Negotiation Skills

Negotiation SkillsNegotiation Skills

By: Kunal Samani

President-Business Development

Rolex Lanolin Products Ltd

Why Negotiation?Why Negotiation?• Negotiation is needed to resolve intra-person or inter-person Negotiation is needed to resolve intra-person or inter-person

conflicts / disagreements / clash of interests. conflicts / disagreements / clash of interests.

• Negotiation is something that we do all the time and is not only used Negotiation is something that we do all the time and is not only used for business purposes. The aim of negotiation is to explore the for business purposes. The aim of negotiation is to explore the situation, and to find a solution that is acceptable to both the sides. situation, and to find a solution that is acceptable to both the sides.

• Only man negotiates; animals do not; when faced with larger Only man negotiates; animals do not; when faced with larger predator, they do not ask for negotiation or justice rather just run predator, they do not ask for negotiation or justice rather just run away. away.

• Negotiation is one of the most difficult jobs a person can do. It Negotiation is one of the most difficult jobs a person can do. It requires not only good business judgment but also a keen requires not only good business judgment but also a keen understanding of human natureunderstanding of human nature

Negotiation

Intra-person Negotiation

Inter-person

Negotiation

Unplanned Negotiatio

n

PlannedNegotiatio

n

Distributive

Negotiation

IntegrativeNegotiatio

n

HardNegotiatio

n

SoftNegotiatio

n

PrincipledNegotiatio

n

Hard NegotiationHard Negotiation

• Hard negotiation involves the negotiation of positions, rather Hard negotiation involves the negotiation of positions, rather than interests. than interests.

• It is highly competitive, seeing victory as the number one goal. It is highly competitive, seeing victory as the number one goal. • Hard bargainers, see the participants as adversaries. They Hard bargainers, see the participants as adversaries. They

distrust the other side and play sneaky games to try to gain the distrust the other side and play sneaky games to try to gain the negotiating advantage. negotiating advantage.

• Hard bargainers refuse to make concessions and demand one-Hard bargainers refuse to make concessions and demand one-sided gains as the price of an agreement. sided gains as the price of an agreement.

• When confronted with a softer opponent, hard bargainers When confronted with a softer opponent, hard bargainers almost always will win. When confronted with another hard almost always will win. When confronted with another hard bargainer, however, it can result in no agreement, both losing. bargainer, however, it can result in no agreement, both losing.

Soft NegotiationSoft Negotiation

• Soft negotiation also involves the negotiation of positions, Soft negotiation also involves the negotiation of positions, rather than interests. However, it treats the participants as rather than interests. However, it treats the participants as friends, seeking agreement at almost any cost, and offering friends, seeking agreement at almost any cost, and offering concessions easily in the interests of preserving (or creating) a concessions easily in the interests of preserving (or creating) a good relationship with the other side. good relationship with the other side.

• Soft bargainers trust the other side, and are open and honest Soft bargainers trust the other side, and are open and honest about their bottom line. about their bottom line.

• This leaves them vulnerable to hard bargainers who act This leaves them vulnerable to hard bargainers who act competitively–offering few, if any concessions. competitively–offering few, if any concessions.

Principled NegotiationPrincipled Negotiation • Principled negotiation is the interest-based Principled negotiation is the interest-based

approach to negotiation.approach to negotiation.

• Fundamental principles of principled Fundamental principles of principled negotiation are: negotiation are:

1.1. it separates the people from the problem; it separates the people from the problem;

2.2. focuses on interests, not positions; focuses on interests, not positions;

3.3. insists on objective criteria of the solution. insists on objective criteria of the solution.

Negotiation StylesNegotiation StylesA

sser t

ive

Unas s

ert

ive

Uncooperative Cooperative

Avoidance

Win / Lose

Accommodating

Win / Win (Collaborating)

Compromise

Win – Lose StyleWin – Lose Style

• The win-lose is the most common style of distributive The win-lose is the most common style of distributive negotiation wherein a person pursues his or her own negotiation wherein a person pursues his or her own wishes at the expense of other party.wishes at the expense of other party.

