BA 625 King Saud University Business Negotiation and Conflict Resolution Essay

  

I need to write 3 general cases about negotiation.

One of them is the use of negotiation without the strategies of presentation.

The other two cases include the negotiation strategies used in the prescribed material

Suggested Cases /

Buying a car / selling a car (without negotiation strategy)

Buying a plot of land / house using negotiation strategies

Selling a medium-profit commercial real estate company (the aim of the sale is to diversify investments) using negotiation strategies

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Essentials of
Negotiation
Part 01: Fundamentals of
Negotiation
Chapter 02: Strategy and Tactics of
Distributive Bargaining
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Overview
Distributive bargaining is basically a competition over who is going to get
the most of a limited resource.
Three reasons to understand distributive
bargaining.
• Some interdependent situations are
distributive.
• You should know how to counter
distributive tactics.
• Every negotiation may require
distributive skills during the “claiming
value” stage.
© McGraw-Hill Education
Understanding these
concepts allow
negotiators not
comfortable with
distributive bargaining to
manage the situations
proactively.
2
The Distributive Bargaining Situation
A target point is a negotiator’s
optimal goal.
A resistance point is a negotiator’s
bottom line.
The asking price is the initial price
set by the seller.
The buyer may counter with an
initial offer.
Both parties should set their
starting, target, and resistance
points before negotiating.
• Staring points are public.
• Target points are inferred.
• Resistance points are secret.
© McGraw-Hill Education
The spread between the
resistance points is the bargaining
range, settlement range, or zone
of potential agreement.
• When a buyer’s resistance
point is above the seller’s:
• There is a positive
bargaining range.
• When the seller’s resistance
point is above buyer’s:
• There is a negative
bargaining range.
Target points, resistance points,
and initial offers all play important
roles in distributive bargaining.
3
Price Continuum for Condo Purchase Negotiation
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© McGraw-Hill Education
4
The Role of Alternatives to a Negotiated Agreement
Negotiators also need to consider what their BATNAs, or WATNAs are.
• Alternatives give negotiators the power to walk away.
• Attractive alternatives mean negotiators can set their goals higher and
make fewer concessions.
• Good bargainers know their BATNAs from the start but continually try
to improve the BATNA during the negotiation.
• Strong BATNAs influence how a negotiation unfolds.
Access text alternative for this image.
© McGraw-Hill Education
5
Settlement Point
The fundamental process of distributive bargaining is to reach a
settlement within a positive bargaining range.
• The objective of both parties is to obtain as much of the bargaining
range as possible.
• In other words, to reach an agreement as close to the other party’s
resistance point as possible.
Both parties know they might have to settle for less than their target point,
but hope the agreement will be better than their own resistance point.
• For agreement to occur, both parties must believe that the settlement
is the best that they can get (within a positive bargaining range).
© McGraw-Hill Education
6
Discovering the Other Party’s Resistance Point
Information is the life force of negotiation.
• The more you can learn about the other party’s information, the more
able you will be to strike a favorable settlement.
• At the same time, you do not want the other party to know your
resistance point, some of your targets, and information about a weak
strategic position or an emotional vulnerability.
• Each side wants to obtain and conceal information, and communication
can become complex – evolving into a coded language.
© McGraw-Hill Education
7
Influencing the Other Party’s Resistance Point
Central to planning the strategy and tactics is locating the other party’s
resistance point and the relationship of that resistance point to your own.
• The resistance point is established by:
• The value the other attaches to a particular outcome.
• The costs the other attaches to delay or difficulty in negotiations.
• The cost the other attaches to having the negotiations aborted.
When influencing the other’s viewpoint, you must also deal with:
• the other party’s understanding of your value for a particular outcome,
• the costs you attach to delay or difficulty in negotiation,
• and your cost of having the negotiation aborted.
© McGraw-Hill Education
8
Weakening the Other Party’s Resistance Point
There are four major ways to weaken the other party’s resistance point.
• Reduce the other party’s estimate of your cost of delay or impasse.
• Increase the other party’s estimate of their own cost of delay or
impasse.
• Reduce the other party’s perception of the value of an issue.
