1 NEGOTIATION SKILLS William A. Burgess, SIOR, CCIM The Burgess Company, LLC Greenville, SC

2 What we will cover: Defining the Negotiation ProcessCritical Variables Preparation “Secrets” Time as a “Game Changer” Negotiating Strategies and Counter-Strategies Class Case Study Negotiations

3 “NEGOTIATIONS” IS A PROCESS!What Is Negotiating? “NEGOTIATIONS” IS A PROCESS!

4 Webster’s Dictionary DefinitionNegotiate: “to settle or conclude a transaction. To transfer or sell. To succeed in crossing, moving through, etc.” Negotiation: “conferring or bargaining to reach an agreement.”

5 Key Elements of the Negotiation ProcessSIOR Negotiation Skills Key Elements of the Negotiation Process The starting point There may be more than one party Are there any conflicts of interest? “Give and Take” It is a voluntary relationship 5

6 Approaches to NegotiationSIOR Negotiation Skills Approaches to Negotiation Approach to come near or nearer to to begin work on; set about: 6

7 Approaches to NegotiationSIOR Negotiation Skills Approaches to Negotiation Distributive Negotiation Positional bargaining, i.e. “this is my position and you can try and bargain me down from it” It’s the “fixed pie” mentality, and I’m going to grab the biggest piece of the pie that I can possibly grab Win/Lose strategy 7

8 Approaches to NegotiationSIOR Negotiation Skills Approaches to Negotiation Integrative Negotiation Also known as interest-based bargaining It seeks mutual benefit for all that are involved “A rising tide raises all boats” – Reagan Win/Win strategy 8

9 Contemplating the Spectrum of NegotiationsSIOR Negotiation Skills Contemplating the Spectrum of Negotiations Integrative Distributive 9

10 Negotiating is a Process1. When does the process commence? 2. Exchanging ideas 3. Influencing your environment 4. Analyzing information/technical skills 5. No right answer: Patience is paramount 6. Online negotiations

11 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation The purpose of this section is to enable students to recognize the various phases and to help prepare students to handle each phase. 11

12 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #1 Problem Identification Define the problem in a form mutually acceptable to both sides. Letter of Intent (LOI) Request for Proposal (RFP) Keep the problem statement as simple as possible State the problem as a goal and identify the known obstacles to attaining that goal Depersonalize the problem – don’t “blame” the other person Separate the definition from the search for solutions 12

13 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #2 Preparation Understand the conflict situation Decide what your team wants Analyze the other side Develop a strategy to help them make the decision you want We will discuss various strategies later on in the course 13

14 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #3 Entry Need to be invited Learn the authority of those with whom you negotiate Start on a positive note Establish or set control over procedure Agree on ground rules, such as: Not to leave room without decision All agree that we are not leaving early All agree there are to be no outside interruptions 14

15 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #4 Connecting with People LISTENING!!! Be courteous Investing in people intentionally 15

16 Invest in People IntentionallySIOR Negotiation Skills The 9 Phases of Negotiation Invest in People Intentionally As you go into any relationship, think about how you can invest in the other person so that it becomes a win-win situation. Here is how relationships most often play out: I win, you lose - I win only once. You win, I lose - You win only once. We both win - We win many times. We both lose - Goodbye, partnership! From How Successful People Think by John C. Maxwell 16

17 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #5 Exploration or Probing Educate yourself, then them Fully explore and question, so as to gain understanding on all the issues, positions, and interests The Five W’s and One H Get them into the habit of saying “yes” Keep the discussion on track, on the issues 17

18 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #6 Inventing Generate a range of alternative solutions Draft and proffer possible agreements that are favorable to both sides 18

19 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #7 Bargaining Bargain for mutual enhancement rather than one-sided victory How: Use reason Make it easier for them to decide what you’d like them to decide 19

20 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #8 Closure Don’t be pressured/don’t pressure Summarize: Have both parties write a summary of what their understanding of the agreement is Consider a trial close Make the agreement operational End on an affirmative, ceremonious note Instructor’s Note: Ask, “How do you feel?” “Do you feel comfortable the way this is structured?” “Are you ready to execute this? 20

