The Art of Negotiation

Stanley I. Proctor
Proctor Consulting Services
Tutorial Session: The Engineer in Transition to Management
AIChE Spring Meeting
New Orleans, LA, April 26, 2004
Authors Note: The topic of negotiation has become very popular in the management arena in
the last twenty or so years. Numerous books and articles have been written on the topic.
Some schools of management have faculty who specialize in the topic. In most of these
works, the steps in the negotiation process are much the same; differences are in emphasis or
technique. Instead of an exhaustive survey of the topic, I have chosen in this tutorial to focus
on a few works. Two (3,6) are classic early works and the others are of more recent vintage. I
believe that the result will be a reasonably good coverage of the art of negotiations. If you
wish to pursue the topic further, these will serve as a good starting point. For convenience,
this tutorial will follow the outline found in Reference 5, with comments and positions of the
various authors included where appropriate.
Introduction
Websters Dictionary defines a negotiation as to hold intercourse with a view to coming
to terms; to confer regarding a basis of agreement. Simply put, negotiation occurs when
someone has something that you want and you are willing to bargain to get it and vice versa.
Commonly, we think of negotiations on a large scale. Politically, we think of peace talks
between the Palestinians and Israel or discussions between nations on the non-proliferation of
nuclear weapons. In business we think of labor/management negotiations or discussions
regarding mergers and acquisitions. But we as individuals undertake negotiations all the time.
In business we may have discussions with our boss regarding salary, performance or
promotion issues. In our personal lives it could be when buying a house or automobile or
deciding where the family will go on vacation or something as simple as deciding where you
and your spouse or significant other will have dinner.
Successful (or unsuccessful) negotiation should never be like a game where someone
wins and someone else loses. Successful negotiations should end with a satisfactory
conclusion for both sides (win/win). An undesirable end is failure where neither side achieves
a desired result (lose/lose). Therefore it is important to remember that in order to achieve what
you want in a negotiation, you must also be willing to give up something that the other party
wants.
Most people think of negotiation as two parties or teams sitting across the table from
each other trying to come to a mutually satisfying conclusion. While that is an important and
critical part of the process, it is only a part. To conduct successful negotiations, one needs to
consider all aspects of the process. These include 1) preparing for the negotiation, 2)
conducting the negotiation and 3) closing and implementing the results.

What follows is primarily aimed at negotiating in a business setting, but it has

application to other types of negotiations as well.

