© Sigma Management Development Limited 2005 1 Presented By: PAUL DAVIS Negotiation Skills © Sigma Management Development Ltd 2004.

1© Sigma Management Development Limited 2005

Presented By: PAUL DAVIS

Negotiation Skills

Negotiating Techniques• IF you give me a bit of what I want THEN I can give you

a bit of what you want

• Always trade values (£)

• Never trade a value without getting one in return

GIVEGIVETO YOUTO YOU TO THEMTO THEM

Low Value/ Cost (easy to give)

High Value (worth a lot)

GIVEGIVEHigh Value Low Value/Cost

The Negotiation Framework

PROPOSE

BARGAIN

DISCUSS

PREPAREPREPAREPREPARE

DISCUSSDISCUSS

PROPOSEPROPOSE

BARGAINBARGAIN

COMMITCOMMIT

REQUIREMENTSREQUIREMENTS

RESEARCHRESEARCH“BUYER” “SELLER”

COUNTEROFFER

• Preparation and planning skills

• Knowledge of subject matter being negotiated

• Ability to think clearly and rapidly under pressure and uncertainty

• Listening skills

• Judgement and general intelligence

• Integrity

• Ability to persuade others

• Patience

Characteristics Of A Skilled Negotiator

• Company, Competition, Likely Requirements• Decision makers & Influencers• The Politics & Barriers• The Personalities• People Behaviours• Buying Motives

ALWAYS BE PREPARED

Research

VARIABLE MAX £ MIN £

EQUIPMENT

SERVICE

DELIVERY

TOTAL PACKAGE £ MAX MIN

Prepare Variables

Negotiation VariablesGrade your variables

High - Important to you to obtain- Potential “walk-aways”

Medium - More of these- Hope to achieve the top end

of your entry pointLow - Willing to trade near to your

exit points- Not a give away

NB: then view them from the other party’s perception

100 120

Buyer’s negotiating range

Seller’s negotiating range

Settlement range

The Negotiators Exit Prices Overlap

The Negotiators’ Exit Prices Meet

100 120 130

Buyer Seller

Emotional Buying Motives

LOGICAL

UsageSpecificationFunctionality

ValueEfficiency

PerformanceSafety

FlexibilityQualityPrice

EMOTIONAL

PersonalityPrestige

FearNovelty

TraditionPrice

StatusPromotion

Good RapportBrand

PROPOSE

BARGAIN

DISCUSS

DISCUSSDISCUSS

PROPOSEPROPOSE

BARGAINBARGAIN

COMMITCOMMIT

COUNTEROFFER

Propose

AIMHIGH

Your proposal is your maximum opening stance

IF…….

Discuss

OFFER….. COUNTER OFFER

Components of a Proposal

Components of a proposal

Condition Offer

Non-specific

Specific

Non-specific

Distinction Between Proposals and Bargains

Proposal Bargain

Condition Non-specific or specific

Always Specific

Offer Always non-specific

Always Specific

Constructive Debate

• Statement• Assurance• Question• Summarise• Demonstrate Listening

Examples Of Destructive Debate Styles

• Threat• Attack• Blame• Point Score• Interrupt/block• Assume• Irritate

Signals• “It would be extremely difficult to meet that delivery date”

• “We would not normally extend our credit facility”

• “It is highly unlikely that my boss will agree to a free upgrade”

• “As things stand our prices must remain as listed”

• “I can’t give you a better discount on your current volumes”

Signals

• “It would be extremely difficult to meet that delivery date”

• “We would not normally extend our credit facility”

• “It is highly unlikely that my boss will agree to a free upgrade”

• “As things stand our prices must remain as listed”

• “I can’t give you a better discount on your current volumes”

ProposalsUse of Brevity

• It might be possible to do something

• We could perhaps look at that

Key Message

Verbage detracts from the message, and often gives your opponent the view you are in a a weak or uncomfortable position

PROPOSE

BARGAIN

DISCUSS

DISCUSSDISCUSS

PROPOSEPROPOSE

BARGAINBARGAIN

COMMITCOMMIT

COUNTEROFFER

PROPOSE

BARGAIN

DISCUSS

DISCUSSDISCUSS

PROPOSEPROPOSE

BARGAINBARGAIN

COMMITCOMMIT

COUNTEROFFER

Structured Questions Ask open questions & listen

To What Extent

To What Degree

How Important

Should

OPENOPEN CLOSEDCLOSED

QUALIFYASK 1ST OPEN QUESTION

LISTEN TO IMPLICATION IN ANSWER

BASE NEXT QUESTION ON ANSWER TO FIRST

REPEATLISTEN

HIT HOT SPOT NOT IMPORTANTUNTIL

The Art of Listening

• The person speaking is not necessarily the person in control

• Listening/talking is the bilateral process

• Listening includes watching

Impediments to Overcome

• Resistance to change

• Thinking one’s own thoughts instead of listening

• Wishful hearing

• Making unwarranted assumptions

• Habitual secretiveness

TALKING

BIASASSUMPTIONEMOTIONS

LISTEN ASSIMILATE REHEARSE REPLY

Summarising

• Summarise throughout (every three minutes)

