MGMT 457 Negotiations Final - Eric Michel NIU
4. Integrative Bargaining Situation definition
"Expanding the pie"
Why negotiators may engage in unethical conduct
- "He/she is going to cheat so I might as well cheat first" - The tactic was unavoidable - The tactic was harmless - The tactic will help to avoid negative consequences - The tactic will produce good consequences - "They had it coming," or "They deserve it," or "I'm just getting my due" - The tactic is fair or appropriate to the situation
1. Define negotiations
- A tactic to use when two or more parties need to reach a joint decision but have different preferences - Preferences must not be identical - Both sides seeking a mutually agreeable outcome
4. Identify strategies that do NOT work to expand the pie
- Commitment to reaching a win-win deal - Compromise - Focusing on a long-term relationship - Adopting a "cooperative orientation" - Taking extra time to negotiate
3. Distributive Bargaining Situation Definition (How do parties seek to maximize their obtained outcomes?)
- 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
how different individual differences (i.e., personality traits) impact negotiation effectiveness
- Conflict - Management Style - Social Value - Orientation - Self Efficacy - Self-Monitoring - Locus of Control - Machiavellianism - The "Big-Five" - Personality Factors - Positive and Negative Affect - Emotional Intelligence
Contrast factors that shape a negotiator's predisposition to using unethical tactics
- Contextual Influences On Unethical Conduct - Past Experience (particularly failure!!!) - Relationship between the negotiator and the other party - What has it been like? - What would you like it to be in the future? - Relative Power Between the Negotiators - Those with more power are generally more likely to use unethical tactics... - Acting as an Agent Versus - Representing Your Own Views - If acting for someone else, more likely to violate personal ethical code... - Group and Organizational - Norms and Pressures
4. What processes do parties put in place to maximize their obtained outcomes?
- 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
4. Identify and define the issue - examples
- 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)
4 possible roles for parties in negotiations + advantages and disadvantages
- Dyad - Agents - Unrepresented bystanders and audiences - Third parties
Understand relevant prescriptive advice when using agents.
- Expertise - Emotional detachment - Tactical Flexibility
1. Conflict - cause of conflict definition
- Goal differences (e.g., resources, time horizons) - Perceptual differences (e.g., status, culture, values)
3. Typical hardball techniques and how to deal with them
- 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 - Ignore them - Discuss them - Respond in kind (same thing back) - Co-opt (befriend)
Rate each alternative on each criterion
- How well will each of the alternative solutions achieve each of the defined criteria? - Evaluating consequences - Most difficult step of the process due to the requirement to forecast future events
Generate alternatives (How long should decision makers generate alternatives)
- Identify all possible courses of action - How long should decision makers generate alternatives? - Diminishing return on the value of additional alternatives - Failure to limit the time spent on generating alternatives will create a barrier to effective decision making
Identify marginally ethical negotiating tactics
- Lies - Puffery - Deception - Nondisclosure - Distraction - Emotional Manipulation - Bluffing
4. What is the key clue to integrative possibilities?
- More than one issue is on the table - the priorities or preferences of each side are different for the various issues in the negoitation
Compute the optimal decisions
- Multiply the ratings in step 5 by the weight of each criterion - Add up the weighted ratings across all of the criteria for each alternative - Choose the solution to the highest sum of weighted ratings (highest perceived value)
1. Why is negotiation important?
- Negotiation is the key communication tool for interdependent relationships - Most people not very good at negotiation (over 80% of corporate executives and CEO's leave money on the table) ...yet 80% of a manager's time is spent negotiating something - Our challenge is to dramatically improve ability to: 1. expand the pie 2. cut the pie 3. Avoid nasty escalation
Etiquette Definition
- Norms governing manners, courtesy, and social propriety - Lesser stakes for human welfare