21 The 9 Phases of NegotiationSIOR Negotiation Skills The 9 Phases of Negotiation #9 Implementation Action Plan Support the agreement with the people you represent Plan for the next negotiation 21

22 Preparation A: Know Yourself and the Other PartySIOR Negotiation Skills Preparation A: Know Yourself and the Other Party Three primary areas to prepare to be an effective negotiator: Knowledge Communication Skills Attitude 22

23 Knowledge PreparationSIOR Negotiation Skills Knowledge Preparation What: The root to negotiating Requires research Assess property Benefit: Allows positional evaluations Allows you to have solutions Allows you to set goals Predict the other side Anticipate the worst Re-strategize during process 23

24 Knowledge PreparationSIOR Negotiation Skills Knowledge Preparation MOTIVATING FACTORS Know the other side Appeal to ego Motivate human behavior 24

25 Knowledge PreparationSIOR Negotiation Skills Knowledge Preparation MOTIVATING FACTORS What Tangibles are at Stake? For Landlord: Income Stream/Return on Equity Appreciation For Tenant: Space and Services Economic Cost Limits Quiet Enjoyment 25

26 Knowledge PreparationSIOR Negotiation Skills Knowledge Preparation MOTIVATING FACTORS What Tangibles are at Stake? Both parties are interested in: Length of contract Wording of agreements Specific settlements Specific solutions Price and rate (least important?) Others? 26

27 Knowledge PreparationSIOR Negotiation Skills Knowledge Preparation MOTIVATING FACTORS What Intangibles are at Stake? Winning or Losing” Maximizing the outcome Defeating the other party Preserving your reputation Standing by your principles Maintaining precedent “Saving face” Being fair: How do we define “fair”? 27

28 Voluntary Exchange ZoneSIOR Negotiation Skills Voluntary Exchange Zone OTHER YOU Your Minimum Other This is a visual representation of what negotiating stakeholders show each other. 28

29 SIOR Negotiation SkillsProbing 29

30 Preparation of Communication SkillsSIOR Negotiation Skills Preparation of Communication Skills Argument Persuasion Reading Body Language Probing Listening Rob – in my opinion, this picture is no longer appropriate. Thoughts? 30

31 Preparation of Communication SkillsSIOR Negotiation Skills Preparation of Communication Skills Relating to the Other Negotiator Be prepared Proceed with sensitivity Seek common ground Understand their wants and needs Be wary of emotions – mine and theirs Do you value other stakeholders? 31

32 Preparation of Communication Skills Then…SIOR Negotiation Skills Preparation of Communication Skills If I… Don’t want to be around people Neglect to listen Don’t offer people help Ignore people Am indifferent… Then… I Don’t Value People From How Successful People Think by John C. Maxwell 32

33 Preparation of Communication Skills Then…SIOR Negotiation Skills Preparation of Communication Skills If I… Want to spend time with people Listen to people Want to help people Am influenced by people Respect people Then… I Value People From How Successful People Think by John C. Maxwell 33

34 Preparation of AttitudeSIOR Negotiation Skills Preparation of Attitude Mine: Attitude toward others Your self-evaluation Difficult? Proving something? Which is mine: selfish or selfless? Other Negotiator: Background of the decision maker Personality of decision maker Difficult? Proving something? 34

35 Preparation B: Critical Variables During the Negotiating ProcessRecognize the hand you’re dealt Make the best lemonade from the lemons you have Here are 3 critical variables: Power Time Information

36 Critical Variable: PowerCOMPETITION Leverage, Leverage, Leverage! You need alternative building choices and tenants BATNA

