THE NEGOTIATION HANDBOOK Negotiation is an essential skill for all those operating commercially on behalf of their organisations. The ability to negotiate quotations, tenders, proposals, internal and external stakeholders, licensing agreements and so on, could form a critical part of any employee’s role, be it on the buy or supply side. The Negotiation Handbook is a useful guide for all those wanting to understand how to apply tools and techniques to the negotiation process. This handbook has been subdivided into seven key sections, each representing a key phase in the negotiation process.The models and concepts are presented so that both a pictorial and explanatory commentary is available to the reader.
This practical handbook supports all those working in a commercial capacity, so that they may apply commonly used tools and techniques and gain maximum benefit on behalf of their employers. Andrea Cordell is a well-known international speaker and author on strategy, negotiation and procurement-related matters. She has worked in senior positions at several global organisations and is currently the managing director of Cordie Ltd, a leading sales and procurement training and consulting company. THE NEGOTIATION HANDBOOK Second Edition Andrea Cordell Second edition published 2019 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2019 Andrea Cordell The right of Andrea Cordell to be identified as author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
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First edition published by Chartered Institute of Purchasing & Supply 2014 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-0-8153-7555-5 (hbk) ISBN: 978-0-8153-7554-8 (pbk) ISBN: 978-1-351-23954-7 (ebk) Typeset in Bembo by Apex CoVantage, LLC CONTENTS List of figures ix List of templates xi Acknowledgements xii Introduction xiii PHASE 1 Preparation 1 1 Negotiation strategy 3 2 Negotiation team 6 3 Negotiation agenda 9 4 Negotiation SWOT analysis 12 PHASE 2 Relationship building 15 5 Building rapport 17 6 Body language 20 7 Neuro-Linguistic Programming (NLP) 24 8 Eye accessing 27 v Contents PHASE 3 Information gathering 31 9 Questioning techniques 33 10 BATNA 36 11 ZOPA 39 12 Negotiation goals and targets 42 PHASE 4 Information using 45 13 Tradeables and straw issues 47 14 First offer 51 15 Negotiation power 54 16 Personalities 57 PHASE 5 Bidding 61 17 Persuasion methods 63 18 Negotiation tactics 66 19 Emotional intelligence 69 20 Influencing 72 PHASE 6 Closing the deal 77 21 Thomas-Kilmann Conflict Mode Instrument 79 22 Subliminal linguistics 82 vi Contents 23 Summarising and ratification 85 24 Game theory 88 PHASE 7 Implementing the deal 91 25 Negotiation evaluation 93 26 Kolb’s experiential learning cycle 96 27 Cultural dimensions 99 28 Handover and contract management 102 Templates 105 Bibliography and suggested further reading 141 Index 143 vii FIGURES 0.1 The negotiation process xiv 1.1 Negotiation Strategies Continuum 3 1.2 The negotiation team 6 1.3 Elements of the negotiation team 7 1.4 The negotiation agenda 9 1.6 Elements of a SWOT 13 2.0 Phase 2: Relationship building 15 2.1 The Rapport Matrix 17 2.3 Body language signals 21 2.6 Elements of eye accessing 28 3.0 Phase 3: Information gathering 31 3.2 Elements of questioning techniques 34 3.4 Elements of BATNA 37 3.6 Negotiation goals and targets 42 3.7 Elements of negotiation targets 43 4.0 Phase 4: Information using 45 4.1 The tradeables evaluation model 47 4.3 Responses to the first offer 51 4.4 Elements of responses 52 ix Figures 4.5 The primary powers 54 4.6 Examples of the perceived powers 55 4.7 Myers Briggs personality type indicator 57 4.2 Elements of the five persuasion methods 64 5.4 Elements of negotiation tactics 67 5.6 Elements of emotional intelligence 70 5.8 Yukl’s and Cialdini’s theories 73 6.0 Phase 6: Closing the deal 77 6.1 Thomas-Kilmann Conflict Mode Model 79 6.2 The Conversation Control Cube 82 6.3 Summarising and ratification 85 6.4 Summarising and ratification techniques 86 6.0 Phase 7: Implementing the deal 91 7.2 Techniques for measuring the negotiation process 94 7.3 Kolb’s experiential learning cycle 96 7.4 Elements of Kolb’s experiential learning cycle 97 7.5 Cultural comparison graph 99 7.6 Three levels of contract management 102 x TEMPLATES 1 Strategy Adoption Matrix 107 2 Negotiation Roles 108 3 Negotiation Agenda Checklist 109 4 Negotiation SWOT 110 5 Building Rapport 111 6 Body Language Observation Sheet 112 7 NLP Self-Assessment Test 113 8 Eye Accessing Observation Sheet 116 9 Questioning Techniques 117 10 BATNA 118 11 ZOPA 119 12 Negotiation Goals and Targets 120 13 Tradeables and Straw Issues 121 14 First Offer 122 15 Negotiation Power 123 16 Personality and Negotiation Self-Assessment Guide 124 17 Persuasion Methods 126 18 Negotiation Tactics 127 19 Emotional Intelligence 128 20 Influencing Styles Matrix 130 21 Thomas-Kilmann Conflict Mode Instrument 131 22 Counteraction Template 132 23 Summary of Negotiation 133 24 Game Theory 134 25 Negotiation Process Evaluation 135 26 Personal Negotiation Evaluation 136 27 Cultural Difference Assessment Template 137 28 Contract Management Effort 139 xi ACKNOWLEDGEMENTS To all those who have helped with the development of this book. A special mention to: Professor Malcolm Higgs at Southampton University who coached me through my doctoral research on negotiation, Ian Thompson and Tracey Webster at Cordie for their critical input and Samantha Wheeler, for her editing skills. xii INTRODUCTION Negotiation is regarded as a key skill for those operating in the business environment. This book is aimed at helping those wishing to increase negotiation capabil- ity whether it is for application in the workplace, for personal use or for students who are pursuing examinations.
