Structuring
Negotiations
A common mistake in negotiating
is “focusing too much on the
substance of the deal and not
enough on the process. Substance
is the terms that make up the final
agreement. Process is how you will
get from where you are today to
that agreement. My advice to deal
makers: Negotiate process before
substance.”
Control the Negotiation Before It Begins, Focus on four preliminary factors that can
shape the outcome.
by Deepak Malhotra
https://hbr.org/2015/12/control-the-negotiation-before-it-begins
SOME FACTORS TO CONSIDER
Who will be the parties to the negotiation?
Who will be at the table for the respective parties (positions
with/relationship to the parties)
Where will the negotiation take place?
What is the schedule for the negotiations?
Will there be a set timeline for completion?
Are the negotiations in person, online or multilayered?
Are the negotiations public or private?
Will there be third-party intervention (voluntary or required)?
If there is third party intervention, what will be their role(s)
If there is third-party intervention, will there be undisclosed parameters
What communication mediums are available to you in the negotiations
(and how and when would you want to use each)?
MAPPING OUT THE NEGOTIATION SPACE
In his article, Deepak Malhotra suggests that prior to
starting negotiations, you should “map out” the
negotiation space to make sure that you understand
outside influences on the negotiations. He describes that
as follows:
“This consists of every party that can affect the
negotiation, along with any party that will be affected by
the negotiation. In my experience, a strategy that makes
perfect sense when you’re thinking bilaterally—that is,
about the relationship between any two parties in the
negotiation—can suddenly become ineffective or even
disastrous when you take a multilateral perspective. I
encouraged my client to evaluate the interests,
constraints, alternatives, and perspective of all the
relevant parties.”
“In the real world, you’ll never have as complete a picture as
you’d like, but you put yourself at further disadvantage if
you focus too narrowly on the party on the other side of the
table. You have to assess the perspective of all the parties
that can influence or are influenced by the deal: Who has the
ability to influence the person on the other side of the table?
How might the strategy or actions of other parties change
your alternatives, for better or worse? How does the deal
affect the interests of those who are not at the table? How
will this negotiation affect your leverage with future
negotiation partners? If multiple parties are involved in the
deal, does it make sense to negotiate with them
simultaneously or in sequence, together or separately?
Your analysis might suggest a change of strategy—that you
should negotiate with a different party first, delay the deal or
speed it up, bring others into the room, expand or contract
the scope of the deal, and so on.”
“Who Are the Other Parties?
A party is a person (or group of people with
common interests) who aces in accord with his
or her preferences. Parties are readily identified
when they are physically present, but often the
most important parties are not present at the
negotiation table. Such parties are known as the
hidden table. (Citation omitted.) When more
parties are involved in the negotiations, the
situation becomes a team or multi-party
negotiation, and the dynamics change
considerably. … Sometimes, it is obvious who
the other parties are, and they have a legitimate
place at the table. However, in other situations,
the other parties may not be obvious at all, and
their legitimacy at the table may be
questionable.”
Leigh L. Thompson The Mind and Heart of the Negotiator 6th edition. Prentice Hall 2015, at p. 26
Who is involved at each stage of the
negotiation for your side and who do
you want to have involved on the
other side?
“Consider [this] scenario. You’ve been negotiating
with someone for months. You have a few final
concessions that you’ve been holding back—they’re
costly but worth making if it will close the deal. With
the finish line in sight, you make the concessions, and
the other side responds: “This is great. I appreciate
your flexibility on these issues. Let me share this with
my boss to see what she thinks.” Unfortunately for
you, you had no idea your counterpart even had a
boss—you thought he was the final decision maker.
The negotiations are clearly not over, and you have
nothing left to give.”
Control the Negotiation Before It Begins
by Deepak Malhotra, From the December 2015 Issue of Harvard Business Review
https://hbr.org/2015/12/control-the-negotiation-before-it-begins
Are any of your answers to the previous
slide different when:
• There are multiple parties involved?
• It is a tiered negotiation (i.e., your
negotiation with one party hinge on
your ability to negotiate successfully
with another party)
(e.g. You are negotiating a lease with a
potential landlord but you will have
roommates or subtenants)
“Imagine leading negotiations
involving representatives from most
of the world’s nations on a
contentious topic such as sustainable
development. Where would you start?
How would you proceed when
conflict emerged? How would you
know when it was time to wrap
things up?”
Program on Negotiation: Harvard Law School
Techniques for Leading Multiparty Negotiations: Structuring the Bargaining Process
Negotiation techniques from great negotiator Tommy Koh on how to lead multiparty negotiations
By PON Staff — on November 25th, 2019 / Mediation
https://www.pon.harvard.edu/daily/mediation/techniques-for-leading-multiparty-negotiations-structuringthe-bargaining-process/
“In every revolutionary conflict,
the acceptance of the guerrillas
as a negotiating partner has
proved to be the single most
important obstacle to
negotiations, for it obliges the
government to recognize the
legal status of the enemy
determined to overthrow it.”
Henry Kissinger
Identify groups and require a
spokesperson for each group.
• What are the pros and cons of
doing this?
In negotiations to end the Vietnam war, who
would have a seat at the table was a crucial factor:
“Eventually it was decided to include all four
parties and simply to label them as ‘our side’ and
‘your side’, thereby avoiding the contentious issue
of legitimacy. Four parties would still be involved,
thus the Communists would be satisfied. On the
other hand, officially the talks were two-sided, as
the US and South Vietnamese emphasized
publicly.”
From: Defense in Depth: Research from the Defence Studies Department, King's College
London
Stuck in Endless Preliminaries: Vietnam and the Battle of the Paris Peace Table, November
1968-January 1969
DR JEFFREY MICHAELS
https://defenceindepth.co/2017/05/19/stuck-in-endless-preliminaries-vietnam-and-thebattle-of-the-paris-peace-table-november-1968-january-1969/
Moreover, the talks became bogged
down in negotiating the preliminaries.
