Okay. Thanks. Thanks, Natalie. As Natalie said, my interest in negotiation goes back a long way.
I was in Oxford for over 20 years. I taught an elective on the MBA around negotiation.
But my interest in negotiation actually goes back. Even before Oxford, when I was actually a negotiator for a trade union,
I worked for trade union and was negotiating with employers around pay conditions of employment.
So I have a long interest in negotiation and hope to share some of the tips I picked up over the years.
And I've called the session The Art and practice of negotiation, because negotiation is an art.
It's not a science there. There's no there are no precise rules in terms of how you conduct negotiation.
As we go through the presentation, you'll see that on many occasions and in relation to many issues you have to make judgement calls.
There's no right or wrong way of doing it. You have to make a judgement.
So that's why negotiation is so interesting, and that's why I've called it an art.
So the starting point for today's presentation is clearly when are we confronted with a negotiating situation?
In other words, what conditions need to be in place for negotiation to actually commence?
And here's a picture of Saddam Hussein.
Departed now, and when he was found by a group of American soldiers in a hole in the ground in the Iraqi desert.
You'll be interested to know that his first words were, I am president of Iraq and I am willing to negotiate.
Now, I suppose the question when asked is, was Saddam Hussein under some illusion, surrounded by soldiers pointing a gun?
And he is suggesting that he wants to negotiate.
Now, is that a negotiating situation? What are people's views?
Anybody got a view? If it's not a negotiation, why not?
And if it is, why is that a negotiation situation?
Anybody got any views? Yeah.
So you're saying it isn't for those reasons. Okay.
So you're suggesting that maybe there is something to do with power here which determines whether we've got negotiating situation,
the balance of power so tilted towards a soldier with a gun that we can't conceivably view that as
a negotiating situation because Saddam Hussein had no countervailing power against that force.
Is that what we're saying there? What?
Yes. So there was an issue to negotiate.
I suppose the issue was whether he had the power and the countervailing force to negotiate over his life.
Does anybody want to argue that this is a negotiating situation?
Yeah. Something like that.
Yep. Why wasn't he shot? Do you think people know?
Yeah, well. Right. So it's interesting.
I mean, you're right. There's an issue there about power and guns and not appealing to have any power, as you say.
Maybe he did have some power. Maybe he knew where the weapons of mass destruction, if they existed, although we know they didn't, may have resided.
So maybe there is an issue there about him having knowledge and information which could be used to negotiate.
So as a starting point,
there's an issue about negotiating situation involving some kind of rough balance of power between parties having something that either side wants.
This is a clip from The Life of Brian, which I'm sure you're.
No. How much quicker?
Well, it's the wife. Oh. Oh.
20 shekels. Right. But they laugh. Wait a minute.
We're supposed to haggle. No, no. I've got to get what you mean. No, no, no.
Haven't got to give it back. No, no, no. I just paid you. Yeah.
This bloke Barnacle won't go. All right.
Do we have to? Hello? I want 24. That I'll just get.
Now, you telling me that's not worth 20 shekels? No. Look at it being a quality.
That's not your goat. All right, I'll give you 19, then. No, no, no.
Come on. Do it properly. Haggle properly. This isn't worth 19.
You just said it was worth 20. Oh, dear. Oh, dear. Come on, haggle.
All right, I'll give you ten. That's more like it. Ten? Are you trying to insult me?
Me with a poor, dying grandmother? Ten. All right, I'll give you 11.
Now you get it in seven. These are you, right? 11.
This cost me 12. You want to go with me? 17 now.
No, no, no. 70. 18. So now you got a 14 now.
I'll give you 40. 14. Are you joking? That's what you told me to say.
Oh. Oh, tell me what to say. Please offer me 14.
I'll give you a booking. He's offering me 14 for this.
15. 17. My last word. I won't take a penny less or start my day.
15. Done cost to do business with you.
Tell you what, I'll throw you in this as well. I don't want to get taxed, but. Yeah, all right.
All right. But I was a 16 year old. I'll just give you 20. Oh, yeah, that's right.
As for why are you eating? That's right. That's fine. That's fine. No, I got to go somewhere.
That's right. That's for. For the gold. For. For this court.
For. Look at it. It's worth. And if it's worth a shekel. You just gave it to me for nothing.
Yes, but it's worth ten. All right, all right. So.
No, no, no, it's not worth ten. You're supposed to argue ten for that.
You must be mad. Oh, well, I'm born every minute.
Okay. So there was an example where. The two parties actually had difficulty in getting a negotiation going because one of them was
prepared to agree straightaway there was no conflict or difference of opinion at the outset.
There was there was an agreement that he would actually pay the this the sound to buy.
We'll have this guy. This mouse is not working right up there.
Got it. Okay. So so initially there was no good negotiating situation because the two agreed.
And a negotiating situation requires conflict. It requires a difference of view.
If the two parties agree on something, clearly we've got no negotiation.
So some of the tenants or basic premises in negotiation are beginning to emerge.
Here is a definition that Putnam and Rodell well of gave of negotiation.