Preparation
Critical to conducting a successful negotiation is thorough preparation. There is much
to be done before the two sides sit down to talk. First, it must be decided who will do the
negotiating an individual, a team, or an agent. The nature of the negotiation will most likely
determine this. For example, if you were trying to get a raise or a new assignment, you would
probably sit down one-on-one with your boss. A union seeking a new contract would appoint a
team to represent the membership. A sports figure would likely use an agent who is skilled in
the art. It is important to note than when an agent or team represents others, the authority of
the representatives must be well defined before any talks start.
You must understand what it is that you want from the process. What are your
objectives and how do you prioritize them? Where are you most flexible and what is the range
of that flexibility? What are you willing to give up to achieve your objectives? Are there issues
that are non-negotiable?
Understanding your opponent is also important. Gather as much information as you
can to help in that understanding. The sooner you begin to gather that information before
actual negotiations begin, the better prepared you will be. Obviously, some simple
negotiations will allow little lead-time. Try to assess the oppositions possible answers to the
questions raised above. What arguments might they use to support their position? How
strong are they? How can you counter?
Cohen (1) gives this list of questions to consider as you gather information:
Why are they negotiating with me?
What are their time constraints and deadlines?
By whom and how will their decisions be made?
How do they react to conflict?
What is their negotiating style?
What are the limits of their authority?
What is their negotiating experience and background?
Do they have a realistic alternative to making this deal?
What incentives do they have to make this deal?
What are their underlying interests and concerns?
What is their track record for honesty and integrity?
What are their expectations with respect to the outcome?
And, if the negotiators are part of a larger organization,
Who do they report to?
Does he or she have a budget or quota?
How are they compensated?
It is important to develop the strategy you will use for the negotiations. What style will
you use? There are a number of options available and there are differences of opinion on
which is best. Indeed, you may have to tailor your style to the nature of the negotiation. Fisher
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and Ury (3) recommend against what they call positional bargaining. In positional bargaining
there are two styles or positions. In a hard position, a side takes a strong stand and initially
refuses to budge. The problem with this is that it may be difficult to back down or revise your
position without losing face. In a soft position, maintaining the relationship is more important
and the negotiator may give in to preserve that relationship. The problem here is that an
optimum agreement may not be reached. When one side takes a hard position and the other
a soft position, the result may be win/lose. Negotiators have two interests; substance or what
he/she wants to gain, and relationships to be maintained for the future. Positional bargaining
places undue emphasis on one or the other without a proper balance.
Fisher and Ury recommend a style they call principled negotiation. The characteristics
of this approach are:
1. To separate the people from the problem this is not to say the people issues may not
arise, but they should be dealt with aside from the topic of the negotiation.
2. To focus on interests, not positions a position that someone takes may not truly reflect
what their ultimate interests are.
3. To generate a variety of possibilities before deciding what to do.
4. To insist that the results be based on some objective standard there are any number of
these, such as market value, precedent, scientific judgment, tradition, reciprocity, etc. It is
important that both sides agree to the criteria to be used.
Cohen (1), whose book is subtitled By Caring But Not T-H-A-T Much, says that the best
approach is one of seeming to be detached and laid back, that is, not emotionally involved. He
makes the following points in that regard:
Whenever you engage in any purposive social exchange or negotiation, detach yourself
emotionally to gain perspective, so you can see the pattern, relationships, and interconnection
of things.
Always view yourself as a problem solver, searching for creative alternatives that can satisfy
both sides real concerns and interests.
When we care too much our adrenaline starts flowing, causing us to become doped up and
dumbed down.
Even when subjected to irrational discourse, emotional diatribes, or the threat of an impasse,