• Under this style negotiation is viewed as a game to be Under this style negotiation is viewed as a game to be won. Losing may be taken as failure, weakness, and a won. Losing may be taken as failure, weakness, and a loss of status.loss of status.

• When engaged in this style, the parties may use When engaged in this style, the parties may use different tactics to win like: persuasion, argument, different tactics to win like: persuasion, argument, power, or even threat.power, or even threat.

Usefulness Usefulness

• A forceful position during negotiation may be appropriate A forceful position during negotiation may be appropriate when the stakes are high and costs of indecision and when the stakes are high and costs of indecision and compromise are non-affordable.compromise are non-affordable.

• It is useful when issues of legality and ethics are at hand. It is useful when issues of legality and ethics are at hand. • Where you do not expect to deal with people ever again, and Where you do not expect to deal with people ever again, and

you do not need their goodwill. you do not need their goodwill. • When there is only one prize.When there is only one prize.• At management level, this style is helping when unpopular At management level, this style is helping when unpopular

but necessary decisions must be made.but necessary decisions must be made.• Win-lose is also a style to use when the other party has a Win-lose is also a style to use when the other party has a

tendency to take advantage of you. tendency to take advantage of you.

Avoiding StyleAvoiding Style

• Avoiding the conflict in certain situations – need of no Avoiding the conflict in certain situations – need of no negotiation at all – is also a negotiation.negotiation at all – is also a negotiation.

• People may physically withdraw by simply leaving the People may physically withdraw by simply leaving the scene of conflict or they can refuse to get involved by scene of conflict or they can refuse to get involved by using silence, or changing the topic of conversation.using silence, or changing the topic of conversation.

• Psychologically, avoiders can also deny the existence Psychologically, avoiders can also deny the existence of conflict.of conflict.

• During formal negotiation, avoiding style is exercised During formal negotiation, avoiding style is exercised by paying deaf ear and / or blind eye to the conflicting by paying deaf ear and / or blind eye to the conflicting stimulus. stimulus.

UsefulnessUsefulness

Useful when:Useful when:• your involvement will only result in negative your involvement will only result in negative

outcomes for you;outcomes for you;• issue is insignificant;issue is insignificant;• cost of challenge / cost is quite high;cost of challenge / cost is quite high;• there is little chance of success;there is little chance of success;• relationships are more important to be maintained;relationships are more important to be maintained;• to buy time and / or get other party cool down.to buy time and / or get other party cool down.

Accommodating StyleAccommodating Style

• Accommodating style of negotiation entails giving in to Accommodating style of negotiation entails giving in to the wishes of the opponent party.the wishes of the opponent party.

• Like avoidance, accommodating the other party Like avoidance, accommodating the other party almost in one-sided way, is also a negotiation.almost in one-sided way, is also a negotiation.

• Unlike avoiders, the accommodators enter into Unlike avoiders, the accommodators enter into negotiation and give in a way that strengthens the negotiation and give in a way that strengthens the relationships.relationships.

• During negotiation, giving in totally / partially may be During negotiation, giving in totally / partially may be part of strategic maneuveringpart of strategic maneuvering. .

UsefulnessUsefulness • When other issues are more important that need When other issues are more important that need

satisfying others and maintaining cooperation.satisfying others and maintaining cooperation.• When social credit is to be built for some latter issue.When social credit is to be built for some latter issue.• To minimize loss when one is already losing.To minimize loss when one is already losing.• When relationships are more important than the When relationships are more important than the

interests.interests.• Though frequent yielding is not a virtue, a yielding to a Though frequent yielding is not a virtue, a yielding to a

fellow in ire, a balanced yielding among spouses, or fellow in ire, a balanced yielding among spouses, or even the frequent yielding obedience of a child to a even the frequent yielding obedience of a child to a parent or teacher is a healthy move.parent or teacher is a healthy move.

