Sally’s Negotiation Dynamics (c) 2014 Dwight Golann

What were each side’s alternatives? Opera’s? Sally’s? (c) 2014 Dwight Golann

Negotiation Dynamics? Sally wants about $25K minimum $15K $20K $25K $30K $35K $40K $45K Zone of Agreement Sally wants about $25K minimum Lyric will pay up to about $35K max (c) 2014 Dwight Golann

Lesson one A bad alternative does not necessarily equal a bad outcome… Why would the Opera not push Sally as far as it could? Why wouldn’t Sally squeeze the Opera, if she could? Other forces often drive deals Relationship Interests Principles But if one side has strong leverage and doesn’t care…it will be decisive R (c) 2014 Dwight Golann

The impact of relationships Others may consider them primary, especially in other cultures Likely to make fairness more important How to establish/enhance? Stress similarities, connections Use gifts as a signal ID a mutual friend or other stake in being trustworthy Distinguish working from personal relationships (c) 2014 Dwight Golann

Objective Standards for Compensation? $0K $5K $10K $15K $20K $25K $30K $35K $40K $45k 35K What Lyric is willing to pay to get Sally to sing What Original Soprano would have been paid $30K What neophyte soprano might be paid < $28K $25K What title role was paid last year $24K What Sally thinks title role paid last year $22K What Sally received 4 years ago for title role What Sally has sung secondary roles for $10K to $18K •------------• $12.5K What Lyric paid Sally last year $25K What Sally would be willing to take (c) 2014 Dwight Golann

Impact of principles Principles are important They influence both us and opponents We want to be, and appear, consistent Principles are useful Legitimize your position Minimize emotional reactions Substitute for relying on alternative Give basis for asking for information Allow moving w/o slippery slope (c) 2014 Dwight Golann

Selecting an effective principle Should not be under your influence Consider industry customs, model clauses, cases, well-known organizations, tradition OK to use a standard that benefits you, if a neutral person might accept it Best to use standard that other side has already accepted: this creates “normative leverage” If you can ID a principle to justify a concession, easier for them to move (c) 2014 Dwight Golann

Integrative (“Win-Win”) Bargaining Good negotiators change style to fit the situation, but integrative bargaining is preferable. Key: What does a party want other than or in addition to money? The answer is its interests. Faced with a position, ask why do they want that? Easier to divide a large pie than a small one (c) 2014 Dwight Golann

What matters, other than money? Personal interests: Being treated with respect, valued as a person Process interests: Telling my story, using fair, predictable rules Economic interests: Getting the best possible value from the deal External interests: Issues from a context outside the negotiation (c) 2014 Dwight Golann

How To Prepare? ID your own interests clearly, and rank your preferences Ask yourself what their interests may be: use role reversal Ask whose interests? Those of bargainer and client may differ ID contrary interests: Why might they say no? Ask: how can I satisfy their goals at a low cost? 6 (c) 2014 Dwight Golann

How to bargain with interests? Competitively: Haggle, often one issue at a time Cooperatively: ID range of issues Exchange info re: relative importance to each side Propose packages Offer adjustments + trade pairs or groups of issues Continue to seek out more information Work to be creative; don’t rush just to be friendly Faced with a position, ask why do you need that? (c) 2014 Dwight Golann

Compare $30K in cash to Sally $0 in special advertising $30K total cost to Lyric to $25K in cash to Sally $5K in special advertising (c) 2014 Dwight Golann

What Solutions in Sally Soprano? Opera: Pay -- How much? When? Risks? Sally: Advertising -- How much? Form helpful to both? Other PR: Master classes Star Status: Limos, roses, dressing room, tribute Future Performances Other ideas? (c) 2014 Dwight Golann

Why Is It Hard? We instinctively view world from our own lens: we assume they want what we want, and would reject what we oppose. Not true! Bargaining fosters competitiveness: We want to “win” and be tough Openness can hurt you when dividing the gains (c) 2014 Dwight Golann