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What is an exploding offer?
A deliberate, calculated strategy that is typically offered together with an extremely short, artificially imposed time limit.
Nibbling
Asking for more at the very end Ex. When you are buying a car, right after you have agreed on a price you say "Oh and I can get the car in silver too, right?"
What is framing?
Determines perspective (Fear of loss, Anticipation of gain) A negotiation technique in which the framer defines the issue at stake in a certain way to close a deal.
How does framing impact negotiations?
Emphasize the other party's loss if you fail to reach an agreement Emphasize the other party's gain if you do reach an agreement Settle as close to possible to the other party's resistance point You have an anchor or initial offer You want to reduce the other party's confidence You try to increase the other party's perception of your position
Good cop/bad cop
Ex. When selling a car, one salesman can be the "bad cop" and not budge on their offer. Then a "good cop" salesman could come in and apologize for their behavior and offer them a lower price. Even though both "cops" were always willing to go to that lower price.
What does integrative negotiation look like?
Free flow of information Understand the other negotiator's real needs and objectives Emphasize commonalties and minimize differences Search for solutions that satisfy both sides
What are virtuous cycles?
A particularly powerful trigger of virtuous relationships is fairness perceptions. Researchers have long understood the importance of people's perceptions of the fairness of a negotiation outcome. More recently, it's been discovered that we also attend closely to whether the negotiation process was itself fair. We tend to judge a negotiation to have been fair when we ourselves had ample opportunity to voice our point of view. Our sense of fairness increases the more we sense that the other side has genuinely considered our perspective
What is a unilateral concession?
A true unilateral concession requires no commitment or concession from the other side. Such concessions must come at little cost or risk to the provider, but be of high benefit to the recipient. In addition to establishing trust, carefully crafted unilateral concessions also demonstrate your competence by portraying you as someone who understands what the other side values.
Chicken
Act like you are fine with walking away Ex. When searching for a room with a random roommate, when negotiating a price you can say that you are fine with walking away if the rent is not what you want to pay. Even though you really need this apartment
What are four ways to regain your balance in a difficult conversation?
Admit to your own mistakes, your own mixed intentions, and your own contributions to the problem, the more balanced you will feel during the conversation, and the higher the chances it will go well." Other ways to maintain a balanced sense of self in difficult conversations include not trying to control the other's reactions, instead preparing for their reaction, imagining yourself in the future, or just taking a break from the conversation.
What are the key goals/purposes behind identifying alternatives?
An alternative should help you define when it makes sense to walk away (identify your reservation point) An alternative should help you gain power and leverage in the negotiation
What is the relationship between the different points in the bargaining range?
An inverse relationship. As you go lower on one end, you are going higher for the other party.
Move the bargaining range
Anchor with your initial offer Reduce the other party's confidence Increase the other party's perception of your position
What important questions should you ask yourself in each of these relationship area of planning?
Are they of a continuing series? Can I trust the other party? What do I know of the other parties' style and tactics? What is the limit of their authority? Consult with them in advance
How can you change the bargaining range?
Ask for more than you expect to get Never say yes to the first offer Play reluctant Vise: Ask for more than is offered: "You'll have to do better than that." Customers want to pay more - give them a reason to Don't offer to split the difference
Batna
BEST of all of the alternative that you identified for yourself
What does it mean to "complexify" your identity?
Become aware of your identity issues. Complexify your identity (adopt the "and" stance). Three things to accept about yourself - You will make mistakes. Your intentions are complex. You have contributed to the problem. Let go of trying to control the other person's reaction and redefine success in the conversation. Prepare for the other person's response. Imagine it's three months or ten years down the road. Take a break if you need it
What integrative negotiation strategies work?
Build trust and share information Ask diagnostic questions Provide information about interests Unbundle the issues Make package deals, not single-issue offers Make multiple offers simultaneously Multiple offers Multiple-issue offers Structure offers to appeal equally to you Present all offers simultaneously Contingency Contracts
How can you win and make the other party think that they won?
Claim you need approval Set difficult issues aside Progressively reduce size of concessions Negotiate for a long time Hold agreement at closing Use the bogey method
What are the five different strategies laid out in the dual concerns model?
