Chapter 1 "The Nature of Negotiation"

Dilemma of Honesty

Concern about how much of the truth to tell the other party.

Dilemma of Trust

Concern about how much should negotiators believe what the other party tells them.

Intergroup

Conflict between groups. Ex) Organizations, ethnic groups, warring nations, feuding families, or within fragmented communities.

Interpersonal

Conflict between individuals. Ex) Bosses/subordinates, spouses, siblings, roommates, neighbors, etc.

Three types of Strategies

- Accommodation - Competition - Collaboration

The Distributive Bargaining Situation: Alternatives Stage

- Alternatives give the negotiator power to walk away from the negotiation.

Generate Options to the Problem

- Brainstorming - Surveys - Electronic Brainstorming

Effective goals must be concrete, specific, and measurable in order to:

- Communicate to the other party what we want. - Understand what the other party wants. - Determine whether an offer satisfies our goals

Mutual Adjustment

- Continues throughout the negotiation as both parties act to influence the other. - The effective negotiator needs to understand how people will adjust and readjust and how the negotiations might twist and turn, based on one's own moves and the other's responses.

Integrative Negotiation Process

- Create a free flow of information. - Attempt to understand the other negotiator's real needs and objectives. - Emphasize the commonalities between the parties and minimize the differences. - Search for solutions that meet the goals and objectives of both sides.

Step 1 of the Integrative Negotiation Process: Identify and Define the Problem

- Define the problem in a way that is mutually acceptable to both sides. (Should be stated in neutral terms that does not lay blame or favor preferences of one side over the other). - State the problem with an eye toward practicality and comprehensiveness. - State the problem as a goal and identify the obstacles to attaining this goal. - Depersonalize the problem. - Separate the problem definition from the search for solutions. (Don't jump to solutions until the problem is fully defined).

Key differences among negotiators

- Differences in interests - Differences in judgments about the future - Differences in risk tolerance - Differences in time pressure

Keys to Implementing Strategy

- Discovering the other party's resistance point. - Influencing the other party's resistance point.

Alternatives Shape Interdependence

- Evaluating interdependence depends heavily on the alternatives to working together. - The desirability to work together is better for outcomes. - Best available alternative: BATNA (Best Alternative to a Negotiated Agreement).

Planning Process (Skilled Negotiators vs. Average Negotiators)

- Explored a wide range of options for action - Worked harder to find a common ground with the other party - Spent more time considering the long-term implications of the issues - Were significantly more likely to set upper and lower limits, or the boundaries of a "range" of acceptable settlements/

Relationship Between the Key Steps in the Planning Process

- Goals - Strategy - Planning

Indirect Effects of Goals on Choice of Strategy

- Ignoring the present or future relationship with the other party. - Incremental progress of a long-range goal should motivate a negotiator toward a strategy choice in which the relationship with the other party is valued as much as (or even more than) the substantive outcome.

Levels of Conflict

- Intrapersonal or Intrapsychic - Interpersonal - Intragroup - Intergroup

Negotiators should specify goals and objectives clearly

- List all goals - Determine the priority - Identify potential multi-goal packages - Evaluate trade-offs

3. Modify the Other Party's Perceptions

- Make alternatives appear less attractive (Make the cost of obtaining alternatives appear higher). - Make demands and positions appear more or less attractive to the other party - whichever suits your needs.

Step 4 of the Integrative Negotiation Process: Evaluate and Select Alternatives

- Narrow the range of solution options. - Evaluate solutions on the basis of quality, objective standards, and acceptability. - Agree to evaluation criteria in advance. - Be willing to justify personal preferences. - Use subgroups to evaluate complex options. - Keep decisions tentative and conditional until a final proposal is complete. - Minimize formality, record keeping until final agreements are closed.

Resistance Point

- Negotiator's bottom line. the most they will pay as a buyer. - The smallest amount they will settle for as a seller.

Hardball Tactics

- Not recommended as they can do more harm than good. (Harm reputation, lost deals, negative publicity, incite revenge). (Self-fulfilling prophecy) Understand so you can recognize in a negotiation and know how to deal with them: - Indicate to the other party that you know what they are doing and suggest a shift to a less aggressive method of negotiating. - Ignore it, change the subject. - Use hardball tactics back - useful if the other party is testing your resolve. - Befriend them before negotiations begin.

Positions Taken During Negotiations

- Opening offers: where will you start? (Making the first offer is advantageous to the negotiator making the offer ("anchors" a negotiation), but only on the first round of negotiationsExaggerated opening offers result in higher settlements. (-) Could be outright rejected or harm long-term relationship. - Opening stance: what is your attitude? Competitive? Moderate? (Think about the message you wish to signal and make sure it's consistent with your opening offer) - Initial Concessions: Should any be made? If so, how large?

