The Fine Art of Negotiations Course: FX230MPI

1. The Fine Art of NegotiationsCourse: FX230MPI Presented by: Patrick Callahan Municipal Consultant Snyder & Associates 563-599-3708 pcallahan@synder-associates.com

2. The Final Art of NegotiationsGeneral Overview of Session • City Government – Examples of Negotiations • Introductions – Speaker & Participants • The Elements of Negotiation • Styles of Negotiations • The Path to Preparation • Preserving the Relationship • Sealing the Agreement • Tips for Negotiating

3. Definition of Negotiate • Negotiate – to settle by bargaining; to arrange; to transfer (a bill, etc..); to surmount; v.i. to discuss with a view of finding terms of agreement; to bargin • Webster’s Dictionary 1987 Edition

4. Patrick Callahan Work Experience • City Experience • City of Fort Madison, IA - 1974 to 1977 • City of West Point, IA – 1977 to 1978 • City of Maquoketa, IA – 1978 to 1993 • City of Anamosa, IA – 2005 to 2010 • Consulting Experience • Institute of Public Affairs – 1993 to 2005 • Ruan Securities Corporation – 2000 to 2005 • MCMS Consulting – 1993 to 2005 • Synder & Associates – 2010 to Present

5. Patrick Callahan Education • Formal Education • Cascade High School – 1968 • Loras College – 1972 Political Science • The University of Iowa – 1974 Public Administration • Recent Class - Negotiation – Get More and Give More at Kirkwood Community College by Julia King Tamang March 12, 2012

6. Professional Experiences Negotiations • Maquoketa – Union Negotiations • Anamosa – Contractor Disputes • Consultant – Cable & Gas Franchise Renewals • Consultant – Employment Agreements on Searches for City Administrators

7. Negotiations in Your Daily Lives • Major agreements – union contracts and franchise renewals • Routine agreements – payment plans and employee issues • Personal business – car purchases, service fees, etc • Personal lives – spouses, children and grandchildren

8. City Government – Examples of Negotiations • Collective Bargaining Agreements – Labor Unions • City Employees – Salary adjustments, Fringe benefits, and Hiring • Department Heads – Employment Agreements • City Budget Discussions – Meetings to balance the budget • Lawsuit Settlements

9. City Government – Examples of Negotiations • Contractors – Change orders on projects • Engineers – RFQ, RFP, & Fees • Utility Company Franchise Agreements • 28E Agreements – Multiple Agencies and Government Units • Citizens – Utility Payment Plans

10. City Government – Examples of Negotiations • Employee Termination Agreements • Regulatory Agencies – DNR, EPA, IRS, DOT • Vendors – Purchase of City Supplies • Economic Development Incentive • TIF Rebate Agreements • TIF Grants • Tax Abatement Agreements

11. Negotiations in Your Personal Lives • Spouse/Significant Other • Children • Grandchildren • Service Providers – Cable Company • Vendors – Car Dealers

12. Class Participants - Introductions • Your Name • Your City and Population • Your Position • Negotiation Experiences • What is your City known for?

13. What is Negotiation? Negotiations: Agreement: A process we all use instinctively When used consciously, it can help fulfill our needs An exchange between two or more parities for the purpose of reaching an agreement Occurs when both parties accept the terms of the arrangement – They do not have to like it. The Executive SummaryThe Elements of Negotiation

14. The Essence of Negotiations: The Vehicle of Negotiations: The Criteria of Negotiations: Cooperation Communication Self Knowledge Flexibility Empathy Timing The Executive SummaryThe Elements of Negotiation

15. What signals success? • You met or exceeded your goals • Your success is good in the short run - and in the long run • You strengthened the relationship • You had an efficient bargaining process

16. What signals success? • No damage to relationship “Bringing them to their senses, not to their knees.” • Long term – Took care of the other person

17. Barriers to Negotiations • Anger • Fear of Rejection • Manipulation • Criticism • Assumptions • Failing to Listen • Bottom Line – Sole Focus

18. Special Considerations for Public Officials • Client • City Council or Board Approval • Confidentiality • Fiscal Limitations • “Deep Pockets” • Fairness and Equality

19. Special Considerations for Public Officials • Precedent • Municipal Bond Rating • Costs of Litigation • Public Accountability • Integrity

20. Understand yourself as a negotiator • Competitor – Win/Lose Person • Accommodator – “Door Mat” • Collaborator – “Win/Win” Style • Avoider – No interest In any given situation we all have some of these styles.

21. Which style is best? Substantive outcome important? YES NO YES NO Relational outcome important?

22. What is your predominate style of Negotiations? • Work Life? • Personal Life? Group Discussion

23. Keys to managing style • Develop flexibility • Know your strengths and weaknesses • Compensate for your weakness – outside assistance • Know your “hot buttons” – take a break

24. Know your power sources & strengths • Information or other resources • Personal traits • Skills – Especially communications • Expertise • Experience (your or someone else’s)

25. Know your power sources & strengths • Problem solving • Trade Information – “Buy Points” • Do not make too many assumptions – Check it out!