Compromising StyleCompromising Style

• Compromising, the most common style of conflict Compromising, the most common style of conflict resolution, entails splitting the differences and resolution, entails splitting the differences and reaching an acceptable middle ground solution reaching an acceptable middle ground solution through give-and-take whereby each party should gain through give-and-take whereby each party should gain something and may have to lose something.something and may have to lose something.

• Parties under this style of negotiation, generally use Parties under this style of negotiation, generally use techniques like trading, bargaining, smoothing over techniques like trading, bargaining, smoothing over differences, and voting etc.differences, and voting etc.

• Most of the negotiations though start with lose-win Most of the negotiations though start with lose-win style, do end up at the compromising style.style, do end up at the compromising style.

UsefulnessUsefulness It is useful:It is useful:

• when two parties have relatively equal power and when two parties have relatively equal power and have mutually exclusive goals;have mutually exclusive goals;

• when time is not available to solve problems that when time is not available to solve problems that are complex and require a great deal of effort to are complex and require a great deal of effort to sort out all the issues;sort out all the issues;

• to allow for a temporary solution until more time to allow for a temporary solution until more time could be devoted to unravel and analyze the could be devoted to unravel and analyze the complexities; andcomplexities; and

• when competition or collaboration fails to lead to a when competition or collaboration fails to lead to a solution. solution.

Collaborating (Win-Win) StyleCollaborating (Win-Win) Style

• Collaborating is based on a willingness to accept other Collaborating is based on a willingness to accept other party’s needs while asserting your own needs as well. party’s needs while asserting your own needs as well.

• It assumes that there is some reasonable chance that It assumes that there is some reasonable chance that a solution can be found to satisfy both parties in a solution can be found to satisfy both parties in conflict without losing much.conflict without losing much.

• Such solution, most of the time, is not possible but a Such solution, most of the time, is not possible but a collaborator believes that it is worth trying to find that.collaborator believes that it is worth trying to find that.

Illustrative StoryIllustrative Story• Two brothers had an orange. Each of them wanted Two brothers had an orange. Each of them wanted

to have it. to have it. • Ultimately they resolved the conflict through Ultimately they resolved the conflict through

splitting the orange into two halves, one half for the splitting the orange into two halves, one half for the each.each.

• Elder brother ate the pulp and threw the peeling. Elder brother ate the pulp and threw the peeling. • The younger brother who did not have an innate The younger brother who did not have an innate

liking for the oranges and just wanted the peeling liking for the oranges and just wanted the peeling as a recipe ingredient, used the peeling and as a recipe ingredient, used the peeling and discarded the pulp. discarded the pulp.

Your Comments…Your Comments…

What negotiation style(s) the two What negotiation style(s) the two brothers adopted to resolve the conflict? brothers adopted to resolve the conflict? Offer your comments over degree of Offer your comments over degree of usefulness of the style(s) used in this usefulness of the style(s) used in this situation.situation.

Preparing for NegotiationPreparing for Negotiation

The “Es” of Negotiations:The “Es” of Negotiations:

1.1. Establish GOALEstablish GOAL

2.2. Establish TRUSTEstablish TRUST

3.3. Establish RULESEstablish RULES

4.4. Establish TRADEEstablish TRADE

5.5. Establish ALTERNATIVESEstablish ALTERNATIVES

Establish GOALEstablish GOAL

Establish TRUSTEstablish TRUST

Establish RULESEstablish RULES

Establish TRADEEstablish TRADE

Establish ALTERNATIVESEstablish ALTERNATIVES

At the TableAt the Table………………

• Negotiation StrategiesNegotiation Strategies

• Communication SkillsCommunication Skills

Negotiation StrategiesNegotiation Strategies

Ahmad and Hassan decided to purchase an office for Ahmad and Hassan decided to purchase an office for their newly started business three months ago. their newly started business three months ago. Their first choice was an office located in a new Their first choice was an office located in a new

development, and priced Rs. 500, 000 (about Rs. development, and priced Rs. 500, 000 (about Rs. 25,000 above their limit). Ahmad thought they could 25,000 above their limit). Ahmad thought they could

get the price down through negotiation with the get the price down through negotiation with the salesman Mr. Sheikh around their limit while salesman Mr. Sheikh around their limit while

Hassan was less optimistic in that regard.Hassan was less optimistic in that regard.