2. Apply the Dual Concerns Model to understand how negotiator's determine their strategic options.
- Per Dual Concerns Model, choice of strategy is reflected in the answers to two questions: - How much concern do I have in achieving the outcomes at stake in the negotiation? - 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
Determine liabilities to the rational model
- Perfectly define the problem - Identify all criteria - Accurately weigh all criteria - Know all relevant alternatives - Accurately assess each alternative based on each criterion - Accurately calculate and choose the alternative with the highest perceived value
Understand how people acquire power in negotiations and the most common source of power in negotiations
- Power based on information and expertise - Power based on the individual and one's position (including control over resources) - info is derived from ability to assemble data to support their position
Universalism
- Process/Duty Ethics...aka Kant's Categorical Imperative - Determine rightness or wrongness before outcomes (motives, or reasons for acting, are important) - Argument for it yielding the best decisions - Guilt indicates violation of moral laws - Advantage: encourages persistence and consistent behavior - Disadvantages: warped/dead consciences, too abstract in times of stress or crisis
Prudence Definition
- Promotes individual welfare or happiness - May or may not overlap with ethics
Personalistic Ethics
- Rightness of an action is determined by one's conscience - Conscience within each person "calls" them to fulfill their humanness and to decide between right and wrong However... - How can we justify ethics by saying "it felt like the right thing to do"? - How can we achieve a collective definition of what is ethical if individuals disagreed? - How can we achieve cohesiveness and consensus in a team/organization that only fosters personal perspectives?
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 However... - Who makes the social rules and how are they evaluated and changed? What if the community is corrupt? - What do we do with independent thinkers who challenge the morality of the existing community (e.g., MLK, Gandhi)?
Satisficing
- Searching for one satisfactory solution that will suffice because it achieves an acceptable level of performance - Decision makers do not examine all possible alternatives - Foregoing the best solution for one that is acceptable or reasonable
2. How goal setting has a direct effect on negotiator's strategy
- Setting goals is the first step in the negotiation process - The goals set have a direct effect on the negotiator's strategy - There are limits to what our goals can be Wishes are not goals - Must consider other party as well - Effective goals must be concrete/specific (measurable) Relationship-oriented goals?
3. Reasons it is important to study distributive bargaining?
- Some interdependent situations are distributive in nature - Many people use distributive bargaining almost exclusively - Avoid counterproductive strategies or tactics
Identify 4 major perceptual errors.
- Stereotyping - Halo effects - Selective perception - Projection
Intuition
- Subconscious mental processing - Values or ethics based decisions - Experience based decisions - Affect initiated decisions - Cognitive based decisions
Law Definition
- Subdomain of ethics consisting of ethical norms to which society attaches severe sanctions and penalties - Often overlap between law and ethics
3. Primary objective in distributive bargaining
- TO MAXIMIZE the value of the single deal - push settlement near opponent's resistance point - get other party to reduce resistance point - make sure other party feels they got a great deal
2. Trust Definition (How it impacts negotiation context)
- 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 - Trust acts as a filter - Truthfulness of statements and information - Concern for maintenance and enhancement of the negotiating relationship
Define perception and understand how perception links environmental stimuli and behavior.
- 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
Utilitarianism
- The rightness of an action is determined by evaluating its projected/expected consequences - Arguments for it yielding the best decisions - Advantages: easy, used frequently, examines consequences - Disadvantages: consequences may be difficult to identify and evaluate, unanticipated outcomes, individuals may reach different conclusions
Understand concepts of bounded rationality including satisficing and intuition.
- There is a limit to how rational individuals can be like time and resource constraints - Especially in the context of non-programmed decisions - Constraints impinge the decision maker
Weight the criteria (ways in which managers employ relative value)
- What is the relative value of each criteria? - Accurately weigh the criteria according to your preferences - Relative Value may be defined as dollars, points, or another scoring system
1. Examples of negotiations in everyday life
- What room you get with the roommates - Buying a car - Where you're going to go eat - Job Offers/Benefits - Negotiation is something that everyone does, almost daily, and examples are constantly
Provide ways to improve communication in negotiations
- ask questions and actively LISTEN
Ethics Definition
- broadly applied social standards for what is right or wrong in a particular situation, or a process for setting those standards - internally defined and adopted and normative in scope
Provide reasons to use a third party in a negotiation, ranges of third party roles, and challenges facing third parties
- emotions high - communication broken - at an impasse - seem irreconcilable
self efficacy
- judgment about one's ability to perform effectively - high self efficacy obtain higher outcomes because they set higher goals and engage in cooperative problem solving behaviors
three ways third parties may effectively intervene in a negotiation
- modify physical and social structure of dispute - modify issue structure - increase disputants' motivation to reach agreement
1. Situational factors (provide examples)
- number of other parties - nature of the issues - Location and configuration of the physical space - time boundaries and deadlines - Social and cultural context - Negotiator's power
Consequences of unethical conduct
- positive or negative consequences based on: 1. Whether the tactic is effective (may lead to rationalization for use of tactic) 2. How the other person, constituencies, and audiences evaluate the tactic 3. How the negotiator evaluates the tactic (e.g., guilt, discomfort, stress) - A damaged relationship with the opponent - A sullied reputation - Lost opportunities*
Authority Definition
- the right to seek compliance
Identify ways to detect deception and understand the power of triangulation.
