Contract Negotiation Ranges

Video Transcript

Hello my name is Barry Payne on behalf of Expert Village. In this section we will be looking at how people when planning to establish their goals or their ranges in which they are going to negotiate. Now take a look at this model, her idea of setting rangers is not new, but first of all some brief guide lines on how to establish them. Firstly your worst case, you will need to have a logic for setting the worst case, your company may have some ratio or profit guidelines, which tell you that anything below that is a deadlock you're not gonna go any further. The bottom point is your point of indifference in an negotiating when a negotiation when you have reached that point you will let your worst enemies tell you whether to shake hands or just walk away. Alright, let’s have a look at the top one. How do you set the best? Well first all let's take a look at some work done by a researcher not in negotiating actually, we did not advertise. Now you will see on this chart he was doing some tests and wanted to move people point from point A to point X, so using his media he asked people to move from point A to X. Then a little bit further this time another groups of people he put through and asked them to move from A to Y and finally with his third set of groups he asked people to move from A to Z. Now here is the question. Which gave him the greatest opinion change A to X, A to Y or A to Z? Well, I will tell you it was actually A to Z. People are not prepared to give out everything that is in their head, for what is in somebody else's head. When we want to move from A to X they only move three quarters away along, A to Y about the same A to Z about the same, three quarters. That took him to the point that he wanted of A to X, So he got excited and asked people to move from A to X queue which was a mile away, so what happened? Well he lost creditability people said it was ridicules and they almost move the opposite direction. Now one knows what exactly to do with negotiating. Here is the question you’ve got to ask yourself when you are planning. What is the maximum I could ask for without loosing creditability and you’ve got to give them a powerful reason? Alright, let’s look back now, and have a look at these ranges again. A range should be wide enough to enable people to negotiate in, but not too wide that it doesn’t give them anything to achieve it makes it too easy and that the case with most separate negotiable issues that you have to sort out for a contract. Alright let's look at the evidence for this and some different things about these ranges. Now if you look at the research model here, you’ll see that skilled people spend much more time talking about the best they can achieve then the average used, the average tend to be frighten in a sense and say well what could we offer them? We could offer them this and that. Skilled people talk about that, but are probably saying, how much can we get? What is the powerful reason to persuade them so we don’t loose credibility? Are you sure we can get more than that. I taught my kids generally in life if you aim higher you will do a little better. I guess most people will agree with that certainly that was true in my case. Now what I am saying to you is in negotiating if you aim higher you'll do little better. You risk slightly more dead locks, but in fact people who aim higher in negotiating tend to get better settlements.

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