Ahmad conducted some research on the Ahmad conducted some research on the development and learned that several of the development and learned that several of the offices including the one they liked had been offices including the one they liked had been

on the market almost a year. Though the on the market almost a year. Though the house they liked was their first choice, other house they liked was their first choice, other

offices were also quality offices and could be offices were also quality offices and could be accepted as a second choice. Ahmad met accepted as a second choice. Ahmad met the other salesman, Mr. Agha and learned the other salesman, Mr. Agha and learned that the prices of those offices were also that the prices of those offices were also

within their limit. With this homework done, within their limit. With this homework done, he made an appointment with Mr. Sheikh and he made an appointment with Mr. Sheikh and

decided to meet him alone.decided to meet him alone.

Ahmad informed the Ahmad informed the salesman he really salesman he really liked the office and liked the office and might be sincerely might be sincerely interested at a lower interested at a lower price such as Rs. price such as Rs. 450,000.450,000.

LOWBALLLOWBALL

He was going for the He was going for the lowest possible lowest possible price.price.

Approach StrategyStrategy

VINEGAR-HONEYVINEGAR-HONEY

ApproachApproach StrategyStrategy

The salesperson The salesperson sounded shocked and sounded shocked and said, “That is said, “That is impossible, we would impossible, we would not even consider it”. not even consider it”. Ahmad anticipated that Ahmad anticipated that response, and asked, response, and asked, “If you would not accept “If you would not accept Rs. 450,000, what will Rs. 450,000, what will you ask?”you ask?”

PINPOINT THE NEED

It had been established that the seller would take less than the asking price but not Rs. 450,000. The task then was to pinpoint how much less than Rs. 450,000?


The salesperson did some The salesperson did some figuring before he said “Rs. figuring before he said “Rs. 490,000”. Ahmad was 490,000”. Ahmad was prepared for this response prepared for this response who tried another strategy who tried another strategy saying, “Mr. Agha has saying, “Mr. Agha has recently sold two office of recently sold two office of similar stature for Rs. similar stature for Rs. 470,000, and several 470,000, and several others are available with others are available with him. Why would not you do him. Why would not you do the same for me?”the same for me?”

A strategy designed to put the other party on the defensive in an effort to win some concessions. Added to the Pinpoint, the Need strategy assists in determining what the seller will actually take.

CHALLENGE


The salesperson said, The salesperson said, “That house went “That house went cheaper, anyway perhaps cheaper, anyway perhaps I could trim the price to I could trim the price to Rs. 485,000 but you will Rs. 485,000 but you will have to pay 20% cash have to pay 20% cash down and the rest within down and the rest within one week.” Ahmad one week.” Ahmad guessed the salesman guessed the salesman has a room to tread has a room to tread downward and said, downward and said,


““Down payment is not the Down payment is not the problem but I cannot pay problem but I cannot pay the rest before three the rest before three weeks.” “It is impossible”, weeks.” “It is impossible”, said the salesman, “our said the salesman, “our company rules do not company rules do not permit it”. Ahmad replied, permit it”. Ahmad replied, “But I cannot pay at least “But I cannot pay at least this much within this this much within this period of time.”period of time.”

FEINTING

This strategy gives the impression one thing is desired whereas primary objective is really something else.


Politicians use a variation of this strategy to test receptivity by the public to something they plan to do.

This planned action is “leaked” by a “reliable resource” to test acceptability before final action is taken.


““I do not think I could make I do not think I could make further concession”, said further concession”, said the salesman. “Ok! Let me the salesman. “Ok! Let me consult my business consult my business partner since final decision partner since final decision will only be after our will only be after our mutual consensus”, said mutual consensus”, said Ahmad and left the Ahmad and left the salesman’s office.salesman’s office.

LIMITED AUTHORITY

Limited authority is an attempt to postpone the decision on a pretext to get approval from a competent authority. Whereas the real aim is to gain time for reconsideration, and / or keeping the opponent under pressure for a possible negotiation breakage.


