HOSPITALITY
SALES MANAGEMENT
HA
-400
By: Dr. Richard G. McNeill
MORE
ON NEGOTIATIONS
Introduction
Hopefully, you will be able to apply these general principles for interviewing.
See Web Site for Power Point
Presentation – On Negotiations
Go to: http://jan.ucc.nau.edu/~rgm/ha400/class/PowerPoint/index.htm
A Basic Map to the Negotiations
Process
Here is a “side-by-side” map of both the Negotiations Process and the Buying/Selling Process. Note the similarities. The point is that during negotiations, selling, or any form of influencing, you should be aware that a process is taking place. Use this as a guide to keep yourself on track.
The
Buying/Selling Exchange Process & The Negotiation Process
|
The Buying/Selling
Exchange Process |
The Negotiation Process |
|
Phase One – Pre-Sales
Strategy: Planning and Preparation Step
One – Understanding Sales Process Step
Two – Research Potential Customer Step Three – Choose Selling Strategy/Tactics |
Phase One – Pre-Negotiation Strategy : Planning and Preparation Step
One–Understanding Negotiation Process Step
Two – Research Opposing Party Step Three – Negotiation Strategy/Tactics |
|
Phase Two – Sales Process
Strategy Step One - Approaching the Buyer Step Two - Investigating Needs Step Three - Demonstrating Capability Step Four - Negotiating Concerns Step Five - Gaining Commitment |
Phase Two – Negotiation
Process Strategy Step One – Opening Step Two - Exploring Step Three – Proposing Agreement Step Four – Clarifying Proposal Step Five - Gaining Commitment |
|
Phase Three – Post-Sales
Strategy Step One - After-Sale Implementation Step
Two - Maintenance & Development
Step Three - Continuous Improvement |
Phase Three – Post-Negotiation
Strategy Step One - Implementing Agreement Step Two - Conducting Self-Critique |
Mapping Out the Way to a Negotiation
Agreement
There are five important points along the way to a mutually satisfactory agreement: (1) Interests, (2) Options for satisfying those interests, (3) Standards for resolving differences fairly, (4) Alternatives to negotiation (BATNA), and (5) Proposals for agreement*.
1. Interests. Negotiation typically begins when one side’s position comes into conflict with the other side’s. In conventional bargaining (Competitive Negotiation Strategy), your Position may be all you need to know in advance of the negotiation session. However, joint-problem solving (Collaborative Negotiation Strategy) revolves around the Interests that lie behind each side’s Positions. The distinction is critical: Your position is the concrete things you say you want- the dollars and cents, the terms and conditions. Your interests are the intangible motivations that lead you to take that position-your real and basic needs, desires, concerns, fears, and aspirations. In order to end up with an agreement that satisfies both sides, you need to begin by figuring out each side’s interests. This is done in the Preparation Phase of the Negotiations Process.
Figure out your interests. Unless you know where you want to go, you’re unlikely to get there. It’s important to rank your interests so that you don’t make the all-too-common mistake of trading off an important interest for a less important one.
Figure out their interests. Negotiation is a two-way street. You usually can’t satisfy your interests unless you also satisfy the other side’s. It is therefore just as important to understand their interests as your own.
The single most important skill in negotiation is the ability to put yourself in the other side’s shoes. I you are trying to change their thinking, you need to begin by understanding what their thinking is.
2. Options. The purpose of identifying each side’s interests is to see if you can devise creative options to satisfy them. An option is a possible agreement or part of an agreement. Inventing options for mutual gain is a negotiator’s single greatest opportunity. Effective negotiators do no just divvy up a fixed pie. They first explore how to expand the pie.
While it may not be possible to obtain your Position, it is often possible to satisfy your Interests. You may not succeed in obtaining the 30% salary increase [a Position of Hope], but you may invent an option that allows you to realize a cost of living gains [Interest] while keeping your employer satisfied.
A common negotiation mistake is to dwell on a single solution – your original Position. By opening yourself up to consideration of a multitude of options, you may generate new possibilities, one of which might meet your Interests while also satisfying the other side. The biggest obstacle in the way of generating creative options is a little voice in the back of our heads that is always saying, “That won’t work!”