Two or more interdependent parties who perceive incompatible goals and engage in social interaction to reach a mutually satisfying outcome.
Now let's unpack that definition a little bit to see what the key preconditions of negotiation are.
So first of all, the parties to the negotiation have to be or are interdependent.
And that's important because. The two parties need each other.
You are not going to be present at a negotiation. You are not going to be involved in negotiation unless you want something from the other party.
And you should never lose sight of the fact that you are negotiating with somebody
else because you want something from them and they want something from you.
So there's an interdependent relationship in a negotiating situation.
Another key term is around the seething. So the parties perceive incompatible goals.
And negotiation is a lot about perception. Perception is often a reality.
How the different parties view the world, how they view their relationship is a crucial aspect of negotiation.
And a crucial aspect is going to be manipulating the perceptions of the other party involved in the negotiation.
So perceptions are crucial in a negotiating situation.
So how are you going to do that? Incompatibility of goals is a crucial or key precondition.
Clearly, if you agree, as the Monty Python characters did in that clip, there is no negotiation.
The seller has to encourage the buyer to actually disagree with him.
Where we have incompatible goals, there is conflict and where conflict exists,
power comes into play as a way of resolving how that conflict actually pans out.
So negotiations involve incompatible goals.
They involve conflict, conflict and the exercise of power.
Social and negotiating situation is a social interaction.
And a crucial thing to remember about a social situation is there's more than one person involved.
You're negotiating with somebody else. So you always need to be aware and sensitive to the other side, to the people you're negotiating with.
Where are they coming from? What are their interests? What kind of levers can you use to change their mind?
So always remember that negotiation has another party, at least one other party involved.
And I suppose the final interesting feature of that definition is a suggestion that negotiations actually conclude with a mutually satisfying.
Outcome. In other words, negotiations are not all about screwing the other side.
The sign of a good outcome. A good negotiation is often that both sides go away feeling they've got something out of it.
So those are the kind of preconditions for negotiating situation.
To parties who want something from each other. Where they're perceived to have incompatible goals, which suggests power and conflict come into play.
The social dimensions of that negotiation,
which suggests that you need to be aware and sensitive to the other side and an outcome which is seen as mutually satisfying.
In other words, both sides get something out of it.
Okay. So what I'm going to do in this talk is look at negotiations along three dimensions.
Firstly, we're going to look at context. So I'm going to be suggesting that there are no golden simple rules which guide negotiation,
that the way you conduct negotiations depends a lot upon circumstances and the conditions that you're in.
So we'll look at context in those terms. Secondly, I'll go through different negotiating strategies, identify those and what they mean for behaviours,
and finally talk briefly about some negotiating tactics that may be linked to those strategies, if that makes sense.
Okay. Now telling them with context, the first of those three things,
I think it be fair to say that negotiations or negotiations have or should have a kind of implicit structure that's not always formalised,
but implicitly there is a structure there and arguably prescriptive that should be the structure.
So appropriate preparation is crucial in any negotiation to be prepared to be ready with information, arguments and a strategy in place.
Then you present your arguments to the other side. They present theirs, you begin to bargain, and then you come to a settlement,
or you abandon that negotiation because walking away is always an option.
And once you've settled, you finally agree. So those are, if you like, the building blocks of any negotiation which should be there.
But I'm suggesting to you that the way in which those different components is actually carried out depends a lot upon context.
It depends on the form of the negotiation, the nature of the negotiation that you're involved in.
It depends upon power, the power balance between the different sides.
And thirdly, it depends upon relationship, the kind of relationship you have with the parties or party that you're negotiating with.
So I'll go through those three contextual factors in turn, just unpacking what they mean for negotiations.
So starting with the form of the negotiation, firstly, one needs to be aware of who one is negotiating with.
So you may have an individual negotiation, which is a 1 to 1 negotiation.
In that Monty Python clip. It was clearly an individual negotiation, one party negotiating with one other individual.
However, often negotiations are collective.
We're dealing with teams of negotiators, and in business you often have a team of negotiators which may comprise,
for example, people from managers from different functions, negotiating with a company who also has a team of negotiators.
And as we see a little bit later on, that's clearly very important because when you're dealing with a negotiating team,
a whole range of issues arise in terms of how you manage that team, how you align the goals of that team,
and how you deal with another side, which may also have a team of negotiators.
So who's negotiating is a crucial contextual factor?
What are we negotiating about?
Again, one can distinguish between one off and recurring negotiations.
That Monty Python clip with a one off negotiation. One suspects.
I don't think he was going to go back and buy another bid.
Often negotiations take place on an issue with a person or group of people you'll never see again.
You've got to buy something and then you walk away and never see them again.
At the same time, you might be negotiating with people on a recurring basis.
So, for example, when you negotiate over pay, when I'm negotiating over pay,
every year I turned up and so the same people to negotiate another pay increase.
And clearly, there are very different issues that arise depending upon whether it's a recurring or a one off negotiation.
If it's a recurring negotiation, you may be very sensitive to not upsetting the other side too much because you know,
you're going to have an ongoing relationship with them and you know you're going to turn up in a year's time to negotiate again.
