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2 MBO Defined: Process in which management and employees jointly define objectives for their organization and understand what they need to do to achieve those objectives. Clear understanding of roles and responsibilities/expectations Activities are related and quantified to the achievement of the organization s goal Culture Clash I think the career of DPPO is terminated, or rather that it has never started, and it won t ever start as long as we in France continue our tendency to [confuse] ideology [with] reality French blue and white collar workers, lower-level and higher-level managers, and patrons all belong to the same cultural system which maintains dependency relations from level to level. Only deviants really dislike the system. The hierarchical structure protects against anxiety. DPO generates anxiety. From French Management Journal 4

3 Elements of National Culture High versus Low Power Distance Individualism versus Collectivism Masculinity versus Femininity Uncertainty Avoidance Long versus Short Term Orientation Elements of Organization Culture Means versus Goal-Oriented Internally versus Externally Driven Easygoing versus Strict Work Discipline Open System versus Closed System Employee Oriented versus Work Oriented Degree of Acceptance of Leadership Style Degree of Identification with your Organization From Hofstede, Hofstede and Minkov, Cultures and Organization 5

4 Role of Time Trust: How quick, institutional surveillance Direct versus Indirect Communication High context versus Low context Analytical, Linear, Holistic Role of Power/Hierarchy 6

5 Collective Bargaining with Unions Conflict Resolution Negotiation Skills Today s Workshop 7

6 What is Conflict? Struggle resulting from the perception that one s needs are incompatible with others. Often these needs relate to goals and resources. Where is Conflict? Is Conflict Good or Bad? Goals of Conflict Management? 8

7 An interactive communication process that can be used to get something from someone else when they are trying to do the same Key Words: Interactive Communication Process To get something from the other, vice-versa When Do We Negotiate? When Do We Refuse to Negotiate? 10

8 Use of Authority? Collective Bargaining Coaching Party to manage own conflict Where Does Negotiation Come In? A meeting between conflicting parties Corporate Dispute Resolution Systems Lawsuit 11

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10 Reality = Facts, Alternatives, Dependence on each other Psychological = Everything Else (almost) 20 Reality Emotion 80 Negotiator Challenge How to Balance 13

11 Deeply imbedded psychological concept that the result is consistent with sense of rightness, fairness, shouldness Examples Means to Achieve Ego Winning Did a good job Social Legitimacy Beat Expectations Other? Anchoring Reciprocity Contrast Principle Commitment Liking Power Plays Negotiator Challenge How to Balance 14

12 Power/Dependence Formal Authority Ability to give or take away Legal Rights Power to walk away Same questions for them Influence When need commitment; power not enough When you need them to say yes When you want/need more than power can give Negotiator Challenge How to Balance 15

13 Deeply imbedded psychological concept that the result is consistent with sense of rightness, fairness, shouldness Examples Means to Achieve Ego Winning Did a good job Social Legitimacy Beat Expectations Other? Anchoring Reciprocity Contrast Principle Commitment Liking Fear; Power Plays Negotiator Challenge How to Balance 16

14 What is an Argument? A series of statements intended to be given in a coherent, logical, and compelling manner in order to persuade Individuals most common experiences of an Argument: -Personal Relationships -Politics -Legal Cases (for lawyers in the audience) Who is the audience? What if you need the other to agree? Where is Argument in Negotiations? Only one part of the effort to persuade We tend to spend too much time thinking and arguing our own needs/views and defending our position from attack. This is not the sign of an effective negotiator. Negotiator Challenge How to Balance 17

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16 1. Strategy (Before you get to the table) 2. Tactics (At the table) Effective Negotiations 19

17 Preparation Strategy : Shoe Repair Did you figure out your goal/target price to sell (or buy) the Shoe Repair Shop? If so, what was it and on what was it based? If not, why not? Did you figure out what was the most you would pay (or least you would take)? If so, what was it? If not, why not? Did you consider what the other s sides lowest (or highest) price they would pay or take? If so, what did you estimate? If not, why not? BATNA- Best Alternative To a Negotiated Agreement Did you consider what your options were if you could not get a deal? If so, what were they? How did this impact bargaining? Same questions for the other side. If you had more time to prepare for this negotiation, what additional research would you have done? Why (how could it help)? Preparation of Tactics Did you consider if you wanted to begin negotiations with an offer/demand or let the other side go first? Or did you decide to ask questions? Discuss your interests? Why did you choose this approach? 20

18 : Shoe Repair Negotiations At the Table How did you actually start negotiations? Discussion of your/other party s interests? Questions? A demand by potential seller (Zapatos)? An offer by potential buyer (Garcia)? Was there information that you learned over the course of the negotiation that changed your view of what you were willing to sell for/buy at? If so, what was the information and how did you learn it? What was the other side s primary interest or interests? What was the result of the negotiation? If agreement, what were the terms? If you did not reach agreement, why not? 21

19 Reservation Price is the least favorable deal that you are willing to accept, e.g., for a buyer it s the highest price he or she will buy, for the seller the lowest price he or she will sell Resistance Point is the same thing for non-monetary items, e.g., the least favorable deal on an item you would accept This is your bottom line and should be based on the sum of your preparation, particularly, your BATNA You should avoid changing your bottom line unless something has changed, e.g., power analysis, view of standards and norms, new information 22