Collaborative/Integrative negotiation Strengths: Increased understanding improves negotiation More focus on issues Can create value: "increase the size of the pie" Produces long term solutions Weaknesses: Requires more self-understanding Requires more understanding of another party Vulnerable in negotiation with a competitive opponent Competitive/Distributive negotiation Strengths: Initially requires less effort Best response: fight fire with fire Weaknesses: Emphasizes rights and power, ignores interests Divisive - impedes communication and understanding May produce short term success but long term failure
How do you prepare for a negotiation?
Define goals and priorities Try to understand other parties strengths and weaknesses Goals SMART goal Strategies Dual concerns model Tactics Identify issues to be resolved Third party research Define the bargaining mix Prioritize issues, identify links between issues Define interests to shape a specific position Define your limits
What is the role of emotion in difficult conversations?
Emotion is at the heart of a difficult conversation and we need to work with it, not against it.
How can you shape/influence the bargaining range?
Emphasize the other party's loss if you fail to reach an agreement Emphasize the other party's gain if you do reach a negotiation Influence the bargaining range: Ask for more than you expect, never say yes to the first offer, play reluctant, don't offer to split the differences Make the other party think they won: Claim you need approval, set difficult issues aside, progressively reduce size of concessions, negotiate for a long time, hold an agreement at closing
Aggressive Behavior
Ex. Balancing act, the friend was mean to her friends fiance because he was not helping plan the wedding
What are four ways you can implement a collaborative strategy? Be able to define and give an example of each.
Expand the pie (try and make both people win, Try to satisfy both parties' needs Logroll (make a range of requests, some of which are important and some that are not; concede on items that are lower priority) (ex. Go to the mountains but stay in a fancy hotel) Offer nonspecific compensation: This is the sweetener. (ex. Buy your husband golf clubs so he will be happy to go anywhere) Cut costs: What can I do to make x as painless as possible? Easier? Bridge: Invent new options completely (ex. She wants to go to the beach & he wants to go to the mountains --> go to Hawaii)
How can you improve your outcomes in a negotiation where a competitive strategy is being used?
Fight fire with fire, use a competitive strategy against someone who is using a competitive strategy. Ignore it Respond in kind Co-opt the other party before the negotiation Call and name their tactics
What does the framing effect suggest for how negotiators should frame issues in order to get the other side to make concessions?
Framing has important implications for negotiator tactics. Using the framing effect to induce a negotiating opponent to concede requires that the negotiator create referents that lead the opposition to a positive frame by couching the proposal in terms of their potential gain. In addition, the negotiator should emphasize the inherent risk in the negotiation situation and the opportunity for a sure gain.
What are several ways that the planning document can help you during a negotiation?
Gives clear objectives for evaluating offers Helps to understand other parties' strengths and weaknesses Prepared to address another party Help identify your interests and your position Interest: what you will get out of the negotiation based on values, desires, interests that is more than just a number. Helps shape your position Position: what you want out of the negotiation Help you know you goals and your limits (BATNA and reservation point) Help you understand the other party's position, wants, and limits
What are the problems of the "Feelings" conversations?
If unaddressed, feelings will leak or burst out and leave us disengaged (block our ability listen)
What increases and decreases interdependence?
If you have other options (you are less interdependent) your negotiating position is strengthened. If you have no back-ups, interdependence increases. If you have many options, your interdependence decreases.
How does BATNA influence interdependence?
If you have other options (you are less interdependent) your negotiating position is strengthened. If you have no other options (you are more interdependent) your negotiating position is weakened.
How can you respond to hardball tactics?
Ignore them Respond in kind/the same manner/fire back Name and discuss them Co-opt the other party before negotiations get intense
Salary Negotiations
Increase your power: Think ahead about how you can sell your strengths and even frame your "weaknesses" as strengths How much information does it make sense to share? Remember that how you deliver the information (e.g. about another offer) dramatically affects how well it is received If you have different beliefs about what will happen in the future - create a contingency plan
What is an opening offer?
Initial value or item you will present to the other parties An offer that is supposed to be high but that gives you some room to work down and make appropriate concessions.
What is the definition of an alternative?
It has nothing to do with the current negotiation partner and is an alternate course of action that helps you address the overall need that the current negotiation would have addressed
"Feelings" conversations?