So you really don't want to upset them. You may be more cavalier in a one off negotiation.
You might try your luck a bit more in a one off negotiation on the basis that you may never see that person again.
I'm not saying one off negotiations inevitably involve cavalier behaviour because reputation and so on matter,
but these different sorts of situation may generate different sorts of behaviour.
When? So what is the time scale for negotiation?
Sometimes negotiations are very compressed.
We've got a train strike coming up in London and the parties are trying to negotiate an agreement before that strike takes place,
which is 930 tonight. So they're going to be actually trying very hard.
They're under pressure to get an agreement and it may generate behaviours which aren't
necessary or required if you've got a much longer timeframe where you can consider issues,
where you can do your research, where you can mull over different options.
So the time that you have short or long timeframes will again affect your behaviours.
And finally, where are you going to go if you know, I'm not going to have time today to talk very much about cross-cultural issues in negotiation.
That's clearly a very important issue, whether you're negotiating in a culture that you're familiar with or whether you're going to go
searching overseas with a different type of cultural environment will affect how you behave.
So, for example, this is a question that was put to managers in three or four different countries.
It's just an example of a hypothetical situation. And this proposition was put to managers in different countries with different cultures,
and the employer and employers worked for the company for 15 years.
Excellent performance over that time, but unsatisfactory over the last year.
If there's no reason to expect, performance will improve.
Which do you agree with? And this was a statement which said the employee should be dismissed on the grounds that job
performance should remain the grounds for dismissal regardless of age or previous record.
There was another option which said that the employer should be kept on.
But if you look at these responses, 75% of U.S. and Canadian managers agreed with that statement,
whereas only 30% of Japanese, French, Italians and Germans agreed with that statement.
So when one goes and negotiates overseas, there are cross-cultural issues to consider.
That's an interesting. Sign.
Just to illustrate cross-cultural differences. What does that sign mean?
Well, if you're English, you think it means.
Good. That's pretty good. However, in Italian, they use that sign to mean one in Japanese five and Greeks may up yours.
So if you go to Greece, you're not going to do that. So you just have to be sensitive to cultural context.
So where you negotiate is clearly important. Okay.
Let's let's look at relationships now, which is the second contextual factor.
And there are a whole range of issues, again, which kick in contextually to affect negotiation.
The first point to note is that negotiations are multidimensional.
One needs to be aware that there's a negotiation about what the substance of what you want and what you're trying to get from each other.
But there's also a kind of shadow negotiation which is also taking place.
So where one negotiates, one clearly is concerned with substance.
Getting what you require from the other side.
But you all the time need to be aware of the shadow aspect of negotiation, which is about the interpersonal.
You're negotiating a particular relationship with the person that you're bargaining with,
and you need to be aware of your communication processes and the way in which you engage with the other side.
So negotiation is not only about the substance, it's about the negotiation of a particular relationship which could be significant,
particularly if you continue to have a connection with that organisation or that person.
So for example, in joint venture negotiations where two companies are coming together to launch a joint venture,
negotiating the terms of that venture,
joint venture are not only about the substance of that arrangement, but the relationships that you negotiate with.
The other side can be very important as well.
So this over here is some research on joint ventures suggest strategy implementation will be a more or less conflictive affair depending
upon the outcome of the negotiating process as it represents and determines the basis of the subsequent function of the partnership.
So the way in which you deal with each other in negotiating the substance of the joint venture affects your future relationship with that other party.
So what should all the world be aware of the kind of relationship you're building up with the other side?
So you might want to slack the law for abuse them. If you know that in the future you're going to have to work and establish a relationship with them.
Knowing the other side not to, you know, the people that you are negotiating with.
Clearly, if you haven't met the other party, if you don't know anything about them, the process of negotiation,
possibly the outcome are going to be very different to circumstances where you know that person very well, maybe where you know that person very well.
You can take things for granted.
You know where they're coming from, you know what kind of meanings they're attaching to certain phrases where you haven't met that person before.
Clearly you're going to be much more precautionary, much more careful, much more probing in how you deal with a negotiation particularly early on.
So whether you know that person is clearly a crucial contingent factor,
assess whether you trust them, which is closely linked to whether you know them or not.
Do you trust that person if they say something? Possibly.
If you've known them for many years and know that they deliver on their promises.
Yes. But if you don't know them again, it's somewhat more questionable.
Do you respect that? You should try and respect the other side in a negotiation.
And this little clip shows what happens when respect breaks down.
Oh. What's it?
Racism. Is there any without raising our voices? All right. Now at a reasonable decibel level.
Can you tell me what exactly the issue is here? Okay.
We at the WGA do not feel that the AMPTP is taking these negotiations seriously.
Do you mind if we ask on what you're basing that assertion?
Okay. Well, any number of things. There's the fact that your side hasn't really moved at all as far as the numbers are concerned.
That's right. And we were under the assumption that you guys were coming back to the table in good faith.
And any progress that's been made has been largely superficial.
And I just jump in here for a second and point out what the real issue is.
Absolutely. By all means,
we feel that the level of commitment by the AMPTP is more or less reflected in the calibre of counsel it chooses to assign to a negotiation.
