1 00:00:02,850 --> 00:00:12,870 Okay. Thanks. Thanks, Natalie. As Natalie said, my interest in negotiation goes back a long way. 2 00:00:14,010 --> 00:00:22,470 I was in Oxford for over 20 years. I taught an elective on the MBA around negotiation. 3 00:00:23,190 --> 00:00:32,249 But my interest in negotiation actually goes back. Even before Oxford, when I was actually a negotiator for a trade union, 4 00:00:32,250 --> 00:00:39,840 I worked for trade union and was negotiating with employers around pay conditions of employment. 5 00:00:39,870 --> 00:00:49,919 So I have a long interest in negotiation and hope to share some of the tips I picked up over the years. 6 00:00:49,920 --> 00:00:56,670 And I've called the session The Art and practice of negotiation, because negotiation is an art. 7 00:00:57,090 --> 00:01:03,390 It's not a science there. There's no there are no precise rules in terms of how you conduct negotiation. 8 00:01:03,900 --> 00:01:10,830 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. 9 00:01:11,220 --> 00:01:14,790 There's no right or wrong way of doing it. You have to make a judgement. 10 00:01:15,900 --> 00:01:20,340 So that's why negotiation is so interesting, and that's why I've called it an art. 11 00:01:20,580 --> 00:01:31,739 So the starting point for today's presentation is clearly when are we confronted with a negotiating situation? 12 00:01:31,740 --> 00:01:39,780 In other words, what conditions need to be in place for negotiation to actually commence? 13 00:01:40,200 --> 00:01:44,430 And here's a picture of Saddam Hussein. 14 00:01:46,540 --> 00:01:57,820 Departed now, and when he was found by a group of American soldiers in a hole in the ground in the Iraqi desert. 15 00:01:58,240 --> 00:02:06,910 You'll be interested to know that his first words were, I am president of Iraq and I am willing to negotiate. 16 00:02:07,180 --> 00:02:16,930 Now, I suppose the question when asked is, was Saddam Hussein under some illusion, surrounded by soldiers pointing a gun? 17 00:02:17,530 --> 00:02:21,430 And he is suggesting that he wants to negotiate. 18 00:02:21,910 --> 00:02:25,809 Now, is that a negotiating situation? What are people's views? 19 00:02:25,810 --> 00:02:29,080 Anybody got a view? If it's not a negotiation, why not? 20 00:02:29,530 --> 00:02:32,860 And if it is, why is that a negotiation situation? 21 00:02:33,170 --> 00:02:38,880 Anybody got any views? Yeah. 22 00:02:43,930 --> 00:02:46,600 So you're saying it isn't for those reasons. Okay. 23 00:02:46,600 --> 00:02:54,400 So you're suggesting that maybe there is something to do with power here which determines whether we've got negotiating situation, 24 00:02:54,610 --> 00:03:01,569 the balance of power so tilted towards a soldier with a gun that we can't conceivably view that as 25 00:03:01,570 --> 00:03:07,160 a negotiating situation because Saddam Hussein had no countervailing power against that force. 26 00:03:07,180 --> 00:03:13,510 Is that what we're saying there? What? 27 00:03:14,720 --> 00:03:18,490 Yes. So there was an issue to negotiate. 28 00:03:18,510 --> 00:03:24,300 I suppose the issue was whether he had the power and the countervailing force to negotiate over his life. 29 00:03:24,670 --> 00:03:28,230 Does anybody want to argue that this is a negotiating situation? 30 00:03:29,610 --> 00:03:32,610 Yeah. Something like that. 31 00:03:33,030 --> 00:03:37,640 Yep. Why wasn't he shot? Do you think people know? 32 00:03:37,880 --> 00:03:43,440 Yeah, well. Right. So it's interesting. 33 00:03:43,460 --> 00:03:48,200 I mean, you're right. There's an issue there about power and guns and not appealing to have any power, as you say. 34 00:03:48,380 --> 00:03:57,350 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. 35 00:03:57,710 --> 00:04:03,740 So maybe there is an issue there about him having knowledge and information which could be used to negotiate. 36 00:04:04,130 --> 00:04:05,570 So as a starting point, 37 00:04:05,570 --> 00:04:15,080 there's an issue about negotiating situation involving some kind of rough balance of power between parties having something that either side wants. 38 00:04:15,650 --> 00:04:22,700 This is a clip from The Life of Brian, which I'm sure you're. 39 00:04:22,740 --> 00:04:34,980 No. How much quicker? 40 00:04:35,520 --> 00:04:38,560 Well, it's the wife. Oh. Oh. 41 00:04:39,000 --> 00:04:43,080 20 shekels. Right. But they laugh. Wait a minute. 42 00:04:44,030 --> 00:04:47,520 We're supposed to haggle. No, no. I've got to get what you mean. No, no, no. 43 00:04:47,550 --> 00:04:51,240 Haven't got to give it back. No, no, no. I just paid you. Yeah. 44 00:04:51,570 --> 00:04:54,780 This bloke Barnacle won't go. All right. 45 00:04:54,990 --> 00:04:58,560 Do we have to? Hello? I want 24. That I'll just get. 46 00:04:58,650 --> 00:05:02,370 Now, you telling me that's not worth 20 shekels? No. Look at it being a quality. 47 00:05:02,370 --> 00:05:05,639 That's not your goat. All right, I'll give you 19, then. No, no, no. 48 00:05:05,640 --> 00:05:08,910 Come on. Do it properly. Haggle properly. This isn't worth 19. 49 00:05:09,120 --> 00:05:12,750 You just said it was worth 20. Oh, dear. Oh, dear. Come on, haggle. 50 00:05:13,290 --> 00:05:17,310 All right, I'll give you ten. That's more like it. Ten? Are you trying to insult me? 51 00:05:17,430 --> 00:05:21,270 Me with a poor, dying grandmother? Ten. All right, I'll give you 11. 52 00:05:21,330 --> 00:05:25,020 Now you get it in seven. These are you, right? 11. 53 00:05:25,020 --> 00:05:28,249 This cost me 12. You want to go with me? 17 now. 54 00:05:28,250 --> 00:05:32,520 No, no, no. 70. 18. So now you got a 14 now. 55 00:05:32,760 --> 00:05:36,700 I'll give you 40. 14. Are you joking? That's what you told me to say. 56 00:05:36,720 --> 00:05:40,800 Oh. Oh, tell me what to say. Please offer me 14. 57 00:05:40,830 --> 00:05:43,860 I'll give you a booking. He's offering me 14 for this. 58 00:05:44,010 --> 00:05:48,090 15. 17. My last word. I won't take a penny less or start my day. 59 00:05:48,180 --> 00:05:51,600 15. Done cost to do business with you. 60 00:05:51,990 --> 00:05:56,520 Tell you what, I'll throw you in this as well. I don't want to get taxed, but. Yeah, all right. 61 00:05:56,580 --> 00:06:00,300 All right. But I was a 16 year old. I'll just give you 20. Oh, yeah, that's right. 62 00:06:00,330 --> 00:06:03,600 As for why are you eating? That's right. That's fine. That's fine. No, I got to go somewhere. 63 00:06:03,690 --> 00:06:07,110 That's right. That's for. For the gold. For. For this court. 64 00:06:07,590 --> 00:06:11,880 For. Look at it. It's worth. And if it's worth a shekel. You just gave it to me for nothing. 65 00:06:11,940 --> 00:06:17,340 Yes, but it's worth ten. All right, all right. So. 66 00:06:18,060 --> 00:06:22,000 No, no, no, it's not worth ten. You're supposed to argue ten for that. 67 00:06:22,020 --> 00:06:27,840 You must be mad. Oh, well, I'm born every minute. 68 00:06:29,700 --> 00:06:39,299 Okay. So there was an example where. The two parties actually had difficulty in getting a negotiation going because one of them was 69 00:06:39,300 --> 00:06:45,330 prepared to agree straightaway there was no conflict or difference of opinion at the outset. 70 00:06:45,630 --> 00:06:52,740 There was there was an agreement that he would actually pay the this the sound to buy. 71 00:06:53,780 --> 00:07:02,270 We'll have this guy. This mouse is not working right up there. 72 00:07:05,500 --> 00:07:10,870 Got it. Okay. So so initially there was no good negotiating situation because the two agreed. 73 00:07:11,170 --> 00:07:15,940 And a negotiating situation requires conflict. It requires a difference of view. 74 00:07:16,150 --> 00:07:19,930 If the two parties agree on something, clearly we've got no negotiation. 75 00:07:20,290 --> 00:07:24,720 So some of the tenants or basic premises in negotiation are beginning to emerge. 76 00:07:24,730 --> 00:07:29,950 Here is a definition that Putnam and Rodell well of gave of negotiation. 77 00:07:30,280 --> 00:07:39,280 Two or more interdependent parties who perceive incompatible goals and engage in social interaction to reach a mutually satisfying outcome. 78 00:07:39,460 --> 00:07:46,570 Now let's unpack that definition a little bit to see what the key preconditions of negotiation are. 79 00:07:47,020 --> 00:07:53,420 So first of all, the parties to the negotiation have to be or are interdependent. 80 00:07:53,890 --> 00:07:58,650 And that's important because. The two parties need each other. 