Establishing what can be Achieved
OPS 938: Negotiation Theory and Practice for Project Management
RODNEY J. CLARKE
Professor, Operations and Systems
Faculty of Arts, Society and Business (ASB)
AGENDA
Conducting Effective Negotiations
Issues, Processes and Actions
Strategies and Behaviours
Process Models of Negotiation
Negotiators Explore Positions with Abandoning their own
Model of a Principled Negotiator
A Common Sequence of Events
Bridging the Issue and the Process Together
Negotiation as a Competitive Process
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AGENDA
Establishing what can be achieved through Negotiation
the importance of being prepared: preparation Checklists
negotiation as a rational and orderly process
getting ready to negotiate (Fells and Sheer 2020, 64)
bargaining mix
walk-away/walk-away point
Negotiation as a Competitive Tension
Nullabor Race Example
A Negotiation Management Checklist and Example
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Critical Reflections: Assignment 1
Negotiation Evaluation
POST NEGOTIATION CHECKLIST USING DEFINITION 1
Compare your reflections on different negotiations; some instructive patterns
may emerge.
Two parties:
how well did we understand the other negotiators?
did the structure of the negotiation ‘work’?
With differences:
how well did we get to understand the extent of what were the critical
differences which needed to be addressed?
Which they need to resolve:
did we overestimate the quality of our walk-away alternative?
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Negotiation Preparation
POST NEGOTIATION CHECKLIST USING DEFINITION 2
Trying to reach agreement:
what were the critical incidents in how the negotiations were handled?
did they trust us and did we trust them?
when was there a sense of us working together rather than working
against?
if so, when and how did that develop?
Through exploring options:
how well did we manage the process of developing some creative
solutions?
And exchanging offers:
how well was the closing tension managed?
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Negotiation Preparation
POST NEGOTIATION CHECKLIST USING DEFINITION 3
And an agreement:
how does the final agreement compare with what we said we really wanted
from these negotiations?
has this agreement made any forthcoming negotiations easier?
Action commitment:
What am I now going to do differently when I next negotiate?
Why?
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Conducting Effective Negotiations
Conducting Effective Negotiations
ISSUES, PROCESS AND ACTION
Issue and process: some useful questions to ask
To help you keep check of progress while negotiating
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Conducting Effective Negotiations
STRATEGIES AND BEHAVIOUR
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Conducting Effective Negotiations
PROCESS MODELS OF NEGOTIATION
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Conducting Effective Negotiations
NEGOTIATORS EXPLORE POSITIONS WITH ABANDONING THEIR OWN
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Conducting Effective Negotiations
MODEL OF A PRINCIPLED NEGOTIATION
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Conducting Effective Negotiations
A COMMON SEQUENCE OF EVENTS
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Conducting Effective Negotiations
BRINGING THE ISSUE AND THE PROCESS TOGETHER
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Conducting Effective Negotiations
BRINGING THE ISSUE AND THE PROCESS TOGETHER
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Conducting Effective Negotiations
NEGOTIATION AS COMPETITIVE TENSION
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Establishing what can be Achieved
through Negotiation
Establishing what can be Achieved
THE IMPORTANCE OF BEING PREPARED: PREPARATION CHECKLISTS
good preparation leads to more effective negotiation- still little
research on how negotiators conduct negotiations and how they
prepare for them
the negotiation literature does suggest preparation checklists
vary in their advice
commonly emphasise the need to set goals for negotiation because
these are viewed to be a fundamental aspect of planning (Furrell 2011;
Wilson & Putnam 1990) and central to negotiation
negotiation can only really be successful if you spend your time trying to
determine what is acceptable/unacceptable to the other party
‘planning’ and ‘preparation’ are used interchangeably
negotiation tries to achieve ‘goals’, ‘targets’, ‘aims’
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Establishing what can be Achieved
RATIONAL AND ORDERLY PROCESS | LEARNING PROCESS
our approach to negotiation is that it is a rational and orderly
process (or at least it can be studied as if it is)
rational: straightforward means for determining what other parties
want to achieve
orderly: sequence of steps to follow in order to finalise the
negotiation
negotiation is a learning process through which we get a better
understanding of the situation and a clearer appreciation of what is
possible
it is usual to need to adjust what we can think is achievable or be
open to investigation new possibilities that the interaction may
provide
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Establishing what can be Achieved
GETTING READY TO NEGOTIATE (FELLS AND SHEER 2020, 64)
two parties with differences
Assessing what we are disagreeing on
STEP 1: Identify my/our own interests some key terms
STEP 2: Identify the other party's interests we will define
Identify other relevant interests
STEP 3: Set your goal/s for the negotiation
that they need to settle
Assessing the power balance
STEP 4: Assess the power balance in the negotiation
Set your walk-away point
trying to reach agreement through exploring options and exchanging offers
Assessing the bargaining mix
