Principled Negotiation

Principled-Negotiation-postIn their book Getting to Yes Roger Fisher and William Ury outline a negotiation philosophy and technique that is interest focused, rather than positional, to emphasis discussion of needs that must be satisfied if the parties are to find a long term satisfying solution.

The five basic principles are:

1)         Separate the people from the problem

As Robert Cialdini observed in his influential book Influence – The Art of Persuasion we are much more likely to cooperate and comply with requests from people whom we like and with whom we feel we have something in common. Separating the people from the problem addresses that observation, but from the opposite viewpoint. Unless we can put aside animosity or dislike between ourselves and the other person, we are less likely to find and maintain a long term solution to the problem at hand.

Also, if we focus on the issues rather than the person it is less likely that we will unintentionally offend the other person and cause an unnecessary barrier to reaching agreement. By critiquing the ideas and not the person themselves we increase the likelihood of useful discussion and ultimately finding a mutually acceptable solution.

2)         Focus on interests not positions/ problems

When the Landlord states that he wants $15 per square foot plus common area costs and the prospective tenant counters with $10 per square foot plus common area costs, the stage is set. What happens next could be the difference between the tenant moving in or moving on.

The key question is AWhy@ ?

Why $15 per square foot – why not $14.00 or $16.00?

Why $10 per square foot – why not $9 or $11?

Would it make any difference if the tenant were to know that the Landlord needs to show rents of $15 per square foot because that is the number his mortgage company requires as a minimum to renew and maintain his mortgage and loans? Also that the Landlord was just concluded negotiations with a new tenant who had been offered a lease rate of $16.00 per square foot.

What difference would it make to the Landlord if he was to learn that the Tenant chose $10 per square foot because he anticipates having to spend $25 per square foot in lease hold improvements in order to be able to conduct business from the space during an initial 5 year lease term. What effect would it have if the Landlord were to also know that the Tenants next door neighbor recently renewed a lease in the adjacent Mall for $10 per square foot or that the Tenants business Plan to the Bank required a rent of $10 per square foot for the first two years in order to be viable.

I think you agree that this is all useful information – information that could contain the kernel of a mutually satisfactory agreement that would meet the needs behind the stated interests.

3)         Invent / uncover options for mutual gain

In the above example he Landlord and Tenant both have an interest in closing the lease deal – the Landlord wants a Tenant and the Tenant wants a viable business. It would not take much >brainstorming= to realize that if the Landlord were to finance the tenants leasehold improvements at  its preferred commercial rate , which may be as much a s couple of interest points below any interest rate available to the Tenant, both parties will get their needs met. The option – discovery stage is an open brainstorming session in which both parties find possible options and do not conduct any evaluation of them until after their thoughts have been exhausted. Here again the first guideline of A Separate the people from the problem A is important so that rejection of any given idea does not cause hard feelings or animosity (When involved in these situations I suggest that neither party claim any ownership in an idea so that neither is bound or obligated to accept or reject an option based on who came up with the idea).

4)         Jointly define objective criteria for evaluating each option / possible solution

In order to be believable any option needs to have a standard against which it can be evaluated. Many times a party in mediation arrives at a solution but is unable to authenticate it.

If I were to say that I wanted $40,000.00 for my car you might say that it was a lot of money. If, however, I was to show that I arrived at that figure because two car dealers had sold the same model for $45,000.00, that a used car guide had valued the vehicle at between $38,000 – $42,000.00 and that one had sold in the Auto Trader for $38,000.00 (but it had cloth seats instead of the leather seats in my vehicle) you now understand how I came to $40,000.00 as my asking price. You may not agree with my asking price (as a buyer you rarely will!) but you have standards to objectively evaluate my price and settle any disagreement.

5)         Know your WATNA / BATNA

Sometimes no agreement is the best agreement. negotiation and mediation (unlike litigation) do not require a party to accept a solution that does not meet their needs. In order to evaluate when to accept or decline an overall solution you must have given some thought to the following questions:

What is the best outcome I could realistically expect if this negotiation / mediation were not to result in an agreement? (BATNA)

What is the worst outcome I could reasonably expect if the negotiation / mediation were not to result in an agreement? (WATNA)

You should only accept something that is better than your WATNA and would be a fool to decline anything better than your BATNA.

Your realistic agreement terms might lie between the BATNA and WATNA. .

It is also useful to conduct, as best as you are able, the same exercise by >stepping into the other party=s shoes=. This will allow you to have some idea of the range of possible solutions the other party might accept. And avoid an offer that is better than their BATNA.

If you use these five principles or guidelines you will be practicing a technique known as Principled Negotiation. By having a logical approach to your negotiations and being able to justify the options that meet both party=s needs you will have greater success and better business and personal relationships. Even if this is a one – off negotiation, which very few are so never burn bridges because you never know when you might meet the same person again, if the other party understands the basis of the options you would like implemented and perceives you as someone who is both trustworthy and rational you will have more success in getting agreement and avoiding failure in reaching settlement / agreement or even costly litigation.

0 Comments