81 00:07:59,010 --> 00:08:06,030 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. 82 00:08:06,270 --> 00:08:10,530 And you should never lose sight of the fact that you are negotiating with somebody 83 00:08:10,530 --> 00:08:15,270 else because you want something from them and they want something from you. 84 00:08:15,450 --> 00:08:19,380 So there's an interdependent relationship in a negotiating situation. 85 00:08:20,070 --> 00:08:26,940 Another key term is around the seething. So the parties perceive incompatible goals. 86 00:08:27,270 --> 00:08:32,520 And negotiation is a lot about perception. Perception is often a reality. 87 00:08:32,520 --> 00:08:39,810 How the different parties view the world, how they view their relationship is a crucial aspect of negotiation. 88 00:08:40,110 --> 00:08:46,470 And a crucial aspect is going to be manipulating the perceptions of the other party involved in the negotiation. 89 00:08:46,800 --> 00:08:50,400 So perceptions are crucial in a negotiating situation. 90 00:08:51,750 --> 00:08:58,080 So how are you going to do that? Incompatibility of goals is a crucial or key precondition. 91 00:08:58,890 --> 00:09:06,780 Clearly, if you agree, as the Monty Python characters did in that clip, there is no negotiation. 92 00:09:07,680 --> 00:09:11,040 The seller has to encourage the buyer to actually disagree with him. 93 00:09:11,640 --> 00:09:17,340 Where we have incompatible goals, there is conflict and where conflict exists, 94 00:09:17,580 --> 00:09:23,850 power comes into play as a way of resolving how that conflict actually pans out. 95 00:09:24,270 --> 00:09:27,450 So negotiations involve incompatible goals. 96 00:09:27,690 --> 00:09:31,350 They involve conflict, conflict and the exercise of power. 97 00:09:32,650 --> 00:09:37,240 Social and negotiating situation is a social interaction. 98 00:09:37,840 --> 00:09:43,270 And a crucial thing to remember about a social situation is there's more than one person involved. 99 00:09:43,550 --> 00:09:52,690 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. 100 00:09:53,050 --> 00:09:58,270 Where are they coming from? What are their interests? What kind of levers can you use to change their mind? 101 00:09:58,720 --> 00:10:04,090 So always remember that negotiation has another party, at least one other party involved. 102 00:10:04,660 --> 00:10:16,120 And I suppose the final interesting feature of that definition is a suggestion that negotiations actually conclude with a mutually satisfying. 103 00:10:17,050 --> 00:10:23,470 Outcome. In other words, negotiations are not all about screwing the other side. 104 00:10:25,720 --> 00:10:33,520 The sign of a good outcome. A good negotiation is often that both sides go away feeling they've got something out of it. 105 00:10:34,360 --> 00:10:39,160 So those are the kind of preconditions for negotiating situation. 106 00:10:40,000 --> 00:10:49,950 To parties who want something from each other. Where they're perceived to have incompatible goals, which suggests power and conflict come into play. 107 00:10:50,520 --> 00:10:53,130 The social dimensions of that negotiation, 108 00:10:53,280 --> 00:10:59,639 which suggests that you need to be aware and sensitive to the other side and an outcome which is seen as mutually satisfying. 109 00:10:59,640 --> 00:11:03,420 In other words, both sides get something out of it. 110 00:11:04,350 --> 00:11:11,460 Okay. So what I'm going to do in this talk is look at negotiations along three dimensions. 111 00:11:11,470 --> 00:11:20,370 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, 112 00:11:20,700 --> 00:11:27,090 that the way you conduct negotiations depends a lot upon circumstances and the conditions that you're in. 113 00:11:27,330 --> 00:11:36,690 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, 114 00:11:36,990 --> 00:11:45,030 and finally talk briefly about some negotiating tactics that may be linked to those strategies, if that makes sense. 115 00:11:45,690 --> 00:11:50,850 Okay. Now telling them with context, the first of those three things, 116 00:11:51,150 --> 00:12:00,240 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, 117 00:12:00,240 --> 00:12:06,479 but implicitly there is a structure there and arguably prescriptive that should be the structure. 118 00:12:06,480 --> 00:12:16,890 So appropriate preparation is crucial in any negotiation to be prepared to be ready with information, arguments and a strategy in place. 119 00:12:17,310 --> 00:12:24,780 Then you present your arguments to the other side. They present theirs, you begin to bargain, and then you come to a settlement, 120 00:12:24,780 --> 00:12:30,210 or you abandon that negotiation because walking away is always an option. 121 00:12:30,570 --> 00:12:38,310 And once you've settled, you finally agree. So those are, if you like, the building blocks of any negotiation which should be there. 122 00:12:38,880 --> 00:12:46,530 But I'm suggesting to you that the way in which those different components is actually carried out depends a lot upon context. 123 00:12:47,040 --> 00:12:52,650 It depends on the form of the negotiation, the nature of the negotiation that you're involved in. 124 00:12:53,220 --> 00:12:58,470 It depends upon power, the power balance between the different sides. 125 00:12:58,740 --> 00:13:07,920 And thirdly, it depends upon relationship, the kind of relationship you have with the parties or party that you're negotiating with. 126 00:13:08,160 --> 00:13:16,050 So I'll go through those three contextual factors in turn, just unpacking what they mean for negotiations. 127 00:13:16,620 --> 00:13:27,180 So starting with the form of the negotiation, firstly, one needs to be aware of who one is negotiating with. 128 00:13:28,290 --> 00:13:33,690 So you may have an individual negotiation, which is a 1 to 1 negotiation. 129 00:13:34,050 --> 00:13:42,720 In that Monty Python clip. It was clearly an individual negotiation, one party negotiating with one other individual. 130 00:13:43,170 --> 00:13:46,110 However, often negotiations are collective. 131 00:13:46,110 --> 00:13:53,579 We're dealing with teams of negotiators, and in business you often have a team of negotiators which may comprise, 132 00:13:53,580 --> 00:14:01,260 for example, people from managers from different functions, negotiating with a company who also has a team of negotiators. 133 00:14:01,530 --> 00:14:07,830 And as we see a little bit later on, that's clearly very important because when you're dealing with a negotiating team, 134 00:14:07,980 --> 00:14:14,310 a whole range of issues arise in terms of how you manage that team, how you align the goals of that team, 135 00:14:14,610 --> 00:14:19,590 and how you deal with another side, which may also have a team of negotiators. 136 00:14:19,890 --> 00:14:25,050 So who's negotiating is a crucial contextual factor? 137 00:14:26,010 --> 00:14:29,340 What are we negotiating about? 138 00:14:29,700 --> 00:14:35,640 Again, one can distinguish between one off and recurring negotiations. 139 00:14:35,940 --> 00:14:39,420 That Monty Python clip with a one off negotiation. One suspects. 140 00:14:40,140 --> 00:14:42,480 I don't think he was going to go back and buy another bid. 141 00:14:43,140 --> 00:14:48,960 Often negotiations take place on an issue with a person or group of people you'll never see again. 142 00:14:49,650 --> 00:14:53,490 You've got to buy something and then you walk away and never see them again. 143 00:14:54,470 --> 00:14:58,230 At the same time, you might be negotiating with people on a recurring basis. 144 00:14:58,970 --> 00:15:03,080 So, for example, when you negotiate over pay, when I'm negotiating over pay, 145 00:15:03,260 --> 00:15:08,720 every year I turned up and so the same people to negotiate another pay increase. 146 00:15:09,050 --> 00:15:15,410 And clearly, there are very different issues that arise depending upon whether it's a recurring or a one off negotiation. 147 00:15:15,860 --> 00:15:22,520 If it's a recurring negotiation, you may be very sensitive to not upsetting the other side too much because you know, 148 00:15:22,880 --> 00:15:28,410 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. 149 00:15:28,430 --> 00:15:33,350 So you really don't want to upset them. You may be more cavalier in a one off negotiation. 150 00:15:33,350 --> 00:15:39,920 You might try your luck a bit more in a one off negotiation on the basis that you may never see that person again. 