STEP 5: Develop the bargaining mix
STEP 6: Set your opening offer
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Establishing what can be Achieved
BARGAINING MIX
negotiation involves seeking out options and exchanging offers, and
preparing for a negotiation involves trying to think what might be other
options that could be utilised in proposing offers that might accommodate
the interests of the other party
each negotiator has specific interests which they are striving to be met
(their goals or targets)
as we get more specific it may be possible to see that there is more than
one issue being negotiated
the bargaining mix is the collection of issues up for negotiation
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Establishing what can be Achieved
WALK-AWAY/ WALK-AWAY POINT
recall a negotiator’s choice of issue strategy summarized below:
contend: you stand form on the issue and expect to achieve an agreement
by the other party conceding
concede: you bring the negotiation to an end by agreeing to what the other
party wants
creative exploration: you find a solution that adds some value to the issues
so that both parties can gain something, but not at the expense of the other
party
clear-cut exchange: you split the difference between what you want and
what the other party wants so that you both get something, but neither of
you gets all that you wanted
walk-away is when your team decides to not to continue engaging in a
negotiation with the party- you can do better elsewhere
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Negotiation as Competitive Tension
Nullabor Bicycle Race Example
Negotiation as Competitive Tension
NULLABOR BICYCLE RACE EXAMPLE …
we can demonstrate the fact that negotiation can have stages
(differentiation, exploration and exchange) by reference to an example
the cycle races are a useful example of the need to cooperate yet also the
incentive to compete
the following shows cooperation within the overall process of coming
together to a point of agreement- the cooperation may be, for example,
over trading concessions to achieve a clear-cut compromise
to find a new value-adding solution (creative compromise), the parties
need to step outside of the path
it is important to remember that a clear-cut compromise – though often
called a win–win because it seems fair – does not add value
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Negotiation as Competitive Tension
NULLABOR BICYCLE RACE EXAMPLE …
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Negotiation as Competitive Tension
NULLABOR BICYCLE RACE EXAMPLE …
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Negotiation as Competitive Tension
NULLABOR BICYCLE RACE EXAMPLE …
the main point is to encourage a systematic, question-oriented approach to
thinking about the state and progress of a negotiation
it is based on the issue–process–action–outcome framework (see next
slide)
if preferred, the next slide can be used instead – the three questions are a
less precise way of thinking about the state of the negotiation.
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Negotiation as Competitive Tension
A NEGOTIATION MANAGEMENT CHECKLIST AND EXAMPLE
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Negotiation as Competitive Tension
DEADLOCKS DURING NEGOTIATION
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Negotiation as Applied Game Theory
Game Theory
HOW DOES GAME THEORY RELATE TO NEGOTIATION …
game theory and negotiation are deeply interconnected, with
game theory providing the mathematical framework to analyze
and understand strategic interactions that occur in negotiation
settings.
negotiation is essentially a strategic interaction where multiple
parties make decisions that affect each other's outcomes
game theory models these strategic interactions by treating
negotiators as rational players who seek to maximize their payoffs
while considering how others will respond to their choices.
reveals why certain negotiation tactics work, e.g. the concept of
credible threats explains when ultimatums are effective versus
when they backfire
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Game Theory
HOW DOES GAME THEORY RELATE TO NEGOTIATION …
game theory provides negotiators a systematic way to think
about strategic choices, predict likely outcomes, and design
more effective negotiation strategies
the theory provides frameworks for analyzing multi-party
negotiations, auction-like scenarios, and sequential bargaining
processes where timing & order of moves matter significantly
it also explains commitment strategies, where limiting your own
flexibility can paradoxically strengthen your negotiating position
game theory helps negotiators understand concepts like BATNA
(Best Alternative to Negotiated Agreement) as outside options
that determine minimum acceptable terms
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Game Theory
SOME KEY GAME THEORY CONCEPTS IN NEGOTIATION
there are certain negotiation outcomes occur naturally- they
represent points where neither party can improve their position
by unilaterally changing strategy- the so-called Nash
Equilibrium
the famous Nash bargaining solution provides a theoretical
framework for predicting fair division outcomes in cooperative
negotiations
Zero-sum versus non-zero-sum games distinguish between purely
competitive negotiations (where one party's gain equals another's
loss) and collaborative negotiations where mutual gains are
possible. Most real-world negotiations contain elements of both
competition and cooperation.
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Class Exercise 1: Game Theory (30 mins)
What Game Theory Reveals About Life, The Universe, & Everything
[Link]
Game Theory
WHAT ARE YOUR TAKE-AWAYS FROM THIS YOUTUBE?
Cooperation strategies are the best strategies- Cooperation pays even amongst rivals!