“The location for the proposed talks
proved to be the first hurdle. From the
end of March until early May 1968
there was a drawn-out exchange
between the US and North Vietnamese
on this topic.”
Stuck in Endless Preliminaries: Vietnam and the Battle of the Paris Peace Table,
November 1968-January 1969
DR JEFFREY MICHAELS
“As these preliminary discussions about who would meet came to a conclusion, they were then followed
with additional talks about how a meeting might be held. These discussions, which began in November
1968, were centered on questions about the shape of the conference table, how many tables there should
be, and how they would be placed. These discussions became known as the ‘battle of the tables’ and would
last ten weeks until mid-January 1969 as fighting continued to rage and Richard Nixon won the presidential
election. From the start, it was recognized that a triangular table (with the North Vietnamese/NLF*
combined but the US and South Vietnamese separate) would be a non-starter as it would imply that the
Communist side was outnumbered two-to-one. North Vietnam wanted a square table in order to provide
further legitimacy to the NLF, and also suggested four tables arranged in either a circular or a diamond
pattern. The American preference was for a two-sided table or two rectangular tables. The North
Vietnamese countered by suggesting a round table. Whereas the Americans supported the idea of a round
table on the basis that people sitting at the table wouldn’t have any position, Saigon then protested that a
round table meant that everyone was equal which would imply that the NLF delegation were equal to the
South Vietnamese government. As a result, the US suggested six variants of a round table, including a
round table bisected with a strip of baize to provide a symbolic dividing line. Later the benefits and
drawbacks of an oval table were debated but the idea eventually was rejected, as were two semi-circular
tables, one round table cut in half, a ‘flattened ellipse’, a ‘broken diamond’ and a parallelogram.”
Stuck in Endless Preliminaries: Vietnam and the Battle of the Paris Peace Table, November 1968-January 1969 DR JEFFREY MICHAELS
(*National Liberation Front (better known as the Viet Cong))
“The deadlock was finally broken by a Soviet diplomat. Anxious to get the
negotiations moving ahead, the Soviets pressured the North Vietnamese to
compromise and accept a round table (4.75 metres in diameter) with two
rectangular tables (3 feet by 4.5 feet) alongside for secretaries (no more and no
less than 4.5 centimetres away). The table would include no nameplates, flags
or markings, but would only be covered in green baize. Interestingly, the
furniture used for the first meeting on January 18, 1969 – later replaced – was
the same unused conference table that had been built for the aborted Nikita
Khrushchev-Dwight D. Eisenhower talks in 1960. A separate dispute about
order of speakers was also resolved with the South Vietnamese speaking first
followed by the US, North Vietnamese and NLF. At the following meeting the
order would be reversed and would alternate accordingly thereafter.”
Stuck in Endless Preliminaries: Vietnam and the Battle of the
Paris Peace Table, November 1968-January 1969
DR JEFFREY MICHAELS
NEGOTIATION PRINCIPLES
“The need to negotiate can happen at any time—sometimes
once a day, and sometimes more than once a day. Any time
you cannot reach your goals without the cooperation of
someone else, you are propelled headlong into negotiation.
You may not be engaged in a hostage negotiation, or striking
a deal for millions of dollars’ worth of a product or service for
a company, but the importance of arriving at a point where
you and the other party both feel you win is vital to your
peace, sanity, and productivity. For example, if your goal is to
eat dinner in peace, and your young child is demanding that
you fix a toy or play a game, you must negotiate.”
Leigh L. Thompson The Truth About Negotiations Second Edition. FT Press 2013
A TACIT NEGOTIATION
You are walking down the middle of the sidewalk when someone
coming in the other direction approaches, also walking down the
middle of the sidewalk. If you both stay on course, you will
collide. Now what?
As the two of you get close, you step to the right and allow the
person to pass. Though nothing was said, there was still an
implicit negotiation as to who would move which resulted in a
resolution to the situation and avoided a collision.
LIST THREE THINGS THAT YOU HAVE
NEGOTIATED SINCE DECEMBER 1, 2022
We negotiate every day whether we do it consciously or not.
People with whom we negotiate are not only in the business
context. We negotiate with:
o
o
o
o
o
o
Roommates
Parents
Children
Coaches
Landlords
Our pets
About things as mundane as:
o
o
o
o
o
Siblings
Spouses
School Groups/Teams
Faculty members
Flea markets
Now that you are living back at home, you are under my roof and must follow my rules.
Which room do I set up for my office while working at home.
No you can’t borrow my sweater.
My essay is due when?
Who is going to do what in relation to our group presentation?
“[T]he most important negotiations we have – the ones
that determine
the
quality
our livesbusiness
and the impact
“As you go
about
theofordinary
of our of
actions
are there
the ones
have with ourselves.
every–day,
are we
inner
Learning
to communicate
well and
influence other
commentators
competing
fortoyour
peopleattention.
are essential
skills inthey
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But even more
At times,
speak nicely.
fundamental
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is learning
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eachtoother
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with
yourself.”
like hostile adversaries on talk radio.”
Managing yourself: The Most Important Negotiation in Your Life, Erica Ariel Fox, September 3, 2013 HBR.org/2013/09/themost-important-negotiation
“One false move in negotiations of major
importance, such as salary negotiations, house
buying, and car buying, can have a dramatic
negative consequence on your economic welfare
for years to come. Given that your quality of life is
affected by your ability to bring home the bacon as
well as eat it in quiet dignity, knowing how to
negotiate in the corporate world and in the kitchen
is essential for peace of mind and retirement.”
Leigh L. Thompson The Truth About Negotiations Second Edition. FT Press 2013
With whom do you negotiate in business?
o Partners
o Investors
o Employees
o Supervisors
o Co-workers
o Customers
o Suppliers
o Competitors
o Landlord
o Unions
o Anybody who has something you want (e.g. owner of a copyright on music or
artwork that you want to use in an advertisement)
AT WHAT POINT IN THE
COURSE OF EVENTS DO WE
NEED TO NEGOTIATE?