151 00:15:40,490 --> 00:15:46,850 I'm not saying one off negotiations inevitably involve cavalier behaviour because reputation and so on matter, 152 00:15:47,180 --> 00:15:52,490 but these different sorts of situation may generate different sorts of behaviour. 153 00:15:54,140 --> 00:15:57,890 When? So what is the time scale for negotiation? 154 00:15:58,280 --> 00:16:01,010 Sometimes negotiations are very compressed. 155 00:16:02,030 --> 00:16:10,100 We've got a train strike coming up in London and the parties are trying to negotiate an agreement before that strike takes place, 156 00:16:10,370 --> 00:16:14,540 which is 930 tonight. So they're going to be actually trying very hard. 157 00:16:14,540 --> 00:16:19,310 They're under pressure to get an agreement and it may generate behaviours which aren't 158 00:16:19,430 --> 00:16:24,979 necessary or required if you've got a much longer timeframe where you can consider issues, 159 00:16:24,980 --> 00:16:28,460 where you can do your research, where you can mull over different options. 160 00:16:28,760 --> 00:16:35,150 So the time that you have short or long timeframes will again affect your behaviours. 161 00:16:36,710 --> 00:16:47,300 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. 162 00:16:47,400 --> 00:16:56,000 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 163 00:16:56,000 --> 00:17:01,820 searching overseas with a different type of cultural environment will affect how you behave. 164 00:17:02,240 --> 00:17:11,900 So, for example, this is a question that was put to managers in three or four different countries. 165 00:17:12,200 --> 00:17:19,850 It's just an example of a hypothetical situation. And this proposition was put to managers in different countries with different cultures, 166 00:17:20,120 --> 00:17:23,780 and the employer and employers worked for the company for 15 years. 167 00:17:24,140 --> 00:17:29,270 Excellent performance over that time, but unsatisfactory over the last year. 168 00:17:29,750 --> 00:17:32,750 If there's no reason to expect, performance will improve. 169 00:17:33,140 --> 00:17:39,680 Which do you agree with? And this was a statement which said the employee should be dismissed on the grounds that job 170 00:17:39,680 --> 00:17:45,230 performance should remain the grounds for dismissal regardless of age or previous record. 171 00:17:45,500 --> 00:17:47,930 There was another option which said that the employer should be kept on. 172 00:17:48,290 --> 00:17:56,180 But if you look at these responses, 75% of U.S. and Canadian managers agreed with that statement, 173 00:17:56,240 --> 00:18:02,000 whereas only 30% of Japanese, French, Italians and Germans agreed with that statement. 174 00:18:02,300 --> 00:18:07,760 So when one goes and negotiates overseas, there are cross-cultural issues to consider. 175 00:18:08,360 --> 00:18:11,700 That's an interesting. Sign. 176 00:18:13,150 --> 00:18:17,530 Just to illustrate cross-cultural differences. What does that sign mean? 177 00:18:18,310 --> 00:18:21,430 Well, if you're English, you think it means. 178 00:18:22,030 --> 00:18:31,750 Good. That's pretty good. However, in Italian, they use that sign to mean one in Japanese five and Greeks may up yours. 179 00:18:31,930 --> 00:18:39,550 So if you go to Greece, you're not going to do that. So you just have to be sensitive to cultural context. 180 00:18:39,730 --> 00:18:44,030 So where you negotiate is clearly important. Okay. 181 00:18:44,030 --> 00:18:48,200 Let's let's look at relationships now, which is the second contextual factor. 182 00:18:48,530 --> 00:18:53,720 And there are a whole range of issues, again, which kick in contextually to affect negotiation. 183 00:18:54,410 --> 00:18:58,850 The first point to note is that negotiations are multidimensional. 184 00:18:59,690 --> 00:19:05,990 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. 185 00:19:06,260 --> 00:19:11,060 But there's also a kind of shadow negotiation which is also taking place. 186 00:19:11,540 --> 00:19:15,680 So where one negotiates, one clearly is concerned with substance. 187 00:19:16,370 --> 00:19:18,620 Getting what you require from the other side. 188 00:19:19,010 --> 00:19:26,420 But you all the time need to be aware of the shadow aspect of negotiation, which is about the interpersonal. 189 00:19:26,810 --> 00:19:32,720 You're negotiating a particular relationship with the person that you're bargaining with, 190 00:19:33,110 --> 00:19:38,900 and you need to be aware of your communication processes and the way in which you engage with the other side. 191 00:19:39,260 --> 00:19:47,030 So negotiation is not only about the substance, it's about the negotiation of a particular relationship which could be significant, 192 00:19:47,150 --> 00:19:52,430 particularly if you continue to have a connection with that organisation or that person. 193 00:19:52,850 --> 00:19:59,870 So for example, in joint venture negotiations where two companies are coming together to launch a joint venture, 194 00:20:00,200 --> 00:20:02,420 negotiating the terms of that venture, 195 00:20:02,630 --> 00:20:07,880 joint venture are not only about the substance of that arrangement, but the relationships that you negotiate with. 196 00:20:07,880 --> 00:20:10,370 The other side can be very important as well. 197 00:20:10,730 --> 00:20:20,660 So this over here is some research on joint ventures suggest strategy implementation will be a more or less conflictive affair depending 198 00:20:20,660 --> 00:20:29,780 upon the outcome of the negotiating process as it represents and determines the basis of the subsequent function of the partnership. 199 00:20:30,200 --> 00:20:39,020 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. 200 00:20:39,230 --> 00:20:44,330 So what should all the world be aware of the kind of relationship you're building up with the other side? 201 00:20:44,750 --> 00:20:51,590 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. 202 00:20:53,170 --> 00:20:58,540 Knowing the other side not to, you know, the people that you are negotiating with. 203 00:20:58,870 --> 00:21:06,370 Clearly, if you haven't met the other party, if you don't know anything about them, the process of negotiation, 204 00:21:06,370 --> 00:21:13,239 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. 205 00:21:13,240 --> 00:21:14,920 You can take things for granted. 206 00:21:15,130 --> 00:21:21,550 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. 207 00:21:21,550 --> 00:21:30,790 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. 208 00:21:31,180 --> 00:21:35,650 So whether you know that person is clearly a crucial contingent factor, 209 00:21:36,190 --> 00:21:40,000 assess whether you trust them, which is closely linked to whether you know them or not. 210 00:21:40,420 --> 00:21:43,659 Do you trust that person if they say something? Possibly. 211 00:21:43,660 --> 00:21:47,080 If you've known them for many years and know that they deliver on their promises. 212 00:21:47,080 --> 00:21:51,910 Yes. But if you don't know them again, it's somewhat more questionable. 213 00:21:52,450 --> 00:21:58,600 Do you respect that? You should try and respect the other side in a negotiation. 214 00:21:59,930 --> 00:22:07,520 And this little clip shows what happens when respect breaks down. 215 00:22:08,650 --> 00:22:13,639 Oh. What's it? 216 00:22:13,640 --> 00:22:18,650 Racism. Is there any without raising our voices? All right. Now at a reasonable decibel level. 217 00:22:18,710 --> 00:22:22,190 Can you tell me what exactly the issue is here? Okay. 218 00:22:23,150 --> 00:22:28,580 We at the WGA do not feel that the AMPTP is taking these negotiations seriously. 219 00:22:31,650 --> 00:22:34,690 Do you mind if we ask on what you're basing that assertion? 220 00:22:34,710 --> 00:22:40,890 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. 221 00:22:40,920 --> 00:22:45,550 That's right. And we were under the assumption that you guys were coming back to the table in good faith. 222 00:22:45,610 --> 00:22:48,620 And any progress that's been made has been largely superficial. 223 00:22:48,630 --> 00:22:51,960 And I just jump in here for a second and point out what the real issue is. 224 00:22:52,260 --> 00:22:53,460 Absolutely. By all means, 225 00:22:54,690 --> 00:23:03,510 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. 226 00:23:06,050 --> 00:23:14,120 Go on. We don't feel that the choice of council reflects a serious attitude towards the guild's demands. 227 00:23:14,300 --> 00:23:20,660 That essentially is the elephant in the room when you're questioning our legal credentials. 