Negotiation Technique in Business- part-2

Why “Win Win” is necessary?

• Better relationship
• Avoid Dissatisfaction
• Goal Achieve is easier in difficult situation.
• Repetitive deals and Long term contract

The art of win-win is to explore and capitalize on all interests and needs which are not opposed, and to develop options that will best meet these needs Win-win does not mean making additional concessions just to make other side happy

Avoid Dissatisfaction: It really means arriving at a deal which maximizes benefits of both sides

While “win-win” is generally preferable, it is not necessarily always applicable

There is always a better deal possible for both parties in every negotiation. This may seem a bold statement but is it backed by considerable economic theory and research. About 150 years ago, Egardo Pareto, an Italian economist, theorized that any contract agreement between two individuals could be improved if the parties continued to work together to raise its value or utility. He proved, through contract utility analysis, that a gain in mutual satisfaction could be achieved at little or no loss to either party in a transaction. Subsequent economic theorists substantiated Pareto’s theory and built on his findings.

 Win-win approach is particularly applicable for long term contract and relationship

Indeed, I am convinced that anything can be done better if people collaborate in doing so. When two negotiators work together to find a better way they will succeed if not limited or impeded by organizational, structural, legal or psychological constraints.

Collaborative Both-Win? negotiation is the path to better agreements. It is within the grasp of anyone to learn. Negotiators do not have to be geniuses to be creative and find a better way.

Two factors come into play to create mutual gain; first, each side comes to the table with their own unique aggregate of assets, ideas, needs, problems, experience and relationships; second, through collaboration both sides integrate their previously unconnected mix of attributes in ways that create enlarged joint satisfaction values not previously tapped or attainable by either party.

The Phase of Negotiation:

Preparation-->Meeting-->Follow up

Preparation is the Key:

It is simple to hear but difficult to implement. You need to know specifically what you want from the transaction or negotiation. Don’t wait for the other party to state their position to determine what yours is going to be. Write down these things as a wish list of all the things you do want before you begin negotiations. If not you may look back and find you were forced into accepting terms for things you didn’t need to begin with.

Due to counter effectively and find how your value matches the other side’s needs, you first need to know what those needs are. Again, be very specific in terms your receivables in a timeline, etc.

  Know the issue in details and study well, so that your counterparty understood you have thorough knowledge over the issue & can’t possible to misguide you. Know the weakness of your counterpart, so that you can capitalize your strength and their weakness. When you negotiate from a position of strong preparation, the other party will be more comfortable meeting you on your terms, based on your expertise.

  Make sure you are very familiar with the subject (It may be product , service..) or object . Be clear & specific yourself on receivables and deliverables. Otherwise your definitely capitalize your weakness or lack of preparation, so psychologically you may down. If that party is experienced , that means they may have your useful information. So if possible then talk to business associates who already dealt with them. They may use some pattern and style. It could be helpful to you.

Your should have a target in your mind before start. Considering all constraints, it should be realistic. These should be include budget limit, management direction & other external force. During the negotiation, your goal may CHANGE based on scope & some other reasons. While your ultimate goal is realistic, this should not constrain your first offer or counteroffer.

     Before you start the negotiation, ensure that the other party is fully empowered to make binding commitments. You don't want to find yourself in a position where you believe you've struck a deal, only to discover that your agreement must be approved by someone higher in the chain of command.

  Gather information as much as possible on your issue and counter party, their interest and favorable outcome. Your team must fully understand the goals and interests and develop an understanding of other parties thought , goals and interest. During the negotiation your team should strive as much as possible to update the info about counterparties , their goal, interest….

Strategies for “Win Win”:

Encouraging Dialogue:

This encourages your counterparty to provide unsolicited information to you.

Let the other parties speak openly, especially if they are emotionally stating a position – such behavior provides valuable information about their interests truly lie. Use simple language. Ask many questions. Build solid relationships. Appeal to personal motivations and negotiating styles. Be creative.

The suggestions that follow work in any question-and-answer situation. Those of you who have faced a barrage of questions will recognize their value.

1.Give yourself the time you need to think. Quick answers are risky.

2.  Never answer until you clearly understand the question.
3.  Recognize that some questions do not deserve answers.
4.  Answers can be given that satisfy part of a question rather than all of it.
5.  If you want to evade a question, provide an answer to a question that was not asked.
6.  Some answers can be postponed on the basis of incomplete knowledge or not remembering.
7.  Make the other party work for answers.  Get them to clarify the question.
8.  When the other person interrupts you, let them talk.  
9.  Correct answers in a negotiation are not necessarily good answers.  They may be foolish.
10. Don’t elaborate.  You may disclose more information than is necessary.

Eye Contact: Maintain eye contact with the other parties as it shows the delegation is paying attention and listening to them. Caution - be aware of cultural differences in which eye contact may be inappropriate or may even send the wrong message.

