PRINCIPLED NEGOTIATION

1. Introduction: the basic concepts

Principled negotiation is the name given to the interest-based approach to negotiation set out in
the best-known conflict resolution book, Getting to Yes, first published in 1981 by Roger Fisher
and William Ury. The book advocates four fundamental principles of negotiation: 1) separate the
people from the problem; 2) focus on interests, not positions; 3) invent options for mutual gain;
and 4) insist on objective criteria.
Separating the people from the problem means separating relationship issues (or "people
problems") from substantive issues, and dealing with them independently. People problems,
Fisher, Ury and Patton observe, tend to involve problems of perception, emotion, and
communication. (1991, p. 22) Perceptions are important because they define the problem and the
solution. While there is an "objective reality," that reality is interpreted differently by different
people in different situations. When different parties have different understandings of their
dispute effective negotiation may be very difficult to achieve. (This is what we have been calling
framing problems.) Fisher, Ury and Patton suggest seven basic strategies for handling problems
of perception. (Click here for a description of these strategies.)
People problems also often involve difficult emotions fear, anger, distrust and anxiety for
example. These emotions get intertwined with the substantive issues in the dispute and make
both harder to deal with. Fisher, Ury and Patton suggest five tactics for disentangling and
defusing emotional problems in the negotiation process. (Click here for a description of these
tactics.)
Fisher, Ury and Patton consider communication problems to be "people problems" as well. They
list three types of communication problems. First, disputants may not be talking to each other.
While their comments are formally addressed to the opponent, they are actually addressing some
outside audience. They are grandstanding, or playing to the crowd. A second communication
problem arises when parties are not listening to each other. Rather than listening attentively to
the opponent, parties may instead be planning their own response, or listening to their own
constituency. Finally, even when parties are both listening and talking to each other,
misunderstandings and misinterpretations may occur. Fisher, Ury and Patton suggest techniques
for minimizing communication problems. (Click here for a description of these techniques.)
Negotiating about interests means negotiating about things that people really want and need, not
what they say that want or need. Often, these are not the same. People tend to take extreme
positions that are designed to counter their opponents positions. If asked why they are taking
that position, it often turns out that the underlying reasons--their true interests and needs--are
actually compatible, not mutually exclusive.
By focusing on interests, disputing parties can more easily fulfill the third principle--invent
options for mutual gain. This means negotiators should look for new solutions to the problem
that will allow both sides to win, not just fight over the original positions which assume that for
one side to win, the other side must lose.
The fourth rule is to insist on objective criteria for decisions. While not always available, if some
outside, objective criteria for fairness can be found, this can greatly simplify the negotiation
process. If union and management are struggling over a contract, they can look to see what other
similar companies have agreed to use as an outside objective criteria. If people are negotiating
over the price of a car or a house, they can look at what similar houses or cars have sold for. This
gives both sides more guidance as to what is "fair," and makes it hard to oppose offers in this
range.
Lastly, Fisher, Ury, and Patton counsel negotiators to know what their alternatives are. If you
dont know what your alternatives to a negotiated agreement are, you might accept an agreement
that is far worse than the one you might have gotten, or reject one that is far better than you
might otherwise achieve. For this reason, Fisher, Ury, and Patton stress the importance of
knowing and improving your BATNA before you conclude negotiations. (Click here for more
information on BATNAs.)
In Getting to Yes, Fisher, Ury, and Patton argue that almost all disputes can be resolved with
principled negotiation. They reject the notion that some conflicts are inherently win-lose or that
positional bargaining is ever a superior approach. Other theorists, however, disagree--as do we.
Principled negotiation is an excellent tool to use in many disputes, but we have found that it
needs to be supplemented with other approaches in the case of intractable conflicts. It also is
more attuned to U.S. and Western European cultures which emphasize rational cost-benefit
analysis, and de-emphasize the importance of relationships and emotions. Cultures which see
relationship issues as central aspects of the conflict may find principled negotiation less useful.
(Click here to read about the limits to principled or interest-based negotiation.)
Elements of principled negotiation:
1. Separate the people from the problem check the personalities at the door this is not
personal;
2. Focus on interests rather than positions your position may be you want a $10K salary
increase but your interest is in fair compensation;
3. Generate a variety of options before settling on an agreement this may even result in
growing the deal;
4. Insist that the agreement be based on objective criteria ie. criteria that are measurable with
the parties responsible and accountable.

