negotiation and conflict resolution - entrepreneurship 101 (2013/2014)
DESCRIPTION
The art of negotiation touches every aspect of our lives — we routinely negotiate with our spouses, our children, our landlord, our employer, and so on. It is equally important in business — we negotiate with our customers, our suppliers and our investors. Case studies focus on situations most entrepreneurs will face: research projects, starting a business venture, obtaining investors and licensing a product or invention.TRANSCRIPT
Negotiation and Conflict Resolution
MaRS Discovery District Entrepreneurship 101 Series
February 12, 2014
Presentation by Michael Erdle
Practical Resolutions Inc.
Introduction
Negotiation
Conflict Resolution
What is Negotiation?
Negotiation is: a process.
a structured conversation.
a means to an end (agreement about something).
We do it all the time, without really thinking about it.
Basis for Negotiation
Interests
Rights
Power
Escalation
Power
Power Strategies: • Take action unilaterally • Win at all costs • Attack/Defend • Threaten • Coerce • Withdraw (Take the Ball and Go
Home) • Physical (or verbal) violence
Characteristics of Power: • Adversarial • “Win/Lose” at best • Usually “Lose/Lose” • Extremely expensive • Negative impact on future
relationships
Rights
Rights Strategies: • Contracts (guarantee the
minimum) • Policies, procedures, rules • Precedent • Past practice • Legal action • Third-party decisions
(e.g. arbitration)
Characteristics of Rights: • Adversarial • “Win/Lose” at best • Often “Lose/Lose” • Extremely expensive • Time-consuming • Impact on future relationships?
Interests
Interests Strategies: • Identify what’s really important • Dialogue about needs and wants • Honest sharing of information • Maximize results for all parties • Help everyone explore and
understand their own interests, and interests of other parties
• Needs an ongoing relationship
Characteristics of Interests: • “Win/win” process • Collaborative • Interdependent • Builds trust • Positive impact on future
relationship
Costs Go Up
Control Goes Up
Litigation
Arbitration Investigation/Fact Finding
Conciliation Mediation
Negotiation Problem Solving
Prevention
All out “War” Unilateral Action
Threats, Coercion Power
Rights
Interests
Power, Rights, Interests
The “Golden Rule”
“The Wizard of Id”, B. Parker, J. Hart
De-escalation
Duty to Negotiate in Good Faith
Obligation to respect the legitimate interests of other parties and to deal promptly, honestly, fairly and reasonably with them. Shelanu Inc. v. Print Three Franchising Corp. (Ontario Court of
Appeal)
Implied in negotiation where there is an imbalance. Wallace v. Grain Growers (Supreme Court of Canada)
Duty to Negotiate in Good Faith
Spectrum of contractual duties
Selfish Selfless
Honesty Good Faith Fiduciary Duty
Duty to Negotiate in Good Faith
Fiduciary: Trustee Corporate Director Lawyer
Good Faith: Professional Code of Ethics Contract Employee/Employer
Negotiation Steps
Distributing Value vs. Creating Value Opportunistic Problem-solving
Identify Issues What does each side want and need?
Consider Interests Common Complementary Conflicting
Effective Negotiation
Interests vs. Positions
“Needs” vs. “wants”
“Separate the People from the Problem.”
Soft on the person
Hard on the problem
Consider other Options
Effective Negotiation
Seek Objective Alternatives
Determine BATNA and WATNA
Best Alternative to Negotiated Agreement
Worst Alternative to Negotiated Agreement
Look for a “win-win” solution
Effective Negotiation
Successful relationships are built on communication and trust.
Lack of trust leads to “win-lose” or “lose-lose”.
Negotiation is one way of creating trust – or deciding whether trust is justified.
Multiple Negotiations
Selfish strategy works in a “winner take all” game.
Life is rarely like that.
Most negotiations involve a continuing relationship.
What happens if there’s a series of negotiations?
Multiple Negotiations
“Tit-for-Tat” strategy is most successful.
Four key conditions:
Nice
Retaliate
Forgiving
Generous
Multiple Negotiations
1. The player always cooperates, unless provoked.
2. The player always retaliates, if provoked.
3. The player is quick to forgive – co-operate next time.
4. The game must continue long enough for the ‘retaliation and forgiveness’ pattern to affect opponent’s behaviour.
Negotiation Styles
Focus on “winning”
Focus on relationship
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Win - Lose
Win - Win
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Focus on Rela5onship
Focus o
n Co
nten
t Negotiation Styles
Win - Lose
Win - Win
Power Ploys
Classic “Hard Bargaining” Ploys Extreme claims, small concessions
“Take it or leave it.”