228 00:23:21,860 --> 00:23:25,280 In a nutshell, yes, that is unbelievably presumptuous. 229 00:23:25,520 --> 00:23:29,420 I don't think it is. And why is that? Because you're puppets. 230 00:23:30,380 --> 00:23:35,080 Excuse me, sir. I am a graduate of Harvard Law School, class of 1984. 231 00:23:35,090 --> 00:23:39,590 I finished at the top of my class and worked as a lawyer for Goldman Sachs for six years. 232 00:23:39,650 --> 00:23:42,800 How is that even possible? You're a monkey and you're a Jew. 233 00:23:42,810 --> 00:23:46,219 So what? I'm only half Jewish. Oh, well, I'm only half monkey. 234 00:23:46,220 --> 00:23:53,870 The other half a squirrel. You know what? [INAUDIBLE] you, monkey. Squirrel. Look, I'm just. 235 00:23:54,020 --> 00:23:57,590 I'm not used to it. I'm not used to having my professional credibility questioned. 236 00:23:57,600 --> 00:24:01,130 All right. So you're saying you all have law degrees? That's correct. 237 00:24:01,500 --> 00:24:06,320 Okay. What's the name on your diploma? Oh, my name is on my diploma. 238 00:24:06,470 --> 00:24:11,690 Steven Callahan. What about you, Alan? 239 00:24:11,690 --> 00:24:14,990 Rich Dale. These are your real names. What about you? 240 00:24:15,110 --> 00:24:18,930 Mr. Kimball's the dog. But that's just what I use on my business cards. 241 00:24:18,950 --> 00:24:22,220 My real name is Michael Shipley. All right. Well, let me ask you this, then. 242 00:24:22,400 --> 00:24:26,030 What about the guys behind the table with their hands up your asses? 243 00:24:26,030 --> 00:24:30,530 Do they all have law degrees? No. They're puppeteers [INAUDIBLE] here a little again. 244 00:24:35,830 --> 00:24:39,960 Here we go. Guys, guys, guys, guys. 245 00:24:39,970 --> 00:24:47,140 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. 246 00:24:47,620 --> 00:24:49,510 Well, then we got a little problem here, don't we? 247 00:24:49,540 --> 00:24:55,840 Yeah, we do, because we're not budging until we get our $0.04 from legitimate authorised AMPTP representatives. 248 00:24:56,200 --> 00:24:59,620 Well, how about we stick that $0.04 up your arseholes rights? 249 00:24:59,900 --> 00:25:01,120 No, no, no. That's a legitimate pitch. 250 00:25:01,540 --> 00:25:09,220 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. 251 00:25:15,230 --> 00:25:18,380 All right, we'll take that deal. Sounds good. It sounds great. Oh, all right. 252 00:25:18,620 --> 00:25:22,099 Right, right. All right. Terrific. Good, good. Thank you, guys. All right, let's go. 253 00:25:22,100 --> 00:25:27,540 Right. Bionic woman. All right, look. Things are going to be a lot tougher than we did it. 254 00:25:27,710 --> 00:25:31,630 It turned out, by the way, who knows you guys better when you guys are going to win. 255 00:25:31,670 --> 00:25:38,000 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. 256 00:25:39,200 --> 00:25:45,919 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, 257 00:25:45,920 --> 00:25:51,080 which I'm not going to actually venture into for fear of upsetting anybody. 258 00:25:51,230 --> 00:25:58,580 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. 259 00:25:58,850 --> 00:26:03,470 I mean, here are a number of statements which the research has commented on. 260 00:26:03,830 --> 00:26:08,960 Women cooperate more than men. True or false? 261 00:26:09,980 --> 00:26:18,260 Well, yes, there is a small but significant difference here, which suggests that women do cooperate more than men. 262 00:26:19,040 --> 00:26:25,880 There's also evidence suggests that women are initially more trusting but less willing to forgive. 263 00:26:26,570 --> 00:26:32,780 And we all know about that. So, yeah, yeah, they're quite provocative. 264 00:26:32,780 --> 00:26:38,150 I mean, we all know about the second one, don't we, as women set lower aspirations? 265 00:26:38,480 --> 00:26:46,430 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. 266 00:26:47,810 --> 00:26:51,320 So managers should just have a bit of research done in the US. 267 00:26:51,590 --> 00:26:57,010 Men expected to earn 13% more than women in their first year and 32% of their career. 268 00:26:57,020 --> 00:27:00,380 So there is an issue about aspiration and expectation. 269 00:27:01,490 --> 00:27:04,040 Women don't ask and that's another one. 270 00:27:04,550 --> 00:27:11,150 Women are 45% more likely than men to score low on a scale designed to show that life is amenable to change via negotiation. 271 00:27:11,390 --> 00:27:18,440 So there are some interesting gender differences, which if we had more time, we could obviously discuss. 272 00:27:18,950 --> 00:27:24,559 Okay. So moving on to the third contextual feature, which is all about power. 273 00:27:24,560 --> 00:27:32,719 So the point here is that the nature of your negotiation would depend upon the balance of power between different parties. 274 00:27:32,720 --> 00:27:36,230 And we talked a little bit about this around Saddam Hussein, 275 00:27:37,700 --> 00:27:46,130 and there are different ways in which one can actually assess power in a negotiating situation, in a general sense, power. 276 00:27:46,610 --> 00:27:49,340 And there have been books and books and books written on definitions of power. 277 00:27:49,670 --> 00:27:54,650 But very crudely and broadly, power is the capacity to exert influence over another party. 278 00:27:55,130 --> 00:27:59,270 The issue is how do you generate that capacity to exert influence? 279 00:27:59,570 --> 00:28:08,510 Here are three kind of generalised ways in which you might define power and use power in a negotiating situation. 280 00:28:08,510 --> 00:28:13,820 So the first one is based on course, the second one is based upon environmental contingencies. 281 00:28:14,150 --> 00:28:18,710 And the third one, possibly the most interesting important is based upon dependency. 282 00:28:19,100 --> 00:28:23,720 So. I'm not going to deal with quotes. I mean, power is a cost. 283 00:28:24,080 --> 00:28:27,560 I mean, this is quite a rational approach to power, 284 00:28:27,920 --> 00:28:35,299 which is saying that bargaining power depends upon the disadvantages your opponent suffers or thinks they suffer 285 00:28:35,300 --> 00:28:41,990 prices that they will suffer if they disagree with your proposal relative to the disadvantages suffered, 286 00:28:42,230 --> 00:28:49,550 if they agree with your proposal. So there's a kind of rational calculation to be made here which suggests that you have power. 287 00:28:49,970 --> 00:28:56,210 If the cost for the other side is greater, if they disagree, than if they agree with what you want. 288 00:28:56,750 --> 00:29:06,020 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. 289 00:29:06,530 --> 00:29:11,240 And just to give you an example of this, so as bargaining power, 290 00:29:11,690 --> 00:29:20,060 the pay is related to the cost to be of disagreeing with a versus the cost of they agreeing with a. 291 00:29:20,570 --> 00:29:31,370 So if A's claim would cost £10,000 to be the cost of disagreeing is £11,000, 292 00:29:31,730 --> 00:29:40,690 then clearly a has power to secure their claim as powerful when the value of the equation is greater than one. 293 00:29:40,820 --> 00:29:45,950 In that case, it clearly is. So if the costs can be calculated and that's a big if, 294 00:29:46,280 --> 00:29:51,590 because the cost of actually conceding and giving the other side what they want can be quite difficult. 295 00:29:51,920 --> 00:30:01,280 There are often certain uncertainties. If you can calculate costs and put that forward as a rationale for succeeding or giving you your claim, 296 00:30:01,460 --> 00:30:06,200 then that can be quite a powerful mechanism to get what you want. 297 00:30:07,130 --> 00:30:11,480 The lesson there is in negotiations you're trying to persuade your opponent that 298 00:30:11,500 --> 00:30:15,829 it's in their own best interests to accept your claim or offer as the alternative. 299 00:30:15,830 --> 00:30:19,350 A rejection is more costly. I remember with dating perceptions, 300 00:30:19,350 --> 00:30:27,590 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. 301 00:30:28,040 --> 00:30:31,310 So think about costs and relative costs of your claims. 302 00:30:32,180 --> 00:30:36,800 The second view of power is much more to do with objective reality. 303 00:30:36,810 --> 00:30:42,080 I mean, power is not only about perceptions, but it's also about external context. 304 00:30:42,440 --> 00:30:46,250 So your power may depend on the political situation. 