Know that the situation is emotionally charged difficult conversations are about feelings we are shaped by an emotional footprint "engaging in a difficult convo without talking about feelings, is like staging an opera without music"
Lowball/highball
Make an initial offer so low or so high that the other person feels like they need to reevaluate their offer and be more willing to go past their resistance point Ex. Boss makes an initial offer for a promotion extremely low in hopes that the employee will questions their worth and not think that they deserve a higher negotiation
Why might it be important for managers to understand the differences between men and women described in this reading?
Men are asking for things they want and initiating negotiations (2 to 3 times) --> women just don't ask. Negotiating your starting salary can produce a gain of more than $0.5M by the end of your career (managers want to pay employees at their lowest cost) Minor instances of group-based bias will eventually lead to major inequalities between men and women
How do you define negotiation?
Negotiation is the art and science of securing agreements between two or more parties who are interdependent and who are seeking to maximize their outcomes.
What is the "And Stance" and why is it important?
Our emotions and others are more complex than just one dimension, so it is important to add more dimensions, "i can be mad AND so can he" There is no bottom line, we need to complexify our identity. It will help us deliver bad news and help us be curious and clear.
What is the "asking advantage"?
Perhaps directly negotiating for advantage - asking for what you want - is a male strategy and women simply enjoy other equally effective strategies to get what they want (partly true). Women often worry more than men about the impact their actions will have on their relationships (thus, not getting what they want). In many cases, the only way to get something is to ask directly for it.
The Flow of Negotiations
Preparation - defining goals and priorities Relationship Building - developing trust Information Gathering - learning about issues Information Application - assemble your case Execution - opening offer vs. expected agreement Closing the Deal - secure commitment to deal Implementation- who does what
Snow job
Pretend to be cooperative when you are not Ex. your coworker asks you to send over the paperwork that you have been working on, so that she doesn't have to do that much work. You say ok, but give it to her super messy and unorganized
Bogey
Pretend to care about issue #1 a lot, but be prepared to make concessions about it. Then use the fact that you lost issue #1 to gain on issue #2 which you actually cared about more than issue #1. Ex. A woman planning her wedding cake with a bakery will say to the baker that she really wants a 4 tiered cake with different flavors. She fights really hard for each cake to be a different flavor, but the baker says she can't do that. Then the woman says ok but can it be at least 4 tiers since I can't have different flavors, and the baker says yes. Meanwhile the woman just wanted a 4 tiered cake and did not really care about the flavors.
What are the advantages and disadvantages of using a scoring system?
Pro: comparing different alternatives, keep you analytically focused and puts emotions in check, can be a conversation in the negotiation Con: takes a long time
What points are included in the bargaining range?
Seller's BATNA, Buyers Initial Offer, Seller's Resistance Point, Buyers Target Price, Seller's Target Price, Buyers Resistance Point, Seller's Initial Offer, Buyer's BATNA
The Bargaining Range
Settle as close as possible to the other parties resistance point Move the bargaining range. Anchor with your initial offer. Reduce the other party's confidence Increase the other party's perception of your position Pattern of Concessions Offer progressively smaller concessions This presents the impression that you are approaching a limitation and will soon stop offering concessions.
What are the qualities of an effective reservation point?
Should encompass all points Not vague
The Used Car
Summary - Distributive Negotiation Prepare thoroughly - think about the bargaining range Try to identify and change the frame Provide a pattern of concessions
How does the behavior of successful and unsuccessful negotiators differ?
Superior: label behavior, test understanding and summarize, ask questions, share internal thoughts and feelings, reflect on negotiation, regain balance (prepare for a response, let go of trying to control reactions, imagine it's 6 months down the line, take a break) Unsuccessful: self-promotion, direct counter proposals, defend/attack exchanges, disagree then explain, use many reactions to back claim
What is a BATNA and how do you use it?
The Best Alternative To a Negotiated Agreement (BATNA) It helps guide your reservation points and how you prepare for the negotiation.
What are the problems of "Identity" conversations?
The all or nothing syndrome - we become hypersensitive to feedback
What is the dual concerns model and how do you use it?
The dual concerns model measures strategies based off of the importance of relationship and the importance of outcomes. Depending on how much you value the relationship or outcome you will use a different strategy. The importance of the relationship and the outcome
What is the endowment effect?