Entering into an agreement
Revisions to an agreement
Dispute resolution
• Are their differences in how you would negotiate in a
business v. in everyday life?
• What do you believe are the three most important
factors in being a successful negotiator in business?
In everyday life?
• Do you think you are a good negotiator? If yes why?
If no, why not?
“Good negotiations contribute significantly to
business success, as they:
• help you build better relationships
• deliver lasting, quality solutions - rather than
poor short-term solutions that do not satisfy
the needs of either party
• help you avoid future problems and conflicts.
Negotiating successfully Queensland Government: Business Queensland Last updated July 17, 2017
https://www.business.qld.gov.au/running-business/marketing-sales/managing-relationships/negotiating
MAJOR NEGOTIATIONS ON THE
NATIONAL/INTERNATIONAL STAGE IN THE
PAST FEW YEARS
Brexit
COVID-19 Stimulus packages
COVID-19 Back to work order/masking, vaccination
requirements in meat packing factories, schools, public
service
Paris Climate Accords
Worcester Nurses’ Strike
Build Back Better Bill
Speaker of the House in Congress/Rules Package
• Do you think it is necessary for a
person in business to be a good
negotiator?
• Why?
• Does it make a difference if the
person is in management v. a nonmanagement worker?
• Negotiations that you have
experienced/witnessed in your
work environment(s)
PREPARING FOR
NEGOTIATIONS
https://www.sdcba.org/?pg=BusinessandCorporatePreparingfo
rNegotiationANovelC
Communication and Negotiation
Exhibit 11.13
Key Factors: People—Situation—Negotiation Process
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
USEFUL NEGOTIATION PREPARATIONS
FROM: The Truth About Negotiation by Leigh Thompson, Pearson Education,
Inc. (2nd edition) 2013
•
•
•
•
•
•
Brainstorm all issues under consideration
Arrange those issues in their order of importance to you
For each issue, brainstorm all of the possible alternatives
Brainstorm the issues that the other party(ies) may care about
Identify your most desirable set of terms for each issue
Identify and prioritize your alternative courses of action for negotiating with
the other party(ies)
• Identify and prioritize the other party(ies) alternative courses of action
• Prepare an opening offer
A Negotiation Preparation Checklist
Our negotiation preparation checklist will position you to prepare as thoroughly as necessary to create value and
claim value in your next important business negotiation.
BY KATIE SHONK — ON DECEMBER 9TH, 2019 HARVARD LAW SCHOOL: PROGRAM ON NEGOTIATION
https://www.pon.harvard.edu/daily/negotiation-skills-daily/negotiation-preparation-checklist/
Analyzing Your Perspective
1.What do I want from this negotiation? List short-term and long-term goals and dreams
related to the negotiation.
2.What are my strengths—values, skills, and assets—in this negotiation?
3.What are my weaknesses and vulnerabilities in this negotiation?
4.Why is the other party negotiating with me? What do I have that they need?
5.What lessons can I apply from past negotiations to improve my performance?
6.Where and when should the negotiation take place?
7.How long should talks last? What deadlines are we facing?
8.What are my interests in the upcoming negotiation? How do they rank in importance?
9.What is my best alternative to a negotiated agreement, or BATNA? That is, what option
would I turn to if I’m not satisfied with the deal we negotiate or if we reach an impasse? How
can I strengthen my BATNA?
10.What is my reservation point—my indifference point between a deal and no deal?
11.What is my aspiration point in the negotiation—the ambitious, but not outrageous, goal that
I’d like to reach?
12.What are the other side’s interests? How important might each issue be to them?
13. What do I think their reservation point and BATNA may be? How can I find
out more?
14. What does their BATNA mean in terms of their willingness to do a deal with
me? Who has more power to walk away?
15. Is there a zone of possible agreement (ZOPA) between my reservation point
and the other side’s? If there clearly is no room for bargaining, then there’s no
reason to negotiate—but don’t give up until you’re sure. You may be able to add
more issues to the discussion.
16. What is my relationship history with the other party? How might our past
relationship affect current talks
17. Are there cultural differences that we should prepare for?
18. To what degree will we be negotiating electronically? Are we prepared for the
pros and cons of negotiating via email, teleconference, etc.?
19. In what order should I approach various parties on the other side?
20. What is the hierarchy within the other side’s team? What are the patterns of
influence and potential tensions? How might these internal dynamics affect
talks?
21. What potential ethical pitfalls should we keep in mind during the negotiation?
22. Who are my competitors for this deal? How do our relative advantages and
disadvantages compare?
23. What objective benchmarks, criteria, and precedents will support my preferred
position?
24. Who should be on my negotiating team? Who should be our spokesperson? What
specific responsibilities should each team member have?
25. Do we need to involve any third parties (agents, lawyers, mediators, interpreters)?
26. What authority do I have (or does our team have) to make firm commitments?
27. Am I ready to engage in interest-based bargaining? Be prepared to try to create
value by trading on differences in resources, preferences, forecasts, risk tolerance,
and deadlines.
28. If we disagree about how the future plays out, can we explore a contingency
contract—that is, stipulate what will happen if each side’s prediction comes true?
29. What parties not yet involved in the negotiation might also value an agreement?
30. Have I practiced communicating my message to the other side? How are they
likely to respond?
31. Does the agenda make room for simultaneous discussion of multiple issues?
32. Is an agreement likely to create net value for society? How can we reduce potential
harm to outside parties?
NONE OF THE ABOVE IS USEFUL IF YOU DO NOT
GATHER THE FACTS AND INFORMATION
NECESSARY TO A FULL UNDERSTANDING OF
YOUR POSITION ON EACH AND THAT OF THE
OTHER PARTY(IES)
Old McDonald has a farm. He
has sold almost all of his crops
and …
There is only one pumpkin left.
You want it!
Peter Piper wants it!
Sally wants it!
Old MacDonald wants a bidding war so that
he can afford to send his daughter to
Wentworth next fall.
