THE ART OF NEGOTIATION IN MEDICINE: LESSONS FROM THE BUSINESS WORLD. Course Objectives. 1- Learn to appreciate different negotiation styles

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1 THE ART OF NEGOTIATION IN MEDICINE: LESSONS FROM THE BUSINESS WORLD Armand Krikorian, MD Gopal Yadavalli, MD Kathy Corey Course Objectives 2 1- Learn to appreciate different negotiation styles 2- Gain understanding of your own negotiation style 3- Apply knowledge to residency-based vignettes

Overview 3 What is negotiation? Why negotiate? The Negotiation Process Know your negotiation style Case-Based Residency Vignette Salary negotiation What is negotiation?

2 Overview 3 What is negotiation? Why negotiate? The Negotiation Process Know your negotiation style Case-Based Residency Vignette Salary negotiation What is negotiation? 4 The process of conferring to arrive at an agreement between different parties, each with their own interests and preferences. The process in which two or more parties exchange goods or services and attempt to agree on the exchange rate for them.

3 Why negotiate? 5 To reach an agreement To beat the opposition To compromise To settle an argument To make a point To buy property, goods, The Negotiation Process 6 The most crucial variable in determining the outcome of negotiations. The five stages in the negotiation process are: 1. Planning and preparing 2. Relationship building between negotiating parties 3. Information exchange 4. Persuasion attempts 5. Concessions/ Agreement

4 The Negotiation Process 7 1. Planning and preparation: Advance planning and analysis Background research Gathering of relevant information Don t ASSUME Planning of strategies and tactics Setting objectives Predetermining possible concessions 2. Relationship building between negotiation parties: Developing trust and personal rapport Establishing long-term association 3. Information exchange: Learning about the needs and demands of the other set of negotiators Acquiring and exchanging other information 4. Persuasion Attempts: Mixture of approaches: Assertive and straightforward Warnings or threats Calculated delays 5. Concessions/Agreement: Allow each party to win Stage 1 Planning and Preparation Stage 2 Relationship Building Stage 3 Information exchange Stage 4 Persuasion Attempts Stage 5 Concessions/Agreement 8 How to Achieve an Effective Negotiation Positions People Involved Maintaining/ Increasing Competition (Win/Lose Focus) Interests Problem/Issue Decreasing/Leasing Competition (Collaborative Focus)

5 Know your negotiation style 9 The Thomas Kilmann Test Designed to measure the behavior of individuals in conflict situations. Strengths: Quick to administer, low social desirability bias Weaknesses: Less cross-cultural validity 10 High Self The different negotiating styles Assertive Competing Collaborating Assertiveness Compromising Unassertive Low Self/Other Avoiding Uncooperative Cooperativeness Accommodating Cooperative High Other

6 Know your negotiation style 11 Results: Accommodating: Dislikes the impact of differences between people on relationships Believes that self sacrifice and placing the importance of the relationship above one s goals is necessary Needs to appease others COST: lends itself to exploitation Know your negotiation style 12 Results: Competing: You see the differences between people as reflecting their skills: Some have skills, others have none. Persuasion, power and force are acceptable tools COST: Damage to long term relationship

7 Know your negotiation style 13 Results: Avoiding: Conflict is evil and perceived as a no-win situation Sense of hopelessness with all forms of negotiation and conflict Know your negotiation style 14 Results: Compromising: Everyone wins a little and loses a little Middle ground is best Never realistic for everyone to be satisfied

8 Know your negotiation style 15 Results: Collaborating: Conflicts strengthen relationships Trust is the result of solving conflicts successfully Working through differences leads to creative and effective solutions 16 Case Vignette 1: Program Administrators You have been employed as a program administrator for five years and have received minimal wage increases over this time. You have taken on added administrative responsibilities over the years. You are working hard and believe a promotion is in order. You are about to meet with your Program Director and to discuss a salary increase. You are nervous about the meeting with your PD but you are prepared.

9 17 TWO MAIN NEGOTIATION TECHNIQUES: Positional/Distributive Bargaining (or Win- Lose) Integrative Negotiation (or Win-Win) POSITIONAL BARGAINING 18 The parties view each other as adversaries Each party wants to maximize their share of the pie Only concern is the current negotiation, past and future relationship is not a concern Typical scenario: Buying a car, house, furniture

Positional Bargaining 19 Party A s aspiration range Party B s aspiration range Party A s target point Party B s resistance point Party A s resistance point Party B s target point ZOPA INTEGRATIVE

10 Positional Bargaining 19 Party A s aspiration range Party B s aspiration range Party A s target point Party B s resistance point Party A s resistance point Party B s target point ZOPA INTEGRATIVE BARGAINING 20 To create as much value as possible for BOTH sides To claim as much value as possible for your own interest Typical use in people who have a continuing relationship and common interests