Next day, Ahmad appeared in Next day, Ahmad appeared in the salesman’s office again the salesman’s office again along with Hassan, his along with Hassan, his business partner and reiterated business partner and reiterated his yesterday’s position that his yesterday’s position that they could not pay Rs. 485,000 they could not pay Rs. 485,000 at least within one week. “It at least within one week. “It seems difficult to give any seems difficult to give any further concession without further concession without consulting the builder”, said the consulting the builder”, said the salesman. salesman.

ApproachApproach StrategyStrategy ““I told you not to approach this I told you not to approach this agency, you could never conclude agency, you could never conclude any deal with them”, growled any deal with them”, growled Hassan and stepped out of the Hassan and stepped out of the office. office.

““You are spoiling almost a You are spoiling almost a

concluded deal. I offer Rs. concluded deal. I offer Rs.

475,000 though I am not sure475,000 though I am not sure

my partner will agree to it. A slight my partner will agree to it. A slight budge from your position can bring budge from your position can bring the deal back on track”, murmured the deal back on track”, murmured Ahmed to the salesman in confiding Ahmed to the salesman in confiding style. style.

When bad guy steps out for a few minutes, the good guy offers the deal that under the circumstances seems too good to refuse. Bad guys usually comprise spouses, lawyers etc.


““By the time you bring By the time you bring your partner back, I call your partner back, I call to the builder for his to the builder for his opinion. I think it is opinion. I think it is possible to reach a deal”, possible to reach a deal”, said the salesman while said the salesman while dialing a telephone dialing a telephone number when Ahmad number when Ahmad walked out of his office walked out of his office to trace his “estranged” to trace his “estranged” business partner.business partner.

GOOD GUY / BAD GUY

The good guy / bad guy is an internationally used strategy. One member of a team takes a hard line approach while other member is friendly and easy to deal with.


After few minutes Ahmad After few minutes Ahmad entered the salesman’s office entered the salesman’s office along with Hassan. along with Hassan.

““The builder has not been The builder has not been around, but I have availed my around, but I have availed my own limit and reduced the own limit and reduced the price to Rs. 482,000 provided price to Rs. 482,000 provided you could give us your offer in you could give us your offer in writing today with writing today with

the 20% deposit.”the 20% deposit.”


Ahmad sensing they were Ahmad sensing they were close to their goal replied, close to their goal replied, “We really do like this “We really do like this office, but it is still more office, but it is still more than we want to pay. than we want to pay. Please excuse us while we Please excuse us while we discuss ways in which we discuss ways in which we might increase our offer. might increase our offer. Would you please Would you please reevaluate your position reevaluate your position too?too?

DEFER

Deferring strategy allows the negotiators time to reevaluate their positions. Deferring a decision to make often proves that patience pays.


Ahmad and Hassan Ahmad and Hassan returned in an hour returned in an hour and offered Rs. and offered Rs. 478,000. 478,000.

The salesperson told The salesperson told them,them,

I called the builder while I called the builder while

you were away. He gave you were away. He gave a a

little, but Rs. 478,000 little, but Rs. 478,000 just just

won’t do. won’t do.


However, if you would be However, if you would be willing to split the differences, willing to split the differences, and make it Rs. 480,000, we and make it Rs. 480,000, we can make a deal, providing you can make a deal, providing you sign the paper and put down sign the paper and put down your 20% cash today. your 20% cash today.

SPLIT THE DIFFERENCE

Ahmad and Hassan Ahmad and Hassan looked looked

towards each other and towards each other and

accepted with pleasure.accepted with pleasure.

Communication SkillsCommunication Skills

• Oral CommunicationOral Communication

• Non-verbal CommunicationNon-verbal Communication

Oral CommunicationOral Communication

• Phrase the words properly; it delivers.Phrase the words properly; it delivers.

Two priests were so addicted to smoking that they

desperately needed to puff on cigarettes even when they prayed.

Both decided to ask their superior for permission to smoke.

The first asked if it was okay to smoke while praying?