What do you do to prepare for the
negotiation with Old McDonald?
You want the pumpkin to make soup
for your restaurant.
Peter Piper wants the seeds so he
can roast them and sell them at the
local farmer’s market.
Sally wants to paint the pumpkin as
decoration for her Halloween party.
RENTAL DISPUTES
Tenant is leasing/renewing lease, for 1000 sq ft
Tenant will pay $23/sq ft
Landlord wants $25/sq ft
Possible Considerations
Gain = $2/sq ft or $2,000 per year
One month’s lost rent at $23/sq ft = $1,916; One month’s lost rent at $25/sq ft =
$2,083.33 So essentially will take a year to make up the differential if you lose even
one month of rent (Calculate out of term of lease, e.g. 5 mos lost rent will take 5 yrs to recoup differential)
Non-financial benefits: Setting market rate for building for other tenants coming in or
renewing.
Keeping building tenancy maximized for appearances to potential new tenants and
financing purposes
NEGOTIATION
STRATEGIES
Five
Negotiations
Styles
“Accommodating (I lose-you
win). The focus of this style is
to preserve relationships. It
should be used when you are
at fault, your position is weak,
or you are unprepared. Make
sure you know the
consequences of conceding
before you do so.”
https://www.hfma.org/topics/trends/62466.html Healthcare
Financial Management Association, Understanding 5
Negotiation Styles, November 26, 2018
Five
Negotiations
Styles
“Avoiding (I lose-you lose).
Use this style when the
issue being negotiated is
trivial or when the value of
resolving the conflict
outweighs the benefit. Set
expectations by both parties
when using this negotiation
style.”
• https://www.hfma.org/topics/trends/62466.html
• Healthcare Financial Management Association,
Understanding 5 Negotiation Styles, November 26, 2018
Five
Negotiations
Styles
“Collaborating (I win-you
win). This should be the
primary negotiation style. It
requires understanding the
other party’s point of view
and motivations. Note that
this style requires more time
and may not work with
competitive negotiators.”
https://www.hfma.org/topics/trends/62466.html
Healthcare Financial Management Association,
Understanding 5 Negotiation Styles, November 26, 2018
Five
Negotiations
Styles
Competing (I win-you lose).
This style often is used when
relationships are not critical
and one you need to get
action quickly. During
negotiations, use clear
language (e.g., “we must
have”) rather than weaker
language (e.g., “we would
like”).
https://www.hfma.org/topics/trends/62466.html
Healthcare Financial Management Association,
Understanding 5 Negotiation Styles, November 26, 2018
Five
Negotiations
Styles
“Compromising (I lose/win
some-you lose/win some). In
this negotiation style, both
parties value fair and equal
resolution. Both parties can get
fast results but it’s also possible
to concede to certain terms too
early without regard for all
aspects of the negotiation.”
https://www.hfma.org/topics/trends/62466.html
Healthcare Financial Management Association, Understanding
5 Negotiation Styles, November 26, 2018
“Lose-lose means that all parties end up being worse off. An example of this would be a budget-cutting
negotiation in which all parties lose money. The intractable budget debates in Congress in 2012-13 are
example of lose-lose situations. Cuts are essential--the question is where they will be made and who will be
hurt. In some lose-lose situations, all parties understand that losses are unavoidable and that they will be
evenly distributed. In such situations, lose-lose outcomes can be preferable to win-lose outcomes because the
distribution is at least considered to be fair.(citation omitted)
In other situations, though, lose-lose outcomes occur when win-win outcomes might have been possible. The
classic example of this is called the prisoner's dilemma in which two prisoners must decide whether to confess
to a crime. Neither prisoner knows what the other will do. The best outcome for prisoner A occurs if he/she
confesses, while prisoner B keeps quiet. In this case, the prisoner who confesses and implicates the other is
rewarded by being set free, and the other (who stayed quiet) receives the maximum sentence, as s/he didn't
cooperate with the police, yet they have enough evidence to convict. (This is a win-lose outcome.) The same
goes for prisoner B. But if both prisoners confess (trying to take advantage of their partner), they each serve
the maximum sentence (a lose-lose outcome). If neither confesses, they both serve a reduced sentence (a winwin outcome, although the win is not as big as the one they would have received in the win-lose scenario).
https://www.beyondintractability.org/essay/win-lose
Win-Win / Win-Lose / Lose-Lose Situations By Brad Spangler
January 2013
Original Publication September 2003, updated January 2013 by Heidi Burgess
What Is Distributive Negotiation? By Katie Shonk — on
December 21st, 2021 / Negotiation Skills
“Distributive negotiation involves haggling over a fixed
amount of value—that is, slicing up the pie. In a distributive
negotiation, there is likely only one issue at stake, typically
price. When you are negotiating with a merchant in a foreign
bazaar, or over a used car closer to home, you are generally
involved in a distributive negotiation, as it may be difficult to
add issues other than price to the mix.”
https://www.pon.harvard.edu/daily/negotiation-skills-daily/what-is-distributive-negotiation/
What Is Integrative Negotiation?
In integrative negotiation, more than one issue is available to be
negotiated. Whenever multiple issues are present—such as salary,
benefits, and start date, in the case of a job negotiation—negotiators
have the potential to make tradeoffs across issues and create value.
Often, what looks like a distributive negotiation is, in fact, an
integrative negotiation, as there may be additional issues you can
add to the discussion.
With integrative negotiation, creativity can lead to value-creation for
both parties.
https://www.pon.harvard.edu/tag/integrative-negotiation/
Zero Sum Game
Best result may be to take results out of a zero sum game if possible and move
both sides forward beyond the preconceived boundaries.
$1,000 at issue; You want 40/60 split so I get only $400 and you get remaining $600. Can
fight over the percentages of the division. But what if working together we can increase the
$1,000 to $1,500. If we still split 40/60, I equal your $600, but you get $900 so we both win.
Need to find way to do that.