• Use their language not yours• Seek agreement and clarification• Test any assumption

PROPOSE

BARGAIN

DISCUSS

DISCUSSDISCUSS

PROPOSEPROPOSE

BARGAINBARGAIN

COMMITCOMMIT

COUNTEROFFER

BEHAVIOURS DOMINANT

HOSTILE WARM

SUBMISSIVE

FIGHTER LEADER

HELPERTHINKER

ABOUT YOUR CUSTOMERS DOMINANT

HOSTILE WARM

SUBMISSIVELOGICALTHINKER

FIGHTER

HELPER

ArrogantAggressiveRuthlessDictatorialOpportunisticConceitedImpulsiveDoesn’t allow mistakes

Fair mindedFirmDecisiveMotivationalOptimisticOpenSees others’ points of viewAllows 1 or 2 mistakes

NegativePedanticBureaucraticCautiousNit-pickingColdDefensiveBlocking

GullibleDeferentialSelf-effacingPassiveSubmissiveIneffectiveManipulativeWeak

LEADER

DOMINANT

HOSTILE WARM

SUBMISSIVE

PEOPLE BEHAVIOUR and how to deal with them

Remain calmBe assertiveAsk open questionsPace upBe well prepared

Be well preparedMirror behaviour

Pace downAsk open questionsInvolveBe patientDon’t “sell”

Be directiveKeep focused on the topicAsk closed questionsPut agreements in writingCheck progressCheck reality of commitments

Rapport BuildingGET ON THEIR WAVELENGTH

Big Picture Or Detailed Lots of OptionsOr Follow Procedures Informal Or Formal Free Wheeling Or Take Control

DON’T TREAD ON TOES OF BELIEFS Politics View of the World Behaviours

Rapport BuildingFIND THEIR HOT BUTTONS

What’s important to you? What do you want from…..?

SPEAK THEIR LANGUAGE Speed Volume Inflection Use their words

BODY LANGUAGE IN NEGOTIATIONS

• Quotation from Sir John Collins, Dixons Chairman:

““I would never have a serious discussion I would never have a serious discussion or negotiation without seeing somebody or negotiation without seeing somebody because the body language is every bit because the body language is every bit as important as what you are saying to as important as what you are saying to me”me”

Times Interview September 2002.

COMMUNICATIONS

10% 20% 30% 40% 50%

7% Verbal

Visual 25%

Verbal & Visual 45%

15% Dramatised Verbal

Body Language

Retention

BODY LANGUAGE

• 50-70% OF OUR COMMUNICATION IS NON-VERBAL

• READ IT…..USE IT!• LOOK FOR CLUSTERS• LOOK FOR CONGRUENCY OR NON-

CONGRUENCY

ROOM LAYOUT

• DESKS?• CHAIRS• POSITIONS OF POWER?• COMFORT ZONE/BODY SPACE• LOCATION?

Negotiation Tactics & Styles

Key Message

A TACTIC RECOGNISED IS A TACTIC DISARMED

Styles of Negotiation

• ‘Tough-guy/Soft Guy’ duo who alternates between aggression and kindness to tempt the negotiator into dealing with the, ostensibly, softer guy.

• Over-valuing a feature of the deal - it could be future profits, for instance - and using this to claim a higher price for themselves.

• Setting pre-conditions for negotiation so as to gain ground before the actual negotiations being - managements, for instance, demand that a strike cease before they will negotiate, governments demand a return to the status quo before they will negotiate a disputed event (seizure of territory etc).

Styles of Negotiation • High initial demands to push the area of settlement

towards themselves and to shock the other negotiator into reassessing his expectations.

• Making threats (veiled or blunt) to coerce the other negotiator into movement - sales people often warn that unless the order is filled today they cannot guarantee supply; union officials often tell management that they must meet the union demands or face the prospect of a long strike.

• Setting pre-emptory deadlines that they know can hardly be met in order to hustle the other negotiator into quick decisions, or, sometimes ominously, to provoke themselves into a preferred choice of action - ‘unless you withdraw your forces by 11 a.m. today, a state of war will exist between us’.

Check your variables

Aim high

Give way slowly

Never give a concession without one in return

Listen, don’t talk

Negotiating Rules

Use structured questions

Never trust your assumptions

Use power gently

Confirm the agreement

Achieve win-win

THERE IS ALWAYS ANOTHER DAY

Negotiating Rules

SPECIALISTS IN PARTNERING AND SUPPLY CHAIN RELATIONSHIPS

© Sigma Management Development Limited 2005 1 Presented By: PAUL DAVIS Negotiation Skills © Sigma Management Development Ltd 2004.

listening slide

buyerseller slide

prepared research slide

skilled negotiator slide

partys perception slide

high value low valuecost

maximum opening stance

negotiation variables

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