Resource Center for Claims Professionals - www.settlementnegotiation.org
NEGOTIATION

Negotiation is the application of basic principle that we all use on daily basis. It is a problem solving process for resolving conflicts in which all parties attempt to find a solution to which all will voluntarily agree.

Fundamental Principles of Negotiation:

Focus on your target:
One of the laws of "human nature" which holds true in negotiations is that those who set and focus on the most favorable targets achieve the most favorable settlements. All offers shoudl be based on sound information. The psychology of negotiation is that typically, the initial settlment offer should leave "negotiating" room. By setting a favorable resolution target within the settlement range, and by making an initial offer that leaves aadequate negotiating room. The adversary should be encouraged to make a more realistic assessment of the value of the case. The negotiator's ability to focus on the settlement target often influences the perceptions and expectiations of the other negotiator. The negotiation plan should be executed within the parameters of the strategy established.

Manage Information Skillfully:
Managing information means planning and preparing before the negotiation, which will empower the negotiator.

Position Your Theme Advantageously:
Positioning your theme allows you to frame the issues being negotiated in a fair yet empowering way. Effective negotiators create a clear theme that accurately reflects their position. What critical and key facts are the most favorable from whic you can construct your theme? Positioning is most effective when the theme is both compeelling and reated often. The negotiator who can continually return the discussion to his/her most favorable issue is far more likely to create advantages in the negotiation.

Know and Maintain Your Power:
Negotiations center around power. To be successful in a negotiation, you must recognize and develop all of your sources of power. When you have confidence and are fully aware of your power, you are able to act with the level of conviction and resolve necessary to persude other negotiators and produce fair and favorable settlements.

Power can be either good or bad. Power should be used in an eghical, professional, non-punitive way to move the negotiation toward mutually acceptable closure.

Your power can come from information, being prepared, your negotiation skills, the strength of the case, or your personal resolve and motivation.

Emphasize Needs Over Wants:
Try to become attuned to the needs that may underlie the opposing party's demand. Do not be swayed by the opposing party's posturing or unreasonably high demands. Determine the value of the case based on the facts rather than the demands of the opposing party. Do not assume that the other party's position lacks merit. Again, probe what, if anything is the demand based on. Be alert and listen actively to uncover information. The art of negotiation is the ability to peel away layers of information, which reside between opening demands, and mutually acceptabel settlements.

Concede Strategically:
Concessions are the compromises you make after your opening offer to move the negotiation forward. To concede strategically means to develop a plan that manages the concession process that will enable the negotiator to exert control over the negotiation process and outcome. Your concession pattern sends a message: so make sure that the way you make a concession sends the right message. Don't make unnecessary concessions. De-escalate the concession process. Each one should be less than the previous one. When you do make a concession, do it slowly, and make sure you get a concession in return.
 
 

Powerful Tips - A quick reference guide from Batna.com

If a negotiation is a test, this is the one-page cheat sheet you're allowed to bring with you.  Thorough preparation and practice are the real keys to success.

1. Your power lies in your walk-away alternatives.  Make sure that you have real, viable options that don't require an agreement: 

  • You'll be empowered to support your interests. 
  • Your confident attitude will compel others to listen to and meet your interests.  They'll realize that they have to if they intend to obtain agreement.
2. Do not disclose your walk-away alternatives.   When you remind others of the options you have should they not acceptably satisfy your needs, your commitment to negotiation falls into question, and the environment becomes hostile.  This draws the attention away from underlying needs, and the climate becomes less conducive to the development of creative options. 

3. Figure out the walk-away alternatives of the other parties.  Knowing what options they have if no agreement is reached will help you construct options that are favorable relative to their specific negotiation. In other words, you'll be able to construct an agreement that improves on their alternativesæa fair agreementæwithout giving away too much.

4. No offer is too high.  Any offer is valid provided you can present objective criteria that prove each term of the offer fills to some extent the underlying needs of all parties. 

5. Don't react emotionally.  When you encounter tactics intended to intimidate, rush, draw out discussions, or otherwise derail the focus from underlying needs and mutual gain, patiently react to the problem at hand:  The discussion needs to be refocused.  Draw attention back to substantive interests and options that fairly address those interests.  Use personal attacks as a signal that it's time to reestablish everyone's commitment to a mutually beneficial outcome. 

6. Remember that all the needs presented are not of equal importance.  Focus time on building an understanding of which needs are most likely to influence the outcome.  Strive to create options that satisfy those interests. 

7. Listen more than you talk.  As a listener, you are gathering information that can help you figure out which of the other side's needs must be met for an agreement to be considered acceptable, and to what degree those needs will have to be met.  Listening gives you the advantage.  The better your understanding, the more flexibility and creativity you'll have as you create options.  Talking gives this advantage to the other side. 

8. Know the authority of each person in the room.  Make sure you know whether or not you are negotiating with someone empowered to make the final decision.  If you aren't, make sure you present options in such a way that they meet the perceived needs of the negotiator and the other members of their organization. 

9. Analyze concessions.  Look for patterns in the types of concessions made by the other parties, and be attentive to the messages sent by your concessions: 

  • Small concessions give the impression that the bottom line is not far off. 
  • Large concessions indicate that a lot more can still be conceded before the bottom line is reached. 
  • Rapid or large concessions undermine the credibility of the initial offer. 
  • All concessions teach the lesson that more concessions will be made. Never make concessions expecting that the other side will meet your terms on the next issue.  On the contrary, they will expect more concessions.  Remember:  When the other side makes a concession on the terms of a specific issue, it is statistically certain that a second concession on the same issue can be secured.
10. Never be bludgeoned into splitting the difference.  When an apparent impasse has been reached, splitting the difference is widely regarded as the ultimate fair solution.  But the suggestion to split the difference is often used to induce guilt.  Guilt is likely to lead to concessions on your partæmaybe even concessions that lead to an outcome worse for you than splitting the difference.  Additionally, splitting the difference rarely results in an outcome that surpasses anyone's expectations, and it does not ensure that the interests of all parties are satisfied. 

Distinguish between interests and positions
The classic story to illustrate this describes two sisters fighting over the only orange in the family larder. Each sister must have the entire orange for herself, any less is impossible. A wise parent asks each of the girls (in private) why she wants the orange. One explains she wants to drink the juice; the other wants to use the rind to cook a pudding. What each sister wants is her position, why she wants it is her interest. In this case, the simple solution is to give the cook the rind after the juice has been squeezed for the thirsty sister - thus meeting the interests of both.
Read "Focusing On Interests Rather Than Positions Conflict Resolution Key"
"Problem Solving and Conflict Resolution - PHILEMON"

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