Permission was denied. The second priest asked if he was

allowed to pray while he was smoking. His superior found his

dedication admirable and immediately granted his request.

• Use simple language instead of complex Use simple language instead of complex terminology. However use frequent jargons terminology. However use frequent jargons when negotiating with your professional when negotiating with your professional counterpart.counterpart.

• Be as descriptive as possible. Avoid Be as descriptive as possible. Avoid generalities.generalities.

Listening: a strong negotiation tool!Listening: a strong negotiation tool!• Perhaps the best strategy to adopt while the other Perhaps the best strategy to adopt while the other

side lets off steam is to listen quietly without side lets off steam is to listen quietly without responding to their attacks.responding to their attacks.

• You often get more through listening by finding out You often get more through listening by finding out what the other person wants than you do by clever what the other person wants than you do by clever arguments supporting what you need.arguments supporting what you need.

• Standard techniques of good listening are to pay Standard techniques of good listening are to pay close attention to what is said, to ask the other party close attention to what is said, to ask the other party to spell out carefully and clearly exactly what they to spell out carefully and clearly exactly what they mean, and to request that ideas be repeated if there mean, and to request that ideas be repeated if there is any ambiguity or uncertainty. is any ambiguity or uncertainty.

Non-verbal Communicatio

n

VibesSymbolic

How something is said instead of what is said i.e. volume, rate

and rhythm, silent pauses, sighs etc.

Facial expressions, body

gestures, dress etc.

KinesicsParalanguage

Feelings and emotions

received from others through

their body actions

Body LanguageBody Language What it could meanWhat it could mean

Avoiding eye contact Lack of confidence in bargaining position

Trying to bully or intimidateMaking excessive eye contact

Lack of confidence in bargaining position

Fiddling with objects such as hair, pencils, or papers

Crossing and uncrossing the legs

Impatient – wants to cut a deal quickly

Not receptive to your bargaining position

Keeping legs and arms crossed

• When we do not know others, there body language When we do not know others, there body language remains the first source of building image about remains the first source of building image about them.them.

• What people say may be reinforced or contradicted What people say may be reinforced or contradicted by the non-verbal cues.by the non-verbal cues.

• When there is no congruence between the verbal When there is no congruence between the verbal and non-verbal communication, reliance is placed and non-verbal communication, reliance is placed on the non-verbal aspect that creates a credibility on the non-verbal aspect that creates a credibility gap on part of the speaker labeled as the “non-gap on part of the speaker labeled as the “non-verbal liar”. verbal liar”.

Be careful, actions speak louder than the words…Be careful, actions speak louder than the words…

Negotiation TipsNegotiation Tips

1.1. Do not underestimate your power. Do not underestimate your power.

2.2. Do not assume that other party knows your weaknesses.Do not assume that other party knows your weaknesses.

3.3. Don’t be intimidated by status.Don’t be intimidated by status.

4.4. Don’t be intimidated by statistics, precedents, principles, Don’t be intimidated by statistics, precedents, principles, or regulations.or regulations.

5.5. Most negotiation will require some concession making.Most negotiation will require some concession making.

6.6. It is a mistake to assume you know what the other party It is a mistake to assume you know what the other party wants.wants.

7.7. Never accept the 1Never accept the 1stst offer. offer.

8.8. Don’t fear to negotiate.Don’t fear to negotiate.

Common mistakes to be avoidedCommon mistakes to be avoided

1.1. Inadequate PreparationInadequate Preparation2.2. Ignoring the give/get principleIgnoring the give/get principle3.3. Use of intimidating behavior.Use of intimidating behavior.4.4. Impatience.Impatience.5.5. Loss of temper.Loss of temper.6.6. Talking too much, listening too little, and remaining Talking too much, listening too little, and remaining

indifferent to body language. indifferent to body language. 7.7. Arguing instead of influencing.Arguing instead of influencing.8.8. Ignoring conflict.Ignoring conflict.

Negotiation Skills

Education

paying deaf

totally partially

actions speak

mutually exclusive

play sneaky

elder brother

newly started

good business