37 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power BATNA Best Alternative To a Negotiated Agreement Defined as the “if the wheels fall off the cart” plan; that is, if negotiation fails for any reason, then this is the solution we’re willing to accept. The process is as follows: Develop a list of criteria on which the decision is being made. Determine your BATNA for each item. Utilize this tool as needed. Take in to consideration: cost, feasibility and consequences. Improve weak BATNA position by: brainstorming creativity experts who may not currently be on the team. Roger Fisher and William Ury in “Yes: Getting to Yes: Negotiating Without Giving In”, 1981; also credit goes to Nobel Laureate John Forbes Nash with undergraduate research 37

38 SIOR Negotiation Skills38

39 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power LEGITIMACY True authority Can be confused with: Perceived authority Imagined authority 39

40 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power RISK TAKING The keys to success in risk taking are: Be willing to walk Willing for negotiations to be unsuccessful How? Be patient Without spite AND… 40

41 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power COMMITMENT With commitment, it is easier to make an amicable deal. How? Communicate your position point by point Obtain commitments on each point Instructor’s Note: Ask the question. “When we reconvene to finish our negotiation, what will have to happened today in order for you to feel really good about our progress?” 41

42 Critical Variable: PowerEXPERTISE Establish expertise with: 3rd party experts Documentation How? Be humble

43 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power INVESTMENT Invest in the asset you are negotiating. How? Acquire knowledge Commit team resources Spend money 43

44 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power IDENTIFICATION If they believe you identify with them Being on the same team How? Agree with other stakeholder Disagree with other stakeholder 44

45 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power PRECEDENT AND PERSISTENCE We’ve always done it this way Persistence “Nothing in this world can take the place of Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated failures. persistence. and determination alone are omnipotent.” – Calvin Coolidge Persistence 45

46 Critical Variable: PowerPOWER OF PERSUASION Tools of persuasion: Logic Have facts and be practical Emotions Positive Negative Mediate Monetary Gains Seek to understand the other side

47 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power ATTITUDE It takes the right combination of attitudes. Have a winning attitude Do not seem hungry or desperate Have “win some” attitude Be able to recognize their attitude. If their attitude is negative, then remember, “it’s just a game.” 47

48 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power SILENCE Can be powerful because it may: Keep them talking Help you learn motives Help you gain information and knowledge How? Probe and hush

49 Critical Variable: PowerSIOR Negotiation Skills Critical Variable: Power MOMENTUM The process is flowing It has fluidity Things come together quickly Creativity seems to be abundant How? Keep engaging Redefine goals and objectives as necessary Momentum happens Instructor’s Note: “Fat Albert”

50 Time Used as a Negotiating Tool: The “Game Changer”Different Power Strategy Time is a continuum No Beginning You are always negotiating

51 Time is a Continuum Take Your Time Time Can Be Advantage Time LimitsBe Credible

52 Time as a Deadline Whose deadline? It is real or imagined?Make your own deadline Use proposals for evolving solutions

53 Time as a Tool Leave yourself room Patience PaysBeware of foot dragging Problems? Probe Concessions

54 Face to Face Meeting What are the factors to consider?SIOR Negotiation Skills Face to Face Meeting What are the factors to consider? What message does your choice send? Housekeeping? 54

55 Face to Face Meeting Where do we meet and why? Your officeSIOR Negotiation Skills Face to Face Meeting Where do we meet and why? Your office Neutral place Lessor’s office Lessee’s office Country Club Favorite Restaurant 55

56 Face to Face Meeting Factors to Consider Time of DaySIOR Negotiation Skills Face to Face Meeting Factors to Consider Time of Day AM vs. PM? Choose your seat carefully Head of table Facing door or window Next to opponent or client Who will attend? What are the roles of each attendee? 56

57 “He/She who controls the agenda, controls the meeting.”SIOR Negotiation Skills Face to Face Meeting Factors to Consider “He/She who controls the agenda, controls the meeting.” What is/are the goal(s) for the meeting? 57

58 Face to Face Meeting Prepare the Room Coffee Pens Paper WiFiSIOR Negotiation Skills Face to Face Meeting Prepare the Room Coffee Pens Paper WiFi Technology needs 58

