NEGOTIATION

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NEGOTIATION

• back and forth communication designed to reach
  an agreement when you and the other side have
  some interests that are shared and others that
  are opposed.
• Fisher and Ury, Getting to Yes Negotiating
  Agreements without Giving In.
• an activity of social decision making where two
  or more people with some interests in common and
  some in conflict (mixed motives) engage in
  back-and-forth communication aimed at reaching a
  settlement or an agreement.

Ancona, et al., Organizational Behavior and
Processes, 1999, page 5 (M-12)
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BASIC CONCEPTS
ISSUES
Negotiable items that will be included in the
formal agreement.
POSITION
A statement of what a person/party wants in a
particular negotiation.
INTERESTS
The concerns underlying a particular position.
BATNAS
Best Alternative to a Negotiated Agreement
RESISTANCE POINT
The point beyond which a person/party will not go.
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What Is A Good Negotiation?

• Dont leave joint gains on the table.
• Preserves/improves the relationship.
• Both parties are satisfied with the outcome.

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Mythical Fixed Pie Assumption

• Tendency to assume that negotiators interests
  must be diametrically opposed when this is not
  necessarily so.
• Focus on obtaining the most in the competition
  actually limits creativity in solutions.

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Distributive vs. Integrative Bargaining
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Conflict-Handling Orientations
High
Competing
Collaborating
Assertiveness
Compromising
Accommodating
Low
Avoiding
Low
High
Cooperativeness
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DISTRIBUTIVE vs. INTEGRATIVE NEGOTIATION
Distributive Negotiation
Each negotiator takes a position and argues for
it makes concessions to reach a compromise
(e.g., haggling over price).

• Potential Problems
• Arguing over positions can lead to unwise
  agreements or the failure to reach agreement.
• People get locked in by their starting positions
  -- need to save face and avoid straying too far
  from their starting position
• Can damage relationships -- loser does not want
  to continue to have a relationship with the other
  person (if it is possible to get out of it).

Integrative or Principled Negotiation

• look for mutual gains where possible
• try to use fair standards to negotiate points of
  disagreement

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Win-Win Strategy Win-Lose Strategy
1. Define the conflict as a mutual
problem 2. Pursue joint outcomes 3. Find
creative agreements that satisfy both groups 4.
Use open, honest, and accurate communication
of your needs, goals, and proposals. 5.
Avoid threats (to reduce the others
defensiveness) 6. Communicate flexibility of
position
1. Define the conflict as a win-lose
situation 2. Pursue own outcomes 3. Force the
other person into submission 4. Use
deceitful, inaccurate, and misleading
communication of your needs, goals, and
proposals. 5. Use threats (to force
submission) 6. Communicate high commitment
(rigidity) regarding ones position.
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PREPARATION

• Preparation is one of the keys to good
  negotiation.
• Need to take a negotiation situation and work it
  plan, prepare, be creative, and think how can I
  do something to make it palatable with the other
  party.
• What is my BATNA?
• What is my RP?
• What is the BATNA and RP of my partner?
• What is my target or aspiration level?
• What are my priorities? What do I care about
  getting the most? What am I willing to give up?

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PREPARATION (contd)

• What are the priorities of my negotiating
  partner? What is s/he most likely to care about
  getting the most? What is s/he most likely
  willing to give up?
• Who will make the first offer? If me, what
  should I ask for?
• Is there any kind of objective criteria we can
  use to reach a fair settlement?
• What kind of relationship do I have or want to
  have with my partner?
• Packaging and Trading off.
• Creative solutions can come from considering
  multiple issues simultaneously.

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FOUR BASIC POINTS OF INTEGRATIVE OR PRINCIPLED
NEGOTIATION
People
Separate the people from the problem. Always
remember you are dealing with a human being.
People can be offended, insulted. A person who
is offended is very unlikely to give in or to
want to continue the relationship. (Jimmy Carter
-- negotiations)
Interests
Focus on interests not positions (too much focus
on positions can lead to an impasse). Focus on
interests gives you more flexibility allows you
to bundle issues together, to be more creative in
solving problems.
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FOUR BASIC POINTS OF INTEGRATIVE OR PRINCIPLED
NEGOTIATION (contd)
Options
Generate a variety of possibilities before
deciding what to do. Basic principle of quality
decision making
Criteria
Use objective standards to assess fairness
(benchmarking against industry standards or
professional norms)
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Characteristics of Skilled Negotiators

• Ask more questions
• Test for understanding
• Avoid responding defensively
• Avoid attacking opponent
• Are well prepared!!

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Framing Effect in Negotiation

• Tendency to react differently to potential
  outcomes of a negotiation depending on whether
  they are framed as gains or losses. One is less
  likely to accept an outcome when it is framed as
  a loss relative to what one stated that one
  wanted rather than as a gain relative to ones
  starting position

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Other Biases in Negotiation

• Escalation of Commitment
• When one gets too wedded to his or her position
  and is unable to back off even when this entails
  a high level of risk
• Failure to consider how the other person views
  the situation and how he or she may rationally
  behave

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Other Biases in Negotiation

• Failure to consider the cognitive processes being
  used by the other person.
• Negotiators are more successful when they
  consider the negotiation from the point of view
  of the other party.

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Take Away Points

• Assess your BATNA and RP estimate your
  opponents BATNA and RP
• Dont assume a fixed pie (your gain may not, in
  fact, come at the expense of the other party).
• Assess how important each issue is to you,
  estimate how important each issue is likely to be
  to your opponent
• Assess where potential tradeoffs exist
• Examine issues simultaneously, not sequentially
• Balance cooperation and competition
• - Address both the integrative and distributive
  dimensions
• - Share and gather information strategically