- watch the eye contact and the body, changes in speech - triangulation is using several baseline methods such as voice, body movements, and gestures
1. 3 important themes regarding the nature of negotiations
1. Basic characteristics of negotiation situations 2. Interdependence 3. Understanding the dynamics of conflict
4. Generate Alternative Solutions - provide examples
1. Brainstorming 2. Expand the pie - How can resources be expanded to meet the demands of both sides? 3. Logroll - Are there any issues of high priority to me that are of low priority to the other, and vice versa? 4. 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 5. 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? 6. Find a bridge solution - Can we invent a solution that meets the relative priorities, underlying interests, and needs of both parties?
4. 3 factors that facilitate successful integrative negotiation
1. Build trust & share information - interests, preferences, priorities (NOT BATNA) 2. Clear and accurate communication - ask diagnostic questions 3. Make package deals, not single offers (if all else fails, make multiple offers simultaneously)
1. 5 strategies for conflict management (Dual Concerns Model, compare and contrast)
1. Contending (competition) - High concern for own, low for others 2. Yielding (Accommodating) - High concern for others, low for self 3. Inaction (avoidance) - Low for both 4. Problem Solving - high for both 5. Compromising - right in the middle
Understand the six steps to the rational decision making model
1. Define the right problem 2. Identify the criteria 3. Weight the criteria 4. Generate alternatives 5. Rate each alternative of each criterion 6. Compute the optimal decision
Apply Ethical Decision Making Guide to address ethical dilemma
1. Determine the facts and state the problem - Assumes MORAL AWARENESS 2. Who will be affected by the decision (who are the stakeholders)? 3. Identify relevant factors (i.e., laws, professional codes, practical constraints, etc.) 4. Develop a list of 3-5 options 5. Test options - Harm, legal, precedence, publicity, defensibility, mom, golden rule, virtues, professional, peer, feelings, organization 6. Make a tentative choice - NOTE: May be influenced by contextual factors (i.e., organizational context, reaction of relevant others, role models, influential peers, etc.) 7. Review choice
4. Describe 4 steps in integrative bargaining 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
1. Levels of conflict - definition and examples
1. Intrapersonal - conflict occurs within an individual 2. Interpersonal - Conflict occurs between individual people 3. Intragroup - Within-group negotiations 4. Intergroup - Within groups and among groups simultaneously
3. 10 pie-slicing strategies in distributive bargaining
1. Know your BATNA & resistance - do not reveal BATNA or resistance, do not lie about it 2. Research other party's BATNA (both public & private info) 3. Set high aspirations (targets) 4. Make the first offer (set anchor, be patient) 5. Counteroffer Immediately (diminishes anchor, willingness to negotiate) 6. Avoid stating ranges 7. Make bilateral concessions (pattern & degree of concessions) 8. Use object-appearing rational to support offer 9. Manage other parties' perceptions 10. Do not fall for the even split
4. Evaluate and select alternatives - provide examples
1. Narrow the range of solutions 2. 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 3. Be alert to the influence of intangibles in selecting options 4. Use subgroups to evaluate complex options - May be done before negotiation as well 5. Take time out to cool off 6. Keep decisions tentative until all aspects of the final proposal are complete 7. Minimize formality and record keeping until final agreements are closed
2. Describe the three steps in the negotiation planning process
1. Self Assessment - What do I want? (Issues, priorities, alternatives, negotiation range) What is my BATNA? (target points, resistance points) 2. Assessment of other party - who are they? trustworthy? tactics/style? limits to authority? What are their issues/priorities/BATNA/Resistance point? possible tradeoffs? 3. Assessment of the situation - one shot, long term, repetitive? agreement required? ratification? time constraints? norms? power differential?