• Increase the other party’s perception that you value an issue.
© McGraw-Hill Education
9
Tactical Tasks
There are four important tactical tasks for a negotiator to consider in a
distributive bargaining situation:
• Assess the other party’s target, resistance point, and cost of
terminating negotiations.
• Manage the other party’s impression of your target, resistance point,
and cost of terminating negotiations.
• Modify the other party’s perception of their own target, resistance
point, and cost of terminating negotiations.
• Manipulate the actual costs of delaying or terminating negotiations.
© McGraw-Hill Education
10
Assess the Other Party’s Target, Resistance Point, and Costs
of Terminating Negotiations
The purpose is to identify what the other party really wants to achieve, as
well as how much they are willing to pay.
Indirect Assessment.
Obtain information indirectly about
the background factors behind an
issue.
• Determine what information a
negotiator used to set target
and resistance points.
• Study how they may have
interpreted the information.
© McGraw-Hill Education
Direct Assessment.
Obtain information directly from
the other party about their target
and resistance points.
• When at the limit, the other
party may reveal information.
• Most of the time, the other
party is not forthcoming and
methods of obtaining
information are complex.
11
Manage the Other Party’s Impressions of Your Target,
Resistance Point, and Cost of Terminating Negotiations
Negotiators need to screen information about their own positions and
represent them as they would like the other to believe.
Screening activities are more important at the beginning of negotiation,
and direct action is more useful later on.
Screening Activities.
• Concealment is the most
general screening activity.
• Calculated incompetence may
be a useful approach.
• Channel communication
through a team spokesperson.
• Present many items, only a few
important to you.
© McGraw-Hill Education
Direct Action.
• Selective presentation – reveal
only the necessary facts.
• Explain or interpret known facts
to present a logical argument.
• Display an emotional reaction.
• Ethics are a concern.
• It may backfire.
12
Modify the Other Party’s Perceptions of His or Her Target,
Resistance Point, and Cost of Terminating Negotiations
A negotiator can alter the other party’s impressions of their own
objectives by making outcomes appear less attractive or by making the
cost of obtaining them appear higher.
• The negotiator may also try to make demands and positions appear
more attractive or less unattractive to the other party.
There are several approaches to modifying the other party’s perceptions.
• One approach is to interpret for the other party what the outcomes of
their proposal will really be.
© McGraw-Hill Education
13
Manipulate the Actual Costs of Delaying or Terminating
Negotiations
Extending negotiations beyond a deadline can be costly.
The ultimate weapon in negotiation is to threaten to terminate
negotiations, denying both parties the possibility of a settlement.
There are three ways to manipulate the costs of delay in negotiation.
Disruptive Action.
• Public picketing, boycotting a product or company, and locking
negotiators in a room until an agreement is reached.
Alliance with Outsiders.
• Involve other parties who can influence the outcome in the process.
Schedule Manipulation.
• Negotiation schedules can be used to increase time pressure.
© McGraw-Hill Education
14
Positions Taken During Negotiation
Opening Offers
Making the first offer is advantageous as it can
anchor a negotiation.
• Higher initial offers have a strong effect on
negotiation outcomes.
Exaggerating an opening offer is advantageous.
• It gives the negotiator room for movement.
• It may create an impression in the other
party’s mind of a long way to a settlement.
• It will also suggest there will be many
concessions to make.
• It may make the other party reconsider
their own resistance point.
© McGraw-Hill Education
Two disadvantages to
exaggerating an
opening offer include:
• Potential rejection
by the other party,
halting negotiations
prematurely.
• The perception of a
“tough” attitude can
harm a long-term
relationship.
15
Positions Taken During Negotiation
Opening Stance
A second decision negotiators should make concerns the stance, or
attitude, to adopt during the negotiation.
• Competitive or moderate?
• Negotiators tend to match distributive tactics from the other party with
their own distributive tactics.
To communicate effectively, a negotiator should try to send a consistent
message through both the opening offer and opening stance.
• When the messages are in conflict, the other party will find them
confusing to interpret and answer.
• Timing also plays a part.
© McGraw-Hill Education
16
Positions Taken During Negotiation
Initial Concessions
An opening offer is usually met with a counteroffer, and these two offers
define the initial bargaining range.
• The first concession conveys a message, frequently a symbolic one,
