Negotiation Ch.2,3 and 9

Offers, Counteroffers, and Motives

A negotiator communicates her preferences during a negotiation. Selectively relaying preferences can have a powerful influence on the actions of the other party and on outcomes. A communicative framework for negotiation assumes that the communication of offers is a dynamic process; the process is interactive; and various internal and external factors drive the interaction and motivate a bargainer to change his or her offer.

Reservation Point (Resistance Point)

A negotiator's resistance point is generally equal to her best alternative to a negotiated agreement (BATNA). This is a negotiator's bare minimum value that she is willing to accept in a negotiation. If the terms of the negotiation cannot meet or exceed the reservation point, the negotiator may walk away from the negotiation. It is incredibly important for a party to recognize her reservation point and prevent another party from discovering it. If the reservation point is not given, negotiators generally derive the reservation point from the alternatives available to a negotiated outcome.

Creativity

A negotiator's willingness and ability to search for and develop alternative resolutions to situations involving differing perceived interests or objectives will affect the breadth of the negotiation.

Concession

A party's adjustment. More specifically, it is an adjustment by one party in favor of the other party as a result of a tactic employed by the other party. Any adjustment in the negotiation is done to bring the parties within the ZOPA.

Process

A party's willingness to negotiate and their actions in the negotiation process are affected by the process through which an agreement is reached as well as the actual outcome obtained.

Alternatives

Alternatives are the options or paths that a negotiator may choose rather than reach an agreement with the other party. Negotiators focus on the best alternative(s) to a negotiated agreement, also known as the BATNA. BATNAs are very important in both distributive and integrative processes because they define whether the terms of negotiation are better than another possibility outside of the present negotiation. To be a BATNA, these other options must meet the negotiator's needs and be more favorable than could be otherwise negotiated.

Setting an Opening Bid

An opening bid or anchor point may be the best possible outcome, an ideal solution, or something even better than was achieved last time. Anchoring, as the name implies, provides a firm location from which to begin a negotiation. The party who first anchors (makes the opening offer) provides either the top or bottom range for the negotiation. The other end of the bargaining range is established by a party's response to the opening offer.

Ask Questions

Asking good questions enables negotiators to secure a great deal of information about the other party's position, supporting arguments, and needs.

Culture

Aspects of cognition, communication, trust, and ethics are all implicated when individuals from different cultures interact.

Procedural Matters

Communications regarding what needs to take place and how. It can involve how well the process is going or what procedures might be adopted to improve the situation. Recall that a primary interest of a negotiator may be procedure-based as much as outcome or relationship-based.

Five major strategies for conflict management have been identified in the dual concerns model

Contending (also called competing or dominating). Yielding (also called accommodating or obliging). Inaction (also called avoiding). Problem solving (also called collaborating or integrating). Compromising - Demonstrates an intention to engage in the back-and-forth that characterizes negotiation.

Related Interests

Determine whether the issues are linked together or are completely separate. Often, one interest will affect another. As such, a seemingly unimportant interests can have far greater impact or importance. Understanding this will allow the negotiators to package interests together that create greater value to either party. This is a tactic known as "bundling". If an interest is completely unrelated, it can be dealt with individually to avoid the loss of value created through bundling like interests.

Substantive interests

Directly related to the focal issues under negotiation.

Strategy & Tactics

Each parties' strategic plan for arriving at a particular outcome (or within a range of outcomes) and the tactics or measures employed to effectuate that plan will affect the negotiation process.

Interests

Each party should seek to understand the extent or degree of importance that each party places on a particular interests. While the interests in a distributive negotiation are usually limited and in direct conflict, there may be an opportunity to integrate other interests into the negotiation. This would allow the negotiators to convert the negotiation in an integrative negotiation in which interests are traded off to achieve greater value.

Zone of Potential Agreement (ZOPA)

Each party's reservation point establishes the ZOPA. In theory, any point in this zone is a potential outcome of the negotiation. Any adjustments or concessions in the negotiation will take place within this range. It is important to note that a party's ZOPA is subject to change as the negotiation develops. The bargaining zone can be positive or negative. A positive zone gives the opportunity for reaching an agreement. A negative ZOPA does not allow for a negotiated agreement. For example, if a buyer is willing to pay up to $7 and the seller is willing to sell for as little as $5, there is a positive ZOPA. If the seller will not take less than $8 and the buyer cannot pay more than $6, there is a negative ZOPA. In a negative bargaining zone, parties should pursue other alternatives. If parties fail to reach agreement in a positive bargaining zone, the result is suboptimal.

"Zone of Potential Agreement" or ZOPA

Each party's reservation point which result in a negotiated agreement, as the negotiated outcome is above each party's reservation point and better than any known BATNA.

Ethics

Ethics influence and individual's values, perceptions of situations, and the communication and strategic tactics employed in a negotiation.

