Negotiation

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Use this cheat sheet to improve your negotiation skills and increase your chance of getting to agreements.

BATNA & 3 Key Numbers

BATNA “bottom line”. Understand other’s BATNA with equal care of your own. Invest on improving it. Do not reveal it.
Power in negotiation comes from your BATNA if the negotiation fails.
Keep options open. Increase BATNA. Hint BATNA. Access other BATNA.
Once you exercise it, it’s gone.
Reservation – < this and go to BATNA
Target – realistically able to get based on comparable deals.
Aspiration – best to hope for. Use as starting bid. Must be able to make a case for it. Be careful not to hurt relationship with high aspiration.
Every offer tells a story – don’t be unreasonable.

How to Reach a Deal Anyway

Separate people from problem
Focus on interests, not positions
Generate a list of possibilities before deciding what to do
Insist that the result be based on some objective standard.

Negotiation

Preparation

  • Initial financial position – 3 numbers.
  • Context – interests, issues, positions, alternatives?
  • Awareness of own mental and emotional state
  • Access the same factors for the other party.
  • Learn about the ZOPA – shape their perception of ZOPA.
  • Be open but skeptical of their information

First Offers

  • Fairness – equity rule, equality rule, needs-based rule. (Varied by individual, situation, relationship)
  • 1st offer – advantageous when it serves as an anchor.
  • Overcome negative impact of count part’s 1st offer by counteroffer quickly and show willingness to negotiate.
  • Pay attention to pattern of concessions.
  • Successful negotiations include both creating (integrative bargaining) and claiming (distributive bargaining) value. Need to manage this tension effectively.
  • Logrolling – “win-win” – trading something of less value for something of more. Be alert on differences in preferences, beliefs and abilities.
  • Build trust and share information. Ask questions. Make package deals. Save face.
  • Reveal the right information is important. Reveal the wrong information put you in disadvantage.
  • Premature concession – don’t give in before exploring integrative potential.

Style

Too Cooperative

  • THINK OF YOUR OWN CONCERNS
  • Develop a strong BATNA.
  • Delegate to an agent
  • Don’t feel selfish.
  • Say “you’ll have to do better than that because…”

Too Competitive

  • THINK OF THE OTHER PARTY’S CONCERNS
  • Think of pie expansion.
  • Ask more questions.
  • Based offers on fair/objective standards.
  • Be reliable
  • Don’t haggle.
  • Rely on colleagues as reality check.

Cross-culture Issues

Not-always-shared US Assumptions

  • Business is business.
  • Time is money.
  • Silence is uncomfortable.
  • WYSIWYG
  • Most important details are written into contracts.

Best Practices

  • Be creative.
  • Use humor.
  • Openness to different POVs.
  • Persistence and patience
  • Empathy and cultural sensitivity.
  • Move past stereotypes.