Go on. We don't feel that the choice of council reflects a serious attitude towards the guild's demands.
That essentially is the elephant in the room when you're questioning our legal credentials.
In a nutshell, yes, that is unbelievably presumptuous.
I don't think it is. And why is that? Because you're puppets.
Excuse me, sir. I am a graduate of Harvard Law School, class of 1984.
I finished at the top of my class and worked as a lawyer for Goldman Sachs for six years.
How is that even possible? You're a monkey and you're a Jew.
So what? I'm only half Jewish. Oh, well, I'm only half monkey.
The other half a squirrel. You know what? [INAUDIBLE] you, monkey. Squirrel. Look, I'm just.
I'm not used to it. I'm not used to having my professional credibility questioned.
All right. So you're saying you all have law degrees? That's correct.
Okay. What's the name on your diploma? Oh, my name is on my diploma.
Steven Callahan. What about you, Alan?
Rich Dale. These are your real names. What about you?
Mr. Kimball's the dog. But that's just what I use on my business cards.
My real name is Michael Shipley. All right. Well, let me ask you this, then.
What about the guys behind the table with their hands up your asses?
Do they all have law degrees? No. They're puppeteers [INAUDIBLE] here a little again.
Here we go. Guys, guys, guys, guys.
Let's try and get this thing back on the rails, okay? We're not negotiating until the AMPTP assigns legitimate counsel to these proceedings.
Well, then we got a little problem here, don't we?
Yeah, we do, because we're not budging until we get our $0.04 from legitimate authorised AMPTP representatives.
Well, how about we stick that $0.04 up your arseholes rights?
No, no, no. That's a legitimate pitch.
How about we stick that $0.04 up your arseholes, and if you can fish it out with your thumb and forefinger in less than 20 seconds, it's yours.
All right, we'll take that deal. Sounds good. It sounds great. Oh, all right.
Right, right. All right. Terrific. Good, good. Thank you, guys. All right, let's go.
Right. Bionic woman. All right, look. Things are going to be a lot tougher than we did it.
It turned out, by the way, who knows you guys better when you guys are going to win.
Do that here or do we go somewhere? Okay. So that's what happens when respect breaks down, although it did break out in the end.
I suppose the final issue about relationships is gender, whether you are negotiating with men and women and this is obviously quite a sensitive area,
which I'm not going to actually venture into for fear of upsetting anybody.
But I suppose there is an issue about whether men and women negotiate differently and there is quite a bit of research about on this issue.
I mean, here are a number of statements which the research has commented on.
Women cooperate more than men. True or false?
Well, yes, there is a small but significant difference here, which suggests that women do cooperate more than men.
There's also evidence suggests that women are initially more trusting but less willing to forgive.
And we all know about that. So, yeah, yeah, they're quite provocative.
I mean, we all know about the second one, don't we, as women set lower aspirations?
Is that true or false? Well, actually, there's quite a bit of evidence to suggest that women do set lower aspirations when they go into negotiations.
So managers should just have a bit of research done in the US.
Men expected to earn 13% more than women in their first year and 32% of their career.
So there is an issue about aspiration and expectation.
Women don't ask and that's another one.
Women are 45% more likely than men to score low on a scale designed to show that life is amenable to change via negotiation.
So there are some interesting gender differences, which if we had more time, we could obviously discuss.
Okay. So moving on to the third contextual feature, which is all about power.
So the point here is that the nature of your negotiation would depend upon the balance of power between different parties.
And we talked a little bit about this around Saddam Hussein,
and there are different ways in which one can actually assess power in a negotiating situation, in a general sense, power.
And there have been books and books and books written on definitions of power.
But very crudely and broadly, power is the capacity to exert influence over another party.
The issue is how do you generate that capacity to exert influence?
Here are three kind of generalised ways in which you might define power and use power in a negotiating situation.
So the first one is based on course, the second one is based upon environmental contingencies.
And the third one, possibly the most interesting important is based upon dependency.
So. I'm not going to deal with quotes. I mean, power is a cost.
I mean, this is quite a rational approach to power,
which is saying that bargaining power depends upon the disadvantages your opponent suffers or thinks they suffer
prices that they will suffer if they disagree with your proposal relative to the disadvantages suffered,
if they agree with your proposal. So there's a kind of rational calculation to be made here which suggests that you have power.
If the cost for the other side is greater, if they disagree, than if they agree with what you want.
So cost kicks in. The extent that you have power is the costs of the other side are greater if they disagree than if they agree.
And just to give you an example of this, so as bargaining power,
the pay is related to the cost to be of disagreeing with a versus the cost of they agreeing with a.
So if A's claim would cost £10,000 to be the cost of disagreeing is £11,000,
then clearly a has power to secure their claim as powerful when the value of the equation is greater than one.
In that case, it clearly is. So if the costs can be calculated and that's a big if,
because the cost of actually conceding and giving the other side what they want can be quite difficult.
There are often certain uncertainties. If you can calculate costs and put that forward as a rationale for succeeding or giving you your claim,
then that can be quite a powerful mechanism to get what you want.
