THE POWER OF PERFORMANCE

51TH ANNUAL CONFERENCE

MAY 22-25, 2018

ORLANDO, FLORIDA

Conducting a Successful Negotiation

Keri Kozlowski J.D., M.P.H.

ABOUT ME

Attorney

Chief Performance Officer

UCF College of Business Faculty

Executive Coach, Leadership Development

Speaker, & Mediator

NEGOTIATION

A discussion between two or more parties

(each with its own aims, needs, and viewpoints)

seeking to discover common ground and

reach an agreement on a matter of mutual

concern or to resolve a conflict.

NEGOTIATION

We begin negotiating when we are very young

People negotiate every day

Every time you ask for something you are

actually negotiating

WHY DO PEOPLE NEGOTIATE?

To resolve a problem / dispute between

parties

To agree on how to share / divide a limited

resource

To create something new that neither party

could attain on his or her own

When we believe we can achieve more

cooperating with others then without

NEGOTIATION MYTHS AND FACTS

Myths

1. Good negotiators

are born

2. Good negotiators

take risks

3. Good negotiators

rely on intuition

Facts

1. They are self-made

2. They carefully consider

risks & potential benefits

3. They rely on preparation

NEGOTIATION MYTHS AND FACTS

4. Negotiations are

always win-lose

5. The only negotiations

are formal or explicit

negotiations

4. A vast majority can

be win-win

5. Far more negotiations

take place informally

every day

NEGOTIATOR SHORTAGE

• Many Master Contract Negotiators in both the

public and private sectors have retired or became

retirement eligible in 2012

• During the past 10 years, there has been an

increase in the complexity of contracts, making

it harder to negotiate a good deal at a fair price

• U.S. Government Procurement Policies are placing

more financial risk on government prime

contracts and subcontractors

• In the next 3-5 years, “Negotiation Skills” will grow

as a key personnel performance indicator

SUCCESSFUL CONTRACT NEGOTIATORS:

• Master the art and science, or soft and hard skills,

required to become a master negotiator

• Are able to and adapt strategies, tactics, and counter

tactics in a dynamic environment

• Communicate ideas clearly and effectively

• Understand their own negotiation style (and others)

• Know their products and services, desired terms and

conditions, and pricing strategy

• Can successfully lead a diverse multi-functional team

• Calmly and deal with high stress situations

46% of contract managers enter negotiations not knowing what they really want.

No clear objectives set

Don’t understand strengths and weaknesses of own and other position (can’t develop persuasive arguments)

Don’t explore opportunities for value creation

Depend on being “quick and clever”

PLANNING FAILURES

THE ESSENCE OF PREPARATION

The foundation for negotiating

Adequate preparation leads to beneficial

outcomes

Preparation & the 80-20 rule:

80% of your efforts should be devoted to

preparation

20% should be devoted to the actual negotiation

THE PREPARATION PROCESS

1 • What do you want or need?

2 • How do you intend to get it?

3 • What are your alternatives if no acceptable agreement

is reached?

4 • What does the other party want or need?

5 • What alternatives do the other side(s) have if no

acceptable agreement is reached?

THE PREPARATION PROCESS

Bargaining Mix

BATNA

Reservation Prices

Bargaining Power

Analyzing the Other Party

THE BARGAINING MIX

The bargaining mix is the package of issues up

for negotiation. Each item in the bargaining

mix, can have its own starting, target and

resistance point.

Prioritize Issues !!

DEFINING THE SITUATION

What will you be negotiating?

All of the issues that must be addressed to

produce the desired outcome

Your goals/objectives

DEFINING THE SITUATION

Kickoff meetings help make sure all players have

complete information

ESTABLISHING GOALS

What do you want?

What the other party wants?

Goals can be:

Substantive

Price, terms,

contract language, …

Relationship

Short vs. long term !!

RELATIONSHIP

TARGET POINTS

What you realistically hope to achieve for each

issue

Determining target points

What is required to satisfy your interests

and set that as your target

Setting targets should be based on research

Justify and quantify

BEST ALTERNATIVE TO A NEGOTIATED

AGREEMENT (BATNA)

The basic test of any proposed agreement

Whether it offers greater value than your

best course of action without the other

party

When preparing to negotiate

Identify and analyze your best no-agreement

alternatives

“What would be my best course of action if I can’t

reach an agreement?”