"Social Accounts" is the method used by negotiators to explain things to the other party, especially when negotiators need to justify bad news.

Explanations

Perception or Cognition

How an individual perceives the facts of the situation. Cognition is the mental process used to process these facts will shape a parties willingness to negotiate. An individual's perception of the facts of a situation and the negotiation process will affect the ability to effectively process the facts or information. Cognition entails logic, emotion, and heuristics (biases). These elements affect a party's understanding of what is a successful negotiation.

Suboptimal Outcome

If the parties fail to reach an agreement within the ZOPA there is a suboptimal outcome. It may result from one party walking away from the negotiation or accepting a settlement point that is outside of the ZOPA. In any event, one or both parties will be in an inferior position or reap less value than was possible.

Dependent Negotiations

In direct contract to independent negotiation, a party's ability to achieve her interests or objective depends entirely upon the actions of the other parties. This generally means that dependent party must, to some extent, allow the other party to further an interest or achieve an objective in the negotiation before the dependent party can improve her position. In negotiating practice, the dependent party must accommodate the other party with little requirement from concession from the other side.

Framing up a distributive negotiation should proceed as follows

Interests, Reservation Point (Resistance Point), Alternatives, Target Point, ZOPA, Bargaining Range, Settlement Point, and Suboptimal Outcome.

Subclassifications of inter personal conflict include

Intra-group Conflict and Intergroup Conflict

Two primary categories of conflict

Intra-personal Conflict (or intra-psychic conflict) and Interpersonal Conflict

Information about Outcomes

Negotiators should be cautious about sharing their outcomes or even their positive reactions to outcomes with the other party. This is especially true if they are going to negotiate with that party again in the future.

Interdependent Negotiations

Parties have mutual dependence on each other. To achieve their desired outcomes, each negotiator must work to achieve the interests or objectives of the other party or parties. The interests and objectives (outcomes goals) of the parties may be the same or they may be characterized as interlocking.

Independent Negotiations

Parties to the negotiation are able to achieve their interests or objectives without assistance from another party. That is, the negotiator focuses on her personal interests or objectives without regard to the interests or objectives of the other parties.

Communication Channel

People negotiate through a variety of communication media: over the telephone, in writing, and increasingly through such electronic channels as e-mail and teleconferencing systems, instant messaging, and even text messaging. It is important to recognize the context of the negotiation and select a communication channel that maximizes the potential for value creation and agreement. Sometimes, however, there is little option to choose a channel. In such a case, it is important to be aware of the general hurdles that any communication channel entails. For example, there is evidence that negotiation through written channels is more likely to end in impasse than negotiation that occurs face-to-face or by phone. There is also evidence that email negotiators reach agreements that are more equal than face-to-face negotiators. Further, negotiators using e-mail need to work harder at building personal rapport with the other party if they are to overcome limitations of the channel that would otherwise inhibit optimal agreements or fuel impasse.

Process-based interests

Relate to how the negotiators behave as they negotiate.

Communication

The ability or effectiveness of parties to a negotiation to communicate their interests, objectives, and acceptable resolutions of situation will affect the negotiation process. In a way, effective negotiation practice is a communication exercise. Parties use communication techniques to derive and understanding of the other party and her interests. Communication is also the primary method of achieving concessions the bring a negotiation within a zone of potential agreement (ZOPA).

Bargaining Range

The bargaining range is established by the points from which the parties begin to negotiate (their "anchor points"). The bargaining range will be constricted by concessions during the bargaining process. The bargaining range may be wider than the ZOPA; however, to reach a negotiated agreement, the bargaining range must constrict within the ZOPA.

Verbal Communication

The effectiveness of verbal communication in a negotiation depends upon the ability of the speaker to encode thoughts properly and on the ability of the listener to understand and decode the intended message(s). Language operates at two levels: the logical level (for proposals or offers) and the pragmatic level (semantics, syntax, and style). We often focus upon logical attributes instead of semantic or style attributes. In any event, the meaning conveyed by a proposition or statement is a combination of one logical, surface message and several pragmatic messages. A negotiator's word choice, tone, tempo, and inflections may not only signal a position but also shape and predict it.

Information about Alternatives

The existence of a BATNA changes several things in a negotiation: 1) Compared to negotiators without attractive BATNAs, negotiators with attractive BATNAs set higher reservation prices for themselves than their counterparts; 2) Negotiators whose counterparts had attractive BATNAs set lower reservation points for themselves; and 3) When both parties were aware of the attractive BATNA that one of the negotiators had, that negotiator received a more positive negotiation outcome.

Compatible Negotiation

The interests of objectives of the parties are the same and NOT mutually exclusive. In fact, the parties desire the exact same outcome. There is no need for tradeoff. The parties want the exact same outcome with regard to the interest or objective at stake in the negotiation.