The lesson there is in negotiations you're trying to persuade your opponent that
it's in their own best interests to accept your claim or offer as the alternative.
A rejection is more costly. I remember with dating perceptions,
so you can work up the kind of costs to the other side of disagreeing and stress how much more cost effective it is to agree.
So think about costs and relative costs of your claims.
The second view of power is much more to do with objective reality.
I mean, power is not only about perceptions, but it's also about external context.
So your power may depend on the political situation.
So, for example, there may be certain issues which generate public opinion which may support your claim.
So when firefighters went on strike five or six years ago, there was initially quite a lot of public support for firefighters.
Here were men and women who risked their lives on a daily basis to rescue you from fires.
And this significantly bolstered the claim of the firefighters.
There may be economic considerations here.
So, for example, levels of inflation or levels of unemployment may affect your power in negotiating a pay increase.
If unemployment levels are quite low, then it actually bolsters the power of the union because employers can't get alternative sources of labour.
So economic circumstances are important, as is regulation issues, simply around, for example, the law.
So for example, in my background is trade unions and the law regulates strike activity in quite a tight way,
and that will affect the extent to which the strike weapon can be used by workers to pursue their claims.
And there also internal factors to consider as well.
For example, around technology, sometimes, for example, employees who actually hold a very important,
pivotal position in the technological process have quite a lot of power.
So the person who switches the machines on only he can do it, has quite a bit of power.
Product markets as well might be important. So for example, how perishable is your product?
Again, my background is in trade unions and historically print unions.
The people who produced newspapers had quite a lot of power over the newspaper
owners because you can only have one day's newspapers once that day has gone,
you can never get it back. So you can never have another July the 21st, 2014.
Once you've lost that day's newspaper, you can never get it back.
And that's why the print unions have quite a lot of power over newspaper owners to actually push their pay claims.
So those kind of internal and external factors will affect power balance between different sides.
And it suggests that if you're involved in negotiation systematically to assess
the constraints and choices that you have given those environmental features.
Does the law actually allow you to take action? Do you have public support?
How much power to somebody have given the kind of product you are producing?
And there is a real world out there. So it's not just about perception. The law is.
The law and you can't dodge it basically however much you might like to.
Finally then dependence as a way of establishing power.
And this view of power suggests that the limits of your bargaining power are set by the negotiators.
Interdependence. How interdependent are you?
And the more the other side is dependent on you, the greater your bargaining power.
And that means that power is significantly influenced in this context by what is called the patina,
which is the best alternative to a negotiated agreement.
Now, the but now the best alternative to negotiate that agreement is your walk away position.
In other words, if you were to leave that negotiation, what would you walk away to?
Now, if you can walk away for something that's quite attractive, whereas the other side walks away for something which is very unattractive,
then clearly you have much more bargaining power than the other side.
So your partner is a crucial determinant of power.
What do you have to walk away to? If the negotiations break down?
Donald Trump, who we all know and have mixed views about,
suggests that the art of the deal is to find out what the other party wants, because if you have it, you've got a deal.
If you've got what they want, what they want, if they are dependent upon you for that, it gives you considerable power.
So a couple of examples of how butlers have kicked in.
This was Formula One in 2009.
Max Mosley, who headed the Formula One association, who ran Formula One, was caught doing rather strange things on the front page of the Sun.
A lot of scandal around Max Mosley doing really odd things, dressed in very strange clothes, was beginning to bring Formula One into ridicule.
And the the car manufacturers wanted to get rid of Max Mosley.
So what did they do? They tried to create their own banner, which is a walking away from the Formula One set up that existed.
So the car makers threatened to break away.
So they created their own banner. And very soon Mosley goes and the breakaway threat is ended.
Another example, quite a high profile example from two or three years ago was Guy Hands, who you may have picked up on, who was head of Terrafirma,
which is private equity firm and quite a big legal case because what happened there was Terrafirma and guy hands were trying to buy.
EMI and Citigroup were brokering this deal and Citigroup suggested that there was an alternative
offer for EMI and that alternative offer prompted Guy Hands to actually up his bid.
So what Citigroup were effectively doing was establishing a partner, somebody else who would buy EMI if Terrafirma didn't.
Now, it subsequently transpired that that will turn to bid was a fraud.
Citigroup have made it up. They've made up the suggestion of an alternative bid.
And there was legal action that followed because it was suggested by Guy has that this was fraud.
What Citigroup were doing was trying to establish a patina and alternative to terrafirma
buying IMO and therefore bolstering their power position and actually going hands on.
She lost that court case. It was not to be fraud. So quite an interesting example of trying to establish a baton.
So the lessons of this are you always need to know what your baton is.
So as a negotiator, think what your walk away position would be if you didn't get an agreement, what would you be left with?
What will you be alternatives? If the baton is weak, then you will want to strengthen it.
So for example, you're negotiating with a contractor or commissioner for a particular contract.
Well, you might go away and provide and seek other providers or other contracts to try and boost your position if this one fell through.
You also need to identify what the other side's backer is.