305 00:30:46,970 --> 00:30:56,210 So, for example, there may be certain issues which generate public opinion which may support your claim. 306 00:30:56,570 --> 00:31:04,130 So when firefighters went on strike five or six years ago, there was initially quite a lot of public support for firefighters. 307 00:31:04,370 --> 00:31:10,190 Here were men and women who risked their lives on a daily basis to rescue you from fires. 308 00:31:10,400 --> 00:31:14,270 And this significantly bolstered the claim of the firefighters. 309 00:31:14,870 --> 00:31:17,420 There may be economic considerations here. 310 00:31:17,720 --> 00:31:24,800 So, for example, levels of inflation or levels of unemployment may affect your power in negotiating a pay increase. 311 00:31:25,250 --> 00:31:32,360 If unemployment levels are quite low, then it actually bolsters the power of the union because employers can't get alternative sources of labour. 312 00:31:32,570 --> 00:31:37,700 So economic circumstances are important, as is regulation issues, simply around, for example, the law. 313 00:31:38,240 --> 00:31:44,960 So for example, in my background is trade unions and the law regulates strike activity in quite a tight way, 314 00:31:45,140 --> 00:31:51,320 and that will affect the extent to which the strike weapon can be used by workers to pursue their claims. 315 00:31:51,590 --> 00:31:54,500 And there also internal factors to consider as well. 316 00:31:55,130 --> 00:32:03,050 For example, around technology, sometimes, for example, employees who actually hold a very important, 317 00:32:03,050 --> 00:32:07,460 pivotal position in the technological process have quite a lot of power. 318 00:32:07,880 --> 00:32:14,330 So the person who switches the machines on only he can do it, has quite a bit of power. 319 00:32:14,600 --> 00:32:19,760 Product markets as well might be important. So for example, how perishable is your product? 320 00:32:20,300 --> 00:32:24,920 Again, my background is in trade unions and historically print unions. 321 00:32:24,920 --> 00:32:30,709 The people who produced newspapers had quite a lot of power over the newspaper 322 00:32:30,710 --> 00:32:35,600 owners because you can only have one day's newspapers once that day has gone, 323 00:32:35,600 --> 00:32:41,720 you can never get it back. So you can never have another July the 21st, 2014. 324 00:32:41,960 --> 00:32:44,480 Once you've lost that day's newspaper, you can never get it back. 325 00:32:44,780 --> 00:32:50,930 And that's why the print unions have quite a lot of power over newspaper owners to actually push their pay claims. 326 00:32:51,230 --> 00:32:57,230 So those kind of internal and external factors will affect power balance between different sides. 327 00:32:57,530 --> 00:33:02,390 And it suggests that if you're involved in negotiation systematically to assess 328 00:33:02,750 --> 00:33:07,250 the constraints and choices that you have given those environmental features. 329 00:33:07,490 --> 00:33:12,140 Does the law actually allow you to take action? Do you have public support? 330 00:33:12,650 --> 00:33:16,370 How much power to somebody have given the kind of product you are producing? 331 00:33:16,700 --> 00:33:20,150 And there is a real world out there. So it's not just about perception. The law is. 332 00:33:20,200 --> 00:33:23,860 The law and you can't dodge it basically however much you might like to. 333 00:33:24,550 --> 00:33:29,470 Finally then dependence as a way of establishing power. 334 00:33:29,920 --> 00:33:36,760 And this view of power suggests that the limits of your bargaining power are set by the negotiators. 335 00:33:36,760 --> 00:33:39,910 Interdependence. How interdependent are you? 336 00:33:40,390 --> 00:33:47,320 And the more the other side is dependent on you, the greater your bargaining power. 337 00:33:47,920 --> 00:33:55,660 And that means that power is significantly influenced in this context by what is called the patina, 338 00:33:55,870 --> 00:33:59,800 which is the best alternative to a negotiated agreement. 339 00:34:00,160 --> 00:34:05,770 Now, the but now the best alternative to negotiate that agreement is your walk away position. 340 00:34:06,550 --> 00:34:11,680 In other words, if you were to leave that negotiation, what would you walk away to? 341 00:34:12,310 --> 00:34:19,420 Now, if you can walk away for something that's quite attractive, whereas the other side walks away for something which is very unattractive, 342 00:34:19,660 --> 00:34:22,660 then clearly you have much more bargaining power than the other side. 343 00:34:23,260 --> 00:34:26,830 So your partner is a crucial determinant of power. 344 00:34:27,310 --> 00:34:32,290 What do you have to walk away to? If the negotiations break down? 345 00:34:33,100 --> 00:34:37,840 Donald Trump, who we all know and have mixed views about, 346 00:34:38,110 --> 00:34:44,260 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. 347 00:34:44,380 --> 00:34:50,500 If you've got what they want, what they want, if they are dependent upon you for that, it gives you considerable power. 348 00:34:51,040 --> 00:34:54,670 So a couple of examples of how butlers have kicked in. 349 00:34:55,420 --> 00:34:59,050 This was Formula One in 2009. 350 00:34:59,530 --> 00:35:08,920 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. 351 00:35:09,550 --> 00:35:17,860 A lot of scandal around Max Mosley doing really odd things, dressed in very strange clothes, was beginning to bring Formula One into ridicule. 352 00:35:18,850 --> 00:35:23,800 And the the car manufacturers wanted to get rid of Max Mosley. 353 00:35:24,460 --> 00:35:32,710 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. 354 00:35:33,040 --> 00:35:36,280 So the car makers threatened to break away. 355 00:35:37,030 --> 00:35:45,010 So they created their own banner. And very soon Mosley goes and the breakaway threat is ended. 356 00:35:45,580 --> 00:35:53,440 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, 357 00:35:53,440 --> 00:36:02,559 which is private equity firm and quite a big legal case because what happened there was Terrafirma and guy hands were trying to buy. 358 00:36:02,560 --> 00:36:11,650 EMI and Citigroup were brokering this deal and Citigroup suggested that there was an alternative 359 00:36:11,650 --> 00:36:19,210 offer for EMI and that alternative offer prompted Guy Hands to actually up his bid. 360 00:36:19,810 --> 00:36:27,610 So what Citigroup were effectively doing was establishing a partner, somebody else who would buy EMI if Terrafirma didn't. 361 00:36:27,910 --> 00:36:32,950 Now, it subsequently transpired that that will turn to bid was a fraud. 362 00:36:34,060 --> 00:36:39,490 Citigroup have made it up. They've made up the suggestion of an alternative bid. 363 00:36:39,850 --> 00:36:44,770 And there was legal action that followed because it was suggested by Guy has that this was fraud. 364 00:36:45,010 --> 00:36:50,200 What Citigroup were doing was trying to establish a patina and alternative to terrafirma 365 00:36:50,470 --> 00:36:55,710 buying IMO and therefore bolstering their power position and actually going hands on. 366 00:36:55,760 --> 00:37:03,160 She lost that court case. It was not to be fraud. So quite an interesting example of trying to establish a baton. 367 00:37:03,820 --> 00:37:08,620 So the lessons of this are you always need to know what your baton is. 368 00:37:08,920 --> 00:37:16,629 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? 369 00:37:16,630 --> 00:37:22,990 What will you be alternatives? If the baton is weak, then you will want to strengthen it. 370 00:37:23,890 --> 00:37:30,250 So for example, you're negotiating with a contractor or commissioner for a particular contract. 371 00:37:30,520 --> 00:37:37,030 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. 372 00:37:38,170 --> 00:37:41,649 You also need to identify what the other side's backer is. 373 00:37:41,650 --> 00:37:48,280 If you can and if you can identify it, then you will clearly want to weaken it because that will strengthen your position. 374 00:37:48,490 --> 00:37:53,770 You think you might be sent the other side. You think there are other contractors who can provide this service for you? 375 00:37:53,920 --> 00:38:00,249 Well, we know there aren't. We've done some research and we know that we're the best provider of this particular service 376 00:38:00,250 --> 00:38:05,830 and that there are very few other suppliers that could offer the quality of service we could. 377 00:38:06,070 --> 00:38:09,550 And what you're doing there is a weakening they're alternatives. You're weakening their baton. 