In the Preparation Phase of Negotiation Process, plan to be flexible in searching for options that can satisfy your Interests. Don’t be fixated on preconceived Positions.
3. Standards. Once you have expanded the pie (created Options), you need to think about how to divide it up. How will you jointly select an Option (decide among the many created options) with the other side when your interests seem to be opposed? Your employer wants to pay you less for your work; your would like them to pay more. How do you resolve the issue?
Perhaps the most common method is to use a contest of wills (The Battle of Positions and classic Competitive Negotiation Strategy). . Each side insists on its position, trying to get the other to give in. The problem is that nobody likes to give in. A contest of wills thus quickly becomes a conflict of egos. The person who eventually gives in remembers it and tries to even the score the next time--if there is a next time.
Successful negotiators head off a contest of wills by turning the selection process (searching and deciding on a mutually satisfactory Option) into a joint search for a fair and mutually satisfactory solution. They rely heavily on fair Standards independent of either side’s will (Position).
An independent Standard is a measuring stick that allows you to decide what is a fair solution. Common standards are:
a. Market Value
b. Equal Treatment
c. The Law
d. Common Precedents – the way the issue has been resolved before.
The great virtue of standards is that instead of one side giving in to the other on a particular point, both can defer to what seems fair. It is easier for your client to accept a standard like market rate that it is to pay a certain fee or salary just because you say that’s what you charge or want.
So think in advance (Preparations Phase of the Negotiation Process) about what standards you could appeal to in your negotiation. Do your homework on going salaries, market rates, scientific criteria, costs, technical measures, and precedents.
Think how you and the other party to the negotiation can openly agree upon the Standards that you will use during the negotiation. This might be a bit uncomfortable, but having standards, will usually guide negotiations to a more satisfactory outcome.
4. Alternatives. Here we are speaking of alternatives available to us to satisfy our Interests. Negotiation is only one way to satisfy interests. All too often people go into a negotiation looking for agreement and examine their alternatives only if things go badly. This is a classic mistake. Knowing what your alternatives are can determine your success in satisfying your interests. We are talking about knowing your BATNA (Best Alternative to a Negotiated Agreement).
The purpose of negotiation is not always to reach agreement. For agreement is only a means to an end, and that end is to satisfy your interests. The purpose of negotiation is to explore whether you can satisfy your interests better through an agreement ha you could by pursuing your BATNA (Best Alternative to a Negotiated Agreement).
BATNA is your walk-away alternative. It is your Plan B. It is your best course of action for satisfying your interest without the other parties’ agreement. BATNA is the key to negotiating power. Your power depends less on whether you are bigger, stronger, more senior, or richer than the other person. Your power depends on how good your BATNA is. If you have a viable alternative, then you have leverage in the negotiation. The better your BATNA, the more power you have.
Identify Your BATNA. Your BATNA should be your measuring stick for evaluating any potential agreement. To identify your BATNA, you should consider three kinds of alternatives:
a.
First, what can you do all by yourself to pursue your interests? Depending upon your role and circumstances,
your walk-away alternative may be
to find another job or supplier or customer.
b. Second, what can you do directly to the other side (other party in the negotiation) to make them respect your interests? Go on strike, go to war, accept a competitor’s offer, etc. But, REMEMBER NOT TO THREATEN! Threatening someone usually causes them to resist based solely on principle. Gently let them know the facts of life. They can draw their own conclusions.
c. Third, how can you bring a third party into the situation to further your interests? Your “third-party” alternative may be to resort to mediation, arbitration, or court.
After generating a set of possible BATNAs, select the one that is most likely to satisfy your interests. Keep this BATNA in your pocket. When you’re under heavy attack in the negotiation and feel panicky, you can pat your pocket and say to yourself, “I’m okay if it (the negotiation) doesn’t go okay.”