Simulation 1: Successful Qualities win (an eye-for-an-eye)
1. Be nice!
2. Forgiving
3. Retaliatory (if your opponent defects, strike immediately. Don’t be a push-over)
4. Be clear (promotes trust)
No single best strategy- it depends on the other strategies around them
Simulation 2: test how well successful strategies survive- only nice strategies survive
(tit for tat)- an island of cooperation can emerge, spread and take over the world
Competition is for losers!
Simulation 3: With misunderstandings- cooperation is seen as a defection- tit for tat
performs badly but if you don’t retaliate all the time (generous or forgiving)
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Negotiation is a Form of Communication
Negotiation is a Form of Communication
NEGOTIATION AS A COMMUNICATIVE PROCESS
we will consider (re)defining negotiation as a communicative
process,
illustrate this (a little bit) by looking at an imaginary hostage
negotiation example
we will then start to unpack this example- considering this
situation (communicatively) as consisting of as involving multiple
completed acts of communication
we will the reflect on how Negotiation is complex and messy!
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Negotiation is a Form of Communication
NEGOTIATION AS A COMMUNICATIVE PROCESS
our textbook’s definition of a negotiation describes it is as a
process, but it doesn’t explain what kind of process it is!
in this subject, we correct this by identifying that negotiation is
a communicative process
the reason I’m trying to be precise about the kind of process we
are dealing with, is that knowing the kind of process gives us
knowledge about what negotiation is
if we identify the precise kind of process and the ‘correct’ way of
thinking about negotiation, then we might be able to identify
and use new and effective methods or techniques in actual
negotiations- I’ll provide a number of examples of this
throughout the subject
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Negotiation is a Form of Communication
HOW ARE WE ACHIEVING THIS?
the approach I’ll use is a functional approach to communication
a theory of communication that explains how people actually
communicate (pragmatics)
I’ve selected a theory that is organised to explain how people
make meanings when they communicate (semantics)
the theory I’m using here is called systemic-functional linguistics
don’t panic we are not getting you to become linguists, but …
the theory is defined to be applied to real world problems
its been found to be very useful in business applications
the techniques we use from it are described in a very practical way
and applied directly to negotiation
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Negotiation is a Form of Communication
SO WHAT?- ADVANTAGES OF A COMMUNICATION APPROACH
understanding that negotiation is a communicative process
means that we might be able to:
better understand those on whose behalf the other party claims
to negotiate- for example paying attention to the language of the
other party often reveals their professional affiliation
understand what other parties are claiming to want during the
negotiation- or attempting to reach- with the questions that they
are asking before they have declared their position
better understand the structure and organisation (and some of
the risks) of the particular negotiation- how a negotiation is
organised will reveal how complex and therefore risky the entire
negotiation may be
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Problems
Problems
CORRECTING SOME POSSIBLE MISUNDERSTANDINGS
your first assignment (A1) has been designed as a Role Playing
Game- but it can’t possibly represent a real situation
here are some reasons why A1 doesn’t represent reality:
most negotiations involve more than one social occasion
it has been stripped down to only two positions- as I have
previously claimed, in real world Business negotiations you often
have more than two positions
in A1, I’ve provided you with basic information about the scenario
you’ll be negotiating- in real world negotiations you or your
team would have had to discover any relevant background
information (we’ll describe and use other communication
techniques for that)
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Problems
WHAT ARE THE SPECIFIC PROBLEMS?
what is the specific problem/s that we are trying to understand?;
there are actually two problems (in this slide show alone) that can
be directly addressed by using communication theory
why is negotiation so complex?
it can’t simply be reduced to the fact that individuals are involved in
negotiations and after all we know that individuals are self
interested, irrational, they lie and so on …
that is all true, but what is also true is that both parties want a
satisfactory solutions
why is negotiation so messy?
it’s probably true but what does this ent mean- we need actual
explanations for this (maybe more than one reason)
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Example
Example
HOSTAGE NEGOTIATION- PIRACY ON THE HIGH SEAS (FELLS, 30)
1. Head of crewing company that supplied the deck crew
2. Local government to prevent them from trying to mount a rescue while
negotiations were ongoing
3. Banks to acquire/borrow the $1m ransom
4. staff to see who would be prepared to act as a courier to smuggle the $1m out
of the country
5. aircraft charter service to hire a plane to transport the courier out of the country
6. a security firm to transport and protect the courier
7. tug company to take the courier to the ransomed ship and its crew
8. with the tug crew
9. a helicopter pilot to drop the cash onto the ship
10. another shipping company for a small tanker to refuel the ransomed ship so it
could leave
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Solution 1
Why is Negotiating Complex?
Solution 1- Why is Negotiating Complex?