to the other party about how you will proceed.
• Negotiators who take a hard line achieve better economic outcomes,
but at a cost of being perceived negatively by the other party.
There are good reasons for adopting a flexible position.
• When taking different stances throughout the negotiation, you can
learn about the other party’s targets and perceived possibilities.
• By observing how they respond to different proposals.
• Flexibility keeps the negotiations proceeding – the more flexible you
seem, the more the other party will believe a settlement is possible.
© McGraw-Hill Education
17
Positions Taken During Negotiation
Role of Concessions
Concessions are central – without them, negotiation would not exist.
• Immediate concessions are perceived less valuable than gradual,
delayed concessions.
• Negotiators generally resent a take-it-or-leave-it approach.
Parties feel better about a settlement when the
negotiation involves a progression of concessions.
• Concessions imply recognition of the other’s
position and its legitimacy.
A reciprocal concession cannot be haphazard.
• Negotiators may not accept inadequate
reciprocal concessions.
© McGraw-Hill Education
Packaging
concessions can lead
to better outcomes
than making
concessions singly on
individual issues.
18
Positions Taken During Negotiation
Pattern of Concession Making
The pattern of concessions
contains information, but it
may be difficult to interpret.
• When successive
concessions get smaller,
the concession maker’s
position is getting firmer
and the resistance point
is being approached.
• Note that a concession
late in negotiations may
also indicate that there is
little room left to move.
Access text alternative for this image.
© McGraw-Hill Education
19
Positions Taken During Negotiation
Final Offers
Eventually, a negotiator wants to convey the message that there is no
further room for movement.
• A simple absence of further concessions conveys the message, but
the other party may feel the pattern of concessions is being violated.
One way to accomplish this is to make the last concession more
substantial.
• Large enough to be dramatic yet not so large it creates suspicion that
the negotiator has been holding back.
A concession may also be personalized to the other party signaling this is
the last concession the negotiator will make.
• “I went to my boss and got a special deal just for you.”
© McGraw-Hill Education
20
Positions Taken During Negotiation
Closing the Deal
Provide Alternatives.
• Provide two or three alternative
packages for the other party
that are roughly equal in value.
Assume the Close.
• After a discussion about buyer
needs and positions, act as if
the decision to purchase has
already been made.
Split the Difference.
• The negotiator summarizes the
negotiation and suggests “why
not just split the difference?”
© McGraw-Hill Education
Exploding Offers.
• Contains an extremely tight
deadline in order to pressure
the other party to agree quickly.
• The purpose is to convince the
other party to accept the
settlement and to stop
considering outcomes.
Sweeteners.
• Save a special concession for
the close.
• “I’ll give you X if you agree to
the deal.”
21
Hardball Tactics
We now turn to a discussion of hardball tactics in negotiation.
• Hardball tactics work best against poorly prepared negotiators.
• They can also backfire.
• Many find the tactics offensive and out-of-bounds.
• Difficult to enact, each involves risk for the person using it.
• It is important to understand hardball tactics and how they work so you
can recognize if hardball tactics are used against you.
© McGraw-Hill Education
22
Dealing with Typical Hardball Tactics
There are four main options negotiators have for responding to typical
hardball tactics.
Discuss Them.
• Label the tactic and offer to negotiate the process itself before
continuing.
Ignore Them.
• Ignoring a hardball tactic can be very powerful – the tactics take a lot
of energy to enact properly.
Respond in Kind.
• May be the most useful when dealing with another party who is testing
your resolve or as a response to exaggerated positions.
Co-opt the Other Party.
• It is more difficult to attack a friend than an enemy.
© McGraw-Hill Education
23
Typical Hardball Tactics
Good Cop/Bad Cop
It often leads to concessions and negotiated agreements but the tactic
has many weaknesses.
• Relatively transparent, especially with repeated use.
• Easily countered by the other party who may call you out on the tactic.
• Difficult to enact – requires a lot of energy in making the tactic work.
• It may alienate the other party.
• Negotiators may get involved in the game and fail to concentrate on
their goals.
© McGraw-Hill Education
24
Typical Hardball Tactics
Lowball/Highball
Negotiators start with a ridiculously low (or high) opening offer they know
they will never achieve.
• Theory is the extreme offer will cause the other party to reevaluate
their opening offer and move close to or beyond their resistance point.
Risk in using this tactic – the other party may think it is a waste of time to
