MA GLOBAL BUSINESS CORE COURSE IN HUMAN RESOURCE MANAGEMENT IN THE GLOBAL ENVIRONMENT Academic year 2007 - 2008

Competencies IHRM
Competencies: learning, practising and assessing , in a global business negotiation and cross cultural environment, how to develop the required skills to:
Separate the people from the problem: Be “unconditionally constructive” on the relationship Focus on global, win-win interests, and not in particular positions Negotiation Skills Invent options for mutual gain: creating and distributing values between all parties Develop objectives criteria to sustained fruitful and long term agreements Recognize cultural diversity as the main Challenge of the Global IHRM Seek to understand and improve the interaction of employees, clients, suppliers, and alliance partners (stakeholders), from different countries and cultures Cross Cultural Skills Assume the compromise to learn from any cross cultural experience and adopt the vision of taking the cultural values into the global strategy Build-up competitive advantages based on Global Values & Global 1 Skills

José Javier Rivera © 2006

International Human Resources Management

Negotiation Skills The Harvard Negotiation Project

Prof. Asociado: José Javier Rivera - j.javier.rivera@uv.es Departamento de Comercialización e Investigación de Mercados Facultad de Economía - Universitat de València

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The Harvard Negotiation Project (HNP)
Contents:
HNP Concept & Proposals Collaborative Negotiation: Table & Elements of the HNP Strategic guidelines for collaborative negotiation HNP Conclusions Negotiation Case

Negotiating collaboratively requires a systematic focus on all phases of negotiation activity

Preparation

Success
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Preparation Conduct

Conduct

José Javier Rivera © 2006

The Circle of Value: a framework for conducting collaborative negotiations
Build relationships. Be “soft” on the people.

Relationship

Communication

Positions
Focus on Interests

Interests Options

Negotiation Table

Explore options for creating and distributing value.

Legitimacy
Use Objective Criteria

If “No”

If “Yes”

Make choices

Alternatives
José Javier Rivera © 2006

Commitment

Success

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The Harvard Negotiation Project
The Harvard Negotiation Project was the first, and remains the foremost, interdisciplinary research center on negotiation in the world. Drawing from numerous fields of study, including law, business, government, psychology, economics, anthropology, and education, The Harvard Negotiation Project works to connect rigorous research and scholarship with an understanding of practice. Founded and based at Harvard Law School, The Harvard Negotiation Project is a consortium of faculty, students, and staff at Harvard University, Massachusetts Institute of Technology, and Tufts University.
http://www.pon.harvard.edu/

The Harvard Negotiation Project
…some Responses to today global business challenges: Organization structures are generally "flatter," and less hierarchical; Cost-effectiveness is emphasized, but so too is… Customer satisfaction, quality, and continuous R & D development …

http://www.pon.harvard.edu/

The Harvard Negotiation Project
Our Responses to today global business challenges:

The Creation and Managing of Global Value for Global firms is mainly based on business alliances >>> where making agreements with local and global clients, suppliers, employees, shareholders, institutions…(stakeholders), while developing the most of partners relations, is becoming the first challenge for today managers The Creation and Managing of cross cultural teams, as a logical need for global business, but also a platform for global business success

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The Harvard Negotiation Project
In order to achieve the global business challenge, from a

“collaborative negotiation oriented skill”…

The Harvard Negotiation Project is focus on faculty & professionals who are keenly aware of these changes in global business & organizations and who are working to:
develop, implement, and evaluate ways that negotiation theory and practice can contribute to understanding these changes and, in some instances, can even serve as a catalyst for change. It is the Harvard Negotiation Project belief that a negotiated approach to change is a core competency -- not just a helpful skill - as work becomes more knowledge-driven and as competitive pressures become more intense.
http://www.pon.harvard.edu/

Negotiating collaboratively requires a systematic focus on all phases of negotiation activity

Preparation

Agenda
The keys to collaborative negotiation
Fundamental elements of negotiation Defining success Preparing systematically Conducting the negotiation