LETS SEE WHERE THE COMMUNICATION THEORY LEADS US …
I’ve claimed that negotiation is a communicative process and I’ve
selected a theory that provides methods we can use to
substantiate this
the first application of this theory has been to reveal that
negotiation in real world applications usually involves
multiple social occasions
each social occasion has multiple completed acts of
communication (including the negotiation itself)
but you also need to think of all the other completed acts of
communication that link to it (documents, minutes agendas
standards etc …)
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Solution 1- Why is Negotiating Complex?
MULTIPLE SOCIAL OCCASIONS
using the Hostage Negotiation example, we have at least 10
different negotiations:
the 10 negotiations had different key parties- recheck the list
there may have been more than one meeting with some of them-
an example of this might be negotiating a tug to transport the
courier to the ransomed ship (7) and negotiating with the tug crew
(8)
each of these meetings is a completed act of communication
regardless of whether an agreement was reached- the spoken
language negotiation is one text, a transcript of the discussion is
another
but there is another added complication …
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Solution 1- Why is Negotiating Complex?
MULTIPLE COMPLETED ACTS OF COMMUNICATION
any given meeting (possibility two actual texts) is based on lots of
other texts- let’s pick one of the hostage negotiations in our
example- say, negotiating with the banks for the ransom money (3)
we hardly scratch the surface by considering some of the other
texts will be:
the balance of discressionary funds available to the bank for this
kind of use (legislation, required accounting practices)
the degree of freedom that the bank’s management has to make
such arrangements (legal disclosure requirements, risk
calculations etc)
the identification requirements for the bona fide negotiation
team representative
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Solution 1- Why is Negotiating Complex?
IN REALITY MANY MORE TEXTS FOR THIS ONE NEGOTIATION
Negotiator
what the communication Identification
approach tells us here is that real Can we act?
world negotiations are complex- Can we do it legally?
the number of actual social
occasions can be large
even if we look at small number
of issues in this one negotiation, Bankers
Negotiator Team
there can be a large number of Representative
texts (completed acts of Can I prove I’m
communication) each with there the authentic
negotiator?
have their own participants Banking Accounting Corporate
Legislation Practices Law
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Solution 2
Why is Negotiating Messy?
Solution 2
COMMUNICATION APPROACH ADDRESSES ‘MESSINESS’ PROBLEM
Negotiation has been said to be messy- but what does this
comment mean? It’s not so clear from the text book
but functional communication theory that we are using actually
does agree with this idea- in fact it says they’re is more than one
form of messiness
the one kind of messiness we will consider here, relates to why
negotiation is complex- multiple social occasion, multiple texts
there is no guarantee that any negotiation can be finalised with an
agreement because each distinct texts may not be agreed with or
finalised
each text has potentially multiple points where agreements may
be accepted or not
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Solution 2
COMMUNICATION APPROACH SOLVES THESE PROBLEMS
consider for example, the negotiator using documents to identify
themselves as a bona fide (true) negotiator
the first meeting between a representative of the bank and the
representative of the team, may result in the bank refusing to start
a negotiation with that individual because the identifying
documentation is inadequate- can’t be easily verified or it is not
sufficient to pass their security issues
consider now the bank, any number of their legislative or
professional practice requirements may hamper the banks ability
to quickly put together a multimillion dollar ransom package
if any one of these fail (eg. have clauses preventing such actions)
then the negotiation has to go on without them in the room
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Solution 2
COMMUNICATION APPROACH SOLVES THESE PROBLEMS
So, functional communication theory says that one kind of
messiness found during negotiations is due to the fact that any of
the associated texts (legal documents, legislation, etc) may block
certain actions form taking place
this means that an agreement cannot necessarily be reached
complex negotiations involve more social occasions- which means
that there will be additional texts and parties that come into play
during the negotiation and will restrict the likelihood of an
agreement being reached
so this form of messiness relates to the risk of the negotiation
reaching agreement
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Reflection
Reflection
MULTIPLE SOCIAL OCCASIONS, MULTIPLE TEXTS
I’ve claimed that negotiation is a communicative process and I’ve
selected a theory that provides methods we can use to
substantiate this
the first application of this theory has been to reveal that
negotiation in real world applications usually involves
multiple social occasions
each social occasion has multiple completed acts of
communication or texts (including the negotiation itself)
but you also need to think of all the other completed acts of
communication that link to it (documents, minutes agendas
standards etc …)
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Reflection
PROVIDES USEFUL INSIGHTS INTO NEGOTIATION
each of the completed acts of communication that are found in
a negotiation will have two contexts
each context has its own methods associated with it and they
are very useful- further technical notes on all of these methods
for the purposes of this technical note, understanding the
existence of these multiple completed acts of communication
provides useful insights into negotiation
negotiations are complex (multiple texts)- each is a possible
occasion for success or failure
accounts for one way in which negotiations are messy-
multiple social occasions, multiple texts within each- multiple
actions and activities and lots of direct & indirect stakeholders
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Closer Title