Internal Negotiations: Win, Lose, or Collaborate

Internal negotiations can include:

  • Resource allocation discussions
  • Project management and implementation
  • Labor relations
  • Influencing and persuading
  • Recruitment and promotion
  • Etc.

The problem starts with the structure of most corporate firms.  Decisions tend to follow a pyramid like hierarchy, even in flat or modular organizations.  As a result, disputes and conflicts are escalated for resolution.  The two sides submit their conflicting views and recommendations for consideration.  The decision maker chooses.  One side wins, and one side loses.  At the risk of over-simplifying the problem, this process creates win-lose outcomes when clearly win-win is appropriate given the circumstance.  (see Wheel of Negotiation)

Change the Decision Process

In order to avoid a win-lose outcome, the first step is to begin treating the discussion as a negotiation.  Instead of relying on delegated authorities to solve the conflict or issue, agree with the parties involved to reach a consensus as a group.  Leave escalation as a means for resolving deadlock or last resort.  If deadlock occurs, a “last best offer” style for the decision can be very effective at minimizing the lose factor.  In treating the issue as a negotiation a formal process needs to be followed to maximize the potential result. (Details below)

  1. Joint brain-storming
  2. Value and priority setting
  3. Agenda exchange
  4. Information Gathering
  5. Concession identification and trade generation
  6. Consensus building
  7. Follow through and execution

Respect and Ego

Egos are absolutely stifling during internal negotiations.  An ego is associated with winning.  For someone to win, someone must lose and you’re right back where you started.  Internal discussions are emotionally charged; adding unnecessary egos to the mix perpetuates the problem.  Enough said.

Respect during and after the process is essential to foster the appropriate climate.  You have to give respect to get respect.  “Give to get” is a theme that will run through the entire process.  Ask yourself two simple questions:

  1. How much value do I gain by getting respect from my counterpart? (choose high, med, low)
  2. What does it cost me to give respect? (If the answer isn’t zero that’s your ego talking)

Many of the problems associated with internal negotiations are created by the way the people talk to each other.

  • How you say something, i.e. your body language
  • The words you choose
  • The tone you use

As a rule you need to eliminate all forms of “No”, and replace it with phrases like “here’s what I can do….”.  See additional information under High Dependency negotiations.  Definitely more complex than it sounds.

Create a Valuation Method

To facilitate the decision process you will need to agree a way to value each side’s proposal.  Borrowed from lessons learned during the early 70s as the United Nations established the “Law of the Sea”, designed to regulate mining activities in international waters.  The valuation method ensures that subsequent proposals grow overall value instead of moving the sides further apart.  It is not used to make the final decision; instead it is used to police directional movement.  Each side must value their proposal and compare the new value against their previous proposal.   Setting up a valuation model usually means involving the finance department to identify key operational metrics.  While each model will be different here are some guidelines,

  • It must contain and evaluate priorities from each side
  • It must account for both tangibles and intangibles
  • It is not used to make the decision, rather ensure directional integrity
  • Can use qualitative values (High, med, low) as well as quantitative values (profit, cost estimates, etc.)

Valuing Intangibles

Internal negotiations involve a lot of complexity encompassing a wide range of issues and variables.  Simple pro-formas often limit the decision to tangible results.  Intangibles take on many forms and are often linked to key branding/marketing elements, corporate policies, time management, resource allocation, etc.  I recommend a simple approach to valuing the intangibles, use an ordinal system that ranks the intangibles from the most important to the least.  The simplest way is to use high, medium and low.  As long as you’re consistent in your approach you maximize the trade-offs during the consensus-building phase.

The Process

  1. Joint brain-storming
  2. Value and priority setting
  3. Agenda exchange
  4. Information Gathering
  5. Concession identification and trade generation
  6. Consensus building
  7. Follow through and execution

Joint brain storming begins the process by setting the stage and managing the climate for a creative solution.  The goal of the brain storming session is to identify as many variables and issues involved the final agreement.  The rules are simple:

  • One moderator who directs traffic and ensures compliance to the rules
  • ALL IDEAS ARE CAPTURED
  • No discussion is allowed
  • 4 to 6 people maximum
  • Equal participation from each side
  • Only allowed 30 minutes maximum

After the joint brain storming, each side will work independently to identify their priorities and rank each issue in terms of value and cost.  Value accrued for your “Takes”, and the cost associated with your “Gives”.  Some issues can be a “Give” or a “Take” depending upon the proposal, so be sure to identify both values and costs when appropriate.  It is at this stage you will cull the list generated by the brain storm session to eliminate unrealistic or non-material items.

Each side will then submit their agenda containing all of their issues for inclusion in the discussion.  The final agenda should be a jointly agreed agenda encompassing all issues from both sides.

An information meeting is held to exchange relative priorities between the groups.  Transparency is the key to a successful exchange of priorities.  You want to be completely open about the value and cost.  Takes notes on the other side’s priorities noting the value and costs.

Each side will then generate a number of proposals and trade-offs to present during the consensus building phase.  This is the beginning of the actual negotiation part of the process.  Use the valuation model to track the movement of each proposal and make sure the value is increasing with each proposal.

The two sides begin to exchange proposals and seek agreement.  Again monitor the language very closely as you always seek to understand “Under what circumstance could you agree to the following…..”.

rinse and repeat steps 4, 5, and 6 until agreement is reached.

Make sure, before you leave the room you have agreed what has been agreed.  Identify follow up steps, project benchmarks, etc. to ensure the execution happens without a hitch.

The Summary

To summarize, treat important internal discussions as if they involved outside parties.  Your preparation will foster your success.  Your ability to minimize escalations will be greatly appreciated by the management team.  No manager likes to be the heavy in a win-lose decision.  Here are the 6 steps to successful internal negotiations.  Good luck.

  1. Treat internal discussions as a negotiation – change the decision process
  2. Give respect to get respect
  3. Eliminate egos
  4. Create a valuation method
  5. Value intangibles
  6. Follow a formal negotiation process for the discussions between the sides
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