378 00:38:10,030 --> 00:38:20,040 And in so doing, strengthening your own position. You need to be aware, though, that actually finding the butler is not always straightforward. 379 00:38:20,280 --> 00:38:24,900 It is often quite difficult to identify options, particularly on the other side. 380 00:38:25,260 --> 00:38:29,640 There is a tendency to overestimate your know. Now we've got lots of other options. 381 00:38:30,090 --> 00:38:33,540 Be careful not to overestimate what's available to you. 382 00:38:33,810 --> 00:38:39,270 And there's a similar tendency to underestimate what the other side can do, what other options they've got. 383 00:38:39,270 --> 00:38:43,799 So just be aware of that and also be aware that patterns may change over time. 384 00:38:43,800 --> 00:38:50,310 Negotiations often take place over a period of time, and in those in that period, patterns change. 385 00:38:51,390 --> 00:38:55,350 Sometimes their partner may strengthen, yours may weaken over time. 386 00:38:56,040 --> 00:39:00,810 So partners are a crucial aspect of power. 387 00:39:01,530 --> 00:39:08,640 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. 388 00:39:09,640 --> 00:39:13,230 It's very important in negotiation to try and align these different elements. 389 00:39:13,230 --> 00:39:15,060 What are you trying to achieve in negotiations? 390 00:39:15,360 --> 00:39:19,620 Be clear what your goals are, what you know, what your goals all think about how are you going to achieve them? 391 00:39:19,860 --> 00:39:27,750 Which is your strategy. Ensure that the style you adopt and the behaviours you adopt support that strategic approach. 392 00:39:28,620 --> 00:39:32,130 Okay, so goals and tangibility. 393 00:39:34,150 --> 00:39:39,220 Sometimes goals are intangible as well as intangible issues of reputation. 394 00:39:40,120 --> 00:39:43,930 For example, trying to establish good relationships with the other side. 395 00:39:43,960 --> 00:39:49,990 These are intangible goals which you need to be aware of and which we've already talked a little bit about. 396 00:39:52,730 --> 00:39:59,600 I go into this is an example of strike the workers in Denmark who went on strike. 397 00:40:01,070 --> 00:40:10,309 These were factory workers at Carlsberg and they went on strike because traditionally Carlsberg had allowed its 398 00:40:10,310 --> 00:40:16,850 workers to take cans of beer off the production line and drink them any time they liked while they were working. 399 00:40:17,210 --> 00:40:21,980 So any time you fancied to drink, it could just pick it up an F1, which was a great perk. 400 00:40:22,220 --> 00:40:25,970 The only condition was, of course, you couldn't be drunk on the job, otherwise you'd lose a job. 401 00:40:26,180 --> 00:40:29,660 But as long as you stayed sober, you're fine to take a drink. 402 00:40:30,110 --> 00:40:31,310 And Carlsberg. 403 00:40:32,030 --> 00:40:40,420 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. 404 00:40:40,430 --> 00:40:46,760 So we need to be aware that sometimes those are intangible as well as tangible and. 405 00:40:48,320 --> 00:40:52,820 We've talked about focus. What kind of relationships you want to build? 406 00:40:54,110 --> 00:41:00,740 We need to be clear about goals in terms of approach interests. The positions and this is a contrast was often drawn. 407 00:41:00,980 --> 00:41:05,000 But one needs to be clear the difference with an interest and a position. 408 00:41:05,240 --> 00:41:10,550 Often when negotiations get stuck is because the two sides take a position. 409 00:41:10,850 --> 00:41:17,360 They get stuck in their demands and these demands appear to be incompatible with one another. 410 00:41:18,050 --> 00:41:24,050 It's much better to step away from a position to see what exactly your interests are so that 411 00:41:24,050 --> 00:41:30,170 you can find other ways of addressing those interests beyond the positions that you take, 412 00:41:30,530 --> 00:41:35,960 the positions get you stuck in to what you want. Interests argue that you step away. 413 00:41:36,680 --> 00:41:39,920 How can we achieve these ends through different means? 414 00:41:40,280 --> 00:41:43,550 So be aware of the difference between an interest and a position. 415 00:41:44,090 --> 00:41:51,770 And finally, when it comes to goals, you need as a negotiator to begin to prioritise what your goals actually are. 416 00:41:52,850 --> 00:41:59,120 Because by prioritising, you can identify what kind of issues you don't care that much about. 417 00:41:59,450 --> 00:42:09,280 These are throwaway issues. Maybe they become bargaining chips right the way up to essential goals, which, you know, are breaking points for you. 418 00:42:09,290 --> 00:42:13,220 These are walk away issues. If you don't get this, then there's no deal. 419 00:42:13,460 --> 00:42:18,680 So what are your deal breakers? What are your essential goals for negotiation? 420 00:42:18,830 --> 00:42:24,080 And this is often described as your sticking point. This is the point where you won't go any further. 421 00:42:24,230 --> 00:42:28,280 And you need to be clear about what that point actually is. 422 00:42:28,730 --> 00:42:35,720 So it's often quite useful as an exercise just to think, Well, what is my sticking point? 423 00:42:37,070 --> 00:42:40,100 What is the realistic possibility in this negotiation? 424 00:42:40,250 --> 00:42:44,150 And what would be the best case scenario? This is just a way of structuring your thoughts. 425 00:42:44,420 --> 00:42:48,800 But clearly the sticking point is a very important bottom line. 426 00:42:49,190 --> 00:42:59,720 And the sticking point is very important because the respective sticking points will determine where the zone of potential agreement actually is. 427 00:43:00,140 --> 00:43:03,350 So, for example, in this case, the sticking point. 428 00:43:03,800 --> 00:43:10,630 So they're buying, I don't know, a call here. The sticking point for the buyer is £20,000. 429 00:43:10,640 --> 00:43:17,180 In other words, the buyer is not going to pay more than £20,000 for that particular product. 430 00:43:17,510 --> 00:43:21,860 And for the seller, the sticking point is £10,000. 431 00:43:22,250 --> 00:43:29,740 And because we get those respective sticking points, the agreement is going to lie between ten and £20,000. 432 00:43:29,750 --> 00:43:34,700 That is the zone of the potential agreement. It can't be higher than 20 K obviously, 433 00:43:34,970 --> 00:43:40,460 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. 434 00:43:40,730 --> 00:43:48,810 So that is the zone of potential agreement, which is clearly an important area because it determines where the deal will actually lie. 435 00:43:48,830 --> 00:43:52,490 I don't know if you can see that, but this is an example. 436 00:43:54,420 --> 00:44:01,980 Often doing exercises, buying and selling a car. And here are some high powered hypothetical figures three buyers and three sellers. 437 00:44:02,250 --> 00:44:07,860 And here is the final price of the call. £8,000, £10,000 and £8,000. 438 00:44:07,900 --> 00:44:15,990 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. 439 00:44:16,290 --> 00:44:21,240 £10,000. Looks like that seller did very well. And who is the best buyer? 440 00:44:21,660 --> 00:44:25,980 Well, that buyer looked to have done very well because they got it for the cheapest price. 441 00:44:26,190 --> 00:44:30,990 But one needs to be slightly careful in making that judgement. 442 00:44:31,260 --> 00:44:35,430 Those are the two who seem to have done best. Here are those same figures. 443 00:44:36,000 --> 00:44:43,170 And what one needs to be aware of in working out who's done well in negotiation is where are the relative sticking points. 444 00:44:43,440 --> 00:44:49,860 So if you look a bit more closely at that 10,000 car, who seems to be the best seller? 445 00:44:50,190 --> 00:44:56,040 Well, actually, the sticking point for that buyer was £12,000. 446 00:44:56,250 --> 00:45:03,060 In other words, the buyer would have been prepared to pay £12,000 for that car and they got it for £10,000. 447 00:45:03,360 --> 00:45:10,110 And therefore, the difference between the sticking points and the final figure was £2,000. 448 00:45:10,290 --> 00:45:14,610 So actually didn't do so well. If you look at the. 449 00:45:15,540 --> 00:45:24,749 Buyer who got it for £6,000. Well, they're the sticking point with £5,000 and the difference was £1,000. 450 00:45:24,750 --> 00:45:28,110 So they could have actually got it for £1,000 cheaper. 