Insights into negotiation are drawn from three sources

- Personal Experience - Media (television, radio, newspaper, magazine and Internet) - The wealth of social science research that has been conducted on numerous aspects of negotiations

Tactics for Closing the Deal

- Provide Alternatives - Assume the Close - Split the Difference - Exploding Offers - Sweeteners

Fundamental Strategies

- Push for settlement near opponent's resistance point. - Get the other party to change their resistance point. - If settlement range is negative, either: (Get the other side to change their resistance point) or (Modify your own resistance point) - Convince the other party that the settlement is the best possible (Negotiators who think they lost something in the deal may try to get out of the agreement later or find other ways to recoup their losses)

4. Manipulate the Actual Costs of Delay or Termination

- Raise the costs of delay to the other party. (Plan disruptive action), (Manipulate the scheduling of negotiations). One party is usually more vulnerable to delaying than the other. - Form an alliance with outsiders. (Involve (or threaten to involve) other parties who can influence the outcome in your favor). Ex) BBB, political action groups, protest organization.

2. Manage the Other Party's Impressions

- Screen your behavior (say and do as little as possible) - Direct action to alter impressions (Present facts that enhance one's position by using selective presentation ), (Use emotional reactions to indicate what is important/unimportant to you). - Negotiators can use industry standards, benchmarks, appeals to fairness, and arguments for the good of the company to draw a compelling picture for the other party to agree what they want.

If alternatives are attractive, negotiators can:

- Set their goals higher - Make fewer concessions

How to elicit information when the other negotiator mistrusts you:

- Share information and encourage reciprocity. - Negotiate multiple issues simultaneously. - Make multiple offers at the same time.

When to Choose A Conflict Management Style:

- Situation - Preferences - Experience - Style - Perception and past experience

Factors that Facilitate Successful Integrative Negotiation

- Some common objective or goal. - Faith in one's own problem-solving ability. - A belief in the validity of one's own position and the other's perspective. - Trust - Clear and accurate communication - An understanding of the dynamics on integrative negotiation - The motivation and commitment to work together. Enhance motivation by: - Discussing relationship - Engaging in presettlement settlements - Creating an umbrella agreement

Types of Interests

- Substantive - Process - Relationship - Interest in Principle

Setting a Target:

- Targets should be specific, difficult but achievable, and verifiable. - Target setting requires proactive thinking about one's own objectives (i.e. don't focus so much on the other party that you set your goals strictly in reaction to the other's anticipated targets/goals). - Target setting may require considering how to package several issues and objectives.

Characteristics of a Negotiation

- There are two or more parties. - There is a conflict of needs and desires between two or more parties. - Parties think they can get a better deal than by simply accepting what the other side offers them. - Parties expect a "give-and-take" process. - Parties search for agreement rather than fight openly, capitulate, break off contact, take their dispute to a third party.

Observations on Interests

- There is almost always more than one type of interest underlying a negotiation. - Parties can have different interests at stake. - Often stem from deeply rooted human needs or values. - Interests can change. - Numerous ways to surface interests. (Sometimes people are not even sure about their own interests. Need to ask probing questions and pay attention to nonverbal cues to find out).

Tactical Tasks of Negotiators

1. Assess the other party's target and resistance points and the costs of termination for the other party. 2. Manage the other party's impressions. 3. Modify the other party's perceptions. 4. Manipulate the actual costs of delay or termination.

5 Styles of Conflict Management

1. Avoiding 2. Accommodating 3. Competing 4. Compromising 5. Collaborating

Two Processes to Value Claiming and Value Creation:

1. Claiming Value 2. Creating Value Most actual negotiations are a combination of both processes and therefore negotiators must be able to recognize the situation and be versatile in their approach.

People in conflict have two independent types of concerns:

1. Concern about other's outcomes. 2. Concern about own outcomes.

10 Step Process to Getting Ready to Implement the Strategy

1. Defining the negotiation goal. 2. Defining the issues related to achieving the goal. 3. Assemble the issues by ranking their importance and define the bargaining mix. 4. Define your interests 5. Know your alternatives (BATNA) 6. Know your limits, including a resistance point 7. Analyze and understand the other party's goals, issues, and resistance points 8. Set your targets and opening bids 9. Assessing the social context of negotiation 10. Present the issues to the other party

Distributive Bargaining

Describes the competitive, WIN-LOSE situation (aka ZERO-SUM situation) - The goals of one party are usually in fundamental and direct conflict with the goals of the other party. - Resources are fixed and limited, and both parties want to maximize their share. - Basically a conflict situation wherein parties seek their own advantage sometimes through concealing information, attempting to mislead, or using manipulative actions such as hardball tactics.

