Friday, May 22, 2009

TX Young CPAs Conference: Negotiation and Conflict Resolution - Dr. Blaine McCormick

Dr. McCormick is the Associate Dean for Undergraduate Programs of the Hankamer School of Business at Baylor University. He is a nationally recognized scholar on the business practices of Benjamin Franklin and Thomas Edison. Dr. McCormick is regularly interviewed across all forms of national media on these subjects.

If you're faithful in the little things, you'll be faithful in the big things. Successfully negotiating small things, greatly improves your ability to negotiate the big things.

Dr. McCormick led the group thorough a role play simulating the negotiations for buying a house.

Reservation vs. Aspiration points:
Aspiration point is what the seller would like to sell for and what the buyer would like to buy for. Reservation point is what the seller is willing to take and what buyer is willing to pay.

In negotiations, most people focus on their reservation points. If you focus on your reservation point, you will be pulled toward the "worst case scenario." Don't have only a reservation point, you should also have an aspiration point. Justify your aspiration point.

Zone of possible agreements. There is a high probability of outcome at the midpoint between the two anchors.

Who should make the first offer in a negotiation?
Myth: You should never make the first offer.
Science: First offers often serve as anchors for the final outcomes.

Should you cross your fingers and hope that the competitor makes a dumb mistake, or should you be prepared to make a first offer?

Only open when you have prepared your offer.

How do concessions work? (The Negotiation Dance)
Extreme opening positions
Final offer
Last offer
Final last offer
Deal (Maybe)

Robert Cialdini:
"Would you be willing to chaperon a group of juvenile delinquents on a day trip to the zoo?"
17% Agreed 1st Trial
"Would you be willing to spend 2 hours per week for 2 years serving as counselors for juvenile deliquents?"
"Well, then would you be willing to chaperon a group of juvenile delinquents on a day trip to the zoo?"
50% Agreed 2nd Trial

Ben Franklin: One of the greatest entreprenuers in American History.
He helped build the first hospital in America.

After this Rev. Tennent asked Ben Franklin to help raise money for a church building.

1. Challenging proposal -- Will you help me raise money?
2. Reasonable proposal -- Will you give me the name of generous people you know?
3. Minimal proposal -- Will you give me advice?

Ben Franklin's advice:
Approach first, the people that you know will give money. Then approach the people about whom you are uncertain and show them the list of people who have already given. Finally, ask the people you know will never give to your project, because you can underestimate people.

Outrageous - Know the difference between Outrageous and Challenging
Challenging - Create three proposals

Starbucks uses bundling strategy when they ask you, "would you like some coffee cake with your coffee?"

How do I inject creativity?

Think: Here are 3 things I can say "yes" to today . . .

Look more flexible
Allow you to be an advocate
Get more agreements and higher satisfaction
Generally results in better agreements

What should happen in the last five minutes of a negotiation?

The correlation between length of colonoscopy and patient's evaluation of the procedure is not existent. There is a correlation between the maximum pain and the mean pain in the last 3 minutes.

Disney Land has the fireworks and parade at the end of the day to create a memorable experience that customers take away.

From colonoscopies to Disney Land, end on an uptick!

If you can do something nice for the other party in the last five minutes of a negotiation, it will increase satisfaction.

White Hat pattern
Extreme opening offer
Generous opening concession
More stingy second concession
Begrudging final concession

Black Hat pattern
Extreme opening offer
Small first concession
Small second concession
Mutually generous final concession

The Black Hat pattern has a higher rate of success, and it ends up on an uptick. This also results in higher satisfaction.

Conflict Resolution:
It is important to see the problem.

Two naive views of conflict:
Talking will only make things worse
Talking will always make things better

A more realisitic view of conflict: an increasing line with peaks and valleys. The valleys are temporary stalemate.

The most important thing you can do in conflict is to have a soft (i.e. not harsh) startup.

The "No Sandwich."
Think: "Yes - No - Yes"
Affirm - Refuse - Affirm
Thank for the invitation/opportunity
Decline to participate
Affirm the relationship and future invitations

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