Negotiation and Conflict Resolution

MaRS Discovery District Entrepreneurship 101 Series

February 12, 2014

Presentation by Michael Erdle

Practical Resolutions Inc.

Introduction

 Negotiation

 Conflict Resolution

What is Negotiation?

 Negotiation is:   a process.

  a structured conversation.

  a means to an end (agreement about something).

 We do it all the time, without really thinking about it.

Basis for Negotiation

 Interests

 Rights

 Power

Escalation

Power

Power Strategies: •  Take action unilaterally •  Win at all costs •  Attack/Defend •  Threaten •  Coerce •  Withdraw (Take the Ball and Go

Home) •  Physical (or verbal) violence

Characteristics of Power: •  Adversarial •  “Win/Lose” at best •  Usually “Lose/Lose” •  Extremely expensive •  Negative impact on future

relationships

Rights

Rights Strategies: •  Contracts (guarantee the

minimum) •  Policies, procedures, rules •  Precedent •  Past practice •  Legal action •  Third-party decisions

(e.g. arbitration)

Characteristics of Rights: •  Adversarial •  “Win/Lose” at best •  Often “Lose/Lose” •  Extremely expensive •  Time-consuming •  Impact on future relationships?

Interests

Interests Strategies: •  Identify what’s really important •  Dialogue about needs and wants •  Honest sharing of information •  Maximize results for all parties •  Help everyone explore and

understand their own interests, and interests of other parties

•  Needs an ongoing relationship

Characteristics of Interests: •  “Win/win” process •  Collaborative •  Interdependent •  Builds trust •  Positive impact on future

relationship

Costs  Go  Up  

Control  Goes  Up  

Litigation

Arbitration Investigation/Fact Finding

Conciliation Mediation

Negotiation Problem Solving

Prevention

All out “War” Unilateral Action

Threats, Coercion Power

Rights

Interests

Power, Rights, Interests

The “Golden Rule”

“The Wizard of Id”, B. Parker, J. Hart

De-escalation

Duty to Negotiate in Good Faith

 Obligation to respect the legitimate interests of other parties and to deal promptly, honestly, fairly and reasonably with them.   Shelanu Inc. v. Print Three Franchising Corp. (Ontario Court of

Appeal)

  Implied in negotiation where there is an imbalance.   Wallace v. Grain Growers (Supreme Court of Canada)

Duty to Negotiate in Good Faith

Spectrum of contractual duties

Selfish Selfless

Honesty                          Good  Faith                            Fiduciary  Duty  

Duty to Negotiate in Good Faith

  Fiduciary:   Trustee   Corporate Director   Lawyer

  Good Faith:   Professional Code of Ethics   Contract   Employee/Employer

Negotiation Steps

 Distributing Value vs. Creating Value   Opportunistic   Problem-solving

  Identify Issues   What does each side want and need?

 Consider Interests   Common   Complementary   Conflicting

Effective Negotiation

  Interests vs. Positions

  “Needs” vs. “wants”

  “Separate the People from the Problem.”

  Soft on the person

  Hard on the problem

 Consider other Options

Effective Negotiation

  Seek Objective Alternatives

 Determine BATNA and WATNA

  Best Alternative to Negotiated Agreement

  Worst Alternative to Negotiated Agreement

  Look for a “win-win” solution

Effective Negotiation

  Successful relationships are built on communication and trust.

  Lack of trust leads to “win-lose” or “lose-lose”.

 Negotiation is one way of creating trust – or deciding whether trust is justified.

Multiple Negotiations

  Selfish strategy works in a “winner take all” game.

  Life is rarely like that.

 Most negotiations involve a continuing relationship.

 What happens if there’s a series of negotiations?

Multiple Negotiations

  “Tit-for-Tat” strategy is most successful.

  Four key conditions:

 Nice

 Retaliate

 Forgiving

 Generous

Multiple Negotiations

1.  The player always cooperates, unless provoked.

2.  The player always retaliates, if provoked.

3.  The player is quick to forgive – co-operate next time.

4.  The game must continue long enough for the ‘retaliation and forgiveness’ pattern to affect opponent’s behaviour.

Negotiation Styles

  Focus on “winning”

  Focus on relationship

Focus  on  Rela5onship  

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Win - Lose

Win - Win

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Power Ploys

 Classic “Hard Bargaining” Ploys  Extreme claims, small concessions

  “Take it or leave it.”

 Unreciprocated offers

 Threats and warnings

 Attacking the alternatives  Good cop, bad cop

Ways to Respond

 Extreme claims, small concessions  Tit for Tat – make equally small concessions

  “Take it or leave it.”

 Make a counter offer

 Offer an alternative  Don’t be afraid to walk away

Ways to Respond

 Unreciprocated offers  Don’t negotiate against yourself

 Wait for a serious counter offer

  Threats and warnings

 Don’t make a counter-threat  Challenge the underlying assumptions

Ways to Respond

 Attacking the alternatives  Ask for an explanation

  “Why do you have a problem with…?”

 Good cop, bad cop

 Negotiate with the boss  Use the “good cop” to your advantage

Understanding Interests

Common Interests

  Parties want the same things

 E.g. company and workers both want to avoid strikes and workplace grievances (costs them both money)

Understanding Interests

Complementary Interests

  Parties want different things, but they don’t conflict

 E.g. company wants to increase productivity & profits; workers want better pensions

Understanding Interests

Conflicting Interests

  Parties want different and incompatible things

 E.g. company wants to reduce labour costs; workers want to be paid more

Negotiation Skills

 Communication is the key to effective negotiation.

 Assertiveness vs. Empathy

 Effective negotiator is assertive and empathetic

 What you say is often less important than how you say it.

 Tone  Body language

Negotiation Skills

 Understanding and recognition do not mean compromise and concession.

  “I understand” vs. “I agree”

 Your own emotions and subconscious brain can hinder your ability to negotiate effectively.

Negotiation Skills

  Listening  Develop “active listening”

 Understanding  Acknowledge the other person’s perspective

  Flexibility  Be open to other options

  Pragmatism  Accept the best available option

Conflict Resolution: Match Process to Business Goals

 Litigation   Public

  Little control over time & expense

 Arbitration

  Private   Quicker and

cheaper?

 Mediation   Private

  Cheaper and quicker

  Control outcome

 Facilitation

  Informal   Inexpensive

Costs  Go  Up  

Control  Goes  Up  

Litigation

Arbitration Investigation/Fact Finding

Conciliation Mediation

Facilitation Problem Solving

Negotiation

All out “War” Unilateral Action

Threats, Coercion Power

Rights

Interests

Power, Rights, Interests

Facilitation

  Informal process

  Parties control process and outcome

  Facilitator ensures that all issues are addressed and all parties have an opportunity to be heard

  Examples: partnering workshops; joint problem-solving; facilitated negotiations (re-negotiations)

Mediation

 A more formal process of facilitated negotiation.

  The Mediator guides the process and helps the parties negotiate more effectively.

  The Mediator does not decide who is right or wrong.

Mediation

  Interest-based Mediation  Mediator is a facilitator  Focus on interests, not legal rights or obligations  Options for creative solutions

 Evaluative Mediation  Neutral evaluation  Based on legal rights & obligations

Mediation

 Qualities of an effective mediator:   Subject area knowledge

 Negotiation & mediation process skills

 Lets parties make key decisions

 Creative approach to the problem

 Patience

Arbitration

 Adversarial process.

  Less formal than litigation, but need to follow procedural rules for fairness and efficiency

 Not necessarily quicker or cheaper than litigation

  Parties can select arbitrator with particular legal, financial or licensing expertise

  Private – don’t “air dirty laundry”

Arbitration

 Qualities of an effective arbitrator:

  Subject matter expertise

 Active control over process

 Fairness and good judgment

Other Dispute Processes

  Executive Committee   Formal escalation process

  Risk that positions become harder as they escalate   Executives must remain engaged throughout the agreement

  Project Umpire   Can facilitate or mediate resolution of project disputes

  Can also provide neutral evaluation or non-binding arbitration   Umpire is engaged throughout the project

  Available to deal with issues on short notice

Resources

  Fischer, Ury and Patton: Getting to Yes, Penguin, 1991

  Ury: Getting Past No, Bantam, 1993

  Cohen: You Can Negotiate Anything, Bantam, 1980

  Mnookin, Peppet and Tulumello: Beyond Winning, Harvard University Press, 2000

  ADR Institute of Ontario (ADRIO) http://www.adrontario.ca/

Questions?