negotiate and stop the process.
The best way to deal with a lowball/highball tactic is not to make a
counteroffer.
• Insist the other party start with a reasonable opening offer and refuse
to negotiate further until they do
• Show the other party that you won’t be tricked.
• Threaten to leave the negotiation.
• Respond with an extreme counteroffer.
© McGraw-Hill Education
25
Typical Hardball Tactics
The Bogey
Negotiators use this tactic to pretend that an issue is of little or no
importance to them, when it actually is quite important.
• Later this issue can be traded for major concessions on issues that
are actually important to them.
• Most effective when a negotiator identifies an issue that is quite
important to the other side but of little value to themselves.
• This tactic is fundamentally deceptive, and can be difficult to enact.
Although difficult to defend against, being well prepared for the
negotiation will make you less susceptible to it.
• If the other party takes a position opposite of your expectations,
suspect a bogey tactic and ask probing questions.
• Be cautious about sudden reversals in positions, especially late in the
negotiation – again, question the other party carefully.
© McGraw-Hill Education
26
Typical Hardball Tactics
The Nibble
Negotiators use the nibble tactic for a proportionally small concession on
an item that hasn’t been discussed previously in order to close the deal.
Weaknesses in using the nibble.
• Many feel the party using the nibble did not bargain in good faith.
• The person being nibbled will not feel good about the process.
Combating the nibble tactic.
• Respond with each nibble with the question “What else do you want?”
• Have your own nibbles prepared for exchange.
© McGraw-Hill Education
27
Typical Hardball Tactics
Chicken
Combining a large bluff with a threatened action to force the other party to
“chicken out” and give them what they want.
• Weakness of tactic.
• Turns the negotiation into a serious game in which one or both
parties find it difficult to distinguish reality from postured negotiation
positions.
Difficult to defend against.
Preparation and understanding of the situation is essential for identifying
where reality ends and the chicken tactics begin.
© McGraw-Hill Education
28
Typical Hardball Tactics
Intimidation
An attempt to force the other party to agree by means of an emotional
ploy, usually anger or fear.
Intimidation may include increasing the appearance of legitimacy.
• The greater the appearance of legitimacy, the less likely the other
party will be to question the process.
Guilt can also be used to intimidate.
• This places the other party on the defensive.
Dealing with intimidation tactics.
• Do not allow yourself to feel threatened.
• Discuss the negotiation process with them.
• Ignore the other party’s attempts to intimidate you.
• Use a team to negotiate.
© McGraw-Hill Education
29
Typical Hardball Tactics
Aggressive Behavior
Aggressive tactics include:
• Relentless push for further concessions.
• Asking for the best offer early in negotiations.
• Asking the other party to explain and justify their proposals.
An excellent response is to halt the negotiations in order to discuss the
negotiation process itself.
• Having a team to counter aggressive tactics can be helpful.
• Good preparation makes responding easier as negotiators can
highlight the merits to both parties of reaching an agreement.
© McGraw-Hill Education
30
Typical Hardball Tactics
Snow Job
Negotiators overwhelm the other party with so much information that they
have trouble determining important facts from distractions.
• Another example is the use of highly technical language to hide a
simple answer to a question asked by a non-expert.
• The snow job can backfire as it interferes with the ability of negotiators
to concentrate on what is important in order to reach agreements.
Negotiators can use the following to counter a snow job tactic.
• Ask questions until you receive an answer you understand.
• If the matter is highly technical, suggest that technical experts get
together to discuss the issues.
• Listen carefully to the other party and identify consistent and
inconsistent information.
• Strong preparation is important for defending against the snow job.
© McGraw-Hill Education
31
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© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
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®
Because learning changes everything. ®
Essentials of
Negotiation
Part 01: Fundamentals of
Negotiation
Chapter 03: Strategy and Tactics of
Integrative Negotiation
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Overview
Integrative negotiation allows both sides to
achieve their objectives.
• Discussion and mutual exploration often
suggest alternatives where both parties gain.
Negotiators make one of three mistakes.
• Failing to negotiate when they should.
• Negotiating when they should not.
• Negotiating, but with the wrong strategy.