Strategy vs. Tactics

Differences involve scale, perspective, and immediacy

Competition

Distributive (WIN-LOSE) bargaining

Interest in Principle

Doing what is fair, right, acceptable, ethical or what has been done in the past and should be done in the future

A Step that Involves Claiming Value

Evaluate and Select Alternatives

Exploding Offers

Extremely tight deadline to pressure the other party to agree quickly instead of considering alternatives.

Setting an Opening Bid:

Formulated around a "best possible" settlement, but important to not inflate and upset the other party.

Split the Difference

Give a brief summary of the negotiation and suggest splitting the difference.

First Step in the Negotiation Process

Goals The goals set have direct and indirect effects on the negotiator's strategy.

1. Assess the Other Party's Target, Resistance Point, and Costs of Terminating Negotiation

INDIRECT Assessment: - Determine information opponent used to set their target and resistance point. Ex) A house that has been on the market for the long time. DIRECT Assessment: - Opponent reveals the information. Ex) When pushed to a limit, a company reveals that a wage settlement above this number will put them out of business.

Relationship Interest

Indicate that one or both parties value their relationship

Self-Fulfilling Prophecy

Initial use of hardball tactics (in anticipation of the other party using hardball tactics) actually creates competitive situation when you might not otherwise have had one.

Collaboration

Integrative (WIN-WIN) bargaining

Step 3 of the Integrative Negotiation Process: Generate Alternative Solutions

Invent options by redefining the problem set: - Logroll - Expand the pie - Modify the pie - Find a bridge solution - Use nonspecific compensation - Cut the costs for compliance - Superordination - Compromise

Accommodation

Involves an imbalance of outcomes. "I lose, you win"

Accommodating (Yielding)

Involves lowering one's own aspirations to "let the other win". (LOSE-WIN) - Used when the relationship is more important than the outcome of the negotiation. - Short term strategy

Step 5 Process to Getting Ready to Implement the Strategy:

Know your alternatives (BATNA). - Learn as much as you can about your alternatives - Your alternatives will drive your strategy

Step 6 Process to Getting Ready to Implement the Strategy:

Know your limits, including a resistance point. - Resistance point - know when to stop. (Help keep people from agreeing to deals that they later realize weren't very smart).

Interdependence

Parties need each other to achieve their preferred outcomes or objectives. - Having interdependent goals does not mean that everyone wants or needs exactly the same thing. (Also does not mean that it's a win-win situation, only that they affect each other).

Competing (Contending)

Parties try to persuade the other party to yield by using threats, punishment, intimidation, and unilateral action. (WIN-LOSE) - The outcome of the negotiation is more important than the relationship. - "I win, you lose"

Step 10 Process to Getting Ready to Implement the Strategy:

Present the issues to the other party. - Two major components: -----How will you present and frame the issues and interest. -----How you should structure the process by which this information is presented. - What is the agenda? - Where and when will the negotiation occur? - Who will be there? - What is the time period? - What might be done if the negotiation fails? - How will we keep track of what is agreed to? - Have we created a mechanism for modifying the deal if necessary?

Bogey

Pretending a low priority item is important in order to trade it for a concession on another item.

Negotiation

Refers to WIN-WIN situations such as those that occur when parties try to find a mutually acceptable solution to a complex conflict (aka NON-ZERO-SUM situation)

Substantive Interests

Relate to key issues in the negotiation

Process Interests

Related to the way the dispute is settled

Aggressive Behavior

Relentless requests for more concessions and better deals with an aggressive tone.

Creating Value

Result of an integrative situation where the object is to have both parties do well.

Claiming Value

Result of distributive bargaining situations where the object is to do whatever is necessary to claim the reward or gain the largest piece of the resource as possible.

Logroll

Risk preference, expectations, time preferences

Sweeteners

Save a special concession for the close.

Step 8 Process to Getting Ready to Implement the Strategy:

Set your targets and opening bids.

Tactics

Short-term, adaptive moves designed to enact or pursue broad strategies. - Subordinate to strategy - Driven by strategy

Brainstorming

Small groups of people work to generate as many possible solutions to the problem as they can.

Compromising

Some researchers do not consider this a viable strategy but rather laziness or a cop-out. (SPLIT the DIFFERENCE) - Used when the parties are under time pressure and need to come to a resolution quickly. - Each party will give in somewhat to find a common ground. - The relationship is only somewhat important, and the outcomes are only somewhat important.