Integrative Negotiations

The interests or objectives of the parties are related and are NOT mutually exclusive. This is a potentially (win-win) scenario. Any value claimed by one party is not at the expense of the other party; rather, the parties negotiate to create or generate value in the situation and both parties may achieve mutual gains beyond what they could achieve independently. There is generally some tradeoff between the parties. The tradeoff allow one party to gain in an interest more important to her in exchange for the other party gaining in an interest that is more important to him. The net result is both parties being better off because of the negotiation.

Distributive Negotiations

The interests or objectives of the parties are the same and are mutually exclusive. As such, it is a competitive (win-lose) situation. Any value claimed by one party in the negotiation is at the expense of the other party. This scenario generally is very competitive and does not foster cooperative behavior.

Medium of Communication

The medium through which parties communicate can affect numerous aspects of the negotiation. Notably, it affects the communication process and the cognitive processing of the information exchanged. This can, in turn, affect the strategy that the parties employ.

Relationships

The nature or extent of the relationship between individuals will contribute to the context, communication, and trust that define a negotiation.

Direct Presentation

The negotiator makes partial disclosure of certain information while strategically withholding other to guide the counterparty to the desired assumptions. This may create an emotional reaction in the counterparty that fosters accommodation. Be careful to not be untruthful or deceitful, as this can affect or destroy the negotiation if discovered.

Vague Reference

The negotiator makes subtle reference to her interests, BATNA, reservation point, or cost of delay or non-agreement. These inexact references will cause the other party to assume information in a given range. Be careful to avoid being exact in stating a range, as the counterparty will assume the lower end of the range is the true reservation point.

Contextual Modification

The negotiator may seek to influence the interests, BATNA, reservation point, or cost of delay or non-agreement by modifying the context of the negotiation. This can be done through altering the interest(s) at stake; creating uncertainty or changing the counterparty's view of their alternatives; changing the counterparty's perception of the repercussions for failure to reach an agreement; or manipulating the medium or timing of communication.

Screening Activities

The negotiator remains silent with regard to interests, BATNA, reservation point, and costs of delay or non-agreement. She will seek to communicate by asking questions that focus on the counterparty. The counter party may reveal information in response to these questions that is useful in deducing the desired information.

Objectives or Interests

The objectives and interests of the parties are often subjective and will drive the negotiation process.

Anchor points

The parties opening offer and response. The anchor points establish the "bargaining range". All of the options within the bargaining range, however, might not represent an acceptable outcome to both parties. That is, either party's anchor point may be outside of the other party's acceptable range or "below her reservation point".

Intermediaries

The presence of facilitators or decision makers will have an effect on the negotiator's objectives, perceptions, strategy, communication, and trust in a situation.

Context

The situation or conditions under which the situation arises. What are the facts of the situation? Who are the parties to the situation? What is the nature of the interaction or relationship between the parties? Are there teams or coalitions among the parties?

Target Point

The target point is a "aspiration point" for the outcome of the negotiation that meets a party's objectives or desires. The target point is generally at a point that the negotiator believes is potentially achievable. That is, it should be a realistic objective. The target point may be very subjective depending on the negotiation and the cognitive characteristics of negotiator.

Role Reversal

This is putting one's self in the position of the other party. It allows the parties to understand the interests and constraints of the counterparty. Role reversal is effective in producing cognitive and attitude changes. When the parties' positions are fundamentally compatible with each other, role reversal is likely to produce acceptable results (cognitive and attitudinal change). When the parties' positions are fundamentally incompatible, role reversal may sharpen the perceptions of incompatibility and inhibit positive attitude change. Role reversal does not necessarily lead to easy resolution of a conflict, particularly when accurate communication reveals a fundamental incompatibility in the positions of two sides.

Settlement Point

This is the negotiated outcome of a successful negotiation. The settlement point always falls within the Zone of Potential Agreement and provides a measurement point for assessing a negotiator's success in the negotiation. The amount or extent of interests or value claimed by a negotiator beyond her reservation point is known as the "negotiator's surplus". Both parties to a negotiation will have a surplus; however, a comparison of negotiator surplus will indicate which party was more successful in the negotiation.

Intergroup Conflict

This regards conflicts that arise between different groups (such as teams, businesses, nations, etc.).

Intra-group Conflict

This regards conflicts that arise between members of small group (such as a team or family).

Interpersonal Conflict

This regards the conflict between different individuals or parties.

Intra-personal Conflict (or intra-psychic conflict)

This regards the internal conflict that an individual experiences regarding ideas, thoughts, emotions, values, predispositions, etc. These conflicts are psychological and are worked out through cognition (mental reasoning) rather than negotiated by parties.

Relationship-based interests

Tied to the current or desired future relationship between the parties.