Negotiation tactics:

• Offer step by step:It means getting an offer by your supplier and then progressively asking for a better offer step by step. This is linked to bargaining, and suggests that you should give concessions little by little, and always in exchange for something in return.
• Silence: This tactic create a pressure on the other side. When you will raise an issue or ask a question, please wait for an answer.
• Divide into small pieces :If you can break a big deal or issue into small part then Definitely you can make concise of the issue. Negotiators often think he is handling single issue but most of the time it wrong. SHOULD NOT EAT A ELEPHANT IN ONE TIME, EAT PART BY PART..... If he can negotiate one after another then success is very near.

Learn to Say "NO": If the demand or request is not possible, too commercially demanding, or not reasonable for any reason we must kill it there and then, or it will come back to haunt you. Do not negotiate if there are unrealistic demands being made at any stage. This is for three reasons. It prevents you having to concede substantial ground unnecessarily. It avoids raising false hopes, which would make it difficult for us later to satisfy later. It stamps your personal authority and professionalism on the situation. A clear and honest "No, I'm afraid not," with suitable explanation and empathy for the other person's situation is all it takes.

Know your BATNA: In negotiation theory, the best alternative to a negotiated agreement or BATNA is the course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached.

A party should generally never accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations, such as relationship value, time value of money and the likelihood that the other party will live up to their side of the bargain.

The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations. Although a negotiator's alternative options should, in theory, be straightforward to evaluate, the effort to understand which alternative represents a party's BATNA is often not invested.

Problems of Business Negotiation :

Resistance in sharing information: In some cases, information will not be forthcoming. These users will regularly attend your workshop but it will take a mammoth effort to make them talk. At the other end of the spectrum, there are users who make your life difficult by bombarding you with loads of documents. In such a scenario, even to find the answer to a simple question, you may have to read hundreds of pages!

How to get around this problem: The very fact that the users are not sharing relevant information should raise red flags. We need to understand the users’ reasons for doing so:

Are they resistant to change and are so used to a certain way of working that they do not want to change?

Is it a complicated case of ego issues and office politics that causes them to not want to share information?

They really don’t know why a certain process is being done in a particular manner and they have been blindly following it for ages.

The first two issues get addressed gradually once the BA is able to gain the users’ confidence and trust. In my experience, this usually happens after a couple of sessions. Once the ice is broken, information flows more easily.

The last issue is a bit tricky as users hate to admit that they never thought of the ‘why’ and they just concentrated on the ‘how’. The BA has to word his or her questions very skillfully here. After playing detective, it is often very clear that users don’t have the information that is the BA needs. Once this is known, the BA will have to identify the proper source for this information by talking to the facilitator.

Irregular attendance:

This happens when key users attend one session and then skip a few in a row. Suddenly, they appear and start changing the course by asking/changing things that were frozen during their absence. Or worse still, they want you to start from where they left.

A set of users keeps on rotating, and a user who is present today may be gone tomorrow. There is inconsistency in attending the workshop.

How to get around this problem:

The first problem usually happens when the changes have been proposed by IT and not driven by a business need. Since there is no buy-in from the business users, they are not interested in attending the workshops. However, as the project is be driven from the top, they attend the sessions intermittently to get the ‘attendance’ and ‘participation’ tick mark. They also pose hurdles in the form of the next problem as they send their team members in turns.

As a business analyst, apart from escalation to the project manager and the project sponsor, there is nothing much that can be done. The BA can highlight that the requirements captured during the workshops may have to be re-validated as there is no continuity of the users.

Accountability for decisions:

There may be instances in which the current business process needs to be changed or modified to make it more efficient. The users may all be in consensus but none will volunteer to approve it. Or, there could be situations where the elicitation process may reach a dead end if certain decisions are not taken.

How to get around this problem:

The very fact that the users are in consensus is itself a big win. Here, the only issue is of accountability. If the issue under discussion can be moved into a parking lot and can be considered later, then the next function can be picked up. If this is not possible then along with the project manager, the BA can prepare a business case and present it to the user community. The business case document should have enough details for the decision-maker to come to a decision. It should clearly elaborate on the issue on which the decision is sought and the preferred outcome to resolve that issue.

This could take two forms:

1. Conflict between the business analyst and the users: This usually happens when the business analyst tries to propose a new or a modified approach to the current process that is being followed.

How to get around this problem:

To address the first problem, the BA will have to first understand the resistance from the users. Has he/she missed or not taken something into consideration? Or, is it again a situation where the users wish to continue doing what they have been doing? The BA will first have to get clear answers for these and potentially other questions. After all this is done, if the BA still feels that the recommendation needs to get a user buy-in, then the approach followed will be similar to the one that we saw in the earlier problem area, i.e., preparing a tight business case without any loopholes and presenting it to the users.

1. Conflict between users: If users who perform similar tasks across different organizational functions come together, there is bound to be conflict as each one feels that their approach is best.