Drawback of the COMPETITION Strategy

Tends to create "superiority-inferiority" patterns and may lead to distortions in judgment regarding the other side's contributions and efforts.

Strategy and Planning

The most critical precursors for achieving negotiation objectives. With effective planning and goal setting, most negotiators can achieve their objectives, without them, results occur more by chance than by negotiator effort

Drawback of the COLLABORATION Strategy

The other party may manipulate and exploit the collaborator and take advantage of the good faith being demonstrated

Strategy

The overall plan to achieve one's goals in a negotiation.

Avoiding (Inaction)

The party prefers to retreat, be silent, or do nothing. In other words, refuses to negotiate (LOSE-LOSE) - Used infrequently

Pareto Efficient Frontier

The point where there is no agreement that would make any party better off without decreasing the outcomes to any other party.

Bargaining Range

The range of possible agreements between the two party's minimally acceptable settlement.

Collaborating

The two parties actively pursue approaches to maximize their joint outcome. (WIN-WIN) - Both parties consider the relationship and the outcome to be equally important. - In order for this strategy to work, there must be a high degree of trust, openness, and cooperation.

Interests

The underlying concerns, needs, desires, or fears that motivate a negotiator.

Chicken

Using a large bluff plus a threat to force the other party concede.

Intimidation

Using emotional ploys such as anger and fear to force concessions.

Lowball/Highball

Using extreme offers to change the anchor of potential negotiation settlements.

Mutual Agreement and Concession Making

When a concession is made, the bargaining range is further constrained.

Concession

When one party agrees to make a change in his/her position.

Snow Job

Overwhelming the other party with so much information they cannot make sense of it.

Bargaining Mix

Package of issues, each of which has a target, resistance, and asking points.

Reasons for why NEGOTIATIONS occur?

- To agree on how to share a limited resources. - To create something new that neither party could attain on his or her own. - To resolve a problem or dispute between the parties.

The importance of the relationship between the two parties will be affected by a number of factors:

- Whether there is a relationship at all - Whether that relationship is generally positive or negative - Whether a future relationship is desirable - The length of and commitment to the relationship - The degree of interdependence in the relationship - The amount and extent of free, open communication between the parties

Direct Effects of Goals on Choice of Strategy

- Wishes are not goals - Goals are often linked to the other party's goals. - There are limits to what goals can be. (Goals must be attainable)

Concessions

- Without concessions, negotiations wouldn't exist. - Immediate concessions are perceived less valuable and negotiators feel like they "could have done better". - Implies recognition of a position and its legitimacy. - Not reciprocating a concession may damage the esteem of the concession maker. - Link concessions by packaging them: If you will move on A and B, I will move on C and D.

Two Dilemmas in Mutual Adjustment

1. Dilemma of Honesty 2. Dilemma of Trust

Key Steps in the Integrative Negotiation Process

1. Identify/define the problem 2. Identify surface interests/needs on both sides. 3. Generate alternative solutions 4. Evaluate and select alternatives

Important Steps for CREATING Value

1. Identify/define the problem 2. Understand the problem fully (identify interests/needs on both sides) 3. Generate alternative solutions These steps must be done first because: - the creating-value process is more effective when it is done collaboratively and without a focus on who gets what. - claiming value involves distributive bargaining processes which may derail the focus on creating value and may even harm the relationship unless it is introduced effectively.

Successful Negotiation involves:

1. Management of tangibles (e.g., the price or the terms of agreement). 2. Resolution of intangibles (the underlying psychological motivations) such as winning, losing, saving face.

It is important that processes to create value precede those to claim value for two reasons:

1. The creating value process is more effective when it is done collaboratively and without a focus on who gets what. 2. Claiming value involves distributive bargaining processes, it may derail the focus on creating value and may even harm the relationship unless it is introduced effectively.

Unlocking the Keys

1. The higher the other party's estimate of YOUR cost of delay or impasse, the STRONGER the other party's resistance point will be. 2. The higher the other party's estimate of HIS or HER own cost of delay or impasse, the WEAKER the other party's resistance point will be. 3. The LESS the other party values an issue, the WEAKER their resistance point will be. 4. The MORE the other party believes that you value an issue, the WEAKER their resistance point may be.

The five basic types of negotiating strategies depend on your combination of preferences for two basic concerns:

1. The relationship with the other negotiator 2. The outcome of the negotiation itself

Three Reasons Negotiators Should Be Familiar with Distributive Bargaining

1. Zero-sum situations require knowing how this works in order to do well. 2. Need to know how to counter the effects of the strategies when someone else uses them. 3. Every situation has the potential to require these skills at the "claiming-value stage".