20 External, objective criteria a party uses (consciously or unconsciously) to establish and justify its position and evaluate the other side s, e.g., the CPI and market rates are standards used to establish sale price Parties attempt to obtain a combination of what they view (a) is possible and (b) as fair. Fairness is based on external standards and norms, and often so is one s view of what is possible e.g., no one else is getting/giving that, how/why should/can we! Parties that have a desire to reach an agreement can often appeal to standards and norms to bridge differences e.g., agreeing on a reasonable cost target based on research of costs in surrounding areas Where a party does not want to reach an agreement, it may seem as if that party has completely alien standards and norms e.g., when one party s BATNA is so favorable it is just going to do what it wants but even then they are referencing some standard and norm. 23

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22 Walkaway Point/ Target Point Asking Asking Price Walkaway Point Target Point Asking Price/Anchor Reservation Price $4 $8 $10 $4 $8 $10 $10 $7.50 $9 Offer Price/ Target Point Walkaway Point Anchor 25

23 Walkaway Point/ Target Point Asking Asking Price Walkaway Point Target Point Asking Price/Anchor Reservation Price $6 $8 $10 $6 $8 $10 $3 $4 $5 Offer Price/ Target Point Walkaway Point Anchor 26

24 Sales 25% 75% Preparation Execution 27

25 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 28

26 Where does agreement come from How do you come to Agreement The Negotiation Process Relative perceptions about power- BATNA Belief by the other side they have achieved better than their perception of their alternatives The Negotiation Process has unfolded in a way that conforms with their sense of fairness", or rightness or shouldness The End Result is consistent with their fairness", or rightness or shouldness 1. Maximize perception of positive/negative leverage 2. Enhance Normative Leverage a. Persuasive positioning of credible standards and norms b. Anchoring c. Use of reciprocity principle d. Use of consistency principle e. Over commitment f. Use of authority fairness; or other normative principles g. Misdirection/manipulation 3. Focus on Interests Not Positions 4. Understanding role of Ego, Emotion and Ideology on Both Sides 5. Bargaining Styles 6. Trust and Relationships 7. Communication Skills 8. Timing and Sequence 1. Exchanging Information 2. Openings Theme, Tone, Objectives 3. Questioning/Problem-Solving vs. Offers and Argument 4. Pacing and Timing 5. Closing and Gaining Commitment 26

27 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 27

28 Based on Key Business/ Organizational Needs Compelling Rationale Based on Data 28

29 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 29

30 Position Interest One possible answer to a problem that is usually unsatisfactory or unacceptable to the other party. An interest is the underlying reason, concern or desire of the person s or group s connection with the issue. Positions are often mutually inconsistent where the underlying interest is not. 30

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32 Information about the other side can benefit you. Learn as much as possible about the other side's circumstances and preferences-including why they want to make a deal, their real interests and business constraints, and their preferences among issues or options. Harvard Business Essentials: Negotiation (2003), p.4 32

33 Many negotiations combine distributive and integrative elements: Negotiators must be able to recognize situations that require more of one approach than the other Increase Integrative Pie-Expanding solutions by focusing on interests and increasing the number of issues to negotiate Negotiators must be versatile in their use of both major strategic approaches Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive than they really are 33

34 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 34

35 Bargaining Objectives Underlying Interests Other Side s Bargaining Objectives Underlying Other Side s Interests 35

36 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 36

37 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 37

38 1. Survey the applicable standards and norms. 2. Identify the ones the other party views as legitimate. Prepare supporting data and arguments. 3. Anticipate the arguments the other side will make. 4. Prepare a positioning theme and anticipate the other side s. 5. If necessary, consider making your arguments before a sympathetic audience (as practice) 38

39 Your objectives Your Targets vs. Bottom Lines The other side s objectives Standards and Norms Identifying Underlying Interests Common and Uncommon Can you change the BATNAS Identifying Alternatives and Linkages Each side s BATNA 39

40 Target Bottom Lines AMBITION BATNA 40

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42 Goals Reservation price/resistance points BATNA Type of negotiation Standards and norms Plan to open Outcome of negotiation and why Dislike or distrust as a factor 42

43 Where does agreement come from How do you come to Agreement The Negotiation Process Relative perceptions about power- BATNA Belief by the other side they have achieved better than their perception of their alternatives The Negotiation Process has unfolded in a way that conforms with their sense of fairness", or rightness or shouldness The End Result is consistent with their fairness", or rightness or shouldness 1. Maximize perception of positive/negative leverage 2. Enhance Normative Leverage a. Persuasive positioning of credible standards and norms b. Anchoring c. Use of reciprocity principle d. Use of consistency principle e. Over commitment f. Use of authority fairness; or other normative principles g. Misdirection/manipulation 3. Focus on Interests Not Positions 4. Understanding role of Ego, Emotion and Ideology on Both Sides 5. Bargaining Styles 6. Trust and Relationships 7. Communication Skills 8. Timing and Sequence 1. Exchanging Information 2. Openings Theme, Tone, Objectives 3. Questioning/Problem-Solving vs. Offers and Argument 4. Pacing and Timing 5. Closing and Gaining Commitment 43