451 00:45:28,290 --> 00:45:35,489 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. 452 00:45:35,490 --> 00:45:41,610 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. 453 00:45:42,330 --> 00:45:46,490 And just to give you an example. Oh. How sticking points were. 454 00:45:47,940 --> 00:45:53,430 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. 455 00:45:53,580 --> 00:45:58,140 If it's an acting job, we should get paid. Yeah, you're going to get paid an experience. 456 00:45:58,380 --> 00:46:02,010 I want to actually get paid. All right. 457 00:46:02,010 --> 00:46:05,639 What do you want? $600 for the day, plus overtime. 458 00:46:05,640 --> 00:46:13,080 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. 459 00:46:14,010 --> 00:46:18,330 $50 for the day and a two week acting class at the YMCA nearest you. 460 00:46:18,690 --> 00:46:23,520 $500 and a four week acting class. $300 and a three week class. 461 00:46:24,150 --> 00:46:28,110 Done. I would have done it for 500. 462 00:46:28,890 --> 00:46:38,580 I would have done it for the experience. So that was an example of the respective sides not going to this. 463 00:46:41,490 --> 00:46:44,879 Okay. Strategic choices. 464 00:46:44,880 --> 00:46:48,000 I'll do this very quickly. One needs to be aware of different choices. 465 00:46:48,000 --> 00:46:53,970 Strategic choices when one goes into negotiations. Three Main strategic choices that need to be made. 466 00:46:55,110 --> 00:47:01,710 Suggested by Wharton. The McKinsey described as the script, distributive, integrated bargaining and intra organisational bargaining. 467 00:47:02,100 --> 00:47:08,940 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. 468 00:47:09,240 --> 00:47:11,370 There's no kind of win win situation here. 469 00:47:11,670 --> 00:47:17,790 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. 470 00:47:18,030 --> 00:47:26,489 So distributed bargaining in both parties, competing to determine the division of limited resourcing resources is a win lose situation. 471 00:47:26,490 --> 00:47:28,860 Parties approach each other as adversaries, 472 00:47:29,130 --> 00:47:34,020 so you have to decide whether you're going to go into a negotiation on the basis of a distributive approach, 473 00:47:34,380 --> 00:47:37,410 and this is an example of a distributive approach. 474 00:47:37,680 --> 00:47:44,580 Clearly, the more that you gains, the less I'm gets. 475 00:47:44,790 --> 00:47:53,859 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. 476 00:47:53,860 --> 00:48:02,100 So this is a distributive situation. Integrative bargaining is a win win situation where you can both gain from the negotiation. 477 00:48:02,280 --> 00:48:06,990 You may have shared problems that you need to solve or you may be trying to create a bigger pie. 478 00:48:07,290 --> 00:48:17,310 So here, negotiation involves cooperation, a concern with the problems by which joint regulation can increase joint gains. 479 00:48:17,550 --> 00:48:22,740 The parties look for shared or compatible interests behind declared positions. 480 00:48:22,740 --> 00:48:28,050 And this is an example of where both sides are getting exactly the same from the negotiation. 481 00:48:28,230 --> 00:48:37,860 Now, integral situations might be viewed as slightly idealised, so one needs to look at different sorts of bargaining. 482 00:48:38,170 --> 00:48:44,580 The best case scenario would be Perito Optimal, where both sides get maximum value out of the negotiation. 483 00:48:44,820 --> 00:48:51,540 That's quite a rare situation, but there may be situations where you have a superior agreement which creates added value for both sides. 484 00:48:51,780 --> 00:48:56,010 Or, in point of fact, an intuitive bargain may simply involve the two sides. 485 00:48:56,160 --> 00:48:59,880 Both are getting above their sticking points to a satisfactory degree. 486 00:49:00,120 --> 00:49:02,250 So that's distributive and integrative bargaining. 487 00:49:02,640 --> 00:49:10,230 And the important thing about distinguishing between distributive and intuitive bargaining is the kind of approach you adopt affects your behaviours. 488 00:49:10,530 --> 00:49:15,990 So clearly if you're adopting an interpretive approach, you're much more open with the other side, 489 00:49:16,290 --> 00:49:19,650 whereas if you're adversary and disruptive you hide information. 490 00:49:20,250 --> 00:49:26,970 Interpretive bargaining involves you trading valued interests, whereas distributed bargaining involves just sticking to your interests. 491 00:49:27,240 --> 00:49:33,300 So here are a range of behaviours which should follow according to the strategic approach you adopt. 492 00:49:33,870 --> 00:49:38,489 And I think more than anything else I find from students and managers involved 493 00:49:38,490 --> 00:49:42,750 in negotiations is they don't think about what the behavioural implications, 494 00:49:42,750 --> 00:49:45,240 all of their different strategic options. 495 00:49:45,570 --> 00:49:52,770 So you'll see the two sides going in and being really aggressive and adversarial towards each other and you ask them, 496 00:49:52,920 --> 00:49:55,470 well, which approach we adopt in distributive or interactive? 497 00:49:55,560 --> 00:50:01,890 And they say, well actually it's integrative and yet their behaviours are completely out of line with their strategic option. 498 00:50:02,070 --> 00:50:07,500 So be aware of what strategic options are and make sure you align your behaviours accordingly. 499 00:50:07,930 --> 00:50:14,310 Finally, that's an issue of style. This is a framework which is often used to assess style. 500 00:50:15,150 --> 00:50:18,840 Style can be determined along two dimensions. 501 00:50:19,110 --> 00:50:25,920 To what extent are you concerned with their own outcomes and what to what extent you're concerned with other outcomes? 502 00:50:26,220 --> 00:50:29,820 And you can actually, if we had more time, we can assess your bargaining style. 503 00:50:30,150 --> 00:50:35,580 If you're concerned with your own outcomes and the other sides, then it's called collaborating. 504 00:50:36,120 --> 00:50:41,610 If you're not concerned with anybody's outcomes, not even your own, let alone the other side, it's called avoiding. 505 00:50:41,880 --> 00:50:48,720 So there are ways of assessing bargaining style by reference to what extent you're interested in the other side's objectives. 506 00:50:49,050 --> 00:50:52,440 Final strategic option is intra organisation bargaining, 507 00:50:52,710 --> 00:50:57,690 and the notion of the organisation bargain is merely drawing attention to the fact that often, 508 00:50:57,690 --> 00:51:02,220 particularly when you're involved in team negotiations, you will have to bargain with your own team, 509 00:51:02,700 --> 00:51:09,090 you will have to look inside your own team and actually bargain with them over their goals. 510 00:51:09,390 --> 00:51:12,480 So within any bargaining team you will have goal dispersal. 511 00:51:12,810 --> 00:51:17,280 Your team-mate is made up of a nature director, a marketing director, an operating director. 512 00:51:17,490 --> 00:51:19,350 They will have different interests, different goals. 513 00:51:19,590 --> 00:51:28,170 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. 514 00:51:29,520 --> 00:51:35,610 Okay. Now, the third area I'm going to cover very briefly, because the time is to do with tactical rules. 515 00:51:36,000 --> 00:51:40,590 And there are a whole range of rules that you need to be aware of when it comes to bargaining. 516 00:51:40,590 --> 00:51:44,580 And as I said, I've got a lot of time to go through these openings. 517 00:51:45,240 --> 00:51:48,809 Rules around openings, important issue about agendas. 518 00:51:48,810 --> 00:51:54,870 Agendas are very important in negotiation because the agenda set the structure for that negotiation. 519 00:51:55,170 --> 00:52:00,840 So you'll need to think carefully about constructing your own agenda and also responding to agendas that are put to you. 520 00:52:00,960 --> 00:52:04,530 Are all the issues there that you want to discuss, other issues that you want to put on? 521 00:52:04,530 --> 00:52:10,530 There are the issues on that agenda framed in the way that you want an extreme position. 522 00:52:11,430 --> 00:52:17,820 Often when you get to negotiation, both sides have have uncertainty about who's going to make the first offer. 523 00:52:18,150 --> 00:52:26,340 I'm thinking how extreme should the offer be? An extreme position going in with a really over-the-top demand. 