26. Take history into account • Your general negotiating experience • Your negotiating experience with this person or company • Look for how your experience creates an advantage or bias

27. Know your beliefs & attitudes • What are your beliefs and attitudes about negotiations? • Do they apply here? • How will they affect this deal? • Know your attitude on money • Your attitude towards the boss – i.e. city council

28. Authority & constituencies • How much authority or power do you have to affect the outcome of this negotiation? • Do city or state laws or policies restrict or protect you? • Are there rules by which you must abide? • Are you negotiating in behalf of someone higher up who has the final say? City council?

29. Why are negotiators unprepared? • People assume “just talking” is low risk • Preparation takes too much time • People don’t know how to prepare well

30. Why are negotiators unprepared? • Many deals are lost or missed due to poor preparation • Not ready? Postpone it • Know how to prepare

31. Stakeholders Challenge Position Interests Options Alternatives Legitimacy Communication Relationship Commitments Path to preparation

32. Group Discussion The Path to Preparation Two Examples • Collective Bargaining Agreement • Construction Project – Contractor change order • What are some actions that could be taken to prepare for negotiations? • How do you maintain a good working relationship after negotiations?

33. Preparation: Identify stakeholders • Who has stake in the outcome? • Anyone at the table • Anyone who stands to gain or lose anything they value • Any “invisible” players or constituencies • Anyone on either side who is affected by the outcome

34. Preparation: Interests • Look for the interests behind positions • Ask “why?” and “for what purpose?” • Ask yourself, “What will happen if I get this?” • Consider the other side’s interests • Probe for their underlying interests • Record this information and use it • Verify it

35. Preparation: Four kinds of interests • Content (substantive) • Be specific and measurable • Break complex goals into strategic stages • Relationship • Present • Future • Identity • Your sense of “who I am” and the other side’s • Process • How to communicate

36. Preparation: What can be traded • Define the bargaining “mix” • What are the pieces? • Are any pieces linked? • Prioritize your interests • Content, relationship, identity and process • Identify limits (upper and lower constraits) for substantive issues

37. Preparation: What can be traded • Hold off on commitment until your know their needs and desires • Not sure on their priorities – Ask them • Goal – Give away low value stuff

38. Preparation: What do people want? • Consider short and long term interests • Check to make sure your interests include the needs of your constituents in your organization • Political mistakes now, cost you later • Look beyond this first deal • What is the order of priority

39. Preparation: What’s most important? • Order tells relative importance • Order tells relative value in terms of dollars • Order helps avoid making concessions on the wrong things • Order helps you decide on packages later on in the deal

40. Preparation: Developing supporting arguments • What facts support your view? • What validates those facts? • Who can help you elaborate or clarify facts? • What data do you need? • Get help, if necessary

41. Preparation: Exploring their interests • Why are these objectives important to them? • How did they come to this position? • What if they can’t reach your goals? • How have their needs changed since you last talked? • Last, outline what you don’t know. Inquire about those things as you go along.

42. Preparation: Researching the other party • Things to learn • Their objectives • Their interests • Their alternatives • Their resources • Their reputation, style, and behavior • Their authority to make an agreement • Their likely strategy and tactics

43. Researching the other party • Need a network of contacts to call • Check on-line for information • Keep track of the information • Remember their style and credibility • Try to get to know them

44. Preparation: Consider options • An option is a possible agreement or parts of an agreement • Common mistakes • Taking a narrow, one-sided focus • Having only one option, with no fall-backs • Thinking that the only approach is to close the gap between differences • Key element • Ability to design the “bargaining mix”

45. Preparation: Building options packages • Step 1 • Examine interests • Figure the “give-aways” from their list that are easily fulfilled and record those • Identify your “throw-aways” (confidential list)

46. Preparation: Expanding the pie • Step 2 • Don’t divide the pie, EXPAND the pie • Remember – the deal is not just about the money.

47. Preparation: Finalizing options • Evaluate the risk and benefits of options, use sub-groups for complex options • Narrow the range to a few of the best • Be willing to justify personal preferences • Be alert to the influence of intangibles • Cool off and come back • Keep decisions tentative till the end – conditional language

48. Preparation: Relationship • When done – get it in writing • When done – Shut up

49. Preparation: Consider alternatives • Best Alternative to Negotiated Agreement (BATNA) • What will you do if you can’t agree? • BATNA • What are your option if the deal fails • How good is your Plan B, really?

50. Preparation: Legitimacy • What criteria can you use to persuade each other that you are not being ripped off? • Legitimacy is a tool to persuade others • Legitimacy is a shield to protect yourself Examples • Collective bargaining – salary survey • Change orders – Unit prices