Trust

Trust between individuals affects the willingness and depth of personal interaction. In this way, trust moderates the interaction between individuals when their interests and objectives differ.

Characteristics common to all negotiations include

Two or more parties; A need to align interests or objectives or to resolve a dispute; A desire to negotiate;

Importance

Understand which issues are more or less important to one's self and the other party. Interests that are directly adverse and equally important are generally distributive in nature. (Negotiators may attempt to trade off on these issues or split the difference in value. Interests that are identical are compatible should be fully exploited to create mutual value for the parties. Adverse interests that differ considerably in importance to the parties offer the greatest opportunity and can be used to develop an integrative negotiation. One party will seek to accommodate another party's interest if that interest is far more important or valuable to that party. In turn, the other party can be convinced to accommodate the negotiator on a separate interest that is more important or valuable to her. In this way, the total value achieved by the parties is greater.)

Parties negotiate to achieve mutual assent with regard to differing perceived interests or objectives. The parties may desire to

align their actions (or inactions) in support of an interest or objective, or resolve a problem or dispute that exists (or may arise) between the parties.

Aversions

are a cognitive disposition with regard to a perceived result or alternative scenario in the event of a failure to negotiation (i.e., broken relations, harm to reputation, legal actions, etc.).

Improve communication in negotiation

ask Q, listen, role reversal

Listening

can be broken down into passive, active, and acknowledging. "Passive listening" involves receiving the message while providing no feedback to the sender about the accuracy or completeness of reception. "Acknowledging" is who the receiver acknowledges the message, such as occasionally nod their heads, maintain eye contact, or interject responses. "Active listening" occurs when receivers are actively listening, they restate or paraphrase the sender's message in their own language. Successful reflective responding is a critical part of active listening.

Dependence

concerns the extent to which parties to a conflict rely on the other to achieve an outcome or resolution of the conflict.

A negotiation should begin by

framing up the negotiation from the point of view of both parties.

Individuals negotiate to

further an interest or achieve an objective or resolve an existing dispute in a mutually acceptable manner. They do so in light of the characteristics of the situation (context and facts) and the other party (disposition, perception, and interest/objectives).

Negotiation

is a process by which two or more individuals communicate with the purpose of furthering or achieving differing or conflicting perceived interests or objectives. For a negotiation to be successful, the parties must arrive at an agreement that fits with a range of situational outcomes acceptable to the other party.

Nonverbal Communication

is anything that is "not words". Examples includes; vocal cues or paralinguistic cues; facial expressions; eye contact; interpersonal spacing; posture; body movements; gestures; touching, etc. Generally, successful communicators are nonverbally sensitive, nonverbally expressive, nonverbally selfcontrolled, and motivated to perform for their "audiences". It can be extremely important with regard to persuasion, power, and trust. People assert dominance and power through nonverbal cues. High social power is reliably indicated by patterns of looking while speaking and listening. Body language can be aggressive, coy, eager, engaged, inviting, closed-off, etc. A skilled negotiator will use any non-verbal communications in a manner that furthers her strategy and strengthens her position. A neutral exhibition of non-verbal communication is known as "attending behaviors". Attending behavior lets the other know that you are listening and prepares her to receive your message. Examples of attending behavior include making eye contact when speaking and adjusting one's body position to show engagement.

The Best Alternative to a Negotiated Agreement (BATNA)

is the most advantageous alternative for a negotiator if no agreement is reached in the negotiation. A subjective preference, which will determine the negotiators willingness or propensity to negotiate. Further, it will determine the extent to which she is willing to "adjust" her position in the negotiation.

The "reservation point" (also known as a resistance point)

is the point in the negotiation or minimum acceptable terms before the negotiator ceases to negotiate and walks away. It is a negotiator's bare-minimum that she is willing to accept in a negotiation. If the terms of the negotiation cannot meet or exceed the reservation point, the negotiator may walk away from the negotiation.

Multiple-issue negotiations

lend themselves more to integrative negotiations because parties can use tactics, such as logrolling, to create issue "packages" that are mutually beneficial.

The opening bid or "anchor point"

representing the best deal one can hope to achieve.

Single-issue negotiations

tend to dictate distributive negotiations because the only real negotiation issue is grabbing the value at stake.

Bargaining mix

this is how parties define the issues or negotiation goals.

Specific "target point"

where one realistically expects to achieve a settlement.

Sitkin and Bies (1993) suggests that three types of explanations are important

⁃ Explanations of mitigating circumstances, where negotiators suggest that they had no choice in taking the positions they did; ⁃ Explanations of exonerating circumstances, where negotiators explain their positions from a broader perspective, suggesting that while their current position may appear negative, it derives from positive motives; and ⁃ Reframing explanations, where outcomes can be explained by changing the context.