If you can and if you can identify it, then you will clearly want to weaken it because that will strengthen your position.
You think you might be sent the other side. You think there are other contractors who can provide this service for you?
Well, we know there aren't. We've done some research and we know that we're the best provider of this particular service
and that there are very few other suppliers that could offer the quality of service we could.
And what you're doing there is a weakening they're alternatives. You're weakening their baton.
And in so doing, strengthening your own position. You need to be aware, though, that actually finding the butler is not always straightforward.
It is often quite difficult to identify options, particularly on the other side.
There is a tendency to overestimate your know. Now we've got lots of other options.
Be careful not to overestimate what's available to you.
And there's a similar tendency to underestimate what the other side can do, what other options they've got.
So just be aware of that and also be aware that patterns may change over time.
Negotiations often take place over a period of time, and in those in that period, patterns change.
Sometimes their partner may strengthen, yours may weaken over time.
So partners are a crucial aspect of power.
Okay, so we've looked at context. Well, I'm going to do now is move on to strategies just to give you an overview.
It's very important in negotiation to try and align these different elements.
What are you trying to achieve in negotiations?
Be clear what your goals are, what you know, what your goals all think about how are you going to achieve them?
Which is your strategy. Ensure that the style you adopt and the behaviours you adopt support that strategic approach.
Okay, so goals and tangibility.
Sometimes goals are intangible as well as intangible issues of reputation.
For example, trying to establish good relationships with the other side.
These are intangible goals which you need to be aware of and which we've already talked a little bit about.
I go into this is an example of strike the workers in Denmark who went on strike.
These were factory workers at Carlsberg and they went on strike because traditionally Carlsberg had allowed its
workers to take cans of beer off the production line and drink them any time they liked while they were working.
So any time you fancied to drink, it could just pick it up an F1, which was a great perk.
The only condition was, of course, you couldn't be drunk on the job, otherwise you'd lose a job.
But as long as you stayed sober, you're fine to take a drink.
And Carlsberg.
I know most of us would like to work Carlsberg, but Carlsberg took away that privilege, and it clearly upset the workers who went on strike.
So we need to be aware that sometimes those are intangible as well as tangible and.
We've talked about focus. What kind of relationships you want to build?
We need to be clear about goals in terms of approach interests. The positions and this is a contrast was often drawn.
But one needs to be clear the difference with an interest and a position.
Often when negotiations get stuck is because the two sides take a position.
They get stuck in their demands and these demands appear to be incompatible with one another.
It's much better to step away from a position to see what exactly your interests are so that
you can find other ways of addressing those interests beyond the positions that you take,
the positions get you stuck in to what you want. Interests argue that you step away.
How can we achieve these ends through different means?
So be aware of the difference between an interest and a position.
And finally, when it comes to goals, you need as a negotiator to begin to prioritise what your goals actually are.
Because by prioritising, you can identify what kind of issues you don't care that much about.
These are throwaway issues. Maybe they become bargaining chips right the way up to essential goals, which, you know, are breaking points for you.
These are walk away issues. If you don't get this, then there's no deal.
So what are your deal breakers? What are your essential goals for negotiation?
And this is often described as your sticking point. This is the point where you won't go any further.
And you need to be clear about what that point actually is.
So it's often quite useful as an exercise just to think, Well, what is my sticking point?
What is the realistic possibility in this negotiation?
And what would be the best case scenario? This is just a way of structuring your thoughts.
But clearly the sticking point is a very important bottom line.
And the sticking point is very important because the respective sticking points will determine where the zone of potential agreement actually is.
So, for example, in this case, the sticking point.
So they're buying, I don't know, a call here. The sticking point for the buyer is £20,000.
In other words, the buyer is not going to pay more than £20,000 for that particular product.
And for the seller, the sticking point is £10,000.
And because we get those respective sticking points, the agreement is going to lie between ten and £20,000.
That is the zone of the potential agreement. It can't be higher than 20 K obviously,
because the buyer won't go for it and it can't be lower than ten K because the seller won't show that for that lower price.
So that is the zone of potential agreement, which is clearly an important area because it determines where the deal will actually lie.
I don't know if you can see that, but this is an example.
Often doing exercises, buying and selling a car. And here are some high powered hypothetical figures three buyers and three sellers.
And here is the final price of the call. £8,000, £10,000 and £8,000.
Now, you might say, well, who is the best negotiator there? And you might say, well, the best seller is the one who got £10,000 for the same car.
£10,000. Looks like that seller did very well. And who is the best buyer?
Well, that buyer looked to have done very well because they got it for the cheapest price.
But one needs to be slightly careful in making that judgement.
Those are the two who seem to have done best. Here are those same figures.
And what one needs to be aware of in working out who's done well in negotiation is where are the relative sticking points.
So if you look a bit more closely at that 10,000 car, who seems to be the best seller?
Well, actually, the sticking point for that buyer was £12,000.
In other words, the buyer would have been prepared to pay £12,000 for that car and they got it for £10,000.
And therefore, the difference between the sticking points and the final figure was £2,000.
So actually didn't do so well. If you look at the.