Unreciprocated offers
Threats and warnings
Attacking the alternatives Good cop, bad cop
Ways to Respond
Extreme claims, small concessions Tit for Tat – make equally small concessions
“Take it or leave it.”
Make a counter offer
Offer an alternative Don’t be afraid to walk away
Ways to Respond
Unreciprocated offers Don’t negotiate against yourself
Wait for a serious counter offer
Threats and warnings
Don’t make a counter-threat Challenge the underlying assumptions
Ways to Respond
Attacking the alternatives Ask for an explanation
“Why do you have a problem with…?”
Good cop, bad cop
Negotiate with the boss Use the “good cop” to your advantage
Understanding Interests
Common Interests
Parties want the same things
E.g. company and workers both want to avoid strikes and workplace grievances (costs them both money)
Understanding Interests
Complementary Interests
Parties want different things, but they don’t conflict
E.g. company wants to increase productivity & profits; workers want better pensions
Understanding Interests
Conflicting Interests
Parties want different and incompatible things
E.g. company wants to reduce labour costs; workers want to be paid more
Negotiation Skills
Communication is the key to effective negotiation.
Assertiveness vs. Empathy
Effective negotiator is assertive and empathetic
What you say is often less important than how you say it.
Tone Body language
Negotiation Skills
Understanding and recognition do not mean compromise and concession.
“I understand” vs. “I agree”
Your own emotions and subconscious brain can hinder your ability to negotiate effectively.
Negotiation Skills
Listening Develop “active listening”
Understanding Acknowledge the other person’s perspective
Flexibility Be open to other options
Pragmatism Accept the best available option
Conflict Resolution: Match Process to Business Goals
Litigation Public
Little control over time & expense
Arbitration
Private Quicker and
cheaper?
Mediation Private
Cheaper and quicker
Control outcome
Facilitation
Informal Inexpensive
Costs Go Up
Control Goes Up
Litigation
Arbitration Investigation/Fact Finding
Conciliation Mediation
Facilitation Problem Solving
Negotiation
All out “War” Unilateral Action
Threats, Coercion Power
Rights
Interests
Power, Rights, Interests
Facilitation
Informal process
Parties control process and outcome
Facilitator ensures that all issues are addressed and all parties have an opportunity to be heard
Examples: partnering workshops; joint problem-solving; facilitated negotiations (re-negotiations)
Mediation
A more formal process of facilitated negotiation.
The Mediator guides the process and helps the parties negotiate more effectively.
The Mediator does not decide who is right or wrong.
Mediation
Interest-based Mediation Mediator is a facilitator Focus on interests, not legal rights or obligations Options for creative solutions
Evaluative Mediation Neutral evaluation Based on legal rights & obligations
Mediation
Qualities of an effective mediator: Subject area knowledge
Negotiation & mediation process skills
Lets parties make key decisions
Creative approach to the problem
Patience
Arbitration
Adversarial process.
Less formal than litigation, but need to follow procedural rules for fairness and efficiency
Not necessarily quicker or cheaper than litigation
Parties can select arbitrator with particular legal, financial or licensing expertise
Private – don’t “air dirty laundry”
Arbitration
Qualities of an effective arbitrator:
Subject matter expertise
Active control over process
Fairness and good judgment
Other Dispute Processes
Executive Committee Formal escalation process
Risk that positions become harder as they escalate Executives must remain engaged throughout the agreement
Project Umpire Can facilitate or mediate resolution of project disputes
Can also provide neutral evaluation or non-binding arbitration Umpire is engaged throughout the project
Available to deal with issues on short notice
Resources
Fischer, Ury and Patton: Getting to Yes, Penguin, 1991
Ury: Getting Past No, Bantam, 1993
Cohen: You Can Negotiate Anything, Bantam, 1980
Mnookin, Peppet and Tulumello: Beyond Winning, Harvard University Press, 2000
ADR Institute of Ontario (ADRIO) http://www.adrontario.ca/
Questions?