Decide If You Should Negotiate At All. After formulating your BATNA, this should be your next question. Why negotiate if there is a better way to satisfy your interests? Remember that BATNA stands for Best Alternative to a Negotiated Agreement. You might decide that your BATNA provides a better solution than a negotiation could provide.
But, keep in mind that it is easy to overestimate how good your BATNA really is. If you know in advance (Preparation Phase of the Negotiation Process) that your BATNA is not all that strong, then negotiations might be the best way to attempt to satisfy your interests.
Identify their BATNA. Knowing the other side’s (to the negotiation) BATNA, can be just as important as knowing your own. It gives you an idea of the challenge your face: developing options for negotiation agreement that will exceed their BATNA. Make sure that you avoid the dual mistakes of: (a) underestimating and (b) overestimating. Don’t underestimate or overestimate the strength of their or your BATNA. Your BATNA may be weak/strong and so may theirs be weak/strong. Know the true situation.
5. Proposals.
Your earlier work on interests
and options opens up the challenge
of creating a solution (agreement) that will satisfy the interests to both
sides of the negotiation. Your list of potential options to mutually satisfy
the interests of both parties helps to design a proposal.
A proposal is a description of a final but tentative solution (agreement) that might satisfy the interests of both parties to the negotiation. It is potential and tentative because it is a summary agreement laid before both parties and asks to be agreed to. A proposal is a possible agreement to which both parties are asked to say YES.
If the proposal is agreed to (both parties say yes), then it automatically becomes a contract either formal or informal. Both parties are expected to abide by its terms. Obviously, some contracts (agreed upon proposals) are more legally binding than others, however, our general moral values operate on the law of what is fair and honest. Thus, one’s word should be his/her bond.
For example, during an interview for a job, if the employers lays out a proposal of salary, starting date, etc. and you agree, both you and the employer are expected to abide by this agreement. In a selling situation, a tentative proposal is laid out after all parties have previously discussed it. If both parties say yes, the proposal becomes a contract. If no, the deal does not go through. If, maybe, the proposal is discussed further until both parties can firmly commit to a yes or no.
When deciding if you will say yes or no to a tentative proposal, it is usefully to have three comparison (ideal) proposals in mind. This will help you gauge whether or not the actual proposal laid out before you truly satisfies your interests.
a. Comparison Proposal # 1 – What Do You Aspire to? Many of us tend to adopt rather modest goals, with to avoid “failing.” Unfortunately, low aspiration tend to be self-fulfilling. What you don’t ask for, the other side is unlikely to give you. Not surprisingly, those who begin with realistically high aspirations often end up with better agreements. How high is realistic: Realistic means within the bounds set by fairness and by the other side’s BATNA. Aim high.
b. Comparison Proposal # 2 – What Would You Be Content With? Often you may not get everything you would like. It is therefore useful to ask yourself a second question: “What agreement, perhaps far from perfect, would still satisfy my basic interests sufficiently that I would be reasonably content?”
c. Comparison Proposal # 3 – What Could You Live With? This third proposal should be based directly on you assessment of you BATNA: “What agreement would satisfy my interest only marginally better than my BATNA could? What agreement could I live with, but just barely?” If you can’t in the end obtain an agreement at least as good as that, you should consider walking away form the table and resorting to your alternative (BATNA). This proposal will function like a trip wire, reminding you that you are n danger of accepting an agreement worse for you than your BATNA
Think of the three above comparison proposals not as rigid Positions, but as concrete illustrations of the kinds of outcomes that would satisfy your interests. They really are potential Scenarios or various imagined situations.
Use these comparison proposals to judge the acceptability of the actual proposal that is laid out before you. Based on these three comparative proposals, you are in a position to either say yes, no, or maybe.
If maybe, you begin to discuss again the terms and conditions of the actual proposal. You cannot know for certain that the other side may or may not accept any of the comparison proposal scenarios that you use to improve the chances of achieving your interests.
* Source:
Ury, William. (1991).Getting Past No:
Negotiating Your Way From Confrontation To Cooperation.
Note: William Ury is coauthor of Getting To Yes and
a founder of the Program on Negotiation (PON) at