Getting to Yes is an excellent book about negotiation. It introduces the concept of principled negotiation, which is useful in innumerable scenarios when managing a company.
GETTING TO YES, by Roger Fisher and William Ury
People typically use positional bargaining to reach agreement. Each sides takes a position, argues for it, and makes concessions to reach a compromise. However, positional bargaining is inefficient:
Arguing over positions produces unwise agreements.
Arguing over positions is inefficient (because each side tends to start with an extreme position, stubbornly holds onto it, deceives the other party as to their true views, and makes small concessions only as necessary to keep the negotiation going).
Arguing over positions endangers an ongoing relationship (it becomes a contest of will).
When there are many parties, positional bargaining is even worse (e.g. a UN conference with 150 countries: it takes all to say yes, but only one to say no. Reciprocal concessions are difficult: to whom do you make a concession?)
Being nice is no answer - it just biases the negotiation in favour of the hard player.
There is an alternative: it is called principled negotiation, or negotiation on the merits. The four basic points are:
People: separate the people from the problem.
Interests: focus on interests, not positions.
Options: generate a variety of possibilities before deciding what to do (invent options for mutual gain).
Criteria: insist that the result be based on some objective standard.
I - Separate the people from the problem
Every negotiator has two kinds of interests: in the substance and in the relationship. The relationship tends to become entangled with the problem. "The kitchen is a mess" or "Our bank account is low" may be intended simply to identify a problem, but it is likely to be heard as a personal attack. Positional bargaining puts relationship and substance in conflict.
> Separate the relationship from the substance: deal directly with the people problem. To do this, be conscious that people problems all fall into one of three categories:
PERCEPTION - put yourself in their shoes. See the situation as the other side sees it. Don't deduce their intentions from your fears, and don't blame them for your problem. Discuss each other's perceptions. Look for opportunities to act inconsistently with their perceptions (e.g. the Israelis saw Sadat and Egypt as their enemy; to alter that perception, Sadat flew to the Israeli capital).
EMOTION - recognise and understand emotions, theirs and yours. Fearful, worried, angry/confident, relaxed? Make emotions explicit and acknowledge them as legitimate. Allow the other side to let off steam, and don't react to emotional outbursts. Use symbolic gestures (any lover knows that bringing a red rose goes a long way).
COMMUNICATION - there are three big problems in communication:
Negotiators may not be talking to each other (or at least not talking in such a way as to be understood). They may be playing to the gallery.
Even if you are talking directly and clearly to them, they may not be hearing you. They may not be paying attention.
Misunderstanding - they may misinterpret what you are saying.
> To solve the communication problem, you should:
Listen actively and acknowledge what is being said.
Speak to be understood.
Speak about yourself, not them (e.g. "I feel let down" is better than "You broke your word").
Speak for a purpose. Some thoughts are best left unsaid. E.g. if you let me know that you would be willing to sell a house for $80k after I have said that I would be willing to pay as much as $90k, we may have more trouble striking a deal than if you had just kept quiet.
Prevention works best - the best time for handling people problems, i.e. before they become people problems. This means building a personal and organisational relationship with the other side that can cushion the people on each side against the knocks of negotiation.
Build a working relationship.
Face the problem, not the people. Like two shipwrecked sailors in a lifeboat, rather than quarreling over limited rations, they should disentangle the objective problem from the people and identify the needs of each.
Deal with the people as human beings, and with the problem on its merits.
II - Focus on interests, not positions
For a wise solution, reconcile interests, not positions. Consider two men quarreling in a library: one wants the window open, the other wants it closed. Those are the positions. The interests however are: the first wants some fresh air, the other wants to avoid a draft. To reconcile the interests, they open a window in the next room, bringing in fresh air whilst avoiding a draft.
Interests define the problem. Behind opposed positions lie shares and compatible interests, as well as conflicting ones. We tend to assume that because the other side's positions are opposed to ours, their interests must also be opposed.
How do you identify interests? First, remember that figuring out their interests is at least as important as figuring out yours.
Ask "Why?" - put yourself in their shoes.
Ask "Why not?" - think about their choice. Figure out the choice they are faced with.
Realise that each side has multiple interests. E.g. when negotiating a lease, to obtain a favourable rental agreement, and to maintain a good working relationship with the landlord.
Understand that the most powerful interests are basic human needs: security, economic well-being, a sense of belonging, recognition, control over one's life.
Communicate your interests. The purpose of negotiating is to serve your interests; the chance of that happening increases when you communicate them.
Make your interests come alive - be specific - e.g. "Three times last week a child was almost run over by one of your trucks".
Acknowledge their interests as part of the problem - e.g. "As I understand it, your interests are ..."
Put the problem before your answer - don't say "I believe you should build a fence around the project. Now let me tell you why..." - tell him why first.
Look forward, not back - e.g. a couple quarreling will argue backwards and forwards, scoring "points" against each other, responding to the latest statement of the other, but not moving forward to any agreement.
Be concrete but flexible - "Illustrative specificity" - e.g. "Something on the order of a five-year contract should meet his need for job security".
Be hard on the problem, soft on the people - attack the problem without blaming the people. Give positive support to the human beings on the other side equal in strength to the vigour with which you emphasise the problem. This is called cognitive dissonance. E.g. attack a problem (such as speeding trucks on a neighbourhood street) whilst at the same time giving positive support to the company representative.