Buyer who got it for £6,000. Well, they're the sticking point with £5,000 and the difference was £1,000.
So they could have actually got it for £1,000 cheaper.
So what appeared to be the best seller? The best buyer? When you look at the sticking points, you kind of slightly change your judgement.
And I'm not saying you should never push the other side to the sticking point, but that is what they could have got that foot car for.
And just to give you an example. Oh. How sticking points were.
I'm just saying telling the truth is not in the cards right now. I thought I thought you'd be excited to have an acting job.
If it's an acting job, we should get paid. Yeah, you're going to get paid an experience.
I want to actually get paid. All right.
What do you want? $600 for the day, plus overtime.
If we go over 8 hours. I'll do my own hair. Makeup. And I want you to pay for the six week intensive acting camp that my mom can't afford.
$50 for the day and a two week acting class at the YMCA nearest you.
$500 and a four week acting class. $300 and a three week class.
Done. I would have done it for 500.
I would have done it for the experience. So that was an example of the respective sides not going to this.
Okay. Strategic choices.
I'll do this very quickly. One needs to be aware of different choices.
Strategic choices when one goes into negotiations. Three Main strategic choices that need to be made.
Suggested by Wharton. The McKinsey described as the script, distributive, integrated bargaining and intra organisational bargaining.
Now distributive bargaining is a zero sum game. You go into the negotiation on the basis that there must be a winner and there must be a loser.
There's no kind of win win situation here.
We're dealing with a fixed pie, and if I get a bigger slice of that pie than you, that I am a winner and you are a loser.
So distributed bargaining in both parties, competing to determine the division of limited resourcing resources is a win lose situation.
Parties approach each other as adversaries,
so you have to decide whether you're going to go into a negotiation on the basis of a distributive approach,
and this is an example of a distributive approach.
Clearly, the more that you gains, the less I'm gets.
So this is the kind of situation where you gets that and gets a higher amount or you gets that which quite a bit and then gets less.
So this is a distributive situation. Integrative bargaining is a win win situation where you can both gain from the negotiation.
You may have shared problems that you need to solve or you may be trying to create a bigger pie.
So here, negotiation involves cooperation, a concern with the problems by which joint regulation can increase joint gains.
The parties look for shared or compatible interests behind declared positions.
And this is an example of where both sides are getting exactly the same from the negotiation.
Now, integral situations might be viewed as slightly idealised, so one needs to look at different sorts of bargaining.
The best case scenario would be Perito Optimal, where both sides get maximum value out of the negotiation.
That's quite a rare situation, but there may be situations where you have a superior agreement which creates added value for both sides.
Or, in point of fact, an intuitive bargain may simply involve the two sides.
Both are getting above their sticking points to a satisfactory degree.
So that's distributive and integrative bargaining.
And the important thing about distinguishing between distributive and intuitive bargaining is the kind of approach you adopt affects your behaviours.
So clearly if you're adopting an interpretive approach, you're much more open with the other side,
whereas if you're adversary and disruptive you hide information.
Interpretive bargaining involves you trading valued interests, whereas distributed bargaining involves just sticking to your interests.
So here are a range of behaviours which should follow according to the strategic approach you adopt.
And I think more than anything else I find from students and managers involved
in negotiations is they don't think about what the behavioural implications,
all of their different strategic options.
So you'll see the two sides going in and being really aggressive and adversarial towards each other and you ask them,
well, which approach we adopt in distributive or interactive?
And they say, well actually it's integrative and yet their behaviours are completely out of line with their strategic option.
So be aware of what strategic options are and make sure you align your behaviours accordingly.
Finally, that's an issue of style. This is a framework which is often used to assess style.
Style can be determined along two dimensions.
To what extent are you concerned with their own outcomes and what to what extent you're concerned with other outcomes?
And you can actually, if we had more time, we can assess your bargaining style.
If you're concerned with your own outcomes and the other sides, then it's called collaborating.
If you're not concerned with anybody's outcomes, not even your own, let alone the other side, it's called avoiding.
So there are ways of assessing bargaining style by reference to what extent you're interested in the other side's objectives.
Final strategic option is intra organisation bargaining,
and the notion of the organisation bargain is merely drawing attention to the fact that often,
particularly when you're involved in team negotiations, you will have to bargain with your own team,
you will have to look inside your own team and actually bargain with them over their goals.
So within any bargaining team you will have goal dispersal.
Your team-mate is made up of a nature director, a marketing director, an operating director.
They will have different interests, different goals.
You will need to resolve and align the goals in your own team before you confront the other side and make sure you retain a united front.
Okay. Now, the third area I'm going to cover very briefly, because the time is to do with tactical rules.
And there are a whole range of rules that you need to be aware of when it comes to bargaining.
And as I said, I've got a lot of time to go through these openings.
Rules around openings, important issue about agendas.
Agendas are very important in negotiation because the agenda set the structure for that negotiation.
So you'll need to think carefully about constructing your own agenda and also responding to agendas that are put to you.
Are all the issues there that you want to discuss, other issues that you want to put on?
There are the issues on that agenda framed in the way that you want an extreme position.