The endowment effect describes how we value things more when they belong to us. Read more about how the endowment effect and its impact on your finances & decision-making.
How does the BATNA influence who has power in a negotiation?
The more options you have, the less interdependent you are, which means your negotiation position is strengthened. You can use it to gain confidence and leverage.
How does the way in which information is framed affect negotiators?
The referent point that we choose determines the frame we impose on our options and subsequently, our willingness to accept or reject options Posing problems as choices among potential gains rather than choices among potential losses can significantly influence the negotiator's preference for specific outcomes Affects cognitive biases and negotiators behavior
"What happened conversations?
The situation is more complex than either party can see It is about conflicting perceptions, interpretations, and values It is about what is important and NOT ABOUT BEING RIGHT Must look at the real intentions Defend and protect your own position, but do not assign blame We are visitors in each other's stories and we have very different stories We need to understand their stories to understand their conclusions truth assumption: we argue for our view (I am right, you're wrong) intention invention: we assume we know the other person's intentions, but we don't
How are the alternatives you identify related to the bigger picture goal of the negotiation?
They help you figure out whether you have a stronger or weaker position in the negotiation.
Equity Splits
Timing of renegotiating - know the key signs that it might be time to renegotiate. Avoidance can come back to bite you There are benefits to negotiating- clarity in expectations for team and for investors Build expectations of flexibility into the agreement: when can renegotiation occur? Remember that the success of your team depends on your ability to openly discuss these issues Don't forget to identify, remember, and stick to your reservation point Process can matter as much, or more, than substantive issues
Intimidation
Try to make it seem like you have the power in the negotiation Ex. When your employee is quitting, you can say "Well where else are you going to go?" or something along the lines of "You need this job"
What characterizes an exchange as a negotiation?
Two or more parties Conflict or difference needing agreement Choose to negotiate to obtain a better deal - maximize outcomes Expect to give and take Prefer to negotiate than to fight openly Manage tangibles and resolve intangibles
What does it mean to "disentangle intent from impact" and why would you want to do this?
We go from, "I was hurt" to "you intended to hurt me" We need to look at: *actions (what was said or done) *impact (what it was on me) *assumption (what assumptions am I making about their intentions?) To resolve this, we must hold our views as an assumption/hypothesis. We must inquire, listen, and be open to reflecting.
What important questions should you ask yourself in each of these situation area of planning?
What deadlines exist? What fairness norms or reference points exist? What topics or questions should we avoid?
Job Offer
What is at stake? Relationship - long term & Compensation What is the best negotiation strategy in this scenario? Collaborative What is negotiable in a Job Offer? Salary Bonus, Other compensation Number of hours Flexibility in scheduling (e.g. working from home) Pension Time off Scope of job/title Allowances Justify your demands/offers Know your priorities Develop rapport Cultivate alternatives Get it in writing Be willing to walk away
What important questions should you ask yourself in each of these me area of planning?
What is your overall goal? (basic needs, why am I talking to this person? what do I hope to accomplish?) What are the issues? (what issues must be negotiated?) How important are those issues to you? (what is/isn't important, where can I stand my ground and where can I concede?) What is your BATNA?
What important questions should you ask yourself in each of these other party area of planning?
What is your overall goal? (basic needs, why am I talking to this person? what do I hope to accomplish?) What are the issues? (what issues must be negotiated?) How important are those issues to you? (what is/isn't important, where can I stand my ground and where can I concede?) What is your BATNA?
When should you avoid negotiation?
When you could lose everything. When you wouldn't be able to meet the terms of a potential agreement. When the demands are unethical. When the other party is untrustworthy. When you have no stake in the outcome. When you don't have time. When waiting would improve your position. When you're not prepared.
What does it mean to label your concessions and why should you do this?
When you've made a significant concession, be sure to communicate exactly how much you've given away and what the sacrifice means to you. By doing so, you'll not only affect the other party's perceptions of your goodwill but trigger your partner's desire to reciprocate, and increase the level of mutual trust.
What are roadblocks to negotiation?
Win-lose goals Misperception and bias Emotionality Decreased communication Blurred issues Rigid commitments Magnified differences, minimized similarities Escalation of the conflict
What is a target price?