Example: Compensation package negotiation. Employee wants a $10,000 raise. Employer only willing to pay
$5,000.
Employee wants the additional money in order to be able to pay for medical expenses. Employer can get
medical insurance for employee which will cover medical expenses for only $2,500/year. Employee wins
because medical expenses paid for. Employer wins because the cost of the insurance is less than the amount
of the demanded raise and is able to keep employee.
Example: Middle East. Is this a zero sum game or is this a situation where both sides working together can
increase the upside for everyone e.g. standard of living, safety, education, etc.
Distributive negotiation
Positional negotiation
Zero sum game
Win – Lose
Integrative bargaining
Win – Win negotiations
Optimizing value
NEGOTIATION STRATEGIES
•Good faith vs. strategic
•Principle vs. practical
•Cost benefit analysis
Good Faith v. Strategic approaches
Making reasonable proposal, especially financial, when other side
is not, will leave you in poor shape if ultimate negotiations
process is to keep parties moving toward “middle” but may
get positive result if other side is also acting unreasonably to
gain the advantage.
Pros of good faith approach
* good faith may play well with mediators/arbitrators if no settlement is
reached by parties i.e. judges, mediators, arbitrators
* good faith negotiations give cover for not accepting end result
* good faith negotiations build reputation for future negotiations with others
even if no result reached in existing negotiation which will help in future
* good faith negotiations will play well with your constituency and cast negative
view of other side with not only your constituency but non parties and possibly
even the other side for future negotiations, voting, etc.
Examples: union negotiations; political negotiations
Principle v. Practical Approach
• If your principles are not being fulfilled, practical
doesn’t matter
• You don’t care whether you win anything in this
negotiation. Your goal is to build your base by
showing you are a strong leader, can stand up to
management/opponent, are the person to back
and/or work with going forward because you are
principled as opposed to doing things primarily for the
almighty buck
Cost Benefit Analysis
TWO IMPORTANT QUESTIONS TO ASK
YOURSELF
1.
Does the cost of moving forward and/or not
reaching a settlement, outweigh the possible benefits to
be gained?
2.
Is the yardstick by which you are measuring
your desired outcome the proper one?
Congressional Refusal to Hold Hearings on New
Supreme Court Nominee
o As a strategy
o Possible Outcome to be Achieved
o Impact
THE IMPACT OF POWER ON
NEGOTIATIONS AND THEIR
OUTCOMES
UNDERSTANDING THE
DIFFERENCE BETWEEN
INTERESTS AND POSITIONS
How to gain an advantage in negotiations
“Many negotiators have been
advised not to reveal any
information to the other party.
However, failure to reveal
information about interests can
lead to lose-lose agreements”
and the failure to achieve a winwin result.
Leigh Thompson The Truth About Negotiations 2nd edition Pearson Education, Inc. 2013
“The trick is to know what type of information to reveal.
As a general rule, hide your BATNA but reveal your
interests.
…
Negotiators who provide information to the other party
about their interests improve their outcomes, or profits,
by over 10 percent.7 “
…
A major benefit of revealing your interests is that you
double the probability that the other party will disclose
hers.”
Id. at p. 79
How to Identify and Focus on Interests
“Here are some steps you can take:
1. “For each position the opposing negotiators take, ask yourself, “Why did they take it?” — that’s the
underlying interest. What needs, concerns, or desires does the position serve?
2. If the other side hasn’t accepted your proposal, ask yourself, “Why not?” Consider what they might have
to gain or lose by accepting — for instance, political support or group cohesion. What consequences do
they face?
3. Recognize that each side has multiple interests. For instance, a tenant may want stable rent but also
more favorable terms, such as the ability to sublet or have a pet. Also, different individuals on the side you’re
negotiating with may have differing interests, which their negotiators are taking into account.
4. Understand basic human needs: Our most powerful interests are our human needs for such things as
security, control over our circumstances, or recognition. Negotiators may mistakenly think money is the only
interest involved, but behind a position involving money may be a need for security. If a basic human need
is at risk, negotiations won’t progress.
5. Make a list of the interests of each side to help remember and prioritize them.
If you focus on interests, not positions, you’ll have a better chance of negotiating successfully.”
https://www.watershedassociates.com/learning-center-item/interests-versus-positions.html
Understanding the difference between interests and positions is a cornerstone of collaborative negotiation success.
Positions
Interests
What they say they want
Why they want it
Positions are surface statements of
where a person or organization
stands, and rarely provide insight
into underlying motivations, values
or incentives.
Interests are a party’s underlying
reasons, values or motivations.
Interests explain why someone
takes a certain position.
Position Example: Union demands
a five-year contract.
Interest Example: Union wants
time for workers to retool their skills
before plant closings are
implemented.
Positions
Interests
Example: “Start a month early”
Example: Finish project on time
What people say they want
Why they want it; underlying
motivations
Demands
Concerns
Things you/they say you
will/won’t do
Fears and aspirations
Subjective wants
Objective needs
Examples of Interests v. Positions
Project Manager’s position:
Project Manager’s interest:
Boss’s position:
Boss’s interest:
I want a one-month extension to
finish the project.
Before facing unforeseen obstacles
in completing this project on time,
she approved the lead
programmer’s vacation and wants
to demonstrate to her team that
she fights for their needs and keeps
her word.
The original deadline stands and
you cannot have a one-month
extension.
Get the project done on time.
Ways to address interests:
1) Boss gives Project Manager
discretion to change team
members assigned to projects,
and extends deadline on
another project so that team
members can be brought over
during the lead programmer’s
absence. 2) Approve budget
for overtime compensation or
additional support.
Result:
Project is done on time,
without an extension, and the
Project Manager keeps her
word on approved vacations.
Buy-Sell Example
Buyer’s position:
I want the price of the specialty equipment lowered
by 10%.
Buyer’s interest:
We’re under pressure to stay under budget/improve
profit.
Seller’s position:
The equipment must sell at full price.