Replicating the style of the hugely popular The Procurement Models Handbook, it provides both students and business managers with a simple analysis of the most common models and concepts associated with the negotiation process. It is hoped that both students and practitioners alike will find it a quick and effective source of reference prior to planning that all-important negotiation. The negotiation process There are many versions of the negotiation process in existence, but perhaps the most well-known and enduring version is that by Professor Leonard Greenhalgh, published in 2001 and founded upon extensive research. The model identifies the basic ‘process’ of negotiation in a linear series of seven sequential steps (see Figure 0.
Preparation – Deciding what is important, defining goals, thinking ahead how to work together with the other party. Relationship building – Getting to know the other party, under- standing how you and the other are similar or different, building commit- ment toward achieving a mutually beneficial set of outcomes. Information gathering – Learning what you need to know about the issues, the other party and their needs, the feasibility of possible settlements, and what might happen if you fail to reach agreement with the other side. Information using – At this stage, negotiators assemble the case they want to make for their preferred outcomes and settlement, one that will maximise the negotiator’s own needs.
This presentation is often used to ‘sell’ xiii Introduction Figure 0.1 The negotiation process Source: Adapted from Greenhalgh (2001) the negotiator’s preferred outcome to the other. Bidding – The process of making moves from one’s initial, ideal posi- tion to the actual outcome. Bidding is the process by which each party states their ‘opening offer’, and then makes moves in that offer toward a middle ground. Closing the deal – The objective here is to build commitment to the agreement achieved in the previous phase.
Both the negotiator and the other party have to assure themselves that they reached a deal they can be happy with or, at least, live with. Implementing the deal – Determining who needs to do what once the agreement is formalised. Not uncommonly, parties discover that the agreement has anomalies, key points were missed, or the situation has changed and is sometimes subject to renegotiation. This book tracks the flow of the Greenhalgh framework and presents readers with a summary of just some of the pre-eminent models and concepts that can be used at each stage.
Choice of models and concepts In preparing this book, I have reviewed many academic texts/papers /journals and negotiation books by a plethora of different authors. The books appear to have been mostly based on personal opinion and perspective, and have ranged from xiv Introduction interesting and light-hearted to the downright wacky. Therefore, the models and concepts that form the content of this book have been selected wherever possible from research with supporting empirical evidence. Other inclusion criteria are as follows: • Whether the content can be applied practically in the context of the negotia- tion process.
• Whether the content is an original concept, rather than a later adaptation. Each stage of the negotiation process has been assessed by leading academics and practitioners in order to arrive at a consensus. Presentation of models and concepts The models and concepts are presented so that both a pictorial and explanatory commentary is available to the reader. The format for each is as follows: • Overview – A brief introduction of the model/concept.
• Elements – A description or definition of the key parts of the model/ concept. • So what? – A guide as to how the model/concept is generally used in a practical sense in the negotiation process. • Negotiation application – Suggestions as to how the model/concept can be applied specifically in a negotiation context. • Limitations – An open and even-handed critique of the model/concept.
• Further reading – A pointer to key works and/or texts on the underpinning theory. • Associated template – An accompanying template and/or additional guid- ance that could be used by the practitioner, which can be found at the back of the book in the templates and bibliography section. xv PHASE 1 Preparation Overview It is assumed that considerable strategic analysis will have taken place prior to the commencement of the negotiation process. Many of the models and frameworks discussed in the corresponding text, The Procurement Models Handbook, may have been used to assist in the development of the negotiation strategy.
Once the planning process has been completed, ratified, sponsored, and a potential source identified, it is then time to make the deal. This section focuses on the initial key activities that will help to set the scene for the practical negotiation: Figure 1.0 Phase 1: Preparation 1 NEGOTIATION STRATEGY Figure 1.1 Negotiation Strategies Continuum Overview Walton and McKersie (1991), first proposed two approaches to negotiation in 1965 when researching industrial relations disputes. This notion was later popularised by Fisher and Ury (1982) in their hugely popular book Getting to Yes. Negotiating Agreement Without Giving In.
It is now generally accepted that there are essentially two types of negotiation strategy. These are commonly referred to as: • Integrative, also known as collaborative, interest-based or win/win. • Distributive, also known as competitive, position-based or win/lose. More recently literature has pointed to a third type called ‘win/perceived win’, which is gaining popularity among academics and practitioners and is viewed as a pragmatic, commercially astute alternative.
Elements These strategies are often explained in terms of a pie; i.