There are 3 phases to successful win-win negotiating:
Phase 1: Before the negotiation: You cant win if you dont play! This phase is part of the
science of negotiating this is the preparation and planning step when you:

o your SWOT analysis and consider the other partys interests as well;

so that you know what you cant live without and if the deal
goes there, youll be prepared to walk away.

Phase 2: During the negotiation: If you want something, ASK! This phase is the art of
negotiating:
a principled negotiator is fair, honest, creative, collaborative;
including actively listening for facts and reasons behind the other
partys interests so you can try to develop creative alternatives without losing the win-win focus;
listen for new ideas, think creatively to handle
conflict, build a cooperative environment;


Phase 3: After the negotiation: Youve made your bed, now youll have to lie in it! This
phase is the post-mortem where we return to the science of negotiating weve learned
something from the quality assurance movement:
outcome;
sk what went well? and What could be improved for the next time?

To conclude, in the art and science of win-win principled negotiating, the product of the
negotiation isnt a document; its the value produced once the parties have done what they
agreed to do. Negotiators who understand that the outcome is what matters prepare differently
than deal makers do. They dont ask: What might they be willing to accept? but rather How
do we create value together?




References:
K. G. Allred andIntroduction
Negotiation can be defined as: "To communicate with the
objective of reaching an agreement by means, where appropriate,
of compromise."
CIPS believes that negotiation is a key skill of the purchasing
and supply management professional. The ability to negotiate
effectively is so fundamental, that without it, an effective
purchasing and supply management service cannot be provided.
Although some people have a natural flair for negotiation
it is a skill which not only needs to be learned through
professional training, coaching and experience but requires
refresher training at, at least, five year intervals.
Purchasing and supply management professionals should
undertake, or lead, any significant negotiation with suppliers
required by their organisation. Where someone else is to
undertake a negotiation, it is the responsibility of the purchasing
and supply management professional to ensure that
they are properly trained and prepared for the experience.
CIPS believes there are reputational risks for the organisation
when an untrained individual undertakes a complex commercial
negotiation. Negotiation should be part of most procurement
exercises especially those which are of high value, high
risk or are complex. In some cases, negotiation with approved
suppliers is preferable to inviting bids such as when
the requirement is difficult to specify.
CIPS Positions on Practice
CIPS views, opinions and beliefs are stated throughout the
document; however the broad practice statements which
underpin the text are as follows:
CIPS firmly believes that negotiation is a key skill requirement
for purchasing and supply management professionals
and is one moreover which requires refresher training
on at least a five -yearly basis
CIPS believes that purchasing and supply management
professionals should be involved either by leading, supporting
or facilitating, on behalf of their organisation, the
strategy and process for any negotiations with suppliers
CIPS advocates the use of cross-functional teams when
significant negotiations are involved; these should be led
by purchasing and supply management professionals
CIPS emphasises the criticality of planning the negotiation
which should include, for instance researching the background,
identifying roles, setting objectives, factors for
trade, potential concessions and a fall back position or
position at which the buying organisation is prepared to
walk away from the negotiation.
In the negotiation process, CIPS believes that ideally purchasing
and supply management professionals should aim
for win-win outcomes (which as explained below - need
not necessarily represent ideal outcomes) for both parties.
Advantages and Disadvantages of
Negotiation
The advantages of negotiation include:
It is a relatively expedient method of obtaining a value-formoney
solution
It is a useful method of maintaining value for money in a
single source situation i.e. where there is no real competition
It is useful when the requirement is difficult to specify