Seller’s interest:
To increase market share for the equipment at a
profitable price.
Ways to address interests:
Seller provides free training (or other value-added
services) to Buyer’s mechanics that will result in their
more effective and efficient use of the equipment,
thereby increasing production time in manufacturing
and lowering labor costs for over-time hours by more
than the 10% reduction in price; and Buyer agrees to
allow seller to publish a report showing the increase in
productivity with use of this specialty equipment and
the subsequent decrease in over-time labor costs.
Result:
Buyer increases profit and Seller has evidence to
support increased sales.
The Band
You are the band Aerosmith.
According to NME, (New Musical Express) a British
music, film and culture website and brand, “Joe Perry says
Aerosmith will be recording a new album ‘when the time is
right.’ ” (https://www.nme.com/news/music/joe-perry-saysaerosmith-will-recording-new-album-2527501)
You are negotiating with the Hard Rock Café for you to
perform at one or more of their locations in the U.S.
The Restaurant
You are the Hard Rock Café.
You are interested in re-establishing your brand in New
England.
You are negotiating with the Band Aerosmith for them to
perform at one or more of your locations in the U.S.
In the publishing company exercise:
What were the stated positions of the parties
and what were the underlying interests of each?
How would knowing (or properly having
anticipated) the other side’s interests have
helped with the negotiation?
“Persons appear to us according to the
light we throw upon them from our own
minds. -Laura Ingalls Wilder, author (18671957)”
Laura Ingalls Wilder
The question is not what you look
at, but what you see. ”
― Henry David Thoreau
Separate the People from the Problem
“A major consequence of the “people problem” in negotiation is that the parties’
relationship tends to become entangled with their discussions of substance. On
both the giving and receiving end, we are likely to treat people and problem as one.
Within the family, a statement such as “The kitchen is a mess” or “Our bank
account is low” may be intended simply to identify a problem, but it is likely to be
heard as a personal attack. Anger over a situation may lead you to express anger
toward some human being associated with it in your mind. Egos tend to become
involved in substantive positions. Another reason that substantive issues become
entangled with psychological ones is that people draw from comments on substance
unfounded inferences, which they then treat as facts about that person’s intentions
and attitudes toward them. Unless we are careful, this process is almost automatic;
we are seldom aware that other explanations may be equally valid.”
Fisher, R., Ury, W. L., & Patton, B. (2011). Getting to Yes [Kindle Android version]
“How you see the world depends on where you sit .
People tend to see what they want to see. Out of a mass
of detailed information, they tend to pick out and focus
on those facts that confirm their prior perceptions and
to disregard or misinterpret those that call their
perceptions into question. Each side in a negotiation may
see only the merits of its case , and only the faults of the
other side’s.”
Id.
“Tenant’s perceptions
Landlady’s perceptions
The rent is already too high .
The rent has not been increased for a long time.
With other costs going up, I can’t afford
to pay more for housing.
With other costs going up, I need more rental income .
The apartment needs painting.
He has given that apartment heavy wear and tear.
I know people who pay less for a
comparable apartment.
I know people who pay more for a comparable apartment .
Young people like me can’t afford
to pay high rents.
The rent ought to be low because the
neighborhood is rundown.
Young people like him tend to make noise and to be hard
on an apartment.
We landlords should raise rents to improve the quality of
the neighborhood.
I am a desirable tenant with no dogs or cats.
His loud music drives me crazy.
I always pay the rent whenever she asks for it.
He never pays the rent until I ask for it.
She is cold and distant; she never asks me
how things are.
Id.
I am a considerate person who never intrudes on a tenant’s
privacy”
From the Textbook
(The Mind and Heart of the Negotiator (6th edition)) pp. 112 – 221
“Emotions and Emotional Knowledge
Emotions are inevitable in conflict and negotiations. Moreover, negotiators
vary in terms of how accurate they are in assessing the emotional expression
of others. Emotions are relatively fleeting states that are usually fairly intense
and often a result of a particular experience. Moods are more chronic and
more diffuse, meaning that whereas emotions are a result of, and can be
directed at certain events or people, moods are usually not directed at
someone. Unlike emotions, which are very specific, such as anger, regret,
relief, gratitude, and so on, moods are often classified as simply ‘being in a
good mood’ or a ‘bad mood.’ Emotions and moods can be either a
consequence or a determinant of negotiation behavior and outcomes.”
Genuine Versus Strategic Emotions
Negative Emotion - - Real versus strategic Negative Emotion
(e.g. temper tantrums)
Emotional Consistency
“In fact, it is when negotiators exhibit emotional inconsistency and
unpredictability, that they achieve greater outcomes for themselves. In a
series of experiments, the counterparty made greater concessions when
the negotiator alternated between anger and happiness (inconsistent
display) compared to expressing consistent anger. This was because the
counterparty felt less in control of the negotiation.”
Emotional Intelligence and Negotiated Outcomes
“Emotional intelligence is the ability of people (and negotiators) to
understand emotions in themselves and others and to use emotional
knowledge to lead to positive outcomes.”
Strategic Advice for Dealing With Emotions at the Table
o Monitor your emotional displays (resist the urge to gloat)
o Beware of what you are reinforcing (making concessions to
get someone to shut up may actually encourage their
behavior going forward)
o Reevaluation is more effective than suppression (telling
yourself not to think about something actually makes you
think about it more)
o Emotions are Contagious
o Understand Emotional Triggers (See Table on p. 121 of
textbook)
Negotiation pattern:
Local group organizing a community fair
want off-duty police officers to help with
traffic and crowd control
What are the people issues?
BE AWARE OF THE ENVIRONMENT IN
WHICH YOU ARE NEGOTIATING
CIRCUMSTANCES COLOR PERCEPTION
AND MAY ALTER THE TRUST /
RELATIONSHIP BUILDING DYNAMIC
Police fire tear gas after protesters throw fireworks, water bottles in Brockton
Updated: 5:36 AM EDT Jun 3, 2020
“After a peace rally at a Brockton middle school dispersed, several hundred demonstrators
moved to the Commercial Street police station while local and state officers and National
Guardsmen stood by in riot gear.
