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Negotiations: Author Hal Stack for Chelst and Canbolat current contract if necessary? How will communication with constituents
or the press be handled?
Opening Statement : Opening statements are your opportunity to set the
tone for the negotiations while signaling your basic themes. What do you want to accomplish at the start of negotiations? Should you address
significant cost issues or the other party’s responsibility for product engineering?
Even when your message contains unwelcome issues for the other side, be sure your opening statement is delivered without hostility or threats. Do not
frame your opening statement as a set of demands but as a way of starting discussion. The opening statement can relieve the tension that is often present at
the beginning of negotiations. Frame the negotiation as a joint effort that will benefit both parties and emphasize your openness to the other party’s issues and
concerns.
7. Activity – Opening Statement: Drawing upon one of the negotiations identified in Activity 1, identify the key points you would have made in
your opening statement. __________________________________________________________
The opening bargaining session is crucial in getting the negotiations off on the right foot and in laying the foundation for a positive outcome. As in any
meeting, it is helpful to have a clear, agreed-upon agenda. Similarly, the meeting should end with agreement on the next steps and the agenda for the next
meeting. Often a flip chart can be helpful in keeping the bargaining teams focused and on track. Although some negotiations may begin with an exchange
of specific proposals, these can quickly transform into fixed positions and rigid demands. A better approach is to focus on understanding and clarifying these
issues and identifying issues that will need to be addressed. Potentially controversial data might best be collected jointly by a subcommittee consisting of
members from both teams. This will save time and reduce conflict over “the facts.”
15.4.2 Value Creation
Effective negotiators recognize that most negotiations involve opportunities to create value, to make the pie larger. Value-creating strategies
involve creative problem solving, the use of beneficial trades, leveraging differences, the use of contingent contracts, and ways to cut the cost of
agreement.
Creative problem solving challenges the parties to seek solutions for mutual gain rather than engage in prolonged arguments over position. While different
problem-solving models exist, everyone agrees on the importance of defining each issue carefully, considering a wide array of possible solutions, and
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Negotiations: Author Hal Stack for Chelst and Canbolat evaluating those possible solutions against objective standards or criteria. In the
context of negotiation, this problem-solving approach is combined with the principles popularized by Fisher and Ury in
Getting to Yes
. The first is to “focus on interests, not positions.” In problem-solving negotiations, the definition of the
issue or problem requires an understanding of the interests of the parties. Further, in focusing on interests rather than positions, the parties avoid
prematurely limiting the range of solutions to their initial positions. In identifying possible solutions, Fisher and Ury recommend “inventing options for
mutual gain.” This means not only brainstorming as many solutions as possible but also seeking solutions that address the interests of both parties. In selecting
the optimum solution, they recommend using “objective criteria” or standards such as market value. In negotiating over the price of a used car, the parties
might rely on market value information available, such as on Edmunds.com, to determine a fair price. Further, in engaging in joint problem solving, Fisher and
Ury advise being “hard on the problem and soft on the people.” As in any problem-solving process, optimal results require rigorous analysis and a group
process where the parties listen carefully, ask probing questions, and respect differing viewpoints. Particularly where the relationship is important, it is foolish
to damage a relationship that will be important to the successful implementation of the deal. In any case, you are much less likely to get a favorable deal if you
have attacked and angered the other party.
Combining these insights leads to the problem-solving model illustrated in Table 15-5. Use of this “interest-based problem solving” model will increase the
likelihood of identifying a solution superior to those originally conceived by the parties. In other cases, the increased clarity of the issue and the parties’ interests
may enable the parties to identify future beneficial trades.
8. Activity – Interest-Based Problem Solving: Apply the interest-based problem-solving model in Table 15-5 to one of the issues involved in one
of the negotiations identified in Activity 1. Beneficial trades between the issues on the table are yet another way to add
value. Most negotiations involve more than one issue, and most negotiators have difference preferences across issues. Thus, there is potential for tradeoffs to create
mutual gain. In some cases, it may be possible to add issues and increase the potential for beneficial trades. When the negotiation seems to be about a single
issue and therefore with no opportunity for a beneficial trade, it may be possible to “fractionate” the issue. Fractionating also called “unbundling” an issue
involves dividing the issue into component issues that may then create the basis for a mutually beneficial trade. Car dealers, for example, fractionate the issue of
purchasing a car to include not just price but also financing options, service maintenance, warranties, and accessories.
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Negotiations: Author Hal Stack for Chelst and Canbolat Table 15-5: Interest-based problem solving
Negotiation is often viewed as a search for common ground, but often agreement is possible because of differences among the parties. These may be
differences in interests, priorities, attitudes toward risk, or forecasts about future performance. Effective negotiators actively search for differences among the
parties as a source of value creation in negotiation. Different beliefs about future sales, inflation, or energy costs can be the basis for mutually beneficial contingent
contracts. Continent contracts are if-then agreements in which one thing happens only if another thing happens before it. In collective bargaining, for example,
wage increases are linked to the cost of living index, which protects workers from the impact of inflation.
Differences in attitudes toward risk provide another opportunity to create value. In some situations, value can be created by allocating more of the risk to
the less risk-adverse party and compensating that party with more of the potential returns. Differences in tax status may create opportunities for joint gain
in a divorce negotiation where the government policy treats “family support” differently from “alimony.” The individual with the highest income and higher
tax rate can provide more money in the form of family support at a lower cost than alimony.
Finally, negotiators can create value by reducing the cost to reaching agreement. This may involve reducing the transaction costs time and money or
making a concession that will make it easier for the other side to agree. A union, for example, may agree to changes in certain work rules that will make it easier
for the employer to more easily agree to a wage increase.
o Who is affected and how are they affected?
o What has contributed to making this an issue?
o What will happen if nothing is done?
Identify stakeholder interests involved: What is at stake for you and
other key stakeholders on this issue?
Generate Options: Using brainstorming, generate as many ideas as you
can to address the issue. Wild and crazy ideas are welcome.
Establish objective criteria: Are there criteria to consider in evaluating
solutions? Cost of implementation? Market value? Accepted standards? Fairness?
Evaluate options: How well do the options address the issue, respond to
the interests of the parties, and meet your criteria?
Select best solutions: What solution or combination of solutions will
work?
Reduce the solution to writing.
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Negotiations: Author Hal Stack for Chelst and Canbolat In creating value, be sure to approach the negotiation as a joint problem-
solving exercise. Ask diagnostic questions to better understand the other party’s interests and priorities. Share information to help the other side better
understand your interests and priorities. It is important to note that initiating the sharing of information and the reciprocity that often follows contributes to
building trust. Keep in mind that it is in your interest to help the other side solve their problem. Finally, be prepared to provide reasons for your proposals and
reasons for your disagreement with the other party’s proposals.
15.4.3 Value Claiming