strive for a balanced attitude of caring, but not t-h-a-t much.
He gives the following amusing example. In the golden age of television, Jackie
Gleasons show was one of CBSs highest rated programs. William Paley, the networks CEO,
was anxious to re-sign him, only Gleason wanted to be paid the then unheard of sum of $11
million a year. During the final bargaining session, the Great One, who was hung over, fell
asleep during the argument over money. Paley, observing his condition, said, Okay, if thats
his attitude [caring, but not t-h-a-t much], give him what he wants.
Will you present a proposal first or respond to theirs? Cohen recommends that, if there
are multiple issues, you start with the easiest one first the one with which there is the
greatest likelihood of agreement. He calls this negotiating with congruence. Make sure that
you have an agreed upon agenda for the meeting. Where will the negotiations take place
your place, their place or a neutral site? There are advantages to having the negotiations take
place at your site, but there are disadvantages as well. At your site, you have ready access to
data and resources. But you also run the risk of more interruptions. Also, you cant tell the
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other side that you will have to check with your boss and get back to them later if he/she is
sitting right down the hall. Cohen gives this good approach: Lets say the other side has a
strong preference where the meeting should be held and you care but not t-h-a-t much your
reaction could be, Mmm, let me think it over, Ill get back to you tomorrow on this. The next
day when you call, fuss a bit, whine about being away from your family, but ultimately concede.
The point is this: You have just made a concession. You have invoked what he calls the
reciprocity norm. That means the other side now owes you. This can also be used during the
negotiations themselves. When you concede a point that you care about, but not that much,
you essentially receive a marker from the other side that you can hopefully cash in on an issue
that is more important to you. If the negotiations are going to take place on your turf, make
sure the room is prepared seating plans, refreshments, etc.
If you are part of a team, determine what role each of the members will have. Hindle (5)
suggests the following: team leader, good guy, bad guy, hard liner, and sweeper or facilitator.
Any team needs a leader to lead the discussions. This person is probably the most
experienced, but not necessarily the senior member. The good guy is the sympathetic one,
who appears to often be supportive of the opposite teams position. The bad guy is just the
opposite. The hard liner takes a tough position on every point. The sweeper is the person
who gathers together all the points of view and presents them in a unified manner. These
roles are utilized at various stages of the negotiations as appropriate. They can be effective
when used properly, but can have negative results if overplayed.
Conducting the Negotiation
Now that the preparations are made, you are ready to conduct the negotiations. Since
negotiating is as much about listening and observing as it is about talking, try to judge the
mood of the opposition. Are they open or closed, eager or bored, friendly or cold? Non-verbal
signals are probably more important clues to the mood than what is being said. Indeed, the
non-verbal signals may contradict what is being said. According to Hindle, Clear-cut body
language includes crossing of arms and legs, which betrays defensiveness, and leaning back
on a chair, which expresses boredom. Small gestures and movements, such as hesitating or
fidgeting, may indicate lack of conviction; raised eyebrows are a clear sign of surprise. Eye
contact is another good source of information; team members may glance at each other when
an important point in the negotiation has been reached. Leaning back with arms crossed may
imply disbelief and hostility; whereas leaning forward may indicate openness and interest.
Direct eye contact from the opposition could mean positive thoughts and a desire to receive
and transmit information.
If you present a proposal first, be prepared to respond to the oppositions counter. If
they are first, you need to be ready to counter or respond in some way. If your preparation has
been effective, it will help you in this. Some points to consider when making or responding to a
proposal (5):
Use as little emotion as possible when making a proposal.
Dont speak until you have something relevant to say.
Listen carefully to the opposition you may be closer than you think.
Be willing to adjust your strategy if you see a viable compromise early.
Make sure you understand the other partys position before you respond.
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Wait for the other party to finish before you respond.