The tense standoff escalated at 8:30 p.m. when someone from the crowd threw lit fireworks
and others threw water bottles at police. Police responded with tear gas canisters to disperse
the group.
A few minutes later, police moved its barriers further up, as protesters continued to lob
fireworks and water bottles at police. Several protesters and officers could be seen reacting to
being exposed to the tear gas.
About an hour later, several lines of law enforcement moved forward, pushing the crowd back
to the other side of the intersection of Commercial and Centre streets. Four people kneeled
with hands up in front of the front line of officers.”
BOSTON POLICE HAILED AS
HEROES AS FIRST RESPONDERS
IN COVID-19 PANDEMIC
HOW TO MOVE BEYOND
PERCEPTION
“Make emotions explicit and acknowledge them as legitimate. Talk with the
people on the other side about their emotions. Talk about your own. It does
not hurt to say, “You know, the people on our side feel we have been
mistreated and are very upset. We’re afraid an agreement will not be kept even
if one is reached. Rational or not, that is our concern. Personally, I think we
may be wrong in fearing this, but that’s a feeling others have. Do the people on
your side feel the same way?” Making your feelings or theirs an explicit focus
of discussion will not only underscore the seriousness of the problem, it will
also make the negotiations less reactive and more “pro-active.” Freed from the
burden of unexpressed emotions, people will become more likely to work on
the problem.
Allow the other side to let off steam. Often, one effective way to deal with
people’s anger, frustration, and other negative emotions is to help them release
those feelings.”
Fisher, Roger. Getting to Yes . Penguin Publishing Group. Kindle Edition.
YOU MUST ALWAYS DISTINGUISH BETWEEN
FACTS, INFERENCES AND ASSUMPTIONS
IT IS NOT ALWAYS EASY AND YOU DO NOT
ALWAYS KNOW THE DIFFERENCE WITHOUT
REALLY BEING CONSCIOUS OF THE
DISTINCTIONS
“Separate the People from the Problem:
Because people tend to become personally involved with the
issues and their respective position, they may feel resistance
to their position as a personal attack. Separating yourself and
your ego from the issues allows you to address the problem
without damaging relationships.”
Principled Negotiation – The Harvard Approach – Fisher & Ury
https://na.eventscloud.com › file_uploads
“Separate the People from the Problem: Because people tend to become personally involved
with the issues and their respective position, they may feel resistance to their position as a
personal attack. Separating yourself and your ego from the issues allows you to address the
problem without damaging relationships. It will also allow you to get a more clear view of the
substance of the conflict.
The authors identify three basic sorts of people problems:
(1) different perceptions among the parties;
(2) emotions such as fear and anger; and
(3) communication problems.
Fisher & Ury’s suggested solutions:
• Try to understand the other person's viewpoint by putting yourself in the other's place.
• Do not assume that your worst fears will become the actions of the other party.
• Do not blame or attack the other party for the problem.
• Try to create proposals which should be appealing to the other party.
• Acknowledge emotions and try to understand their source (understand that all feelings are valid
even if you do not agree or understand them).
• Allow the other side to express their emotions.
• Try not to react emotionally to another’s emotional outbursts.
• Symbolic gestures such as apologies or expressions of sympathy can help to defuse strong
emotions.
• Actively listen to the other party (give the speaker your full attention, occasionally summarizing
the speaker's points to confirm your understanding).
• When speaking direct your speech toward the other party and keep focused on what you are
trying to communicate.
• You should avoid blaming or attacking the other person, speaking only about yourself. Try using
“I” statements, such as “I feel” or “I think.” Think of each other as partners in negotiation
rather than as adversaries
‘It’s hard to live in a studio apartment in San
Jose with a man who’s learning to play the
violin.’ That’s what she told the police when
she handed them the empty revolver.
‘It’s hard to live in a studio apartment in San Jose with a
man who’s learning to play the violin.’ That’s what she
told the police when she handed them the empty
revolver.
• What do you think happened?
• Why did it happen?
• Possible relationships between the violin player and
the woman?
• How does the story end?
‘It’s hard to live in a studio apartment in San Jose with a
man who’s learning to play the violin.’ That’s what she
told the police when she handed them the empty
revolver.
Facts
Inferences
• Live in San Jose
• Man and woman living
together in apartment
• Police are at apartment
• Woman is with the police
• There is an empty
revolver
• Woman shot the man
• Man killed himself
• Someone broke into the
apartment and killed the
man
• Someone injured the man
• The woman shot the
violin
BUSINESS DISPUTES
Overview
BUSINESS ONLY
MIXED
Business vs. Business
Employee vs. Business
Employees
Executives
Contract; Collections; Non-Compete; IP;
Unfair Competition
Internal Disputes Over
Management/Money
Consumers vs. Business
small (close corp.)
larger (stockholders)
Others vs. Business
(Torts; Environmental; Construction, etc.)
DISPUTE RESOLUTION -Lawsuits
Pretrial
-Default
-Negotiation
-Non-trial motions
Trial
-by Jury
-to a Judge
Class Actions
Business Courts
Dispute Resolution –
Administrative Agencies
Subject Matter Expertise
Efficiencies
Less Technical
Executive Branch (“Political”) Appointees
Decision-maker’s tenure not protected
“Alternative” Dispute Resolution
• Mediation
• Arbitration
• Conciliation
95%+ of disputes settle without a formal
trial
Some language that
can be used in
contracts regarding
ADR
GOVERNING LAW. This
Agreement shall be construed in
accordance with, and governed
by, the laws of the State of
Massachusetts, without giving
effect to rules governing choice of
law. The Parties agree that any
dispute arising out of or related
to this Agreement shall be
resolved by the Courts of the
Commonwealth of Massachusetts
in Middlesex.