59 Face to Face Meeting Housekeeping Be on time = early!!SIOR Negotiation Skills Face to Face Meeting Housekeeping Be on time = early!! Dress appropriately: over, under or equal? Everyone is there for a reason! 59

60 Powerful Negotiating StrategiesANCHORING AND PIE-SHARING

61 Powerful Negotiating StrategiesTHE SILENT TREATMENT

62 Powerful Negotiating StrategiesLOW-BALLING/ANCHORING

63 Powerful Negotiating StrategiesPOWER OF PRINT

64 Powerful Negotiating StrategiesTIME: LAST MINUTE

65 Powerful Negotiating StrategiesGOOD GUY/BAD GUY

66 Powerful Negotiating StrategiesMY MANAGEMENT

68 Powerful Negotiating StrategiesLEAVING MONEY ON THE TABLE

69 Powerful Negotiating StrategiesFAIT ACCOMPLI

70 Powerful Negotiating StrategiesAPPEAR UNREASONABLE

71 Powerful Negotiating StrategiesCLARIFICATION OF POSITION

72 Powerful Negotiating StrategiesLISTING THE PROS AND CONS

73 Powerful Negotiating StrategiesTHE POWER OF GUILT

74 Powerful Negotiating StrategiesSTRAW TIGER ISSUES

75 Powerful Negotiating StrategiesRED HERRING

76 Powerful Negotiating StrategiesSUMMARIES OF FACTS, STATEMENTS, AND AGREEMENTS

77 Powerful Negotiating StrategiesRECESSES AND ADJOURNMENTS

78 Powerful Negotiating StrategiesCHANGING NEGOTIATORS IN MID-DEAL

79 Powerful Negotiating StrategiesCONCILIATORY MOVES CONCESSIONS SPICE AND DRAMA

80 Powerful Negotiating StrategiesTHREATS –ULTIMATUMS AND INTIMIDATION

81 Powerful Negotiating StrategiesBLUFFS

82 Powerful Negotiating StrategiesWALKOUTS – DO NOTHING

83 Powerful Negotiating StrategiesLEAVING GRACEFULLY IF NO DEAL: BATNA

84 Powerful Negotiating StrategiesNEGATIVE SALESMANSHIP

85 Powerful Negotiating StrategiesSPLIT DOWN THE MIDDLE / RE-ANCHORING

86 Powerful Negotiating StrategiesIT’S TOO COMPLICATED – LET’S MAKE IT SIMPLE

87 Powerful Negotiating StrategiesAlternative of Choice Close Left at the Altar Making Balloon Futures Calling in a Higher Authority Crunch Time Bring in the Dancer Re-Trading the Deal

88 Powerful Negotiating StrategiesHuntley and Brinkley Turning Soviet Roaring Brains Needs vs. Wants Matrix

89 Unselfish Thinking Makes You Part of Something Greater than YourselfSIOR Negotiation Skills Unselfish Thinking Makes You Part of Something Greater than Yourself “We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear.” – George W. Merck The lesson to be learned? Simple. Instead of trying to be great, be part of something greater than yourself. From How Successful People Think by John C. Maxwell 89

90 SIOR Negotiation SkillsExhibits 90

91 Exhibit A Is the Substantive Outcome Very Important? YES NOSIOR Negotiation Skills Exhibit A Is the Substantive Outcome Very Important? YES NO Is the Relationship Outcome Very Important? TRUSTINGLY COLLABORATE OPENLY SUBORDINATE FIRMLY COMPETE ACTIVELY AVOID NEGOTIATING 91

92 Concern for RelationshipSIOR Negotiation Skills Exhibit B Concern for Substance High Moderate Low Defeat Be a winner at any cost. Take whatever you can get Withdraw Collaborate Creatively problem solve so both parties win Build friendly relationships. Accommodate Compromise Split the difference Low Moderate High Concern for Relationship 92

93 SIOR Negotiation SkillsExhibit C 93

94 THANK YOU, SIOR STUDENTS!!William A. Burgess, CCIM, SIOR The Burgess Company, LLC Greenville, SC