4. Identify why integrative negotiation is difficult to achieve
1. The of the relationship between the parties - If contentious in past, it is difficult not to look at negotiations as win-lose 2. A belief that an issue can only be resolved distributively - Negotiators are biased to avoid behaviors necessary for integrative negotiation 3. The mixed-motive nature of most negotiating situations - Purely integrative or purely distributive situations are rare - The conflict over the distributive issues tends to drive out cooperation, trust needed for finding integrative solutions
1. Interdependence consequences of relationships
1. Value creation -"the whole is greater than the sum of its parts" - Negotiators should be aware that potential differences can be used to reach agreement 2. Conflict
4 standards for evaluating strategies
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)
Differentiate between bystanders and audience members
Bystanders - have some stake in a negotiation, care about the issues or the process by which a resolution is reached (do not formally represent bystanders) Audience - people not directly involved in or affected by a negotiation, offer input and advice
Define and contrast the two routes to persuasion.
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 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
Understand when a negotiator may seek to use the central route and when to use the peripheral route
Central Route When: - target is motivated and able to process the message, message content, message structure, persuasive style Peripheral Route When: - NOT motivated or able to process message, message characteristics. source characteristics, context effects
1. Benefits and drawbacks of conflict - provide examples
Drawbacks: - Competitive - Misperception and bias - Emotionality - Decreased communication - Blurred issues (generalizations) - Rigid commitments/escalation of commitment - Magnified differences/minimized similarities Benefits: - Creates incentive to solve underlying problem - Promotes awareness of self and others - Can stimulate new ideas, etc.
Understand the Phase Model of Communication in Negotiation and identify characteristics of each phase/stage
Early - Negotiators engage in behavior to state and defend their own position to the other party Middle - Negotiators become less competitive and protective of position Later - Negotiators work to achieve a joint solution
Define 7 cognitive biases that negatively impact negotiator performance.
Escalation of Commitment - commitment even if it constitutes irrational behavior Anchoring and Adjustment - effect of standard anchor against which subsequent adjustments are measured Framing - lead people to seek avoid or be neutral about risk Availability of Information - when info presented in vivid ways becomes too easy to recall Fundamental Attribution Error - explain other's behavior by making attributions (overestimate personal factors, underestimate situational factors) Endowment Effect - overvalue something you own Reactive Devaluation - devaluing the other party's concessions because they made them
Broadly, which influence tactics are the most/least effective?
HIGH Rational Persuasion - Give info, explain, present detail, logical arguements Inspirational Appeal - emotional request to values or ideals Consultation - requesting improvements to proposal where targets assistance is desired MOD. Apprising - how proposal will benefit target personally Ingratiation - making others feel important, acting humble, friendly Exchange of Benefits - offer exchanges, transactions Personal Appeal - appeal to friendship or service LOW Coalitions - obtain support from others making a group appeal Legitimating - demanding, ordering, deadlines Pressure - threats or negative consequences
1. Understand why negotiations are more complicated than individual decision making
Impacted by not only one person's decisions but the decisions of others
Define the right problem (Ways in which managers err:)
Individuals err by: - Defining the problem in terms of proposed solutions; - Missing a larger problem; - Diagnosing the problem in terms of its symptoms
Define influence and persuasion
Influence: Efforts designed to use information, as well as the qualities of the sender and receiver of that information, to adjust the other party's positions, perceptions, and opinions Persuasion: The effectiveness of influence tactics
Contrast manageable vs. unmanageable questions in negotiations. Provide examples of each.
Manageable - 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, directive, gauging Unmanageable - 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, heated
Ethics vs. Morality
Morals are values based on ideas of right and wrong, possess a greater social element and tend to have very broad acceptance (externally imposed)
1. Interdependence Definition
Mutual dependency, an important aspect of negotiations
1. Negotiation myths
Myth 1 - negotiations are fixed sum Myth 2 - you need to ne 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
Understand how position and personal power leads to influence.