WHY BATNA IS IMPORTANT?

The goal of a negotiation is NOT to make any

deal

The goal of a negotiation is to make a “good”

deal: One that is better than each party’s

respective BATNA

Assessment requires three steps:

Identify all the plausible alternative options you

might pursue if you are unable to reach an agreement

with the other party

Estimate the value associated with each alternative

Select the BEST alternative—this is your BATNA

BATNA

Your reservation price is your walk-away point; the

point at which you pursue other options (i.e. your

breakeven point)

Define your reservation price before negotiating

Learn your opponents’ reservation price, if possible

CALCULATE RESERVATION PRICE (RP)

ZONE OF POSSIBLE AGREEMENT

Seller Settlement Range

Buyer Settlement Range

Seller’s Resistance Price

Buyer’s Resistance Price

ZOPA

ZOPA is Positive

Positive Bargaining Zone Exists

Seller’s Target Price

Buyer’s Target Price

ZONE OF POSSIBLE AGREEMENT

Seller Settlement Range

Buyer Settlement Range

Seller’s Resistance Price

Buyer’s Resistance Price

ZOPA

Seller’s Target Price

Buyer’s Target Price

ZOPA is Negative

No Possible Agreement

LEARN ABOUT OPPONENTS’ RP

Estimate the other party’s:

Definition of the situation

Goals, issues, interests

BATNA, reservation prices

Exhaust pre-negotiation sources of

information

Consulting company reports (e.g. Hoovers)

News Article, Press Releases, Job Boards

Contact your sources within that industry

Determine their strategic goals

See what you can learn from any member of

the negotiating team though informal

discussions or slips of the tongue at the table

Examine your assumptions

Ask direct questions; watch for non-responses

LEARN ABOUT OPPONENTS’ RP

Often people have a singular goal of convincing

other side to accept a certain kind of deal or

demand

Prepare by: Determining what I want and

identifying a host of reasons why the other

side should agree to give it to me.

What we learn is limited by what we allow

ourselves to learn. We often erect barriers to

learning simply by the way we negotiate.

LEARN ABOUT OPPONENTS’ RP

RAPPORT BUILDING

Negotiators who chat for 5-10 min, even about

unrelated issues:

Share more information

Make fewer threats

Develop more trust and respect than pairs

who do not

Efforts to analyze the other party involve making

estimates, assumptions, educated guesses or

even hunches

ANALYZING THE OTHER PARTY

The dilemma of trust

The other party may take advantage if you believe

too much of what he or she tells you

But you may not be able to reach an agreement if you

believe too little

The dilemma of honesty

The other party may take advantage if you share too

much information

But you may not be able to reach an agreement if you

share too little

You need to prepare in advance for tough

questions.

Helps you avoid lying

Helps you avoid giving up too much information

Helps you reclaim control of the conversation (and

framing)

WHAT IF THEY ASK TOUGH QUESTIONS?

RUG EXERCISE

VALUE CLAIMING AND VALUE CREATION

Value differences that exist between negotiators

include:

Differences in interest

Differences in judgments about the future

Differences in risk tolerance

Differences in time preferences

NEGOTIATION STRATEGIES

Characteristics Distributive Integrative

Available resources Fixed amount of

resources to be divided

Variable amount of

resources to be divided

Primary MINDSET I win, you lose

I win, you win

Primary interests Opposed to each other

Convergent

with each other

View of relationships Short term

Long term

DISTRIBUTIVE BARGAINING

Positions (not issues) are the primary focus

Reservation prices / resistance points set limits

Target points are what you realistically hope to

achieve

Offers & counteroffers define the process

Alternatives (BATNAs) define your resistance points

and your power

TACTICS OF DISTRIBUTIVE BARGAINING

Tactic 1: Planning: Assess your BATNA and improve it

Tactic 2: Planning: Determine your resistance point, DO NOT

reveal it

Tactic 3: Estimate the other party’s BATNA and their resistance

point

Tactic 4: Set your targets high

Tactic 5: Make the first offer (if you are prepared)

Tactic 6: Immediately re-anchor if the other party opens first

Tactic 7: Plan your concessions & counter offers

Tactic 8: Provide objective support and explanations for your

offers

Tactic 9: Appeal to norms of fairness

Tactic

10:

Do not fall for the “even split” ploy / Dirty Tactics

TACTIC 1:

ASSESS YOUR BATNA AND IMPROVE IT

Define your BATNA

If you BATNA is week Improve it

IMPROVE YOUR BATNA

If the parties believe your BATNA is inferior to

the other party’s BATNA:

Keep your BATNA concealed, increase its

perceived strength

Weaken the other party’s BATNA – thus

balance the seesaw

Team up with other parties to increase your

BATNA

Seek a third party opinion

TACTIC 2:

DETERMINE YOUR RESERVATION PRICES

Reservation prices or resistance points set

limits & define ZOPA

Should you reveal your reservation prices?

Seller’s

Resistance

Price

Buyer’s

Resistance

Price

ZOPA

= B

= S

ZOPA = B - S > 0

Positive Bargaining Zone Exists

Push for settlement near other’s resistance

point

Convince other party to change their

resistance point

Create a positive settlement range (ZOPA>0)

Convince the other side it is the best deal

Tactic 3:

Estimate Other Party’s RPs

ESTIMATE OTHER PARTY’S RP

Factors affecting the other party’s resistance points:

Other’s party’s

lower value of

a particular

issue

Other’s party’s

perception of

how much you

value an issue

Other’s vs. your

cost to delay/stop

negotiations

Other party’s resistance point

+ +/-

+/-

TACTIC 4:

SET HIGH ASPIRATIONS / TARGETS

Be realistic but optimistic (not outrageous)

Negotiators who set high aspirations end up

with more of the pie than those who set lower

aspirations

PLAN YOUR SIDE &

GUESS OTHER PARTY’S SIDE

Target

Prices /

Aspiration

Points

Reservation

Prices /

Resistance

Points

BATNA Opening

Offer

Your side

Other Party’s

Side

TACTIC 5:

FIRST OFFERS & ANCHORS

The most critical step in negotiations

WHO SHOULD MAKE THE FIRST OFFER?

If your understanding is Inferior

Will have trouble anchoring effectively

If your understanding is Superior

You have a better understanding of ZOPA

Take advantage and make an optimistic offer

If both parties understand the ZOPA well

Making the first offer is of little consequence

Parties are concerned about fairness

If neither parties understand the ZOPA

Can run the risk of being too concessionary or too

demanding

ANCHORING

Anchoring = the first offer on the table may

“anchor” the entire negotiation

HIGH OPENING OFFERS

Advantages

Gives you room to

maneuver as more

information becomes

available

Sends a strong

message that:

There is a long way

to go to a settlement

More concessions

than the opponent had

planned may be

necessary

Risks

You may alienate the

opponent to the point

they say "Get lost!"

It may damage future

negotiations between

the parties

If you choose to open

high, be certain to have

a contingency plan

to deal with rejection

RESPONSES TO AN “EXTREME” OPENING

OFFER

How do you respond to an “Extreme” Opening

Offer?

Ignore

Ask them to justify—but be careful!

Make an anchored counter, then propose

moderation.

Give the other side an opportunity to moderate—

without losing face.

Avoid making unilateral concessions

Label your concessions

Be explicit about expectations of reciprocity

Make contingent concessions

Diminishing pattern in concessions

Be comfortable with silence

Don’t lose track of the number of size

concessions made by both parties

TACTIC 7:

CONCESSIONS

EXAMPLE: PATTERN OF CONCESSIONS

100

500

300

200

400

5 4 3 2 1

Concession Number

Siz

e o

f C

on

cessio

ns (

in d

oll

ars

)

0

=Texas Couple concessions

= Chris’s concessions

BRACKETING

The logical process of moving toward a middle

point between the opening offers

BRACKETING

Buyer’s Opening

Offer

Seller’s Opening

Offer

X = Negotiated price

S = seller’s reservation price (min. price)

B = buyer’s reservation price (max. price)

$19,500

$20K $21K $52K

$52,500

$500 $500

$51K

X

$1,000 $1,000

$41K

$10,000

$31K

$10,000

TACTIC 8:

PROVIDE OBJECTIVE SUPPORT AND EXPLANATIONS

Skilled negotiators utilize information / objective

criteria to support their offers or diffuse other offers

TACTIC 9:

APPEAL TO NORMS OF FAIRNESS

Norm Negotiator Utilizing the Norm

Equality • Outcomes are distributed without regard to inputs, and

everyone benefits (or suffers) equally

• Evenly splits the difference between offers; 50-50

Equity Splits the difference between offers based on proportional

inputs of the parties

Need Splits the difference between offers based on proportional

needs of the parties

THE EVEN SPLIT

Earlier concessions may have been different in

terms of magnitude or pattern, making the bases

to split potentially unfair

Often the person who suggests the even split is in

an advantageous position

Ok when dealing with smaller amounts

OTHER TACTICS

Use Silence

Use time to your advantage

Flinch

HARDBALL TACTICS AND DIRTY TRICKS

Hardball Tactic Brief Description How to Counter

Bogey Pretend unimportant

issue is important Good preparation

Good Guy/Bad guy Use two negotiators Openly describe tactic

Intimidation and

Other Aggressive

Behavior

Fear, anger, guilt,

appearing legitimate

Ignore, halt the

negotiation to discuss

process

Lowball/Highball Extreme opening offers Good preparation

Nibble Include a small issue late

in negotiation What else do you what?

Snow Job Overwhelm other with

info

Ask questions, listen

carefully, use tech.

experts

Selective, Deceiving,

or Distorted Info.

Relentlessly push for

concessions Document

FINAL OFFER

At some point in your negotiations, you will reach

a point beyond which you are unwilling or unable

to go

When you get there, make your final offer

HIPAA COMPLIANCE EXAMPLE

Tactic 1: Planning: Assess your BATNA and improve it

Tactic 2: Planning: Determine your resistance point, DO NOT

reveal it

Tactic 3: Estimate the other party’s BATNA and their resistance

point

Tactic 4: Set your targets high

Tactic 5: Make the first offer (if you are prepared)

Tactic 6: Immediately re-anchor if the other party opens first

Tactic 7: Plan your concessions & counter offers

Tactic 8: Provide objective support and explanations for your offers

Tactic 9: Appeal to norms of fairness

Tactic

10:

Do not fall for the “even split” ploy / Dirty Tactics

PRACTICE

Landlord Tenant

INTEGRATIVE NEGOTIATION

Focus on commonalities not differences

Address needs and interests, not positions

Commit to meeting the needs of all parties

Exchange information and ideas

Invent options for mutual gain

Use objective criteria to set standards

CREATING VALUE

Expanding the resources from which the

parties are drawing

Goal is to have both parties do well

Its is not compromising

Positions may be incompatible, but interests

may be compatible

CREATING VALUE

EXPAND THE PIE

Changing the number of considerations & the amount of each (adding resources)

EXPANDING THE PIE:

JOB OFFER NEGOTIATION

The employee requests a $75,000 salary

Employer offers $52,500

Employer’s

OO

Employee’s OO

$52,500

$75,000 $60,000 $65,000

$62,500

Employee’s RS

Employee’s TS

Employer’s TS

Employer’s RS

$57,500

EXPANDING THE PIE:

JOB OFFER NEGOTIATION

A sign-on bonus

Performance bonuses

Relocation expenses

Stock options

Increased vacation time

Working conditions or

location

Working at home or

flexible hours

Title

Timed salary increases

A car lease or purchase

Parking Space

Additional unpaid leave

Health insurance:

dental, medical, optical

Long-Term Care /

Disability Insurance

Retirement Funds

Tuition reimbursement

INTEGRATIVE BARGAINING TACTICS

Identify and Define the Problem (Issues)

Separate the Person from the Problem

Focus on Interests Not Positions

Invent Options for Mutual Gain

Use Objective Criteria to Evaluate Options

I. IDENTIFY AND DEFINE THE PROBLEM

Identify all issues

Classify issues

III. SEPARATE THE PERSON FROM THE PROBLEM

Being soft on people but hard on the problem

Challenges:

Managing emotions

Managing perceptions

Effective communications

THE ROLE OF EMOTION

Conflict is expressed through our emotions:

Anger

Fear

Disappointment

Frustration

Hostility

Depression

THE ROLE OF EMOTION

Negative emotions cause negotiators to:

Pay less attention to the other party’s interests

Diminish the accuracy of judgments about

interests

Use of less cooperative strategies

Less interested in having future interactions

Can bring a negotiation to an impasse or an end

“WHENEVER YOU'RE IN

CONFLICT WITH SOMEONE,

THERE IS ONE FACTOR THAT

CAN MAKE THE DIFFERENCE

BETWEEN DAMAGING YOUR

RELATIONSHIP AND

DEEPENING IT. THAT FACTOR

IS ATTITUDE.” –WILLIAM JAMES

STRATEGIES FOR TREATING PERCEPTION

1. See the situation from

your opponent's

perspective

2. Avoid blaming your

opponent for the

problem

3. Discuss each other's

perceptions

4. Try to disappoint your

opponent's worst

beliefs and

expectations about

you (be kind!)

5. Give your opponent

a stake in the

outcome by making

sure they participate

in the negotiation

process

6. Make your proposals

consistent with the

principles and self-

image of your

opponent

FREE FLOWING INFORMATION

Ask open-ended and probing questions

Engage in active listening

Reframing

WARM BUT LEADING QUESTIONS

“Hey, I know what you best looks

like and I don’t think this is it, is

the best that you can do?”

ACTIVE LISTENING

• Focus on what

the other

person is

saying,

understanding

both the

content and

emotion

IV. FOCUS ON INTERESTS NOT POSITIONS

Interests:

Why do you want what you want? Why do you

have the goal you have?

Positions: What you want

No reasons, no justification, just a demand

Positions are what you want, interests are

why you want it.

POSITIONS VERSUS INTERESTS

Position 1

I want the orange

Position 2

I want the orange

Why?

FIND OUT THE OTHER PARTY’S INTERESTS

Do research

Ask questions ???

IDENTIFYING INTERESTS

Why do I want the position I demanded?

How will it help me?

What purposes will it serve for me?

What will happen if the other party says no to my

demand?

What will happen if the other party says yes to my

demand?

V. INVENT OPTIONS FOR MUTUAL GAIN

To invent creative options:

Think up possible decisions first ; Decide later

Broaden the options on the table rather than look

for a single answer

Search for mutual gains

Look through the eyes of different experts

How would each expert diagnose the situation &

what kinds of approaches they may suggest

INVENT OPTIONS FOR MUTUAL GAIN

Broaden your

Options

Trap: The tendency to

search for the single

best answer

Mythical fixed pie

VI. USE OBJECTIVE CRITERIA

TO EVALUATE OPTIONS

Search for a standard such as market value, expert

opinion, law

This way, neither party is “giving in” to the other

and a fair agreement is possible

Explanations are helpful in persuading the other side

to agree

We are asking for $50,000 in fees

How did you arrive at that figure?

Is it supported by market data?

EXPANDING THE PIE

Build trust and share information

Ask questions regarding interests & priorities

Provide information

Unbundle issues to create potential for tradeoffs

Negotiate multiple issues simultaneously

Make offers in packages

Make multiple offers at the same time

PRACTICE

Seller Buyer

DIFFICULT NEGOTIATOR TIPS

Pre-decide what you will and will not give up for

the sake of the relationship

Prepare emotionally, tell yourself “this is

temporary”

Ask factual questions… “How did you get to those

numbers?” “You said that was illegal, have you

spoken to an attorney? Do you need time to speak to

an attorney?”

If you disagree, start out with “I might be wrong

but…” then name the parts you disagree with. Or

“What you say could be correct, but my boss will

raise the following concerns…”

Stand your ground. “Please let me finish” or “Of

course you would expect me to take these numbers

back to my people for verification.”

RECOMMENDED READING

Getting to Yes: Negotiating Agreement

Without Giving In by Roger Fisher & William

Ury

Crucial Conversations Tools for Talking

When Stakes Are High, 2nd Edition by Kerry

Patterson, Joseph Grenny, Ron McMillan & Al

Switzler

Contract Negotiations by Gregory A. Garrett

The Five Dysfunctions of a Team: A

Leadership Fable by Patrick Lencioni

KERI KOZLOWSKI J.D., M.P.H.