Decision Making & Negotiation

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Decision Making & Negotiating A Presentation by Rajiv Bajaj

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Part I – Problem Solving & Decision Making

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Problem-solving and decision-making are important skills for business and life Problem-solving often involves decision-making Decision-making is especially important for management and leadership

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Decision-making comes more naturally to certain people These people should focus more on improving the quality of their decisions People that are less natural decision-makers are often able to make quality assessments But they need to be more decisive in acting upon the assessments made

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Good decision-making requires a mixture of skills: Creative development & identification of options Clarity of judgment Firmness of decision; and Effective implementation

The Decision-Making Process:

The Decision-Making Process Define and clarify the issue – 1. Does it warrant action ? If so, now ? Is the matter urgent, important or both ? 2. Gather all the facts and understand their causes 3. Think about or brainstorm possible options and solutions

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4. Consider and compare the pros and cons of each option - consult if necessary – it probably will be 5. Select the best option - avoid vagueness or 'foot in both camps' compromise 6. Explain your decision to those involved and affected, and follow up to ensure proper & effective implementation

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Decision-making maxims will help to reinforce the above decision-making process whether related to problem-solving or not For example: "We know what happens to people who stay in the middle of the road. They get run down." - Aneurin Bevan

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"In any moment of decision the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing." - Attributed to Theodore Roosevelt

Just Do It !:

Just Do It ! JDI - Just Do It ! - The decision-maker's motto There are usually several right answers when you are faced with a complex decision When you've found the best solution you can find, get on with it, make it work, and it most probably will !

The Pros & Cons Decision-Making Method:

The Pros & Cons Decision-Making Method Pro means 'for', and con means 'against' In other words, advantages and disadvantages Method also applies to all sorts of problem-solving where issues & implications need to be understood and a decision has to be made

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Some decisions are a simple matter of whether to make a change or not, such as moving, taking a new job, or buying something, selling something, replacing something, etc Others involve numerous options, and are concerned more with how to do something involving a number of choices Use the brainstorming process to identify and develop options for decision-making and problem-solving

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Let’s see how to go about this : 1. First you will need a separate sheet for each identified option 2. On each sheet write clearly the option concerned, and then beneath it the headings 'pros' and 'cons' (or 'advantages' and disadvantages', or simply 'for' and 'against'). Many decisions simply involve the choice of whether to go ahead or not, to change or not; in these cases you need only one sheet

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3. Then write down as many effects and implications of the particular option that you (and others if appropriate) can think of, placing each in the relevant column 4. If helpful 'weigh' each factor, by giving it a score out of three or five points (e.g., 5 being extremely significant, and 1 being of minor significance)

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5. When you have listed all the points you can think of for the option concerned compare the number or total score of the items / effects / factors between the two columns 6. This will provide a reflection and indication as to the overall attractiveness and benefit of the option concerned.

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If you have scored each item you will actually be able to arrive at a total score, being the difference between the pros and cons column totals The bigger the difference between the total pros and total cons then the more attractive the option is

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7. If you have a number of options and have complete a pros and cons sheet for each option, compare the attractiveness - points difference between pros and cons – for each option The biggest positive difference between pros and cons is the most attractive option

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8. N.B. - If you don't like the answer that the decision-making sheet (s) reflect back to you, it means you haven't included all the cons - especially the emotional ones, or you haven't scored the factors consistently, so re-visit the sheet (s) concerned

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You will find that writing things down in this way will help you to – See things more clearly ; AND Become more objective and detached This will help you to make clearer decisions

Part II – Win-Win Negotiations :

Part II – Win-Win Negotiations Finding A Fair Compromise

What is Negotiation ?:

What is Negotiation ? Negotiation can be defined as a process of bargaining by which agreement is reached between two or more parties We all negotiate every day in a wide range of work and social situations

Importance Of Negotiation Skills:

Importance Of Negotiation Skills Impact of good or bad negotiating can directly affect revenues / profits Negotiation skills help you to resolve situations where what you want conflicts with what someone else wants

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Negotiation aims to explore the situation to find a solution that is acceptable to both parties Styles of negotiation depend on circumstances

The Possible Outcomes:

The Possible Outcomes 4 potential outcomes from negotiation – I Win, You Lose I Win, You Win I Lose, You Lose I Lose, You Win

Styles of Negotiation:

Styles of Negotiation Adversarial Vs. Cooperative Bargaining Style of negotiation influenced by the style of the other party If both are adversarial, there will be little trust between the two parties

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If one decides to be co-operative, there is a danger the other side will use this apparent sign of weakness to their advantage Co-operative bargaining has the advantage of being a more efficient style of negotiation However certain rules have to be followed by both parties, for it to work

Features – Adversarial Bargaining:

Features – Adversarial Bargaining Each side takes up a position and defends it Opening bids set at unrealistic levels; too high or too low, in order to give room for maneuvers Movement is small or non-existent until later on in the negotiation

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Tactics are used to gain short term advantage Too much emphasis placed on trust – “This really is my best price !” Information is withheld, or misrepresented Outcome is often win-lose, or lose-lose

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The more aggressive negotiator usually does best This style does not encourage long term, mutually beneficial relationships Neither side asks enough questions, or explores alternatives in sufficient depth

Features – Co-operative Bargaining:

Features – Co-operative Bargaining Each side recognises that other has needs and feelings and accepts implicit rules Objective measures are taken of what is fair and reasonable Trust is not an issue as either side is willing to share information

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This style is friendly, but not soft. There is willingness to trade concessions There is a clear, communicable strategy Bad behaviour is frowned upon Involves creative problem solving Encourages long term, mutually profitable relationships

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Each side asks more questions and explores alternatives, rather than taking up fixed positions The usual outcome is win-win “The objective of negotiation should not be a dead opponent. “ - Napoleon

Circumstances & Negotiation:

Circumstances & Negotiation Where you do not expect to deal with people ever again; And You do not need their goodwill - It may be appropriate to ‘play hardball’ - seeking to win a negotiation while the other person loses out However…

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Where there is a great deal at stake in a negotiation - For example, in large sales negotiations, it may be appropriate to prepare in detail ; And Use certain amount of subtle gamesmanship to gain advantage

A Word of Caution !:

A Word of Caution ! Both approaches usually wrong for resolving disputes with people you have an ongoing relationship with : If one person plays hardball, then this disadvantages the other person – this may, quite fairly, lead to reprisal later

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Similarly, using tricks & manipulation during negotiation can severely undermine trust and damage teamwork While a manipulative person may not get caught out if negotiation is infrequent , this is not the case when people work together on a frequent basis Honesty & Openness are the best policies in this case

Preparing For Successful Negotiation:

Preparing For Successful Negotiation Depending on scale of disagreement , a level of preparation may be appropriate for conducting a successful negotiation For small / minor disagreements, excessive preparation can be counter-productive : it takes time that is better used elsewhere

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May also be seen as manipulative because just as it strengthens your position, it can weaken the other person’s To resolve a major disagreement, it may be worth preparing thoroughly Think through the following points before you start negotiating:

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Goals: What do you want to get out of the negotiation? What do you expect the other person to want?

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Trades: What do you and the other person have that you can trade? What do you each have that the other might want? What might you each be prepared to give away?

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Cost and Value It is possible during negotiations to concede issues that have little cost to you but have great value to the other side Best type of concession to make Avoid, however, conceding on issues that have a high cost to you irrespective of their value to the other side

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Alternatives: If you don’t reach agreement , what alternatives do you or the other person have? Are these good or bad? How much does it matter if you do not reach an agreement? Does failure to reach an agreement cut you out of future opportunities?

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Relationships: What is the history of the relationship? Could or should this history impact the negotiation? Will there be any hidden issues that may influence the negotiation? How will you handle these ?

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Expected Outcomes: What outcome will people be expecting from this negotiation? What has the outcome been in the past , and what precedents have been set?

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The Consequences: What are the consequences for you of winning or losing this negotiation? What are the consequences for the other person?

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Power: Who has what power in the relationship? Who controls resources ? Who stands to lose the most if agreement isn’t reached? What power does the other person have to deliver what you hope for?

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Possible solutions: Based on all of the considerations, what possible compromises might there be?

Style Is Critical:

Style Is Critical For Negotiation to be 'win-win', both parties should feel positive about the situation when negotiation is concluded Helps to maintain a good working relationship afterwards

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This governs the style of the negotiation – H istrionics & displays of emotion are clearly inappropriate They undermine the rational basis of the negotiation & they bring a manipulative aspect to them

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Despite this, emotion can be an important subject of discussion… …because people's emotional needs must fairly be met If emotion is not discussed where it needs to be, then the agreement reached can be unsatisfactory and temporary

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Be as detached as possible when discussing your own emotions – perhaps discuss them as if they belong to someone else

Negotiating Successfully:

Negotiating Successfully Negotiation is a careful exploration of your position and the other person’s position The goal is to find a mutually acceptable compromise that gives you both as much of what you want as possible

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People's positions are rarely as fundamentally opposed as they may initially appear The other person may quite often have very different goals from the ones you expect !

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An ideal situation - you will find that the other person wants what you are prepared to trade, and that you are prepared to give what the other person wants If this is not the case and one person must give way, then it is fair for this person to try to negotiate some form of compensation for doing so

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The scale of this compensation will often depend on the many of the factors discussed earlier Ultimately, both sides should feel comfortable with the final solution if the agreement is to be considered win-win

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Questions ?