It is relatively inexpensive to undertake
It is flexible and not prescriptive
It should be confidential
Undertaking Negotiation
Purchasing and supply management professionals often lead
cross-functional teams when undertaking complex procurement
negotiations. It is imperative that those parties undertaking
the negotiation are empowered to make decisions so
as to bring discussions to an effective conclusion.
CIPS encourages purchasing and supply management professionals
to understand and appreciate the importance of the
use of emotion and body language in negotiations, in order
that all messages given directly or indirectly by the supplier(s)
can be interpreted appropriately.
To be successful, the purchasing and supply management
professional should ensure that the negotiation is properly
planned. The extent of the planning should be a function of
value and risk. The planning process should include:
A diagnosis of the situation
An accurate appraisal of the buying organisation's expectations
An assessment of both parties' bargaining power
The setting of objectives for the negotiation e.g. the ideal,
realistic and fall back positions need to be identified and
agreed
The development of a strategy for the negotiation i.e. approach,
style, communication, concessions, baseline even
venue e.g. a neutral venue may prove more appropriate
than the offices of one of the parties to the negotiation
The factors to be traded need to be identified i.e. those
things which the buying organisation can trade for things
they would like to obtain from the supplier and those
things which can be conceded etc. It is advisable to try to
anticipate the suppliers' perception of such factors.
Tel +44(0)1780 756777 Fax +44(0)1780 751610 Email ckw@cips.org Web www.cips.org
During the negotiation, the strategy must be implemented
and in addition:
The needs of both parties should be explored
Movement needs to be maintained
Objectives may need to be reviewed
Tactical ploys may need to be used
Concessions may need to be given from both sides
Settlement needs to be recognised and agreed
Closure needs to happen
The agreement needs to be documented
Issues to Consider
CIPS believes that purchasing and supply management professionals
should aim for a mutually acceptable solution for
both parties where appropriate. There will rarely be occasions
when the benefits of the negotiation are equally balanced
but if suppliers feel they have "lost", this may adversely
affect their attitude to the relationship making any
negotiated gains by the purchasing and supply management
professional short-term triumphs.
In some cases e.g. when negotiating with an ad-hoc supplier,
as opposed to one with whom the buying organisation is to
have a longer term relationship, it is appropriate for the
buyer to drive as hard a bargain as possible.
Negotiation is particularly difficult where there is little competition
in the marketplace. This strengthens the supplier
position and correspondingly weakens that of the buyer. The
purchasing and supply management professional must identify
alternatives as part of the negotiation strategy and have a
position with which they are prepared to walk away from the
negotiation (for this position Fisher and Ury coined the term
"Best Alternative to a Negotiated Agreement or BATNA".
Conclusion
Negotiation is a skill which must be learned, and refreshed
periodically. Purchasing and supply management professionals
should be responsible for determining when negotiations
with suppliers are appropriate and ensuring that these are
undertake
What BATNAs Are
BATNA is a term coined by Roger Fisher and William Ury in their 1981 bestseller, Getting to
Yes: Negotiating Without Giving In.[1] It stands for "Best ALTERNATI VE TO a negotiated
agreement." Said another way, it is the best you can do if the other person refuses to negotiate
with you--if they tell you to "go jump in a lake!" or "Get lost!" So it is not necessarily your ideal
outcome--unless your ideal outcome is something you can get without the cooperation of the
other person. It is the best you can do WI THOUT THEM.

BATNAs are critical to negotiation because you cannot make a wise decision about whether to
accept a negotiated agreement unless you know what your alternatives are. If you are offered a
used car for $7,500, but there's an even better one at another dealer for $6,500--the $6,500 car is
your BATNA. Another term for the same thing is your "walk away point." If the seller doesn't
drop her price below $6,500, you will WALK AWAY and buy the other car.

