Beyond the Codes_Repositioning towards sustainable development
Art of negotiations 1
1. The Art of Negotiation I
By Dr. Robert Mudida,
Senior Lecturer,
Strathmore Business School
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2. What is Negotiation?
• Negotiation is a means by which people deal
with their differences.
• Negotiation implies seeking mutual
agreement through dialogue.
• Negotiation may be formal across a bargaining
table or informal.
• It is an expectation management process that
is focused on problem resolution and value
creation.
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3. Negotiation as a fact of life
• Negotiation is a fact of life. We all negotiate.
• We negotiate when we discuss a raise with
our boss, we negotiate when we try to buy a
house or a car, we negotiate when we are
planning for a merger, we negotiate when we
meet with union leaders to avert a potential
strike and we negotiate when we represent
our country in trade either at bilateral or
multilateral level.
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4. Negotiation as a fact of life
• Everyone negotiates something every day.
Your real world is a giant negotiating table and
like it or not you are a participant.
• People negotiate even when they don’t think
of themselves as doing so.
• You negotiate with your spouse about which
TV channel or which movie to watch. You
often negotiate with your children about
doing their homework.
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5. Negotiation as a fact of life
• Negotiation is a basic means of getting what
you want from others.
• It involves a back and forth process designed
to reach an agreement when you and the
other side have some interests that are shared
and others that are opposed (as well as some
that may be simply different).
• Negotiation skills are often presumed
incorrectly to be instinctive.
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6. Negotiation as a fact of life
• Addressing conflicts both at organisational,
local or international level often requires
negotiation.
• People differ and they use negotiation to
handle their differences.
• Whether in business, government or the
family, people reach most decisions through
negotiation.
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7. Negotiation as integral to the managerial role
• Negotiation is integral to the managerial role.
• Although negotiation can be associated with
high profile issues such as collective
agreements or the purchase or sale of entire
companies, a similar type of negotiation
process occurs in the daily interactions of
managers with people inside and outside the
organisation.
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8. The manager as a negotiator
• Increasingly, managers are supposed to act as
change leaders thereby requiring the support,
ideas, and commitment of other individuals.
• This reduces the ability that the manager has
to make decisions unilaterally.
• Individuals expect their input to be taken into
account especially when it relates to how they
perform their work, and they want to feel
more involved in the organisation.
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9. The manager as a negotiator
• The manager is then expected to negotiate more and more
with his subordinates, superiors and colleagues and involve
them in the decision making process.
• These challenges have increased the amount of time the
manager must dedicate to the negotiation process.
• Although negotiation takes place every day, it is not easy to do
well. Standard strategies for negotiation often leave people
dissatisfied and alienated.
• It is important to have a conceptual framework that allows
oneself, as a manager, to continue learning and improving
one’s negotiation skills with each negotiating experience.
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10. Styles of negotiation
• People often find themselves in a dilemma. They
usually see two ways of negotiating: hard and soft.
• The soft negotiator wants to avoid personal conflict
and so makes concessions readily so as to reach
agreement. He or she wants an amicable solution
but often feels exploited and bitter.
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11. Styles of negotiation
• The hard negotiator sees any negotiation as a
contest of wills in which the side that takes
the more extreme positions fares better.
• He or she wants to win but often produces an
equally hard response that exhausts the
negotiator and his or her resources and harms
the relationship with the other side.
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12. Principled negotiation
• The third type of negotiation is principled
negotiation developed at the Harvard
Negotiation Project.
• This approach suggests looking for mutual
gains wherever possible and where interests
conflict, one should insist on the result being
based on some fair standards independent of
the will of either side.
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13. Principled Negotiation
• Principled negotiation is hard on merits and
soft on people. It does not involve tricks or
posturing.
• It shows one how to obtain what they are
entitled to and still be decent.
• It enables you to be fair while protecting you
against those who want to take advantage of
your fairness.
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14. The framework of negotiation
• Every negotiation is different but the basic
elements of the framework do not change.
• The framework can be used if there is one
issue or several or if there are two or more
parties and also when different issues are
involved.
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15. A Multi-disciplinary Field
• Negotiation draws from the fields of
psychology, decision analysis, law, political
science, game theory, organisational
behaviour, sociology and common sense.
• Negotiation is a primarily a problem solving
and value creation process.
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16. Negotiation as a Management Skill
• The key to management development is acquiring both skills
and knowledge.
• Knowledge is learnt more quickly than skills as we grow older
it becomes difficult to acquire new skills.
• One can have knowledge without having the skill.
