© January 23, 2013 Cities for Financial Empowerment Fund All rights reserved.

Financial Empowerment Center Counselor Training Curriculum Topic 9: Negotiation

I 3 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Questions to Think About What is effective negotiation? What kind of preparation is required for a negotiation? How do I ensure the other party keeps its side of the negotiated agreement?

I 4 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. What is Negotiation? “…back-and-forth communication designed to reach an agreement between two or more parties with some interests that are shared and others that may conflict or simply be different.” (Moffit & Bordone: The Handbook of Dispute Resolution) “Process through which parties move from their initially divergent positions to a point where agreement may be reached”. (Steele & Beasor: Business Negotiation – A Practical Workbook)

I 5 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. “Acceptable compromise by determining which needs are fixed and which flexible for negotiators.” (Fisher & Ury: Getting to Yes) “Break through the barriers: your reaction, their emotion, their position, their dissatisfaction, their power.” (Ury: Getting Past No) What is Negotiation?

I 6 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. In a Nutshell: Getting what each party wants via effective communication and compromise. What is Negotiation?

I 7 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Effective Negotiation Steps to A Successful Negotiation 1.Preparing 2.Negotiating From Position of Strength 3.Summarizing and Memorializing Agreement 4.Delivering As Agreed

I 8 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Step 1: Preparing Gather All Necessary Information Answer the following questions: 1.What information do I need to know? What are the accumulated late fees? How many late payments have there been? Has this account been negotiated before? What is the client’s cash flow? 2.What resources do I need in order to negotiate this account on behalf of my client? Does the creditor need a letter proving job loss? Are there any proofs of previous payments? Prepare all necessary documents and summarize the facts. 3.What legal rights are involved for each party?

I 9 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Preparation 4.Who is the other party? Is it the creditor, a third party collector, a buyer of the account? Is there an intermediary – A mediator, referee, another counselor, attorney? 5.What is the other party’s authority to negotiate? Is this the decision maker? If third-party collector, do they have a WA license? Do they have documentation of the debt? 6.What are the other party’s objectives? What does he need to accomplish? What does he have at stake? 7.What motivates the other party? Performances, commission.

I 10 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Preparation Likes and dislikes Personal issues Find some common ground What do both sides want? Consider the needs of everyone involved

I 11 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Preparation Define Desired Outcome What is the range of acceptable outcomes? Maximum (Ideal) Minimum (Acceptable) Be SMART What can both sides afford to lose? Understand the consequences of the decision

I 12 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Preparation Consider alternative options, if an agreement cannot be reached Prepare to walk away Understand the consequences Consider how to minimize effects

I 13 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Step 2: Negotiating From Position of Strength Understand negotiation strategies and tactics (the other side is using them too) Frame and ask questions properly Assess and evaluate the offer (go back to the list of desired outcomes from preparation)

I 14 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Effective Negotiation – Position of Strength Negotiation strategies and tactics Negotiation decoy Extreme offer Nibble Cherry picking Flinch Good cop / bad cop

I 15 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Effective Negotiation – Position of Strength Negotiation strategies and tactics Limits – Best offer, deadline Higher authority Take it or leave it

I 16 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Frame & Ask Questions Framing questions properly sets stage for rapport, sense of cooperation “Cooperative” questions What did you mean by…? Can you tell me more about …? Is it possible to…? Please help me understand…

I 17 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Frame & Ask Questions Questions that challenge, or escalate conflict What?? Why?? Do you honestly expect me to…? Isn’t it true that…?

I 18 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Assess & Evaluate Offer Choose when, where and how to respond Allow time to respond appropriately Apply negotiation tactics

I 19 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Step 3: Summarize & Memorialize Agreement After an agreement has been reached: Summarize and restate terms with other party Memorialize ASAP – Confirm by or fax GET IT IN WRITING!!!!

I 20 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Step 4: Deliver As Agreed Review the offer’s terms for amounts, deadlines, processes Deliver as agreed in a timely and appropriate manner

I 21 © January 23, 2013 Cities for Financial Empowerment Fund All rights reserved. Role Play All of the credit cards are jointly held. Bobby has a 712 credit score, and Marta has a 690 score. They recently missed the monthly payment on one of the cards by 15 days, and were charged a $39 late fee. The credit card company for which his payment was late, called Bobby at work, and left a message with a co-worker asking him to call their 800 number. Bobby did get the message, and the card company called again the next morning. This time, the caller left a message saying that Bobby’s payment was overdue with his co-worker. Marta has a savings account with $500 that pays $1.50% per year. On April 10, Bobby’s mother and brothers sent him $1,500 for his birthday. Is there anything that Bobby did that you would change, and if so, what would it be and why? Topic 9 Exercise #1