policy to deal
with escalated conflicts directly with theircounterparts.
In 1990s, IBMs sales and delivery organizationbecame increasingly complex because of
reintegration of divisions. This led to the creation of Market Growth
Workshop.
(Not successful right away). This brought about frontline product specialists
to resolve cross unit conflicts.
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Make the process for escalated conflict
resolution transparent.
How was the decision made?
Based on what kinds of assumptions?
With what kind of trade offs?
A managerial black box.
Clear communication about the resolution of
the conflict can increase peoples willingnessand ability to implement decisions
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IBMs Market Growth Workshops have evolvedinto a more structured approach to manageescalated conflict known as Cross TeamWorkouts(to increase transparency).
The meetings(held for sales and delivery issues)provide a public forum for resolving conflicts overaccount strategy, solution configuration, pricing
and delivery. The most complex and strategic issues reach the
global forum.
IBM has designated a Managing Director in salesand a global relationship partner in IBM globalservices as the ultimate point of resolution forescalated conflicts.
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Tapping the learning latent in conflict
At Johnson & Johnson , conflict is recognizedas a positive aspect of cross companycollaboration.
Example- outsourcing of clinical researchservices. Trends are spotted and informationabout them is disseminated throughout J&Jmore quickly. Better to partner with suppliers
as it structures its collaboration and realizesmore value from its relationship.
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Thank You