Take notes of all the offers on the table; dont rely on memory.
Dont respond too quickly. It may damage your position. However, if you decide to make a
counteroffer, it should be done as soon as you have completed a through assessment of the
other sides offer.
Dont back yourself into a corner from which you cant recover.
Information should be exchanged as part of a compromise and not be given away.
Make sure the opposition knows that every concession you make is a major loss to you and
make them work for each concession. Dont give them away or they wont be valued.
Emphasize the positives for your case.
Test the validity of the oppositions information.
Dont undermine the dignity of the opposition.
Any mistakes on your part should be acknowledged immediately.
A deal is made, not won. It should be a positive outcome for both parties.

Ploys are sometimes used in negotiations. These can include threats, intimidation,
emotional appeals, bluffing and others. Either side can use these. If you choose to use a ploy,
you need to understand when and how to do so and recognize the possible consequences. If
the other side is using them, you need to know how to recognize them and how to respond
effectively. Some suggestions (5):
Making threats that unwelcome repercussions will occur if you dont agree to an offer. Counter
by stating that you will not negotiate under duress and will make concessions only if they can
prove the merits of their case.
Insulting your professional competence, the quality of your product or the performance of your
company. Counter by remaining calm and not offering insults in return. Warn that you will
stop negotiating unless they are more constructive.
Bluffing by making unspecific claims or dubious assertions. Counter by calling the bluff. Try a
bluff of your own and refuse to agree and wait for a response. Ask for evidence to support
their claims.
Using intimidation through seating arrangements or interrupting the proceedings. Counter by
maintaining your terms and conditions.
Trying to exploit possible differences among the team members by divide and conquer.
Counter by making sure everyone on the team is aware of this possibility beforehand. Adjourn
to caucus the team if significant differences arise.
Asking leading questions to probe for weaknesses. Counter by refusing to answer. Check on
claims made by the opposition.
Accusing you of acting unfairly or claiming you have a lack of trust. Counter by affirming your
commitment to reaching a fair agreement. Test the validity of their claims.
Testing the boundaries by trying to get more than what was agreed to. Counter by making
sure everyone knows exactly the terms of any agreement. Have a clearly worded statement of
agreement.
People Problems
In spite of best intentions, people problems often do arise during negotiations. They must be
dealt with quickly and effectively or the negotiations could bog down or end in failure. As
Fisher and Ury (3) have said, it is important to keep people issues separate from the topics of
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the negotiation. They say that people problems involve either perception or emotion or both.
They give the following suggestions for handling these.
Remember that perception is reality for the other side. Sometimes that can work in your favor
and sometimes it can work against you. When it creates problems, consider these
approaches:
- Put yourself in their shoes. The ability to see the situation as the other side sees it is a
valuable asset.
- Dont deduce their intentions from your fears. Dont put the worst interpretation on what the
other side does.
- Dont blame them for your problem. Its counterproductive even if justified. Separate the
problem from the people.
- Discuss each others perceptions.
- Look for opportunities to act inconsistently with their perceptions. Send a message different
from what they expect.
- Give them a stake in the outcome by making sure they participate in the process. The more
their involvement, the more they care about the results.
- Help them save face by making your proposals consistent with their values. The opposition
needs to reconcile any agreement with their principles and past words and deeds.
When discussions become intense, even bitter, emotions may run high. People may feel
threatened and this can generate fear. Fear can lead to anger and anger to more fear on both
sides. To deal with this,
- First recognize and understand emotions, theirs and yours.
- Make emotions explicit and acknowledge them as legitimate. Allow them to let off steam.
- Dont react to emotional outbursts.
- Use symbolic gestures a handshake, an apology for the situation without acknowledging
blame.
Some of these problems may be caused by a failure to communicate. Fisher and Ury identify
three types of communication problems: 1) the negotiators may not be talking to each other; 2)
even if you are talking directly, the other side may not be listening; and 3) there is a
misunderstanding or misinterpretation of what is being said. Ways to avoid these problems
are: 1) listen actively and acknowledge what is being said; 2) speak to be understood; 3) speak
about yourself, not them; and 4) speak for a purpose.
Closing the Deal
Assuming that the bargaining has been successful and agreement appears likely, its
time for closure. There are a number of ways to accomplish this. Make sure everyone
understands what has been agreed to at this point. Dont ignore any remaining issues just to
move faster. Emphasize what the opponents are gaining and what you are giving up. When
closure has been reached, it should be documented and understood by all parties. Finally, be
sure that the agreement is effectively implemented.
Cohen (1) makes these points in the section of his book on closing the deal:
Before the strategic interaction occurs, establish a specific and measurable goal that gives
direction to your activities.
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Being flexible on style enables you to grudgingly yield on some how items to gain substance
(what) concessions in return.
Open all discussions with commonality and a demeanor that communicates consideration and
warmth.
Save the most knotty or zero-sum issue for last.
Since human beings are complex and multifaceted, probe below the surface so you can
broaden the discussion. This enables you to make trade-offs and exchanges to facilitate
agreement.
Concessions are not appreciated unless effort is expended to obtain them.
If you say or do something inappropriate, immediately offer an unqualified and unconditional
apology.
There are four major criteria that will finally induce your counterpart to say yes;
1. Sufficient investment.
2. Having a basis for comparison.
3. A concession rate that signals the approach of your bottom line.
4. The feeling that they were involved in producing this outcome.
Conclusion
The art of negotiation is a complex process. For the greatest chance of success,
extensive preparation is needed. Flexibility, openness and attention to detail are needed
during the negotiating sessions. People issues, if they arise, must be dealt with immediately
and effectively. Understanding and follow-through are required for closure.
Walker (7), in his review, identifies a list of highlights for successful negotiation from a
collected group of experts:
Stay rationally focused on the issue being negotiated.
Exhaustive preparation is more important than aggressive argument.
Think through your alternatives. The more options you feel you have, the better a negotiating
position youll be in.
Spend less time talking and more time listening and asking good questions. Sometimes
silence is your best response.
Let the other side make the first offer. If youre underestimating yourself, you might make a
needlessly weak opening move.
Some gurus advocate a bit of play-acting. Always seem put off at your rivals offer. Play up
the importance of factors you dont care about so itll seem like a bigger deal when you
concede on them. Seem more befuddled than you are so your opponent will underestimate
you.
Above all, if youre serious about becoming a better negotiator, dont believe that theres
a quick-fix solution (like this). Changing your mindset and behavior should be the real goal,
and thats a major undertaking.

References:
1. Cohen, Herb, Negotiate This, Warner Books (2003)
2. Craver, Charles, The Intelligent Negotiator, Prima Venture (2002)
3. Fisher, Roger and William Ury, Getting To Yes, 2nd edition, Penguin Books (1991)
4. Fisher, Roger and Scott Brown, Getting Together, Penguin Books (1988)
5. Hindle, Tim, Negotiating Skills, DK Publishing (1998)
6. Karrass, Chester L., Give and Take, Thomas Y. Crowell (1974)
7. Walker, Rob, Take It Or Leave It: The Only Guide To Negotiating You Will Ever Need, pp
75-82, INC., August, 2003