Managerial Negotiations

________% of executives and CEO's leave money on the table

-80% leave money on the table and spend this much of their time negotiating

Major Costs of Unethical Negotiation:

-A damaged relationship with the opponent -A sullied reputation -Lost opportunities*

Manageable questions-

-Cause attention or prepare the other person's thinking for further questions (May I ask you a question?); Getting information (How much will this cost?); Generating thoughts (Do you have any suggestions for improving this?) -Open-Ended -Leading questions - point toward an answer -Directive questions - focus on a specific point -Gauging questions - ascertain how the other person feels

Unmanageable questions-

-Cause difficulty, give information (Didn't you know that we couldn't afford this?) and bring the discussion to a false conclusion (Don't you think we've talked about this enough?) -Loaded Questions - put the other party on the spot regardless of answer -Heated questions - high emotionality; trigger emotional responses

Expanding the Pie: Strategies That Do Not Work

-Commitment to reaching a win-win deal -Compromise -Focusing on a long-term relationship -Adopting a "cooperative orientation" -Taking extra time to negotiate

Dysfunctional Conflict: -Most people view conflict as dysfunctional...why?

-Competitive -Misperception and bias -Emotionality -Decreased communication -Blurred issues (generalizations) -Rigid commitments / Escalation of Commitment -Magnified differences / minimized similarities

Distributive bargaining defined:

-Competitive, Win-Lose -Goals of one party are in fundamental and direct conflict with goals of other party -Resources are fixed and limited -Each party wants to maximize his/her share of the resources Each party will use strategies and tactics that maximize outcomes obtained -Most strategies guard information -Give information only when it provides a strategic advantage -Attempt to obtain information from other party -"Winning" in distributive bargaining in large part depends on strategies and tactics used -Distributive bargaining typically has a negative, macho, offensive connotation

Benefits of Conflict: (3)

-Creates incentive to solve underlying problem -Promotes awareness of self and others -Can stimulate new ideas, etc.

Identify and define the issue

-Define the issue in a way that is mutually acceptable to both sides -Not worded to lay blame or favor one side or the other... -Keep the issue statement clean and simple -Be as specific as possible, but not too specific... -Depersonalize the problem -Separate the issues from the parties and relationships involved in the negotiation

Detecting Deception:

-Don't rely only on a person's face (watch the body!) -Eye contact -blinking; dilated pupils; low eye contact -Note: often most used, but VERY unreliable and often irrelevant.....WATCH THE BODY! -Changes in speech -raised pitch; less fluency; sentence repairs -The power of triangulation -Use several methods and baseline: examine tone of voice, body movements, gestures, etc... -study says tone is the best way to tell

What nonverbal behaviors mean you should not trust someone?

-Fidgeting -Excessive smiling or sheepish smiles -Overly serious tone; lack of emotion -Averting eyes; lack of eye contact -Being too quiet Behaviors that mean you can trust someone... -Direct speech -Open gestures and behavior -Smiling

Causes of conflict:

-Goal differences (e.g., resources, time horizons) -Perceptual differences (e.g., status, culture, values)

Typical Hardball Techniques

-Good guy/Bad guy -Highball/Lowball -Bogey (playing up an issue of little importance) -The Nibble (asking for a number of small concessions to get to agreement) -Chicken -Intimidation / Aggressive behavior -Snow Job (overwhelm the other party with information) -Assume the close -Exploding offers

Dealing with Hardball Tactics:

-Ignore them -Discuss them - negotiate the negotiation process -Respond in kind (i.e., do the same thing to them) -Co-opt (i.e., befriend) the other party

Individual Power based on position: (3)

-Legitimate power: the "right" (authority) granted by the organization, to expect/demand compliance -Reward power: raises, bonuses, promotions, plum assignments, recognition -Coercive power: ability to punish: withholding rewards, threats, fear

Marginally Ethical Negotiating Tactics

-Lies -Puffery - exaggerating the value of something -Deception - misleading negotiation partner

The Central Route to Influence:

-Make the offer attractive to the other party - other's gain -Make the message normative - consistency principle -Frame option as a positive gain (to some reference point) if want status-quo (i.e., person becomes risk averse) -Frame choice in negative terms (i.e., losses) if you want to induce change (i.e., person becomes risk taking) -Repetition enhances the likelihood that the message will be understood Influence opponent's perception of his/her -BATNA (usually in an attempt to get opponent to reveal BATNA)

Evaluate and select alternatives

-Narrow the range of solutions -Evaluate solutions based on quality, acceptability, and objective standards/criteria -Agree to the criteria in advance of evaluating options -Be willing to justify personal preferences -Be alert to the influence of intangibles in selecting options -Use subgroups to evaluate complex options -May be done before negotiation as well -Take time out to cool off -Keep decisions tentative until all aspects of the final proposal are complete -Minimize formality and record keeping until final agreements are closed

Trust: The expectation that the other party will cooperate in the future. Based on...

-Past experience with the person -Knowledge of person's actions -Expectations of likely actions

Fundamental Strategies in Distributive Bargaining

-Primary objective in distributive bargaining is to maximize the value of the single deal... -Push for settlement near opponents resistance point -Get the other party to reduce their resistance point -If bargaining range is negative either: -Get the other side to reduce their resistance point -Modify your own resistance point -Be sure that other party feels they got the best possible deal (i.e., ego satisfaction)

First step in negotiation process:

-Setting goals -must be specific and measurable -are not wishes and must factor in other party's wants

Nonverbal Communication

-Vocal cues (tone and inflection) -Facial expressions -Eye contact -Remember: cultural norms -Friendliness or Aggressiveness -Interpersonal spacing -Posture -Body movements -Touching

Bargaining range:

-difference between buyer and seller resistance points Positive - when seller resistance point is below the buyer's res. point Negative - when the seller resistance point is above the buyer's.

Target point - Resistance point-

-optimal goal -bottom line (most you will pay, least you will accept)

Look at entire slide deck 9 and 10

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Roles in negotiations:

1) A negotiating dyad 2) Agents 3) Unrepresented bystanders and audiences 4) Third parties

Personality Differences

1) Competitiveness versus Cooperativeness -Students who rated themselves as aggressive/competitive were more likely to use marginally ethical tactics 2) Machiavellianism -Individuals who are strongly Machiavellian are: -More likely to lie when they need to -More persuasive and effective in their lies

Five Major Strategies for Conflict Management (Dual Concerns Model)

1) Contending (Competition) -Actors pursue own outcomes strongly, show little concern for other party obtaining their desired outcomes 2) Yielding (Accommodating) -Actors show little interest in whether they attain own outcomes, are quite interested in whether the other party attains their outcomes 3) Inaction (Avoidance) -Actors show little interest in whether they attain own outcomes, little concern about whether the other party obtains their outcomes 4) Problem solving -Actors show high concern in obtaining own outcomes, as well as high concern for the other party obtaining their outcomes 5) Compromising -Actors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes

Individual Power based on characteristics: (2)

1) Expert Power: a person has the knowledge and skills to outperform others; her good judgment is respected and relied upon. A specialist physician has expert power. 2) Referent Power: a person is strongly liked and admired by others and often exerts a charming influence. A celebrity has referent power.

Advantages of an Agent:

1) Expertise 2) Emotional detachment (e.g., divorce attorney) 3) Tactical Flexibility - good cop/bad cop, plead to higher authority, etc.

Strategy & Tactics of Integrative Negotiation

1) Fundamental assumption for integrative negotiation: It is possible for both sides to achieve their objectives. 2) Important processes in integrative bargaining -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

Demographic Factors in unethical behavior

1) Gender -Women tend to make more ethically rigorous judgments than men -Women tend to be more rules focused while men tend to be more utilitarian 2) Age and Experience -Both men and women behaved more ethically as they aged -Individuals with more general work experience were less likely to use unethical negotiating tactics

Dual Concerns Model considerations-

1) How much concern do I have in achieving the outcomes at stake in the negotiation? 2) How much concern do I have for the current and future quality of the relationship with the other party? -Avoidance: Don't negotiate -Competition: I win, you lose -Collaboration: Win-win -Accommodation: I lose, you win

Key Steps in the Integrative Negotiation Process

1) Identify and define the issue 2) Understand the issue fully -Identify interests and needs on both sides 3) Generate alternative solutions 4) Evaluate and select among alternatives (steps defined on slide deck 5)

Level of Conflict: (4)

1) Intrapersonal Conflict -Conflict that occurs within an individual 2) Interpersonal Conflict -Conflict is between individual people 3) Intragroup Conflict -Within-group negotiation -Among team and committee members and within families, classes etc. 4) Intergroup Conflict (most complex) -Conflict can occur within groups and among groups simultaneously -Conflict between unions and management, warring nations, feuding families, or community action groups and government authorities

Cognitive Biases:

1) Irrational Escalation of Commitment: negotiators maintain commitment to a course of action even when that commitment constitutes irrational behavior 2) Anchoring and Adjustment: the effect of the standard (anchor) against which subsequent adjustments (gains or losses) are measured. the anchor might be based on faulty or incomplete information, thus be misleading 3) Framing: frames can lead people to seek, avoid, or be neutral about risk in decision making and negotiation 4) Availability of Information: operates when information that is presented in vivid or attention-getting ways becomes easy to recall. becomes central and critical in evaluating events and options 5) Fundamental Attribution Error: people often explain another person's behavior by making attributions, either to the person or to the situation. the tendency is to: overestimate the role of personal or internal factors. underestimate the role of situational or external factors 6) Endowment Effect: the tendency to overvalue something you own or believe you possess 7) Reactive Devaluation: the process of devaluing the other party's concessions simply because the other party made them

Pie slicing strategies:

1) Know your BATNA and Resistance point 2) Research the other party's BATNA 3) Set high aspirations (target points) 4) Make the first offer if you can 5) Counteroffer immediately 6) Avoid stating ranges 7) Make bilateral (not unilateral) concessions -BH/WH study shows making small concessions early and large ones late in negotiations are most effective 8) Use an objective-appearing rationale to support your offers 9) Manage other parties' perceptions 10) Do not fall for the "even split" ploy (i.e., split the difference)

Situational Factors: (8)

1) Number of other parties 2) Nature of the issues 3) Location and configuration of the physical space 4) Time boundaries and deadlines 5) Social context 6) Cultural context 7) Negotiator's power 8) Availability of alternative ways to resolve the dispute

Moral Development and Personal Values

1) Preconventional level -The individual is concerned with concrete outcomes that meet his or her own immediate needs, particularly external rewards and punishments 2) Conventional level -The individual defines what is right on the basis of: -What his immediate social situation and peer group endorses -What society in general seems to want 3) Principled level -The individual defines what is right on the basis of some broader set of universal values and principles *Contextual Influences Factors Shape a Negotiator's Predisposition to Use Unethical Tactics

The planning process:

1) Self-assessment 2) Assessment of other party 3) Assessment of the situation

Peripheral Routes to Influence:

1) Source credibility depends mostly on qualifications of the source, perceived trustworthiness, and self-presentation (or likeability) 2) Personal attractiveness 3) Aspects of Context/Communication

Four major perceptual errors

1) Stereotyping: An individual assigns attributes to another solely on the basis of the other's membership in a particular social or demographic group 2) Halo Effects: An individual generalizes about a variety of attributes based on the knowledge of one attribute of an individual 3) Selective Perception: The perceiver singles out information that supports a prior belief but filters out contrary information 4) Projection: People ascribe to others the characteristics that they possess themselves

Two Routes to Persuasion:

1) The Central Route: -Occurs consciously and involves integration of the message into the individual's existing cognitive structures (thoughts, intellectual frameworks, etc.) -direct, mindful, information-based, rational, logical -Ideal when dealing with analytical people who tend to focus on information, facts, and data -Resistant to counter-influence 2) The Peripheral Route: -Characterized by subtle cues and context; automatic, pre-conscious, emotional -Ideal when the negotiator is distracted or highly emotionally involved in the situation

Three important themes regarding the Nature of Negotiations

1) The basic characteristics of negotiation situations 2)Interdependence, the relationship between people and groups that most often leads them to negotiate 3) Understanding the dynamics of conflict and conflict management processes which serve as a backdrop for different ways that people approach and manage negotiations

The Main Approaches to Ethical Decision Making:

1) Utilitarianism (End-Results Ethics): -the rightness of an action is determined by evaluating its projected/expected consequences; "The greatest good for the greatest number" 2) Universalism (Process/Duty Ethics) -determine rightness or wrongness before outcomes; different situations may have different outcomes -human conduct should be guided by primary moral principles, or "oughts" 3) Social Contract Ethics -rightness of an action is determined by the customs and norms of a community -communities become "moral bodies" for determining ground rules 4) Personalistic Ethics -rightness of an action is determined by one's conscience

Sources of Power:

1) information and expertise 2) the individual and one's position (including control over resources) 3) organizational factors -Information is the most common source of power

Four standards for evaluating strategies in negotiation:

1) the results I expect to achieve (e.g., greatest return on investment) 2) my duty to uphold appropriate rules and principles (e.g., the law) 3) norms, values, and strategy of my organization or community (e.g., the usual way we do things here) 4) my personal convictions (e.g., what my conscience tells me to do)

Potential consequences of interdependent relationships

1) value creation 2) conflict

Generate alternative solutions (creative phase)

Brainstorming -Expand the pie - How can resources be expanded to meet the demands of both sides? -Logroll - Are there any issues of high priority to me that are of low priority to the other, and vice versa? -Use nonspecific compensation - one negotiator receives what he or she wants, and the other is compensated (or paid) by some method that was initially outside the bounds of the negotiation -Cut the costs for compliance—What can I do to minimize the other's risk and costs so that he or she would be more willing to agree? -Find a bridge solution - Can we invent a solution that meets the relative priorities, underlying interests, and needs of both parties?

Structural Contingencies of organizational power: (3)

Centrality -Importance to the organization, their mission Dependency -The only source for a resource Uncertainty -Provide information -Make predictions, prevention -Absorption: prevent uncertainty from affecting others

Trust acts as a __________:

Filter -Truthfulness of statements and information -Concern for maintenance and enhancement of the negotiating relationship

Understand the issue fully

Interests: The underlying concerns, needs, desires, or fears that motivate a negotiator -Substantive interests -Process interests -Relationship interests -Interests in principles Focus on INTERESTS not positions

Negotiation Myths:

Myth 1: Negotiations are fixed-sum Myth 2: You need to be either tough or soft Myth 3: Good negotiators are born Myth 4: Experience is a great teacher Myth 5: Good negotiators take risks Myth 6: Good negotiators rely on intuition

Basic Responses to Power: (3)

Position power: 1) compliance 2) resistance Personal Power: 3) commitment

Prescriptively: Behaviorally:

Prescriptively: you should make a deal if ZOPA is positive Behaviorally: -People often fail to reach agreement when the ZOPA is positive -Sometimes, people reach agreement when the ZOPA is negative *Bargaining range, settlement range, zone of potential agreement (ZOPA)

Working definition of Power:

The capacity to influence the behaviors (and thoughts) of others, overcome resistance, and get people to do things they normally would not do. -Power is a relational concept; it does not reside in the individual but rather in the relationship of the person to his/her environment

Perception:

The process by which individuals connect to their environment -"The process of screening, selecting, and interpreting stimuli so that they have meaning to the individual" -People interpret their environment in order to respond appropriately (sense-making) -The complexity of environments makes it impossible to process all of the information (we select only parts of the transmission) -As a result people develop shortcuts to process information -These shortcuts create perceptual errors

Self-Assesment:

What do I want? -Which interests (issues) are most important? -How important (priorities)? - possible scoring system? -What are the alternatives for each issue? -Which interests are tradable? -Develop a negotiation range and provide a rationale for points in range -What are your key assumptions (and their importance)? What is my B.A.T.N.A.? Determine resistance point

Assessment of other party:

Who are the other parties? -Can you trust the other party? -What is the other party's style and possible tactics? -What are the limits to the other party's authority? -Hidden table (i.e., the most important parties are not present at the negotiating table) -Always assume the other party is well prepared! -What are the other party's issues (and priorities)? -What are some potential trade-offs? B.A.T.N.A.? - What are the alternatives to doing business with you? Resistance point?

Ethics -

are broadly applied social standards for what is right or wrong in a particular situation, or a process for setting those standards -Ethics are different from morals, which are individual and personal beliefs about what is right and wrong.

Negotiation is the key communication tool for ________________

interdependent relationships

Other reasons for specific strategies:

past experience, expertise with one strategy, external factors

Principles are-

the guidelines for desires and expectations about how the negotiation relationship will be established, conducted and continued.

Synergy:

the notion "the whole is greater than the sum of its parts". -Negotiators should be aware that potential differences can be used to reach agreement -It is also possible to create value through shared interests and through scale (task too big for one party to accomplish alone)