Personal Power leads to commitment Position Power (if perceived as appropriate) leads to compliance Position Power (if perceived as excessive) leads to resistance
3. Define/contrast positive and negative bargaining zones/ranges
Positive Bargaining Zone: - should make a deal, but often fail to do so - between Seller & Buyer's resistance point Negative Bargaining Zone: - Should not make a deal, but often do - no space between seller & buyer's resistance point
2. #1 driver of negotiation success
Pre-negotiating planning - effective planning, preparation, and strategizing
Social Value orientation
Proself (egoistic) orientation - personal outcomes Prosocial (cooperative) orientation - benefit self and others
Family of "ought" thoughts & relationship to ethics
Prudence, Etiquette, Morals, Law
Contrast the rational decision making model and bounded rationality perspective
Rational Approach - ideal method for how individuals should make decisions Bounded Rationality Perspective - how decisions are made under severe time and resource constraints
Understand the ten proactive influence tactics and their potential outcomes associated with their respective effectiveness level
Rational Persuasion Inspirational Appeal Consultation Apprising Ingratiation Exchange of Benefits Personal Appeals Coalitions Legitimating Pressure
Contrast five attributes of perception and provide examples of each
Selective: The environment contains too many stimuli for us to observe at one time Learned: Experiences teach us to perceive the world in specific ways Culturally determined: We learn to see the world in a particular way based on our cultural background Consistent: Once we see something in a particular way, we tend to see it that way Inaccurate: We see things that do not exist and do not see things that do exist
Understand how influence impacts motivation
Source credibility - depends mostly on qualifications of the source, perceived trustworthiness, and self-presentation (or likeability) Personal Attractiveness - friendliness, ingratiation, helping, similarity, charisma
Power Definition
The capacity to influence the behaviors (and thoughts) of others, overcome resistance, and get people to do things they normally would not do. - the ability to seek compliance
4 main ethical decision making approaches
Utilitarianism Universalism Social Contract Ethics Personalistic Ethics
Identify Criteria
What criteria will guide the decision? Ex. Purchasing a car - In most situations, individuals will attempt to balance more than one criteria
2. Self-Assessment key questions & assumptions you seek to answer in advance of negotiation
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? What are your key assumptions (and their importance)? What is my B.A.T.N.A.? What "packages" might appeal to you? What is your risk profile?
2. Other Party Assessment - key questions/assumptions you seek to answer in advance of negotiation
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? 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?
1. Interdependence examples of goals
Win-Lose - I win, you lose Win-Win - opportunities for both parties gained
Conflict Management style
avoiding, accommodating, competing, compromising, collaborating
locus of control
external - attribute to external reasons like luck internal - attribute to internal reasons like ability
Compare and contrast position power and personal/individual power
position power - based on legitimate power, reward power, coercive power - who control resources have the capacity to give them to someone, and withhold them (money, supplies, human capital, time) Individual power - based on characteristics of the individual - expert power, specific knowledge - referent power, want to be like them, groupies to rockstars
Identify nonverbal behaviors that indicate 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
4. Understanding the issue fully - Definite interests and differentiate between 4 types (Why is it critically important to focus on interests and not positions?)
Interests: The underlying concerns, needs, desires, or fears that motivate a negotiator Types of interests: - Substantive interests (e.g., price) - Process interests (e.g., voice) - Relationship interests - Interests in principles (e.g., equality) FOCUS ON INTERESTS NOT POSITIONS - job offer example - there may be more than one and interests might change
2. Situation Assessment - key questions/assumptions you seek to answer in advance of negotiation
Is the negotiation one-shot, long-term or repetitive? Do the negotiations involve scarce resources, ideologies or both? Is the negotiation one of necessity or opportunity? Is the negotiation an exchange or dispute situation? Is agreement required? Is it legal to negotiate? Is ratification required? Are there time constraints or time-related costs? Where do the negotiations take place? Is third-party intervention a possibility? Are there conventions or norms in terms of the process of negotiation (e.g., who makes the first offer; fairness norms, etc.)? Do negotiations involve more than one offer? Is there a power differential between parties? Is precedent important?
3. How to determine a zone of potential bargaining?
Key analysis points - target points and resistance points
Understand how language and nonverbal communication impacts negotiation
Language - what is said, how it's said, how it's perceived Non-verbal - vocal cues, facial expressions, eye contact, personal spacing, posture, body movements, touching
