Fundamentals of Negotiation
(lecture outline accompanying PowerPoint presentation)
Supplemented by Workshop Exercise Scenarios
Edited for web page 16 July 1999
Dennis L. Hufford
CDR, MC, USN
Faculty Development Fellowship
Madigan Army Medical Center
This is the crux of the issue. The goal of negotiation is mutual success of both parties in meeting their needs. It is contrasted with competition, in which one side wins, the other loses.
You may want or need to enter into future negotiations with the same or related parties. Building a good relationship facilitates effective future negotiations.
When to Negotiate?
Your offer/counteroffer should make sense, and be supportable with facts.
Both sides must have some room to maneuver, or else youíre dealing with an ultimatum: "Take it or leave it"
When to NOT Negotiate:
You may occupy any or all of these roles at various times in your career.
Your role determines:
Preparing to Negotiate
For each issue, you need to determine your minimum acceptable value (a.k.a. "your bottom line"), your best-possible (realistic) value, and your target value, somewhere between the first two.
Decide beforehand what your negotiation ranges are for each of your issues, and which issues are most important. Concentrate on getting at least your target values on the most important issues. That allows you more flexibility with the less important issues. Develop your justifications for the most important issues.
Strive to remain calm, diplomatic, and principled throughout, no matter what the other side does or says. Anticipate problem areas. Never resort to attacking the other party or third parties. It simply doesnít work!
The Negotiation Process
Seek to understand the other partyís position/situation. Explain yours.
Use open-ended questions to force other party to explain their position. Answer their questions truthfully and with enough factual detail to allow them to understand.
While "all your cards" need not be revealed at the onset, it is important that the other side understand your position and objectives. All critical factors need to be laid out fairly early if the other side is to understand you. Otherwise, they will not have the opportunity to consider your concerns.
Avoid "sandbagging", that is, holding back crucial facts until late in the negotiation. That tactic reveals insincerity on your part, and will cause mistrust and resentment in the other party.
Either party may make the opening offer. If you are well prepared, it really should not matter to you who goes first. If the other partyís opening offer in completely unrealistic, DO NOT make an immediate counteroffer. (It legitimizes their offer.) Rather, question them about their rationale, their justifications, and their true objectives. Give them the opportunity (and firmly state your expectation for them) to adjust their initial offer into the "realistic" range. If they refuse, it may be a signal that youíre in a no-win situation and are better off terminating the negotiation. If they improve their first offer, THEN you may counter.
Calculate your first offer based on what youíve learned about the other partyís objectives. You may consider making your first offer (or counteroffer) toward the high end of your range, so that compromise may move toward your target objectives. However, this tactic may require that you justify your high end offer! And if you cannot justify it, you lose credibility.
Track achievement of both partiesí critical objectives as you go. Comparing the "scorecard" facilitates compromise on more difficult issues.
How do you know when youíre done?
Options in this case are renegotiate or fall back on your BATNA.
Remember, if you canít justify a position, you lose credibility.
Show up on time, ready to start. Arriving late shows insincerity and a lack of respect for the other party. Third parties, attorneys, or other experts may join you if both sides agreed upon this beforehand. Donít surprise them, or accept their surprises.
Itís OK to strike a tough bargain, as long as trust and mutual respect are preserved. If one side is plundered so as to make future negotiations more difficult, you risk missing future opportunities.
Nothing destroys a negotiation faster than the words: "Great, we have a deal, as long as my boss approves it!" That proves the WRONG people were at the table in the first place!
1. Belzer, Ellen. The Family Physicians Guide to Bargaining and Deal Making: How to Negotiate Better Agreements. AAFP Managed Care and Practice Enhancement Forum, AAFP Scientific Assembly, 18 September 1998.
-syllabus in my officeÖexcellent overview of the negotiation process incl. 2 Belzer articles published in Family Practice Management. She is a "guru" for the AAFP in this area.
2. Belzer, Ellen. Becoming an Effective Negotiator. AAFP Monograph Series: From Residency to Reality, Series I, No. 4, 1997. p. 2-9.
-Residents: you should have this one on your shelf already, available through AAFP.
3. Nelson, Debra L, and James C. Quick. Organizational Behavior: Foundations, Realities, and Challenges. St. Paul: West Publishing Company, 1997, p. 395-7.
-Short textbook treatise on the subject.