Your BATNA "is the only standard which can protect you both from accepting terms that are too
unfavorable and from rejecting terms it would be in your interest to accept."[2] In the simplest
terms, if the proposed agreement is better than your BATNA, then you should accept it. If the
agreement is not better than your BATNA, then you should reopen negotiations. If you cannot
improve the agreement, then you should at least consider withdrawing from the negotiations and
pursuing your alternative (though the relational costs of doing that must be considered as well).
Having a good BATNA increases your negotiating power. If you know you have a good
alternative, you do not need to concede as much, because you don't care as much if you get a
deal. You can also push the other side harder. If your options are slim or non existent, the other
person can make increasing demands, and you'll likely decide to accept them--because you don't
have a better option, no matter how unattractive the one on the table is becoming. Therefore, it is
important to improve your BATNA whenever possible. If you have a strong one, it is worth
revealing it to your opponent. If you have a weak one, however, it is better to keep that detail
hidden.
Guy Burgess and Heidi Burgess have adapted the concept of BATNA slightly to emphasize
what they call "EATNAs"-- estimated alternatives to a negotiated agreement" instead of "best
alternatives." Even when disputants do not have good options outside of negotiations, they often
think they do. (For example, both sides may think that they can prevail in a court or military
struggle, even when one side is clearly weaker, or when the relative strengths are so balanced
that the outcome is very uncertain.) Yet, perceptions are all that matter when it comes to deciding
whether or not to accept an agreement. If a disputant thinks that he or she has a better option, she
will, very often, pursue that option, even if it is not as good as she thinks it is.
BATNA and EATNAs also affect what William Zartman and may others have called "ripeness,"
the time at which a dispute is ready or "ripe" for settlement.[3] When parties have similar ideas
or "congruent images" about what BATNAs exist, then the negotiation is ripe for reaching
agreement. Having congruent BATNA images means that both parties have similar views of how
a dispute will turn out if they do not agree, but rather pursue their other rights-based or power-
based options. In this situation, it is often smarter for them to negotiate an agreement without
continuing the disputing process, thus saving the transaction costs. This is what happens when
disputing parties who are involved in a lawsuit settle out of court, (which happens in the U.S.
about 90 percent of the time). The reason the parties settle is that their lawyers have come to an
understanding of the strength of each sides' case and how likely each is to prevail in court. They
then can "cut to the chase," and get to the same result much more easily, more quickly, and less
expensively through negotiation.
On the other hand, disputants may hold "dissimilar images" about what BATNAs exist, which
can lead to a stalemate or even to intractability. For example, both sides may think they can win
a dispute if they decide to pursue it in court or through force. If both sides' BATNAs tell them
they can pursue the conflict and win, the likely result is a power contest. If one side's BATNA is
indeed much better than the other's, the side with the better BATNA is likely to prevail. If the
BATNAs are about equal, however, the outcome is much less certain. If the conflict is costly
enough, eventually the parties may come to realize that their BATNAs were not as good as they
thought they were. Then the dispute will again be "ripe" for negotiation.
The allure of the EATNA often leads to last-minute breakdowns in negotiations, particularly
when many parties are involved. Disputants can negotiate for months or even years, finally
developing an agreement that they think is acceptable to all. But then at the end, all the parties
must take a hard look at the final outcome and decide, "is this better than all of my alternatives?"
Only if all the parties say "yes," can the agreement be finalized. If just one party changes his or
her mind, the agreement may well break down. Thus, knowing one's own and one's opponents'
BATNAs and EATNAs is critical to successful negotiation
Determining Your BATNA
BATNAs are not always readily apparent. Fisher and Ury outline
a simple process for determining your BATNA:
1. develop a list of actions you might conceivably take if no
agreement is reached;
2. improve some of the more promising ideas and convert
them into practical options; and
3. select, tentatively, the one option that seems best.[4]
BATNAs may be determined for any negotiation situation,
whether it be a relatively simple task such as finding a job or a
complex problem such as a heated environmental conflict or a protracted ethnic conflict.