Provide Alternatives

2 or 3 packages to choose from.

Integrative Negotiation

A WIN-WIN negotiation in which the agreement attempts to find solutions so both parties can do well and achieve their goals. - The goals of the parties are NOT mutually exclusive. - One parties gain is NOT at the other party's expense.

Negotiation

A form of decision making in which two or more parties talk with one another in an effort to resolve their opposing interests. - A skill that can be used to effectively resolve conflicts and enhance outcomes for all parties. - A central aspect of organizational life - A useful framework to interpret a number of different interpersonal interactions.

Conflict

A perceived divergence of interest, or a belief that the parties' current aspirations cannot be achieved simultaneously.

Electronic Brainstorming

A series of questions to guide input from participants who enter responses anonymously into a networked device that aggregates and displays entries to the group as a whole.

Surveys

A written questionnaire to a large number of people, stating the problem and asking them to list all the possible solutions as they can imagine.

Assume the Close

Act as if the decision has already been made.

Good Cop/Bad Cop

Alternating between negotiators who use tough and more lenient negotiation approaches.

Best Alternative to a Negotiated Agreement

An option that can be pursued if the current negotiation fails. - It is an outcome outside the scope of a negotiation with another party, and can be pursued if it appears more attractive than any potential outcome from a negotiation.

Step 7 Process to Getting Ready to Implement the Strategy:

Analyze and understand the other party's goals, issues, and resistance points. - Gather as much information about the other party as possible: (Goals and objectives) Does the other party have the same goals as we do?- If not, are the goals sufficiently different enough to invent a solution by which both parties achieve their goals? - Issues and the likely bargaining mix - Interests and needs - Resistance point and alternatives

Nibble

Asking for a proportionally small concession on a new item to close the deal.

Step 3 Process to Getting Ready to Implement the Strategy:

Assemble the issues by ranking their importance and define the bargaining mix. - Create a comprehensive list of issues from both sides. - Prioritize the issues: Which are more important and which are less important (rank order, high/medium/low, weigh on scale of 100 points). - Determine whether the issues are linked together or separate.

Step 9 Process to Getting Ready to Implement the Strategy:

Assessing the social context of negotiation. - Complete a "field analysis" to assess the key parties involved in the negotiation. - A (the direct actors) - B (the opposition actors) - C (indirect actors) - D (interested observers) - E (environmental factors)

Intrapersonal or Intrapsychic:

Conflict that occurs within an individual. Ex) I want to eat a pint of ice cream, but I know it is bad for me.

Intragroup

Conflict within a group. Ex) Team/committee members, families, classes, etc.

Step 4 Process to Getting Ready to Implement the Strategy:

Define your interests. - If issues help us define what we want, then understanding interests requires us to ask why we want it. - Like goals, interests may be: (Substantive)(Relationship-based) (Process-based) (Interests in principle)

Step 2 Process to Getting Ready to Implement the Strategy:

Defining the issues related to achieving the goal. How many issues? - Single issues tend to indicate distributive negotiation. - Multiple issue tends to indicate integrative negotiations because parties can create issue "packages" that are mutually beneficial.

Step 1 Process to Getting Ready to Implement the Strategy:

Defining the negotiation goal. - Goals can be: (Substantive (tangible) Ex): money or a specific outcome. - Psychological (intangible). Ex): winning, beating the other party, getting a settlement at any cost. - Procedural (how we get to agreement). Ex): shaping the agenda or simply having a voice at the table

The Distributive Bargaining Situation: Preparation Stage

Each party should set a: - Starting/asking price or initial offer. - Target point - Resistance point

Drawback of the ACCOMMODATION Strategy

May generate a pattern of repeatedly giving in to keep the other party happy or to avoid a fight.

Target Point

Negotiator's preferred price/optimal goal.

If there are no attractive alternatives:

Negotiators have much less bargaining power

Selective Presentation

Negotiators reveal only the facts necessary to support their case.

BATNAs can influence how a negotiation unfolds

Negotiators with stronger BATNAs are more likely to make the first offer in a negotiation and appear to negotiate better outcomes.

Common Goal

One that all parties share equally, each one benefiting in a way that would not be possible if they did not work together.

Shared Goal

One that both parties work toward but that benefits each party differently. Example: partners can work together in a business but not divide the profits equally.

Joint Goal

One that involves individuals with different personal goals agreeing to combine them in a collective effort. Example: