Negotiation

Three Approaches to Dispute Resolution (Interests, Rights, Power)

Interests - reconciling the parties' interests Rights - determining who is right (according to some independent standard) Power - determining who has more power (i.e. the capacity to coerce someone into doing something they would otherwise not do)

The law of small numbers

The tendency to draw strong conclusions from small sample sizes

anchoring and adjustment

The excessive weight of an initial offer to remain the standard against which subsequent adjustments are measured.

Framing a negotiation as a whole (Heen & Stone)

"What is this negotiation all about?" This is a negotiation about ____________. Frames can be a barrier to mutual understanding, or a way to influence how others see you, themselves, and the conflict.

BATNA

(Best Alternative to a Negotiated Agreement) The best outcome a party can obtain with someone else

ZOPA

(Zone of Possible Agreement) aka Bargaining Zone. The spread between the parties' respective resistance points e.g., between the least the seller will accept and the most the buyer will pay

The upside/downside of taking a competitive approach to negotiation, when it IS NOT recommended:

-Can be costly, time-consuming, and otherwise inefficient -Time could be better spent on information sharing, a mutual exploration of issues, searching for solutions that satisfy each party's interests, etc. -Might hurt the relationship and toughen competitors -Might be used by inexperienced negotiators who assume it's the only approach to negotiation -Might underestimate the determination of the other side to win/not lose (playing chicken) -When competitive we generally underestimate the insight, planning, power, effectiveness, etc. of the other party -Might drift into a "win at all costs" mentality and pay too high a cost -Could develop an unwanted reputation for being needlessly confrontational

Key Points of White's Critique of GTY

-Treatment of distributional bargaining -Insistence on use of objective criteria -View of use of raw poser -Treatment of deception and other "dirty tricks"

The upside/downside of taking a competitive approach to negotiation, when it IS recommended:

-the goal of the parties is short-term (do the deal and move on) -the parties assume (rightly) their goals are incompatible -the other party is expected to take a competitive approach -The negotiator represents somebody else who will view them as doing a good job he or she is strong, doesn't give in, dominates, etc

The Mediation Process

1. Explanation of the process 2. Joint session (each party states its view of the issue and the merits of their view; also review past efforts at settlement, if any) 3. Individual sessions or caucuses (mediator meet with parties individually to get more information, discern their true interests, goals, etc.) 4. Additional joint sessions (as and if needed) (mediator reveals what was shared in individual sessions to extent authorized to further inform participants and begin to imagine/explore settlement options) 5. Further individual sessions if and as needed (shuttle diplomacy) 6. Final joint session & finalization of agreement

The 4 Elements of the GTY Approach

1. People - separate the people from the problem 2. Interests - focus on interests, not positions (not for single-issue negotiations) 3. Options - generate a variety of possibilities before deciding what to do 4. Criteria - insist that the result be based on some objective standard

Two-sided message is best when:

1. The other party is thoughtful and well-informed 2. The other party will be exposed to counterarguments and alternative 3. The other party is familiar with the issue or topic (making it more likely they'll be formulating counterarguments as you speak)

4 criteria for determining which approach is best

1. Transaction costs 2. Satisfaction with outcomes 3. Effect on the relationship 4. Recurrence

5 Bargaining Styles

1. avoiding 2. compromise 3. accommodation 4. competitive 5. collaborative

2 types of personal inclination:

1. cooperative 2. competitive studies show cooperative strategies are more effective cooperative people have strong potential to be extremely effective negotiators

4 Pillars of Negotiation Effectiveness

1. willingness to prepare 2. high expectations 3. the patience to listen 4. commitment to personal integrity

Positional Bargaining

A method of negotiation that focuses on the parties exchanging offers, with concessions being made so that parties find a middle ground. The seller refers to the last offer made as its bottom line, and the buyer refers to the last offer made as its top dollar.

Distributive Negotiation

A competitive and adversarial negotiation approach in which each party strives to get as much as it can, usually at the expense of the other party. ie fixed pie, win/lose, single issue, positions, claiming value, competitive

Multiparty Negotiation Guidelines

Agree upon and use an agenda Introduce players and assign roles Decide on procedural rules Utilize public note taking Utilize active listening and summarize often Consider using a facilitator or mediator Find early agreement on some issues Build consensus through multi-voting Use subgroups to secure tentative agreement As appropriate, use caucuses Confirm agreements, next steps

Multi-party Negotiation Challenges

Competition for airtime Preparation challenges Procedural chaos Development of trust Unaligned interests Formation of coalitions and alliances Impact of cultural differences (e.g. collectivist vs. individualistic cultures) Dysfunctional group dynamics (Simultaneous conversations; silence/withdrawal, side conversations, groupthing, dominating or blocking)

Hallmarks of Mediation

Confidentiality Presence of the parties Reality testing Parties retain control Option building Active involvement of a facilitating (neutral) third party

Mediation - what's necessary to be effective (as managers)

Facilitate information flow, communications and learning Serve as advisors Provide additional information relevant to the dispute Help the parties be more comfortable with each other Enhance ingenuity Avoid escalation of conflict - de-escalate if needed

Goals vs. Expectations (Shell)

Goals become expectations when our attitude changes (preparation is the key to the positive shift in attitude). Goals - things we strive to achieve Expectations - what we strongly believe we can and should achieve

Primacy and recency effects

Make sure the first and last thing they hear or see is your key point of the most important requirement.

Gender & Negotiation: Advantages for Females (Babcock)

Men see negotiation as a game; Women see it as a collaborative undertaking. Studies show the cooperative approach tends to get better results (Pepulator exercise) Key to expanding the pie: increase flow of info and find out as much as possible about the other side's needs interests and preferences More likely to engage in active constructive behaviors and passive constructive behaviors: -perspective taking -creating solutions -expressing emotions -reaching out -reflective thinking -delay responding -adapting

Emotional Intelligence

Personal competence: self-awareness / self-management Social Competence: social awareness / relationship management

Power in Negotiation: Sources of Power + the Effective Use of Them + Advisability of Beginning with Threats or Ultimate (Fisher)

Physical force (DOES NOT EQUAL) Negotiating power Sources of Power: -The power of skill and knowledge -The power of a good relationship -The power of a good alternative to negotiating -The power of legitimacy -The power of commitment

Fisher's Response to White's Critique

Suggests he and White have different purposes. "White is more concerned with the way the world is, and I am more concerned with what intelligent people ought to do"

Reservation Price (aka Resistance Point)

The price beyond which a party will not go (the most a buyer will pay, the least a seller will accept); indifference point

Loss Aversion

The strong tendency to regard losses as considerably more important than gains of comparable magnitude—and, with this, a tendency to take steps (including risky steps) to avoid possible loss.

confirmation bias

The tendency to seek out and give too much weight to evidence and arguments that support our preconceptions and positions while ignoring or giving too little weight to evidence and arguments to the contrary

issue framing and risk

We give disproportionate weight to prospective losses in comparison with prospective gains (and subsequently take unwise risks to avoid the losses)

Aspiration Levels (or Target Points)

What you realistically hope to achieve for each issue; A party's preferred price, where the party would like to conclude

Value Creation: Logrolling

a negotiation exchange that involves making concessions or the 'trading-off' of issues so as to maximize on each sides' value

Integrative Negotiation

a win-win negotiation in which the agreement involves no loss to either party ie expandable pie, win-win, multiple issues, interests, creating&claiming value, cooperative

Key Negotiation Lessons Drawn from in the Wal-mart/P&G Relationship

a. Stay close to your counterparts to understand their culture and real interests; build a relationship based on trust b. Negotiate a larger join vision within which small disputes can be more productively handled. Make this a continuing process, not a one-time event. c. Reframe the concept of negotiation away from each side's position be probing underlying interests as inputs to a join problem-solving process. d. Employ a new money approach to negotiation based on aligning incentive, sharing information, and using multifunctional teams. e. Finding early wins, build momentum and adopt a system of decision ownership to ensure implementation and to prevent backsliding. f. As trust builds, increasingly rely on a positive social contract that reflects the spirit of the deal between the parties.

Value Creation: Post-settlement Settlement

can produce greater value (ie pareto improvements) for both parties: - signed agreement verifies parties can work together to create value - after a deal is signed parties are often less anxious and share info more freely - clear that both parties will accept a PSS only if it improves the outcome for both (signed deal becomes a new BATNA for both parties)

Gender & Negotiation: Women

choose to negotiate less than men rely more on "fairness" and follow more than men- suffer from "stereotype threat"

Accommodation

complying with someone else's offer, without any benefit to yourself

Competitive

do all in your power to get your way

Compromise

each person agrees to share equally. fast, easy, fair strategy but doesn't fully solve problem

Collaborative

finding a way to let everyone win, the most imaginative strategy and most difficult to implement

Avoiding

good strategy when you are happy with status quo, but not the best approach

Ethics in Negotiation - the elements of fraud

i. "A bargaining move is fraudulent when a speaker makes a (1) knowing (2) misrepresentation of a (3) material (4) fact (5) on which the victim reasonably relies (6) causing damages."

Ethics in Negotiation - 3 main school of negotiation ethics

i. "It's a Game" Poker School ii. "Do the Right Thing Even If It Hurts" Idealist School iii. "What Goes Around Comes Around" Pragmatist School

Traits and Practices of Effective Negotiators (Huthwaite) - Planning

i. Amount of planning time is similar ii. Skilled negotiators give more than 3x as much attention to common ground iii. Skilled negotiator show 2x as many long-term comments iv. Setting limits (plan objectives in terms of a range rather than a fixed point) v. Skilled negotiators are more flexible around the order in which issues are discussed (average negotiators use sequence planning)

availability of info / vividness bias

i. Availability bias: information that is presented in vivid, colorful ways is more readily available than other information that may be at least as important. ii. Vividness bias: certain aspects of the deal or issues within it are vivid to us and we focus on them to the neglect of dull but important factors.

Best Practices for executing a competitive negotiation

i. Better to be consistent than tough in the opening stage. ii. Plan to make some concessions for the sake of the other party's esteem and reputation. iii. Insist on reciprocity in concessions. Not if it's lacking ,and link concessions if need be (I'll do X if you do Y) iv. Focus on winning the war, not necessarily each battle v. Watch for signals that the other part is nearing his or her walkaway or resistance point vi. Phrase commitments with a back door: "under these circumstances, our final offer is X"

Irrational escalation of commitment

i. Continued commitment to a course of action that makes decreasing sense ii. Arises in part from a need to justify past decisions and actions as having been correct.

Negotiation Strategy: Three purposes of Info Exchange Process

i. Development of rapport between negotiators ii. Surface underlying interests, issues, and perceptions iii. Initial setting of expectations based on the parties' relative leverage

self-serving bias/egocentricism

i. Having different opinions when the outcome benefits us, vs the same situation with reversed roles when the outcome doesn't benefit us ii. Our perceptions, beliefs about what is fair, and expectations are biased in our favor iii. Behavior we would consider unfair in others we consider fair in ourselves

Strategies of Influence

i. Highlight their potential looses rather than their potential gains ("loss aversion") · Be strategic and targeted rather than pervasive ii. Disaggregate their gains and aggregate their losses iii. Employ the "door in the face" technique (contrast effect) iv. Employ the "foot in the door" technique v. Leverage the power of justification vi. Leverage the power of social proof vii. Make token unilateral concessions

Value Creation: Prep Strategies

i. Identify your multiple interests · Think of all the things you value that the other party may be able to provide ii. Create a scoring system · Method to organize your interests and priorities iii. Calculate a package reservation value (PRV) · Don't accept any value less than PRV · If you cannot meet one area, try to make up for it elsewhere iv. Identify the other party's multiple interests

Pepulator Exercise

i. If both sides worked together collaboratively, they overall achieved a better result than if they had been competitive. ii. Trust was the key component to this exercise - with lack of trust, once one team feels betrayed than you derail the remaining rounds iii. The ideal situation was if both teams picked the middle price - you both make the most money

Leverage (Shell)

i. Leverage = power not just to reach an agreement, but to obtain an agreement on your own terms ii. Leverage checklist: · Which side has more to lose from no deal? · For whom is time a factor? · Can I improve my alternatives or make the other party's worse? · Can I gain control over something the other party needs? · Can I commit the other party to norms that favor my result? · Can I form a coalition to improve my position? iii. Leverage can change, power more stable

Value Creation: Execution Strategies

i. Negotiate multiple issues simultaneously ii. Make package offers iii. Leverage differences of all types to create value · Parties have different priorities, and different expectations about the future, differences in risk preferences and time preferences

endowment effect

i. Our tendency to overvalue what we own of possess ii. This can lead to inflated estimations of value

Four tips for reading and using body language

i. Pay attention · Watch especially for signals of engagement or disengagement ii. Identify a baseline iii. Evaluate gestural clusters · A good rule is to look for three body language signals that reinforce the same nonverbal language iv. Consider the context

Body Language Guidelines

i. People form an opinion of you within the first seven seconds. Be aware of that and use it to your advantage ii. Initiate a great handshake iii. Continue building rapport (e.g., by mirroring) iv. Display confidence v. Defuse a strong argument with alignment vi. Make a positive final impression

Traits and Practices of Effective Negotiators (Huthwaite): Face-to-Face

i. Reduced use of irritators ii. Making immediate counter-proposals less frequently iii. Reduced use of attacking or defending comments iv. Use of behavior labeling (i.e., "Can I ask a question", rather than simply asking it) v. Testing understand/summarizing (twice as likely as average negotiator) vi. Showing implementation concerns vii. Asking questions (ask twice as many questions) viii. Feelings commentary (more likely to give internal information about what they are feeling, thinking, etc.) ix. Argument dilution · Skilled negotiators are more inclined to use fewer, stronger arguments rather than as many as they can generate x. Reviewing negotiation · More likely to review a completed negotiation and learn from it

reactive devaluation

i. Rejecting an offer or demand based on its source rather than its substance ii. Problematic mindset: "if they're offering it, it can't be good for us"

Negotiation Strategy: Bases of Opening and Concession Strategy

i. The situation (Transaction, Relationship, or Balanced Concerns?) ii. Your leverage (who has the most to lose if no deal is made?) iii. Your own and your counterpart's style (are you or the other person predictably competitive or cooperative?)

Key insights from Trump's The Art of the Deal on effective negotiation tactics

i. Think big, have total focus ii. Protect the downside and the upside will take care of itself iii. Maximize your options iv. Know your market v. Use your leverage vi. Enhance your location vii. Get the word out (generate interest and create excitement, bravado) viii. Fight back ix. Deliver the goods x. Contain the costs xi. Have fun

Ethics in Negotiation - "cabin in the woods"

i. With buying the cabin from the elderly owner, inform that you believe she undervalued it. ii. With selling the cabin, simply say it feels time to try something new.

Listening Mistakes

i. You think about what you want to say rather than listening to what is being said ii. You talk when you should listen iii. You interrupt others when they are talking iv. You hear what you expect to hear rather than what is actually said v. Your preoccupation with other things hinders listening vi. Your prejudice against the speaker or subject hiders you from listening vii. Your tendency to stereotype keeps you from maintaining an open mind viii. Your self-centeredness keeps you from focusing on what others are saying ix. For whatever reason, you don't pay attention to what others are saying

Pareto improvement:

modifies a deal in a way that makes at least one party better off without making any party worse off one key goal in negotiation is to look for pareto improvements to the point of "pareto efficiency" ie the point where there is no way to make one party better off without hurting another party; no value is left on table, so value is maximized