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David received a MSc. in International Management (Oil and Gas concentration) from the University of Liverpool and completed the Strategic Decision and Risk Management Program at Stanford University. He obtained his Civil Engineering degree in 2001 from Santa Maria University in Venezuela and progressively advanced his education in Project Management, Project Development and Organizational Strategy at several institutions across the globe, remarkably Villanova University in USA and the Institut Français du Pétrole (IFP) in Paris. David is a Professional Engineer (P.Eng.) in the province of Alberta, Canada.He can be contacted at david.tain@septentrioncanada.com

Phase Approach Negotiations*

David Tain, MSc., P.Eng., PMP

In our lifetime, we are in constant negotiation: we negotiate with our parents a reward for our good behaviour, an extension in our curfew, we negotiate with our teachers the way an exam was corrected to obtain more points for the procedure, with our employers our salaries, with the banks our mortgages and so on. In the business environment, these transactions become more complex and are influenced by internal and external factors. Internal factors such as culture, education, religion, sex and race define the individual and establish its preconceptions. External elements such as environment, governments and corporations shape the landscape where these interactions take place.


The evolution of a negotiation can be described as a sequential set of activties framed into three phases: The Preparation Phase, where the feasibility and the need of the negotiation process is validated, the Analysis phase where the information of the parties, the scenarios and the conditions under which the negotiation will be developed are gathered and analyzed; and the Execution Phase, where the actual negotiation process will take place trough the physical interaction of the parties and the deployment of the negotiation strategies: 

1- Preparation Phase: A negotiation implies the engagement of two or more parties should be ensured aiming an end objective. Roger Fisher mentions in his book “getting to Yes”, the reason to negotiate is to produce something better than the results obtained without negotiating. With this in mind, the first step of a negotiator is to analyze the potential transaction envisioning its validation. The understanding of the position and strength of the parties is the most crucial element in this validation process: If the position or the leverage of one of the parties is considerably strong compared to the other party, negotiation may not be the most optimal path towards the achievement of a desired result since, more tan likely, the stronger party will dictate a position that the counterpart cannot modify. For instance, it will be very difficult to negotiate the price of a Big Mac in a McDonald’s restaurant or the amount of tax I should be paying to the government.  The ultimate goal of the preparation phase is to determine whether a) it is viable to enter in a negotiation to obtain a desired result or b) the negotiation is not a viable action to obtain a desired outcome, in which case, the negotiation will not exist.


2- Analysis Phase: Once the negotiator has determined in the Preparation Phase that none of the parties has the strength to establish a unilateral position, the negotiator enters in the Analysis phase. In this phase, the negotiator should invest a substantial good amount of effort in collecting as much information as possible to enhance the power when entering in the ”negotiation table” by identifying the key features of the transaction. These features can be divided into three interrelated categories:

  • The internal and external strengths and weaknesses of both parties,
  • The sociocultural or corporate characteristics that define individuals and/or the companies involved in the negotiation, and
  • The context under which the negotiation would take place.  


The likelihood of success of the negotiation increases considerably with the level of information obtained in this phase. In parallel, the negotiator must perform simulations of the future scenarios with the objective of visualize as close as possible the potential outcomes of the negotiation. The scenarios should be categorized and arranged from the most pessimistic to the most optimistic one. It is here where the negotiator will define the BATNA: The Best Alternative to Negotiated agreement. In other words, the bottom line of the negotiation in case the minimum acceptable requirements are not met. At this point, the negotiator may have collected enough information to go to the negotiation table ready to deploy her strategies in the next phase. 

3- Execution Phase: The Execution phase is where the actual negotiation is developed. In this phase, the parties will interact with each other. The main characteristic of this phase is the deployment of the negotiation strategies by the parties to ensure the achievement of their particular objectives. Depending on their power and position, the negotiation strategies will move between two dimensions that may combine and overlap with each other during the negotiation process. These are the Collaborative dimension and the Persuasive dimension.  


 A negotiation strategy can incline towards the collaborativedimension if both parties have similar power or position. In this case, the strategies will revolve around the identification of common grounds where the parties can work in. The result will most likely be a win-win siruation.This dimension approach proposed by the through Roger Fisher’s works in the Harvard Negotiation Project. Fisher’s methodology outlines 4 main strategies:

  • the separation of the people from the problem,
  • the focus on the interests over positions,
  • the discovery of options for mutual gain and
  • the reinforcement of using objective criteria. 


When the power or the position of the negotiating parties is dissimilar, the strategies will move around the persuasive dimension. The main characteristic of persuasive strategies is that they work by modifying the “normal” sequence of events where the negotiation takes place, the behaviour of the counterpart or both. Conversely to the collaborative strategies that focus on the discovery of common grounds,  persuasive strategies artificially create temporary atmospheres that often distort the perception of the real negotiation environment. In some cases, these techniques can target the Maslow’s hierarchy of needs of the counterpart and psychologically reduce the resistances. The strong psychological component in this dimension not increases the level of complexity of this type of negotiations (compared to the ones developed in a collaborative dimension) and  educes the likelihood of a win-win scenario as an end result.


Retail companies, for example, regularly use persuasive strategies to increase their sales or to introduce new products, and they train their sales representatives in to follow these techniques. They create artificial environments to convince the buyer that their option is the more advantageous in the market and psychologically disable any resistance. Frequently, we see publicity with lines such as “this product is designed for an exclusive group of individuals” or “taking a special promotion that won’t be longer available”. Less often, and in much more extreme cases (hostage situations, countries crises, etc.) the application of persuasive strategies may prevail over the collaborative approach as the later fails as an alternative to reduce the possibility of a catastrophic outcome.


Dr. Robert Cialdini provides an excellent illustration of persuasive strategies in his Book “Influence, Science and Practice”. Cialdini frames some of the strategies into 6 fundamental principles:

  • Reciprocation (I give you first, you pay me later),
  • Commitment and Consistency (once engaged in a behavior, change will be resisted),
  • Social Proof (Let’s do what others do),
  • Liking (you are special to me, follow my steps!),
  • Authority (my hierarchy makes you obey) and
  • Scarcity (Hurry up! These are the last ones!).


Phase approach negotiation aims to cover all aspects of a potential transaction from preparation the execution, allowing the negotiator to validate a the transaction, study the parties and preparing a strategy to ensure a desired objective. The fact that negotiations depend fundamentally on people and their external environments makes cumbersome the establishment of a firm set of strategies that can be rigidly applied to determined cases. Therefore, understanding the dimensions where negotiations take place is paramount to recognize the power and the position of each party and design the most appropriate negotiation strategy in a particular situation.

 
References: 

Cialdini, R. (2009) Influence, Science and Practice, New York: Pearson 

Fisher, R. & Ury, W. (1997) Getting to Yes - Negotiating agreement without giving in,  New York: Penguin

 About the Author:


David Tain, MSc., P.Eng., PMP is the  Principal Consultant - Project Management & Strategy Execution at Septentrion Strategic Solutions. David has worked extensively in the development of industrial facilities primarily for the oil and gas sector, holding diverse project leadership positions in several international oil operators and multinational engineering and construction corporations in North and South America. His professional and academic expertise focuses on projects execution, strategic organization, decision analysis, leadership, negotiation and the analysis of human behaviour in project environments. 


* First edition published at PM World Journal, Volume II, issue IV. Available at:

 http://pmworldlibrary.net/wp-content/uploads/2013/09/pmwj9-apr2013-tain-phase-approach-negotiations-AdvisoryArticle.pdf