Success

Conduct

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The fundamental elements of negotiation
The things you want Interests, including a sense of Legitimacy and at least a working Relationship Ways to get what you want Alternatives — Things you can do without the agreement of the other side Options — Possibilities that require both sides’ agreement Agreements/decisions to do something Commitments Process — How you communicate about these things Communication

Defining success

Preparation

Preparation

Success
Conduct

Conduct

Common measures of success
Winning
Made fewer concessions Broke their bottom line Got a better deal than them Agreed above my bottom lime

Not Losing
Got a deal Got more than I expected We are both happy We didn’t fight

Success

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Preparation

Conduct

A systematic definition of success
No agreement, or an agreement that: Is better than your Alternatives (Best Alternative To a Negotiated Agreement) Satisfies Interests: (Interests ≠ Positions) – Ours, very well – Theirs, at least acceptably – Others’ tolerably Is efficient: Among the best of many Options Is Legitimate: No one feels “taken” Involves well-planned Commitments: realistic, sufficient, operational Where the Process: Is efficient: The product of good Communication Helps build the kind of Relationship you want

Substance

Preparation

Conduct

The Pareto Frontier
Unrealized Value

Supplier’s Units of Satisfaction

Customer’s Units of Satisfaction

The Pareto Frontier: Efficiency Definition
An allocation of goods is Pareto efficient if no alternative allocation can make at least one person better off without making anyone else worse off.

– Inefficient if can re-allocate to make better

without making anyone else worse

– Assumed that decisions are made with this in

mind….to implement a win-win agreement

Success

Success

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Preparing systematically

Preparation

Preparation

Success
Conduct Preparation Conduct Success Success

Conduct

Preparing to negotiate collaboratively: Key questions to ask
Positions

Each side’s needs, desires, concerns and fears. What each party has decide upon. What each party pretend to obtain from de the negotiation in a preliminary phase

Interests
The reasons why of my needs, aims, and concerns? How do I prioritize my needs, aims, and concerns? The reasons why of their needs, aims, and concerns? Which interests are shared, which are just different, and which conflict?

Preparing to negotiate collaboratively: Key questions to ask

Alternatives

Identifying your BATNA and the other side’s BATNA
What are my alternatives? Of these which is my best (BATNA)? What do I think their alternatives are? Of these which is their best (BATNA)? Can we improve ours? Worsen theirs?

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Preparation

Conduct

Preparing to negotiate collaboratively: Key questions to ask (cont.)
Options

What are several possible agreements or pieces of agreements that might creatively satisfy both our interests? What are some ways to use our different interests to create value?

Legitimacy
What external criteria would be favorable to us? Potentially persuasive to them? What standards might a judge apply? What “ought” to govern an agreement? What will they argue? Our best response?

Preparation

Conduct

Preparing to negotiate collaboratively: Key questions to ask (cont.)
Commitments
What What What What

level of authority do I have to reach a commitment? level of authority do I think they have? are mechanisms for revisiting commitments over time? level of commitment should I aim for at this meeting?

Relationship
What kind of working relationship would I like to build with them? How is it now? How would we like it to be? What can we do to bridge the gap at low cost and risk?

Preparation

Conduct

Preparing to negotiate collaboratively: Key questions to ask (cont.)
Communication
What do we want to learn from them?
– How can we improve our listening?

What do we want to communicate?
– What will be persuasive to them? – How can we make our messages unambiguous?

What’s our agenda and plan for the negotiation? – How will we start off? What negotiation “system” would we like to use? – How should we handle disagreements?

Success

Success

Success

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Conducting the negotiation

Preparation

Preparation

Success
Conduct

Conduct

A common negotiation dilemma

A Good Relationship

The Best Deal

Preparation

Conduct

A common negotiation dilemma
Soft
“Have to talk”: Participants are friends; the goal is agreement Make concessions “for the relationship” (soft on the people and the problem) Open with a reasonable position Concede generously Make offers — avoid a contest of will

Hard
“Don’t have to talk”: Participants are adversaries; the goal is victory Demand concessions to have a relationship (hard on the people and the problem) Open with an extreme position Concede stubbornly Make threats — win a contest of will

Success

Success

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Preparation

Conduct

Positional Bargaining: The Dance of Concessions
“A reasonable price of . . .” “Just for you…” “That’s my bottom line”

No Deal (Go to BATNA)

Threat

“Take it or leave it” Split-the-difference compromise

CounterThreat

“Last” Final Offer “Final” Offer

Fallback (Minor Concession) Extreme Opening Position

Walk Out (Temporarily)

No Deal (Go to BATNA)

Preparation

Conduct

What’s wrong with traditional positional bargaining?
It rewards stubbornness It promotes deception It erodes trust and damages relationships It impedes creative problem-solving

It traps both sides in the “Hard-Soft” dilemma (negotiate hard to get the best deal, or soft to preserve the relationship)

Best for: Simple transactions; low stakes; market context; or one-shot (?) deals

Preparation

The Circle of Value: a framework for conducting collaborative negotiations
Build relationships. Be “soft” on the people.

Conduct

Relationship

Communication

Positions
Focus on Interests

Interests Options

Negotiation Table

Explore options for creating and distributing value.

Legitimacy
Use Objective Criteria

If “No”

If “Yes”

Make choices

Alternatives

Commitment

Success

Success

Success

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Preparation

Conduct

What’s better about the Circle of Value approach?
Resolves the “Hard-Soft” dilemma It avoids arbitrary outcomes It is neither adversarial, nor naive It builds trust and improves relationships It promotes creative problem-solving It sets good precedents for resolving differences that make future interactions more efficient and productive

Best for: High stakes; important, complex, and/or multiparty problems; where precedent and relationship matter

Preparation

Conduct

Negotiation: A fundamental choice
Classic Positional Bargaining
“A reasonable price of . . .” “Just for you…” “That’s my bottom line” Threat “Take it or leave it” Split-the-difference compromise CounterThreat “Last” Final Offer “Final” Offer No Deal (Go to BATNA) Walk Out (Temporarily) Alternatives If “No” No Deal (Go to BATNA)

Joint Problem–Solving
Relationship Communication

Interests

Options

Legitimacy If “Yes”

Fallback (Minor Concession) Extreme Opening Position

Commitment

Assumptions
Pie is fixed Only job of negotiator is to claim value

Assumptions
Pie can be expanded Negotiators should work together to create and distribute value

Preparation

Conduct

Strategic guidelines for collaborative negotiation: Communication

Negotiate over the process first (set an agenda, clarify goals) Balance advocacy and inquiry Summarize and test your understanding of what they are saying often Explain your reasoning, inquire into theirs

Success

Success

Success

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Preparation

Conduct

Strategic guidelines for collaborative negotiation: Relationship
Be “unconditionally constructive” on the relationship Separate the people from the problem

– Attack the problem, not the people – Use interests, options, etc. to address the problem – Discuss people issues separately and explicitly
Speak for yourself, not for them Avoid trying to fix relationship problems with substantive concessions

Preparation

Conduct

Strategic guidelines for collaborative negotiation: Interests
Clarify interests, not positions Consider sharing your interests first Ask "why" to elicit their interests Solicit criticism of possible options (ask “Why not?”) Look for key differences in interests to create value

Preparation

Conduct

Strategic guidelines for collaborative negotiation: Options
Jointly brainstorm multiple options Separate inventing from deciding

Present them within possible solutions, not problems If you get stuck, go back to the underlying interests

Success

Success

Success

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Preparation

Conduct

Strategic guidelines for collaborative negotiation: Legitimacy

Focus on why an option is fair or how it is defensible

– Use criteria as a “sword” — “Let me show you why” – Use criteria as a “shield” — “Why?” “Based on

what?”

Look for fair procedures Be open to persuasion If you compromise, base it on standards

Preparation

Conduct

Strategic guidelines for collaborative negotiation: Alternatives (BATNA)
Acknowledge BATNA as a choice Acknowledge theirs BATNA and Test theirs BATNA

– How well does it satisfy their interests?
Use discussions about BATNA as an opportunity

– To learn about interests – To create options jointly that are better than your

BATNAs

Preparation

Conduct

Strategic guidelines for collaborative negotiation: Commitment
Commit early to process Commit to substance at the end of the process

Make commitments with care, after learning all you can

– Nothing is agreed until everything is agreed
As you decide, keep your definition of a Good Outcome in mind Make sure both of you know exactly to what you are committing

– Review your understanding – Ask yourselves if it has the necessary detail to be

implemented

Success

Success

Success

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The Harvard Negotiation Project Conclusions
Be ready for complex business negotiations Be professional to identify win – win situations The harvard negotiation “circle of value” is learned through preparation and practice A win – win negotiation approach and skill can make the difference in a business situation = creating or not creating long term Value for you and your partners Assume the negotiation skill as a personal competency Implement the negotiation competency as an organizational skill and permanent learning process from any “negotiation table” The negotiation competency of your organization is a platform for building up competitive advantages in the global business
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José Javier Rivera © 2006

Preparation

The Circle of Value: a framework for conducting collaborative negotiations
Build relationships. Be “soft” on the people.

Conduct

Relationship

Communication

Positions
Focus on Interests

Interests Options

Negotiation Table

Explore options for creating and distributing value.

Legitimacy
Use Objective Criteria

If “No”

If “Yes”

Make choices

Alternatives

Commitment

Negotiating collaboratively requires a systematic focus on all phases of negotiation activity The 4 laws of the Harvard Negotiation Method
SEPARATE THE PEOPLE FROM THE PROBLEM FOCUS ON INTERESTS, NOT POSITIONS

Preparation

INVENT OPTIONS FOR MUTUAL GAIN INSIST IN USING OBJETIVE CRITERIA

Success

Conduct

Success

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Be Creative, Constructive, and Fair, to solve problems, create value and manage partnerships!

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José Javier Rivera © 2006

The goal: A fair agreement
… “meetings the legitimate interests of each side to the extent possible, resolving conflicting interests fairly, durable, and taking community interests into account,”

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José Javier Rivera © 2006

Let’s develop new win-win skills , for new global management challenges.
Let’s start practicing “The Harvard Negotiation Method”, in order to win value for our own professional career and business organization.

In any professional and business situation… so the “story” would be different…and maybe the “history”…

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© 2004 The New Yorker Collection from cartoonbank.com. All Rights Reserved.

Negotiation Bibliography
GETTING TO YES: NEGOTIATING AGREEMENT WITHOUT GIVING IN. Roger Fisher & Willian Ury. PENGUIN BOOKS. New York 1983 GETTING READY TO NEGOTIATE: THE GETTING TO YES WORKBOOK. Roger Fisher, Danny Ertel. PENGUIN BOOKS. New York 1995. NEGOCIACIÓN 2000 - LA COLECCIÓN DE CONFLICT MANAGEMENT. Danny Ertel. MCGRAWHILL 1996. NEGOCIACIÓN: RESOLUCIÓN DE PROBLEMAS Y CREACIÓN DE VALOR. Juan Roure. BIBLIOTECA IESE DE GESTIÓN DE EMPRESAS 1997. NEGOCIACIÓN Y RESOLUCIÓN DE CONFLICTOS Varios Autores... HARVARD BUSINESS REVIEW – DEUSTO 2001. NEGOCIACIÓN - HARVARD BUSINESS ESSENTIALS. Varios Autores. HARVARD BUSINESS SCHOOL PUBLISHING CO. DEUSTO 2004.

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