Negotiation
(Mostly the) Science and (Some) Art
Agenda
• What are we talking about here?
• Six Key Concepts of Negotiating
• Preparing to Negotiate
• Strategies and Tactics
• The Contract
• The “Art” side of Negotiating
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What is
Negotiation?
negotiation
[ni-goh-shee-ey-shuh n]
Noun: mutual discussion and
arrangement of the terms of
a transaction or agreement:
the negotiation of a treaty.
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Key Concepts
Agent
Someone acting on behalf of a third party whose power
to negotiate is limited by their agents agreement.
Reservation Price
(Walk-Away Price)
The lowest price the seller will take, or the highest price
the buyer will pay.
Most Likely Price
Reasonable market value.
Stretch Goal
A higher price the seller wants to receive, or a lower
price the buyer wants to pay.
BATNA
Best Alternative to a Negotiated Agreement
ZOPA
Zone of Potential Agreement
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Preparing to Negotiate
“By failing to prepare, you are preparing to fail.”
Benjamin Franklin
Should You Negotiate?
What’s Your Negotiating Style?
Ethical Foundations
Negotiation Analysis
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Should I Negotiate?
• Are you comfortable negotiating?
• Will the benefits outweigh the costs?
• Do the benefits justify the risks?
o A poorly conducted negotiation can lead the other party to withdraw.
o Improperly phrased, a counter can legally void an offer.
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Negotiating Style
• Is the negotiation position based or interest based?
o Position based tends to be more short term.
o Interest based tends to be more long term, building relationships.
o Can you discover the other party’s underlying interests?
• 10 Dimensions to your Personal Negotiating Style
o Can you assess the other party’s style?
o Should you try to adopt their style?
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Ethical Foundation
Legal
Obligations
Voluntary Ethics
No Fraud
Do not lie.
Fiduciary duty?
The highest duty
of trust and
loyalty.
Don’t act in an
unconscionable
manner.
Do not abuse
your dominant
position of
power.
Organizational
standards
Is there a Code of
Conduct you
must adhere to?
Someone you
admire
What would they
do?
Family test
How would your
family feel?
Newspaper test
What if your
actions were
published?
Golden Rule
Do unto others…
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Analyze the Negotiation
• What’s the goal? Why is it the goal?
• What are the most important issues? Why are they
the most important issues?
• What is my BATNA?
• What is my Reservation Price?
• What is the Most Likely Price?
• What is my Stretch Goal?
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Example – Selling A Car
BATNA
Sell to cousin for
$4000
Reservation Price
Most Likely
$4500
$5000
Stretch
$6000
Zone of Potential Agreement (ZOPA)
$3500
$4500
Stretch
Most Likely
$5500 Buy a different car
Reservation Price
BATNA
Seller: Cash for down payment on new truck. Keep 3 weeks until truck gets in.
Buyer: Need car to get to work. Want it immediately.
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Strategies & Tactics
“The trick to negotiation was to hold all the cards going in
and, even if you didn't, to try to look as though you did.”
― Eoin Colfer, Artemis Fowl
Develop Your Negotiating
Power
Psychological Tools for
Negotiating
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Your Negotiating Power:
A Strong BATNA
What is your BATNA?
Disclose your BATNA?
Is your BATNA strong or weak?
Lie about a weak BATNA?
NEVER outright lie.
What’s their BATNA?
ASK a lot of questions. Gather intel. LISTEN!
Can I weaken their BATNA?
Can I strengthen my BATNA?
Can you bring in other offers?
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Psychological Tools/Traps
Fixed pie myth
Look for underlying interests. Focus on substance.
Anchoring
Unknown value: let other party make 1st offer.
Known value: make the 1st offer yours.
Overconfidence
Seek disconfirming evidence. Do not undersell your
stretch goals or the ZOPA.
Framing
People are risk averse looking at a gain, but
accepting of risk looking at a loss.
Look deeper
Easy info to get is not necessarily the most relevant.
Dollar Auction Trap
Don’t get stuck in the process.
Encourage reciprocity
Both sides should give.
The Contrast Principle
Showcase the option you want them to choose
against worse options.
THE BIG PICTURE
Don’t get lost in the details.
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Example Offer Scenario
BATNA
Reservation Price
Most Likely
Stretch
2nd best offer or
keep looking
85% of target
100% of target
120% of target
Zone of Potential Agreement (ZOPA)
Unknown
Offer Amount
Unknown
Unknown
Unknown
Stretch
Most Likely
Reservation Price
BATNA
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Example Offer Scenario
BATNA
Reservation Price
Most Likely
Stretch
2nd best offer or
keep looking
85% of target
100% of target
120% of target
Zone of Potential Agreement (ZOPA)
85-110% of target
Offer 80% target
Stretch
95% target
Most Likely
110% target 2nd best candidate
Reservation Price
BATNA
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Considerations under
Contract Law
“A valid contract requires voluntary offer, acceptance, and
consideration.” ― Robert Higgs
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Contract Law
Is there a preliminary document?
Ensure it is properly labeled as
preliminary.
Have you reached final agreement?
A counter offer can terminate an
existing offer.
Have both sides given up something?
Is the agreement legal?
Common/Civil & Criminal law.
Is the agreement in writing?
Are all negotiated terms reflected in
the contract?
Courts need not enforce terms not in
the contract.
Are there implied terms that are not
part of the contract?
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The “Art” of Negotiating
“We can't go back into our past history and make changes.
But we can begin this moment by setting a goal and pursuing
it for a better life with a greater purpose.” ― Ellen J. Barrier
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Negotiate Better
• Parallel vs. Serial negotiating
• Limit justifications: even 1 weak reason can be
exploited and used against you
• Test your understanding by summarizing their
position back to them
• Get to know the other party before starting to
negotiate an interest (relationship) based contract
• 1st offer primacy
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How to Muck it Up!
•
•
•
•
•
•
Get personal
Lie about something
Lack confidence
Get defensive
Issue an ultimatum
Over negotiate the details
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Family
Will this support you
spending enough time with
family?
Leisure
Will this support you doing
what you enjoy outside of
work?
Retirement
Match your
negotiation to
your life goals.
Take a big-picture
perspective and analyze
Will this allow you to retire
when and how you want?
your life goals. Negotiate
Financial
Will this support your other
financial plans?
goals.
Career
Does this further your career
interests? Starting a business?
Relationship
Are there changes to personal
relationships on the horizon?
Service
Will this allow for community
service at the desired level?
terms that fit with those
This is especially critical
when you are negotiating
for dispute resolution.
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Questions &
Wrap-Up
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For more details:
This presentation was based
on information in the book
Negotiating for Success:
Essential Strategies and Skills
by George Siedel.
The book is an easy read.
One good evening without
interruptions.
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10 Dimensions of
Negotiating Style
1. Goal: Contract vs.
Relationship
2. Attitude: Win/Lose vs.
Win/Win
3. Personal Style: Informal
vs. Formal
4. Communication:
Direct vs. Indirect
5. Time Sensitivity: High
(quick) vs. Low (slow)
6. Emotionalism: High vs.
Low
7. Agreement Form:
Specific vs. General
8. Agreement Building:
Bottom Up (details)vs.
Top Down (principals)
9. Team Organization:
One Leader vs.
Consensus
10. Risk Taking: High vs.
Low
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