11 Integrative Bargaining 21 Operates under the assumption that there exists one or more settlements that can create a win-win solution. To achieve more integrative outcomes Bargain in teams will reach more integrative agreements than bargain individually. Put more issues on the table Compromise may be your worst enemy in negotiating a win-win agreement. 22 Distributive Versus Integrative Bargaining Bargaining Characteristic Distributive Bargaining Integrative Bargaining Information sharing Low (sharing information will only allow other party to take advantage) High (sharing information will allow each party to find ways to satisfy interests of each party) Duration Short term Long term

12 23 Distributive Versus Integrative Bargaining Bargaining Characteristic Goal Distributive Bargaining Get as much of the pie Integrative Bargaining Motivation Win-Lose Win-Win Focus Positions I can t go beyond this point on this issue. Expand the pie so that both parties are satisfied Interests Can you explain why this issue is so important to you? interests Opposed Congruent Opening Offers 24 Anchoring: Let the other party make the first offer Bracketing: Make the counter offer so that the midpoint is desirable to you Wait before responding Always justify your counter offer

13 Four Core Principles BATNA ZOPA Wants Versus Needs Empathy BATNA Defined by Roger Fisher and William Ury as the Best Alternative To a Negotiated Agreement Involves knowing what you will or won t do if an agreement isn t reached Helps you gauge when to walk away and when a deal makes sense Source: Watkins, Michael. Negotiation. Boston: Harvard Business School Press, 2003.

14 Knowing Your BATNA Decide your BATNA before you enter into a negotiation; make it strong. Work to identify your counterpart s BATNA. Improve your BATNA by seeking alternatives that don t require the other side s cooperation; have less to lose. Source: Watkins, Michael. Negotiation. Boston, Massachusetts: Harvard Business School Press, Determine your BATNA If the other party withdrew from the negotiations, what would your alternative be? 2- What are the variables that can estimate your BATNA? (price, timing, office space, sign-on bonus, CME ) 3- How important is your long-term relationship with the partner? 4- How can you improve your BATNA?

15 29 TRAPS TO AVOID with a BATNA Set your BATNA before starting negotiations If you are tempted to settle for less than your BATNA, stop negotiating and go home to reassess NEVER REVEAL YOUR BATNA!! 30 GUESS THE BATNA GAME Listed price: $ 390,000 Pattern A: Offer 1: $ 310,000 Offer 2: $ 350,000 Offer 3: $ 370,000 Offer 4: $ 380,000 Pattern B: Offer 1: $ 310,000 Offer 2: $ 330,000 Offer 3: $ 350,000 Offer 4: $ 370,000 Pattern C: Offer 1: $ 310,000 Offer 2: $ 330,000 Offer 3: $ 340,000 Offer 4: $ 345,000

16 ZOPA Defined as the Zone Of Possible Agreement The set of agreements that can satisfy both sides in a negotiation Assumes overlap of needs and wants to create a range of acceptable terms Source: Watkins, Michael. Negotiation. Boston, Massachusetts: Harvard Business School Press, Creating Your ZOPA Determine your ZOPA (i.e., a high and low range of acceptable terms) before you enter into a negotiation. Work to identify your counterpart s ZOPA. Consider all elements of value to both sides; have something in reserve to sweeten a deal, if necessary. Source: Watkins, Michael. Negotiation. Boston: Harvard Business School Press, 2003.

17 Empathy Involves understanding your counterpart s view and goals. Leads to a focus on common interests and joint problem-solving. Leads to enhanced interdependence and trust. 4 Common traps to Avoid 34 Lowball offer Aimed to questioning the validity of the position Good guy/bad guy routine The Whole Pie vs. single slices or it is not over until it is over The Nibble or one last item

18 10 Points to Remember 35 1-Pick the Time and Place 2- Plan what you will say and do 3- get to the point. Do not allow side issues 4- Attack the problem- Not the person 5- Share your feelings and how you are impacted 6- No Hearsay 7- Pay attention to body language 8- Control emotions 9- Focus on the desired end 10-No monologues! Recommended Readings 36 Getting to Yes: Negotiating Agreement Without Giving In. Roger Fisher & William Ury, Penguin Non-Classics, 2 nd Edition, 1991 Harvard Business School Publishing Guide to Smart Negotiations, 2003 Secrets of Power Negotiating: Inside Secrets from a Master Negotiator. Roger Dawson, Career Press, 2010

19 37 Contact Information Armand Krikorian: Gopal Yadavalli: Kathy Corey:

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