The Smiths will give the Joneses notice of
what the Smiths intend to plant and Joneses
will have a reasonable right of approval so that
they can object within three (3) days to
plantings that are too large or otherwise
objectionable. The Parties, through their
respective counsel, (i.e, Attorney T.C. for the
Smiths and Attorney Arlene Beth Marcus for
Joneses) shall resolve any disputes regarding
said plantings.
Dispute Resolution: The Parties
agree that, upon written notice
from one side to the other of any
dispute or other issue
concerning the Easement, the
two sides will attempt to resolve
the issue or dispute amicably for
15 days before either side may
file a lawsuit.
In the event that either party is alleged to have
materially breached a term of this Settlement
Agreement, then the other party may bring a
claim to enforce the Settlement Agreement in
Middlesex Superior Court. The prevailing party
shall be entitled to request an award of its
attorneys' fees incurred in adjudicating the
claim and the award of said fees shall be solely
in the discretion of the Court. The Parties agree
that jurisdiction and venue in Middlesex
Superior Court for any such claim is proper.
If the dispute cannot be settled by
negotiation between the parties within 90
days of receipt of notification, upon
election of either party, the dispute shall be
referred to the American Arbitration
Association to be settled in Boston, MA on
an expedited basis in accordance with the
commercial arbitration rules of said
organization. Fees and expenses of such
arbitration shall be shared equally.
When the child commences a five day a week program such as kindergarten or fulltime preschool, the parties
shall review the existing parenting schedule and if they cannot agree on an amendment/modification to the
schedule in light of the child’s full time program, they shall present the issue to Judge Name for binding
arbitration. The parties shall each pay one-half of any upfront cost of the arbitration but the final allocation
of said costs shall be determined by the conciliator. In the event Judge Name is unable to serve or declines to
serve as the arbitrator then the parties shall agree on a successor arbitrator, or request the Court to select an
arbitrator if they cannot agree.
At the option of a party who obtains a new job, the parties shall review the existing parenting schedule.
If the parties cannot agree on an amendment/modification to the schedule in light of the child’s full time
program, the parties shall first attempt to resolve the issue through mediation prior to either party filing the
appropriate pleading with the Court for resolution.. .
Arbitration, Mediation and Conciliation: differences and similarities from an International and
Italian business perspective
Twitter Facebook LinkedIn Reddit
by Alessandra Sgubini, Mara Prieditis & Andrea Marighetto
August 2004
“The main ADR alternatives to civil litigation are negotiation,
arbitration, conciliation and mediation. Other, more particular ADR
processes available are early neutral evaluation, mini-trial,
summary jury trial, and the judicial settlement conference.
Disputing parties use these ADR methods because they are
expeditious, private, and generally much less expensive than a trial.
While each of these ADR processes may be effective in various
circumstances, mediation in the United States has proven to offer
superior advantages for the resolution of disputes that resist
resolution.”
https://www.mediate.com/articles/sgubinia2.cfm
“Arbitration.
Arbitration is an ADR (alternative dispute resolution) method where the
disputing parties involved present their disagreement to one arbitrator or a
panel of private, independent and qualified third party “arbitrators.” The
arbitrator(s) determine the outcome of the case. While it may be less
expensive and more accessible than trial, the arbitration process has welldefined disadvantages. Some of disadvantages include the risk losing, formal
or semi-formal rules of procedure and evidence, as well as the potential loss
of control over the decision after transfer by the parties of decision-making
authority to the arbitrator. By employing arbitration, the parties lose their
ability to participate directly in the process. In addition, parties in arbitration
are confined by traditional legal remedies that do not encompass creative,
innovative, or forward-looking solutions to business disputes.”
“Mediation.
Mediation is an ADR method where a neutral and impartial third party, the mediator,
facilitates dialogue in a structured multi-stage process to help parties reach a conclusive and
mutually satisfactory agreement. A mediator assists the parties in identifying and articulating
their own interests, priorities, needs and wishes to each other. Mediation is a “peaceful”
dispute resolution tool that is complementary to the existing court system and the practice
of arbitration.
Arbitration and mediation both promote the same ideals, such as access to justice, a
prompt hearing, fair outcomes and reduced congestion in the courts. Mediation, however, is
a voluntary and non-binding process - it is a creative alternative to the court system.
Mediation often is successful because it offers parties the rare opportunity to directly
express their own interests and anxieties relevant to the dispute. In addition, mediation
provides parties with the opportunity to develop a mutually satisfying outcome by creating
solutions that are uniquely tailored to meet the needs of the particular parties. A mediator is
a neutral and impartial person; mediators do not decide or judge, but instead becomes an
active driver during the negotiation between the parties. A mediator uses specialized
communication techniques and negotiation techniques to assist the parties in reaching
optimal solutions. “
“Conciliation.
Conciliation is another dispute resolution process that involves building a positive
relationship between the parties of dispute, however, it is fundamentally different than
mediation and arbitration in several respects. Conciliation is a method employed in civil law
countries, like Italy, and is a more common concept there than is mediation. While
conciliation is typically employed in labour and consumer disputes, Italian judges encourage
conciliation in every type of dispute . The “conciliator” is an impartial person that assists the
parties by driving their negotiations and directing them towards a satisfactory agreement. It
is unlike arbitration in that conciliation is a much less adversarial proceeding; it seeks to
identify a right that has been violated and searches to find the optimal solution.
Conciliation tries to individualize the optimal solution and direct parties towards a
satisfactory common agreement. Although this sounds strikingly similar to mediation, there
are important differences between the two methods of dispute resolution. In conciliation, the
conciliator plays a relatively direct role in the actual resolution of a dispute and even advises
the parties on certain solutions by making proposals for settlement. In conciliation, the
neutral is usually seen as an authority figure who is responsible for the figuring out the best
solution for the parties. The conciliator, not the parties, often develops and proposes the
terms of settlement.“
What language would you want in a construction contract?
What types of dispute resolution do you think would work best in your
industry?
Have you been involved in, or sat in on, and dispute resolution events?
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