Your goal in the negotiation
What is a reservation point? How is it different from a BATNA?
Your reservation point is the furthest you would go in the negotiation before you decline/rescind the offer. You create the resistance point to know where not to pass before it will not be a successful negotiation. It is different from the BATNA because the resistance point is the furthest point you will go in a negotiation whereas the BATNA is an alternative to a negotiation that you would accept in case the original negotiation does not go well.
How can you overcome common mistakes in "Feelings" conversations?
describe your feelings and negotiate with them know your feelings & how they transform themselves must look for what our story is missing describe feelings carefully, don't evaluate them; full spectrum of feelings
The Vacation
don't delay discussions of money set clear expectations before any commitments are made be aware of potential for collateral damage be willing to identify your own contributions process matters strategy: ask yourself, what's more important, friendship or money
What are vicious cycles
frequently grow out of widespread human tendency to take an exaggerated view of others' perceived hostility or unreasonable behavior; leads us to reciprocate with negative behavior Vicious cycle triggers: self-fulfilling prophecy, naive realism, confirmatory bias, sincerity gap, accuser and excuser bias, winning traits
How can you overcome common mistakes in the "Identity" conversations?
ground your identity become aware of your identity issues complexify your identity with the "and stance" accept that you will make mistakes learn to regain balance and not control others' reactions prepare for their response and imagine it's the future and take a break
two basic concerns in all negotiations
importance of relationships and outcomes
What is interdependence?
interlocking goals
How do you promote virtuous cycles?
keep in mind that having a close, positive relationship with the party is no guarantee that a negotiation will result in a mutually beneficial outcome good will should always be combined with the active pursuit of joint gains our sense of fairness increases the more we sense that the other side has genuinely considered our perspective
Why would anyone make an exploding offer?
last offer that could end relationship with the offer (sign of offerers weaknesses, no comparison time)
"Identity" conversations?
may be the most subtle and the most challenging looks inward, who we are/how do we see ourselves? difficult conversations threaten our identity revolves around, I am competent, I am a good person, and I am worthy of love
What four components of negotiation should you focus on during planning?
me, other party, situation, relationship
Resistance point (reservation)
point at which you will cease a negotiation. You will not accept an agreement that does not meet this criteria
The Balancing Act
some of the most important negotiations you do in the future will be with family members family can make or break your ability to focus and succeed at work be proactive about setting expectations and negotiating the relationship to prevent a crisis. don't leave it to chance
What are some common cognitive mistakes that negotiators make?
tend to be overly affected by the frame or form of presentation of information tend to non-rationally escalate commitment to a previously selected course of action when it is no longer the most reasonable alternative tend to assume that their gain must come at the expense of the other party and thereby miss opportunities for mutually beneficial trade offs between the parties judgments then are anchored upon irrelevant info - such as an initial offer tend to rely on readily available info tend to fail to consider info that is available by focusing on the opponent's perspective tend to be overconfident concerning the likelihood of attaining outcomes that favor the individuals involved
How can you avoid vicious cycles?
test your assumptions: before mounting an aggressive response to other side's perceived unreasonable behavior, check your perspective with others who don't have a stake in the issue before assuming ill intent, look for extenuating circumstances that might provide an alternative explanation
"What happened conversations? Problems
think about it as they're selfish they're naive, controlling, & irrational we never put blame on ourselves stories can only come from available info, our observations (which we observe the world differently and have different access to info), our interpretations (past experiences), our conclusions our assumptions about intentions are usually wrong (we assume bad things and jump to that they're bad people)
How can you effectively respond to an exploding offer?
try be reasonable and make sensible counter offers farpoint gambit (accept provisionally, nonescalative, last chance) defuse it by "embracing it" "I accept. Provisionally." key is to make requests that are completely reasonable, by which will eventually result in a deadline being violated, due to the need for further clarification simply ask "can we talk about it on monday? Extension? Prepare for a counteroffer Set a date that you would be in a position to accept and explain why this date would be beneficial
How can you overcome common mistakes in "What Happened" conversations?
we need to understand their story shift from certainty to curiosity look for understanding, not being right disentangle impact from intent hold view as a hypothesis look to see how each contributed