How to get around this problem:

This could be an ego issue as each function would like to outshine the other. This is an area where the BA’s facilitation and analytical skills are put to test. The BA should be able to dissect all the views that have been put forth and try to facilitate a healthy discussion in which all the parties are listened to. It is not necessary to accept every suggestion but it is important that each user feels that he or she has been given a fair chance to present his or her case. In most situations, this approach works. If it doesn’t, the only option left is escalation to the relevant people.

1. Real needs vs. perceived needs:

Sometimes it becomes difficult for business users to distinguish between a real need and a perceived need. A perceived need is always a little tricky as it may be a workaround/temporary solution for the problem and not the problem itself!

How to get around this problem:

Real needs are the obvious ones and can be easily identified. These are usually the issues or the major process changes that the business requires. In the eyes of the business user, a perceived need is very much a real need. The trick here is to dig deeper and probe to discover the real issue. For example, a user might ask for the functionality to update data. This can definitely be a risky requirement as it may lead to data tampering. However, the real need may be that the source data is received in an Excel file and the user probably has to do some sort of data formatting (e.g., date to be in mmddyyyy instead of ddmmyyyy) and hence the request. This can be easily achieved by asking the source to provide the data in the requisite format. Thus, it is very important for the business analyst to dig deeper and identify the true problem area.

1. Changing needs:

Time and again, we have faced this, and there is always a dilemma as to whether a BA should accommodate or ignore the change.

How to get around this problem:

This is a perpetual problem and I am sure that there is hardly anyone in the business analyst world who has not faced this! There is no hard and fast rule to accept or reject the changes. The best way is to first understand the reason for the change. If it is regulatory then the change will most likely have to be included but at the cost of a delay in the project delivery. If it is not regulatory then a dialogue is required with the customer to understand the priority, whether it can be included in the current phase or if it could be delivered in the next phase.

Important Facts of Business Negotiation:

1. The power of body language

Using body language is as important as reading body language. Practice these guidelines until comfortable.

Feet slightly apart and planted to the floor;

Shoulders comfortably back;

Neck straight, not tilted;

Stomach in;

Arms comfortably by your side.

Develop your personality, habit and skills to impress people

1.Emotional persuasion: Making the other party understanding your feeling on an issue

1. Logical persuasion: Using a rational argument based on facts and figures
2. Bargaining: The use of variables say if you do this, we will do that. In other words it refers to the exchange of concessions to reach an agreement
3. Compromise: Agreeing to meet somewhere in between the two positions

Negotiating Through Email

*  appear to take longer than face-to-face negotiations.
*  provide less satisfaction than face-to-face negotiations.
*  are perceived as less fair than face-to-face negotiations.

Best e-mail Negotiating Practices

1. Use a ‘blended’ negotiation. Start the negotiation with a personal telephone call. Talk informally and use this as an opportunity to plan your negotiation. As the negotiation proceeds, supplement your e-mails with an occasional ‘real time’ telephone call or actual face-to-face meeting.
2. In your e-mails share personal information about yourself and invest some time developing a personal relationship with the other party. Use ‘non-task’ chatting about personal items. Maybe e-mail pictures to each other so you can see what the other person looks like.
3. Establish some common areas of interest – same professional association, same college, lived in the same state or city, etc. Discover what you have in common. The more areas of common interest the better. This helps develop trust, encourages honesty and builds rapport.
4. Try using some ‘emoticons’ (symbols to express emotion). ;-)  for wink, :-) for smile, :-I  for indifference, or   :-( for unhappy. !! can express anger, excitement, happiness as well as urgency – be careful.
5. Frequently summarize, list any concessions you have made and provide assurances: “What we have achieved so far….”  “Susan, we’ve made great progress. . .”
6. Include positive signals and refer to the relationship: “Bob, thanks for your flexibility on this issue . . .”
7. E-mails provide a wonderful way to create a record of your negotiation. Build folders for your e-mail correspondence – remember the power of record keeping.
8. Be careful when replying and forwarding e-mails. Understand the power of copying to other people (i.e. other departments, management, team members). How much information are you forwarding (e.g. just your last e-mail, or the last seven e-mails and all associated replies and attachments)? Is this what you want to do?
9. One final test – do you want to press the send button? Is this what you want to say (i.e. proof read, is the tone right)? Ask yourself, can I wait until tomorrow to send this (i.e. it might be wise to think about it overnight)? Don’t shoot off a quick reply when you are angry. Most of us live to regret it.

Put Yourself In Their Shoes:

When you are in a business or social negotiation, ask yourself three simple questions.

1. What decision do I ‘realistically’ want the other party to make?
   2. Why have they not already made that decision?
   3. What action can I take that would make it easier for them to make the decision I would like them to make?

These three questions will help you think more constructively about your own actions and how your actions can influence the decision-making process of the other party.

Ready for the Negotiation ? Now know the fact carefully, take preparation and get ready....

(I uploaded summary from my presentation at IBA, Dhaka University on TECHNIQUE OF BUSINESS NEGOTIATION)