Additional insights into
BATNA are offered by
Beyond Intractability project
participants.
Fisher and Ury offer a job search as a basic example of how to determine a BATNA. If you do
not receive an attractive job offer by the end of the month from Company X, what will you do?
Inventing options is the first step to determining your BATNA. Should you take a different job?
Look in another city? Go back to school? If the offer you are waiting for is in New York, but you
had also considered Denver, then try to turn that other interest into a job offer there, too. With a
job offer on the table in Denver, you will be better equipped to assess the New York offer when
it is made. Lastly, you must choose your best alternative option in case you do not reach an
agreement with the New York company. Which of your realistic options would you really want
to pursue if you do not get the job offer in New York?
More complex situations require the consideration of a broader range of factors and possibilities.
For example, a community discovers that its water is being polluted by the discharges of a
nearby factory. Community leaders first attempt to negotiate a cleanup plan with the company,
but the business refuses to voluntarily agree on a plan of action that the community is satisfied
with. In such a case, what are the community's options for trying to resolve this situation?
They could possibly sue the business based on stipulations of the Clean Water Act.
They could contact the Environmental Protection Agency and see what sort of authority
that agency has over such a situation.
They could lobby the state legislature to develop and implement more stringent
regulations on polluting factories.
The community could wage a public education campaign and inform citizens of the
problem. Such education could lead voters to support more environmentally-minded
candidates in the future who would support new laws to correct problems like this one. It
might also put enough public pressure on the company that it would change its mind and
clean up voluntarily.
In weighing these various alternatives to see which is "best," the community members must
consider a variety of factors.
Which is most affordable and feasible?
Which will have the most impact in the shortest amount of time?
If they succeed in closing down the plant, how many people will lose their jobs?
These types of questions must be answered for each alternative before a BATNA can be
determined in a complex environmental dispute such as this one.
BATNAs and the Other Side
At the same time you are determining your BATNA, you should also consider the alternatives
available to the other side. Sometimes they may be overly optimistic about what their options
are. The more you can learn about their options, the better prepared you will be for negotiation.
You will be able to develop a more realistic view of what the outcomes may be and what offers
are reasonable.
There are also a few things to keep in mind about revealing your BATNA to your adversary.
Although Fisher and Ury do not advise secrecy in their discussions of BATNAs, according to
McCarthy, "one should not reveal one's BATNA unless it is better than the other side thinks it
is."[5] But since you may not know what the other side thinks, you could reveal more than you
should. If your BATNA turns out to be worse than the opponent thinks it is. Then revealing it
will weaken your stance.
BATNAs and the Role of Third Parties
Third parties can help disputants accurately assess their BATNAs through reality testing and
costing. In reality testing, the third party helps clarify and ground each disputing party's
alternatives to agreement. S/he may do this by asking hard questions about the asserted BATNA:
"How could you do that? What would the outcome be? What would the other side do? How do
you know?" Or the third party may simply insert new information into the
discussion...illustrating that one side's assessment of its BATNA is likely incorrect. Costing is a
more general approach to the same process...it is a systematic effort to determine the costs and
benefits of all options. In so doing, parties will come to understand all their alternatives. If this is
done together and the parties agree on the assessment, this provides a strong basis upon which to
come up with a negotiated solution that is better than both sides' alternatives. But if the sides
cannot come to such an agreement, then negotiations will break down, and both parties will
pursue their BATNA instead of a negotiated outcome. The Best Alternative to a Negotiated
Agreement (BATNA)i
BATNAs are elegantly simple in concept, but notoriously difficult to execute. A BATNA is the
option a negotiating party might execute should the negotiations fail. The key is that the BATNA
must be executed without the involvement of the opposite. A BATNA is not the negotiations
bottom line a BATNA is something you may wish to do if an acceptable bottom line
cannot be achieved during the negotiations. You should always know and update your BATNA