524 00:52:26,610 --> 00:52:30,210 The pros and cons of that particular approach. Here's a little bit. 525 00:52:30,360 --> 00:52:35,370 Here's a clip from The Apprentice and these Apprentice is The Apprentice with Alan Sugar. 526 00:52:35,640 --> 00:52:41,490 And these guys were going to negotiate the price of a buffet, a meal with a company, 527 00:52:41,760 --> 00:52:45,150 and they were wondering exactly where to pitch their opening offer. 528 00:52:45,480 --> 00:52:49,260 And we can see what happened in this particular case. 529 00:52:50,230 --> 00:52:54,760 I apologise. With regards to price, I want to go no lower than £60 per head. 530 00:52:56,620 --> 00:53:02,410 Not as high. High. I think that's high, obviously going off to see what the fella's like. 531 00:53:02,770 --> 00:53:07,420 And but we're thinking three grand for the package. We don't we don't want to go. 532 00:53:07,430 --> 00:53:11,469 You know what? We're doing a lot like Dixieland. That's that's the 60 days. 533 00:53:11,470 --> 00:53:17,200 Well, I think you're a mile away, miss. I understand it, Irish, but I think a fair price for in central London. 534 00:53:17,200 --> 00:53:21,070 They're a big firm. If we pitch to law, he's going to negotiate you down. 535 00:53:21,100 --> 00:53:24,640 I think we might undersell ourselves, James, but I. 536 00:53:26,730 --> 00:53:29,879 It's a bit high. I'm gonna have to do what I was going to do. My leg in ten credit. 537 00:53:29,880 --> 00:53:34,930 Can I play nearly ready again? 538 00:53:34,950 --> 00:53:45,370 Philip will lead the negotiation. We sort of procrastinate around £65 per head, and that would include a selection of canapés, 539 00:53:45,370 --> 00:53:48,939 including two sweet canapés, six savoury plus stuff for the evening. 540 00:53:48,940 --> 00:53:53,230 And I don't know how it sounds to you. I think you would need to seriously rethink that. 541 00:53:53,950 --> 00:53:57,580 Saying this is what you would consider for a sit down three course dinner. 542 00:53:57,670 --> 00:54:04,780 Yeah I'm spice pricing is concerned we looked at something that was going to be around to me were moments. 543 00:54:09,550 --> 00:54:12,790 Let's get realistic if we're talking sort of £35 per head. 544 00:54:14,350 --> 00:54:17,380 No, not in the least. Don't let him close. 545 00:54:23,560 --> 00:54:30,790 Right. So if we went down to something like 1750 ahead and looking at that sort of figures, I think it's incredibly realistic. 546 00:54:31,570 --> 00:54:44,190 I'm still unimpressed. I think we're going to find it very difficult to stack up at anything lower than around £15 ahead. 547 00:54:45,240 --> 00:54:48,750 That sounds that sounds feasible. I think you can justify that. 548 00:54:49,210 --> 00:54:53,400 Yeah. So we've got a deal that's £15 per head. And yes, we'd be happy to go with that. 549 00:54:54,390 --> 00:55:01,800 Well, that was absolutely hideous. And then after we spoke them on the phone, we told them it was too high. 550 00:55:02,670 --> 00:55:06,570 Rugby is the gaffer and it was. That's what you want to go down. We were looking at complete fronts. 551 00:55:10,680 --> 00:55:15,480 Oh, good. So from 65 to 15 is probably not that good. 552 00:55:15,990 --> 00:55:20,760 So extreme positions you need to treat with care. Extreme position can affect your credibility. 553 00:55:20,760 --> 00:55:24,540 If you go into high affects your credibility, it can undermine your relationship. 554 00:55:24,560 --> 00:55:28,980 The other side as well. Sometimes extreme positions can be used because if you're splitting the difference on a deal, 555 00:55:28,980 --> 00:55:32,549 clearly the higher you start, the clearly a broader basis for splitting the deal. 556 00:55:32,550 --> 00:55:37,830 But you need to treat extreme positions with extreme care rules around pay. 557 00:55:37,830 --> 00:55:44,250 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. 558 00:55:45,120 --> 00:55:52,949 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. 559 00:55:52,950 --> 00:55:55,980 So think about the pace of your negotiations. 560 00:55:56,250 --> 00:56:02,580 There are also rules about concessions, so think carefully about how you make concessions. 561 00:56:02,820 --> 00:56:05,910 Often you make conditional concessions. 562 00:56:05,910 --> 00:56:10,530 I will give you this if you give me something else. So linking concessions. 563 00:56:10,680 --> 00:56:16,980 Linking items is very important. There are rules around pressures, the use of threats and plots. 564 00:56:17,400 --> 00:56:25,500 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. 565 00:56:25,770 --> 00:56:32,910 Rather than trying to get the deal over the whole package. Sometimes dealing with issues one at a time can actually move negotiations on. 566 00:56:33,720 --> 00:56:38,730 There may be issues about information. Make sure you acquire information, 567 00:56:38,970 --> 00:56:45,990 you are continually improve and update your information and trying to think of ways of getting information from the other side. 568 00:56:46,200 --> 00:56:52,980 So testing the water, making a suggestion like a shot in the dark, which may all information from the other side. 569 00:56:53,370 --> 00:57:02,310 And finally, there are issues about people framing and anchoring and body language, as I've already hinted at, kicking in negotiations. 570 00:57:02,610 --> 00:57:08,220 So think about the way in which you frame your proposals, presenting them positively. 571 00:57:08,430 --> 00:57:12,209 So, for example, this glass is half full rather than half empty. 572 00:57:12,210 --> 00:57:18,360 It's a way of presenting issues in a positive way and think about how you communicate. 573 00:57:18,360 --> 00:57:20,820 And I've already said that body language is very important. 574 00:57:21,450 --> 00:57:30,150 This is a very famous piece of work which showed that the communication of feelings and emotions is mainly achieved through body language, 575 00:57:30,420 --> 00:57:34,229 only through the voice and only 7% in content. 576 00:57:34,230 --> 00:57:38,400 So think heavily about your body language. 577 00:57:39,030 --> 00:57:46,110 And clearly body language tells us a lot. I mean, George Bush looks bored and is bored about most things. 578 00:57:46,500 --> 00:57:49,950 This is a caring person. The body language shows that. 579 00:57:50,160 --> 00:57:54,510 I'm not sure what this one is showing. Puzzlement and uncertainty possibly. 580 00:57:55,140 --> 00:58:01,680 Okay. I suppose the final rule of negotiation and this is about where concluding my talk is that 581 00:58:01,680 --> 00:58:09,360 you always in negotiations need to summarise and confirm what your deal actually is. 582 00:58:10,020 --> 00:58:15,870 So at the end of negotiations, you summarise and confirm and that is crucial. 583 00:58:15,870 --> 00:58:24,240 You don't want the different parties to walk away from a negotiation with different ideas about what that deal actually is. 584 00:58:24,630 --> 00:58:32,910 You want to ensure that the no ambiguities and misunderstandings in a negotiation which may come back to haunt you. 585 00:58:33,210 --> 00:58:41,850 So the end of a negotiation summarise what the agreement is and confirm that both parties are in agreement. 586 00:58:42,180 --> 00:58:45,299 And so by way of summarising this talk, 587 00:58:45,300 --> 00:58:51,300 what I've tried to do is give you a feel for negotiations by looking at context and 588 00:58:51,300 --> 00:58:55,470 suggesting that the way you negotiate depends a lot on the form of the negotiation, 589 00:58:55,860 --> 00:59:00,510 the relationships you have with the other side, and the balance of power between them. 590 00:59:00,990 --> 00:59:07,200 I've told you a little bit about strategies that need to be clear about your goals and your priorities, 591 00:59:07,680 --> 00:59:13,140 making sure that you choose between distributive and integrative bargaining approaches, 592 00:59:13,530 --> 00:59:17,820 ensuring that your behaviours align with those particular structures. 593 00:59:18,180 --> 00:59:24,270 And finally we talked a little bit about tactics and the different sets of rules around information, 594 00:59:24,660 --> 00:59:29,610 pressure and getting information, which means to guide you through the negotiation process. 595 00:59:29,820 --> 00:59:35,700 And with that I'll stop and if there are a few questions for 5 minutes, I'm happy to answer those. 596 00:59:36,030 --> 00:59:36,900 So thank you for that.