Often when you get to negotiation, both sides have have uncertainty about who's going to make the first offer.
I'm thinking how extreme should the offer be? An extreme position going in with a really over-the-top demand.
The pros and cons of that particular approach. Here's a little bit.
Here's a clip from The Apprentice and these Apprentice is The Apprentice with Alan Sugar.
And these guys were going to negotiate the price of a buffet, a meal with a company,
and they were wondering exactly where to pitch their opening offer.
And we can see what happened in this particular case.
I apologise. With regards to price, I want to go no lower than £60 per head.
Not as high. High. I think that's high, obviously going off to see what the fella's like.
And but we're thinking three grand for the package. We don't we don't want to go.
You know what? We're doing a lot like Dixieland. That's that's the 60 days.
Well, I think you're a mile away, miss. I understand it, Irish, but I think a fair price for in central London.
They're a big firm. If we pitch to law, he's going to negotiate you down.
I think we might undersell ourselves, James, but I.
It's a bit high. I'm gonna have to do what I was going to do. My leg in ten credit.
Can I play nearly ready again?
Philip will lead the negotiation. We sort of procrastinate around £65 per head, and that would include a selection of canapés,
including two sweet canapés, six savoury plus stuff for the evening.
And I don't know how it sounds to you. I think you would need to seriously rethink that.
Saying this is what you would consider for a sit down three course dinner.
Yeah I'm spice pricing is concerned we looked at something that was going to be around to me were moments.
Let's get realistic if we're talking sort of £35 per head.
No, not in the least. Don't let him close.
Right. So if we went down to something like 1750 ahead and looking at that sort of figures, I think it's incredibly realistic.
I'm still unimpressed. I think we're going to find it very difficult to stack up at anything lower than around £15 ahead.
That sounds that sounds feasible. I think you can justify that.
Yeah. So we've got a deal that's £15 per head. And yes, we'd be happy to go with that.
Well, that was absolutely hideous. And then after we spoke them on the phone, we told them it was too high.
Rugby is the gaffer and it was. That's what you want to go down. We were looking at complete fronts.
Oh, good. So from 65 to 15 is probably not that good.
So extreme positions you need to treat with care. Extreme position can affect your credibility.
If you go into high affects your credibility, it can undermine your relationship.
The other side as well. Sometimes extreme positions can be used because if you're splitting the difference on a deal,
clearly the higher you start, the clearly a broader basis for splitting the deal.
But you need to treat extreme positions with extreme care rules around pay.
So I'm not going to go through these in detail group of time. They're an issue about how quickly you push negotiations on.
Sometimes you want to speed things up, sometimes you want to slow things down to get the other side a chance to ruminate on what you've offered.
So think about the pace of your negotiations.
There are also rules about concessions, so think carefully about how you make concessions.
Often you make conditional concessions.
I will give you this if you give me something else. So linking concessions.
Linking items is very important. There are rules around pressures, the use of threats and plots.
Salami slicing is quite a common tactic. When you take issues one at a time and try and resolve them and once you resolve them, move on.
Rather than trying to get the deal over the whole package. Sometimes dealing with issues one at a time can actually move negotiations on.
There may be issues about information. Make sure you acquire information,
you are continually improve and update your information and trying to think of ways of getting information from the other side.
So testing the water, making a suggestion like a shot in the dark, which may all information from the other side.
And finally, there are issues about people framing and anchoring and body language, as I've already hinted at, kicking in negotiations.
So think about the way in which you frame your proposals, presenting them positively.
So, for example, this glass is half full rather than half empty.
It's a way of presenting issues in a positive way and think about how you communicate.
And I've already said that body language is very important.
This is a very famous piece of work which showed that the communication of feelings and emotions is mainly achieved through body language,
only through the voice and only 7% in content.
So think heavily about your body language.
And clearly body language tells us a lot. I mean, George Bush looks bored and is bored about most things.
This is a caring person. The body language shows that.
I'm not sure what this one is showing. Puzzlement and uncertainty possibly.
Okay. I suppose the final rule of negotiation and this is about where concluding my talk is that
you always in negotiations need to summarise and confirm what your deal actually is.
So at the end of negotiations, you summarise and confirm and that is crucial.
You don't want the different parties to walk away from a negotiation with different ideas about what that deal actually is.
You want to ensure that the no ambiguities and misunderstandings in a negotiation which may come back to haunt you.
So the end of a negotiation summarise what the agreement is and confirm that both parties are in agreement.
And so by way of summarising this talk,
what I've tried to do is give you a feel for negotiations by looking at context and
suggesting that the way you negotiate depends a lot on the form of the negotiation,
the relationships you have with the other side, and the balance of power between them.
I've told you a little bit about strategies that need to be clear about your goals and your priorities,
making sure that you choose between distributive and integrative bargaining approaches,
ensuring that your behaviours align with those particular structures.
And finally we talked a little bit about tactics and the different sets of rules around information,
pressure and getting information, which means to guide you through the negotiation process.
And with that I'll stop and if there are a few questions for 5 minutes, I'm happy to answer those.
So thank you for that.