and always estimate (and update) the opposites BATNA. Seek ways to improve your BATNA
and make the opposites BATNA less valuable.
There are three keys to determining a valid BATNA:
1. It must be an option that you can execute unilaterally (without any action or interaction with
the other negotiating party). A BATNA is not a BATNA if it requires the participation of the
opposite.
2. It must be a real option. It must be something you can and would want to do (have the time,
resources, and will to execute).
3. Finally, it must be perceived as credible by the opposite. You may believe you will execute
your BATNA, but unless the opposite also believes your BATNAs credibility, it is useless. As
an example, if you are negotiating with other base personnel on an office move, and it is getting
nowhere, a strong BATNA would be that your current office space is adequate to do the mission,
and it is available for the foreseeable future. A weak BATNA would be that your current office
area is cramped, the electrical system unsafe, and it is due to be demolished in three weeks. A
useless BATNA is telling the other side your current office space is adequate to do the mission,
and they know the contract to demolish your building was just awarded and begins in 14 days.
BATNAs may change during the negotiation as information and conditions change. For example,
you may be looking for a new car with a good BATNA (your current car is in excellent
condition). However, your BATNA would change considerably if your car got sideswiped in
tomorrows commute.
BATNA is brought up here before the detailed discussion of the five negotiating strategies
because it is a useful tool in four of the five strategies (Insist, Evade, Settle, Cooperate but not
Comply). Of note, in the Cooperative Negotiating Strategy (CNS) there is an extra effort to
identify and manage both sides BATNAs. Additionally, since CNS has relatively more
engagement (in both depth and duration) than the other strategies, there is an opportunity within
CNS to better manage BATNAs (i.e. work conditions to strengthen your BATNA or weaken the
opposites BATNA. In short, BATNA has applicability in many negotiating strategies, but can
be exercised to its fullest potential using the CNS.
integrative bargaining,
the parties perceive that they might be able to
increase the resource pie by trying to come up with a creative solution to the conflict.
They do not view the conflict competitively, as a win-or-lose situation; instead,
they view it cooperatively, as a win-win situation in which all parties can gain.
Integrative bargaining is characterized by trust, information sharing, and the desire
of all parties to achieve a good resolution of the conflict.39 For the BC Nurses
Union and the hospital administrators to show a commitment to integrative bargaining,
each side would need to figure out ways to address some of the needs of
the other, rather than simply taking an adversarial position.
There are five strategies that individuals can rely on to increase the odds of a
win-win solution:40
Emphasize the big-picture goals. This reminds individuals that they are working
together for a larger purpose or goal despite their disagreements.
Focus on the problem, not the people. All parties to a conflict need to keep focused
on the source of the conflict and avoid the temptation to discredit each other by
personalizing the conflict.
Focus on interests, not demands. Demands are what a person wants, and interests
are why the person wants them. When two people are in conflict, it is unlikely
that the demands of both can be met. Their underlying interests often can be
met, creating a win-win solution.
Create new options for joint gain. Rather than having a fixed set of alternatives from
which to choose, the parties can come up with new alternatives that might even
expand the resource pie.
Focus on what is fair. Emphasizing fairness will help the parties come to a mutual
agreement about what is the best solution to the problem.



*Original publication date June 2003; reviewed and updated in July 2012 by Heidi Burgess

[1] In 2011, Fisher and Ury published a 3rd Edition of Getting to Yes. The updated edition was
edited by Bruce Patton and incorporates Fisher and Ury's responses to criticisms of their original
1981 book.
[2] Roger Fisher and William Ury. Getting to Yes: Negotiating Agreement Without Giving In, 3rd
ed. (New York: Penguin Books, 2011). <http://www.beyondintractability.org/library/external-
resource?biblio=23737>.
[3] I William Zartman, Ripe for Resolution, (New York: Oxford, 1985/1989).
<http://www.amazon.com/Ripe-Resolution-Conflict-Intervention-Africa/dp/019505931X>.
[4] Roger Fisher and William Ury. Op.cit, 108.
[5] William McCarthy, "The Role of Power and Principle in Getting to Yes," in Negotiation
Theory and Practice, Eds. J. William Breslin and Jeffery Z. Rubin. (Cambridge: The Program on
Negotiation at Harvard Law School, 1991), 115-122.
<http://www.colorado.edu/conflict/peace/problem/mcca7535.htm>.

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