• Learning a skill requires us to persistently push beyond our
comfort zone until the new skill becomes part of our
repertoire.
• Acquiring competence in a management skill like negotiation
is only possible if the individual is willing to extend their own
repertoire of behaviours by learning new, more effective ones.
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17. Negotiation as a management skill
• In order to be comfortable and competent in
negotiations, it is necessary to incorporate new
approaches through practice and to reflect on the
process in each new negotiation experience: what
has worked, what has not worked and what could
have been done differently.
• This reflection should encompass the examination of
one’s own attitudes and behaviour and also those of
the other negotiating party.
• A conceptual framework is also key to facilitating the
learning process.
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18. Journal
• Reflect and briefly report on the following
areas:
• 1. What worked for you in the negotiation?
• 2. What did you learn about the negotiation
process and about yourself as a negotiator?
• 3. “Areas for improvement” that you commit
yourself to put into practice
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19. Types of Negotiation
There are 2 main types of negotiations:
Firstly, competitive (or distributive) which is a negotiation in
which parties compete over the distribution of a fixed sum of
value. The fundamental question in a distributed negotiation
is : Who will claim the most value? In distributive
negotiations, a gain by one side is made at the expense of the
other.
Secondly, collaborative (or integrative): this is a negotiation
where the parties co-operate to achieve maximum benefits by
integrating their interests into an agreement. These type of
deals involving creating value and claiming it.
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20. Key strategy-Competitive negotiations
• Distributive negotiators should not begin at their
target point since if one opened at the target point
and then had to make concessions he would be
moving away from this price with the first concession
to a price closer to the resistance point. One should
therefore start at a price more favourable than the
target point to have some room for negotiation.
• At the same time the starting point cannot be too far
from the target point since this may lead to a break
off in negotiations.
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21. Role of relationship
• Relationship means little in this tug of war.
• Negotiators are not willing to trade value in
the deal for value in their relationship with the
other side.
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22. Approach to information
• Information plays an important role in this
type of negotiation.
• The less the other side knows about your
weaknesses and real preferences and the
more it knows about your bargaining strength,
the better will be your position.
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23. Key considerations
• The first offer can become an important psychological anchor
point that sets the bargaining range. Studies show that
negotiation outcomes often correlate with the first offer. So
start at the right place.
• Do not disclose any significant information about your
circumstances- including why you want to make the deal, your
real interests or business constraints, your preferences among
issues or your options, or the point at which you’d walk away
from the table. It is beneficial to however let the other side
know you have good options if this deal falls through.
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24. Key considerations
• Information about the other side can benefit you. Learn as
much as possible about the other side’s circumstances and
preferences- including why they want to make the deal, their
real interests and business constraints, and their preferences
among issues or options.
• Exploit what you learn about the other side in setting your
first offer or demand.
• Don’t overshoot since if you claim aggressively or greedily, the
other side may walk away and you will have lost an
opportunity to make a deal.
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25. BATNA
• A key concept in negotiation is the BATNA.
• This concept was developed by Fisher and Ury and is
the acronym for best alternative to a negotiated
agreement.
• It is the preferred course of action in the absence of
a deal.
• Knowing your BATNA implies knowing what you will
do or what will happen if you fail to reach an
agreement in the negotiation at hand.
• Don’t enter a negotiation without knowing your
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26. Collaborative negotiations
• In a collaborative or integrative negotiation
the parties co-operate to achieve maximum
benefits by integrating their interests into an
agreement while also competing to divide the
value.
• In collaborative negotiations you have to be
good at both creating value and claiming it.
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28. Creative options
• The parties should focus on creative options
and not simply which concessions to make.
• The more creative you are at coming up with
things that are good for both of you the
happier both of you will be.
• This creativity is only possible if both parties
understand their own key interests and the
key interests of the other side.
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29. Barriers to creativity
• Being afraid to fail
• Pessimistic attitude
• Too much stress
• Action based on rules
• Too much is based on assumptions
• Too much is dependent on logic
• Believing you are not creative
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30. Enablers to creativity
• Preparation and knowledge about the
problem
• Necessity without becoming stressed.
• A certain level of trust
• Regain a capacity to observe.
• Explore using conditional questions such as:
• -What if......?
• -Assuming ...What....?
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31. Information sharing
• Finding opportunities for mutual benefit requires
information sharing.
• Unlike the distributive situation in which you avoid
disclosing information, in an integrative negotiation
negotiators are encouraged to:
• -Provide significant information about their
circumstances.
• -Explain why they want to make a deal
• -Talk about their real interests or business constraints
• -Reveal in general terms their preferences among
issues or options. 31