Rather than assume a win-lose situation, look for
win-win solutions.
© McGraw-Hill Education
Successful integrative
negotiator traits:
• Honesty and
integrity.
• Abundance
mentality.
• Maturity.
• Systems
orientation.
• Superior listening
skills.
2
Overview of the Integrative Negotiation Process
Key contextual factors include:
• Creating a free flow of
information.
• Attempting to understand the
other negotiator’s real needs
and objectives.
• Emphasizing things parties
have in common.
• Searching for solutions that
meet the goals and objectives
of both parties.
© McGraw-Hill Education
Managing integrative negotiations
involves creating a process to:
• Identify and define the
problem.
• Surface interests and needs.
• Generate alternative solutions.
• Evaluate and select
alternatives.
3
Creating a Free Flow of Information
Effective information exchange promotes the development of good
integrative solutions.
• Failure to reach integrative agreements is often linked to the failure to
exchange enough information to allow identifying integrative options.
For the necessary exchange to occur:
• Negotiators must be willing to reveal their true objectives and to listen
to each other carefully.
In contrast, a willingness to share information is not a characteristic of
distributive bargaining situations.
• The parties distrust each other, conceal and manipulate information,
and wish to learn about the other for their own competitive advantage.
© McGraw-Hill Education
4
Attempting to Understand the Other Negotiator’s Real Needs
and Objectives
You must understand the other’s needs before helping to satisfy them.
Realize the other’s priorities are not your own.
• Stimulate information exchange.
Exchange information about your priorities for particular issues.
• But not necessarily about your positions on those issues.
Make an effort to understand what the other side really wants to achieve.
• This is in contrast to distributive bargaining.
If one negotiator is inexperienced, the other may need to assist them in
discovering their underlying needs and interests.
© McGraw-Hill Education
5
Emphasizing Things in Common between the Parties and
Minimizing the Differences
Negotiators may require a different outlook or frame of reference.
• Individual goals may need to be redefined through collaborative efforts
directed toward a collective goal.
• At times the collective goal is clear and obvious, and other times it is
not clear or easy to keep in sight.
© McGraw-Hill Education
6
Searching for Solutions That Meet the Needs and Objectives
of Both Sides
The success of integrative negotiation depends on the search for
solutions that meet the needs and objectives of both sides.
• In this process, negotiators must be firm but flexible.
• Firm about their primary interests and needs.
• But flexible about how these needs and interests are met.
In a competitive interaction:
• Negotiators ensure that what the other obtains
does not diminish their own accomplishments.
• Negotiators may block the other from obtaining
their objectives due to a strong desire to win.
In contrast, integrative negotiation requires both
negotiators to define and pursue their own goals.
• But also be mindful of the other’s goals.
• And search for solutions satisfying both sides.
© McGraw-Hill Education
If the objective of
one party is to get
more than the
other, successful
integrative
negotiation is very
difficult.
7
Key Steps in the Integrative Negotiation Process
The first three steps are important for creating value.
The fourth step involves claiming value.
It is important that processes to create value precede those to claim value
for two reasons:
• First, the creating-value process is more effective when it is done
collaboratively and without a focus on who gets what, and
• Second, because claiming value involves distributive bargaining
processes, and may derail the focus on creating value and may even
harm the relationship unless it is introduced effectively.
Access the text alternative for this image.
© McGraw-Hill Education
8
Figure 3.1: Creating and Claiming Value and the Pareto
Efficient Frontier
The goal of creating
value is to push the
solutions to the
Pareto efficient
frontier, and has the
point where no
agreement would
make any party
better off without
decreasing the
outcomes to any
other party.
Access text alternative for this image.
© McGraw-Hill Education
9
Step 1: Identify and Define the Problem
The problem identification step is often the most difficult one, but critical.
• Define the problem in a way that is mutually acceptable to both sides.
•
•
•
•
• Problem definition is, and should be, separate from any effort to
generate or choose alternatives.
State the problem with an eye toward practicality and
comprehensiveness.
State the problem as a goal and identify obstacles to attaining the goal.
Depersonalize the problem.
Separate the problem definition from the search for solutions.
• It is important not to jump to solutions until the problem is fully
defined.
© McGraw-Hill Education
10
Step 2: Surface Interests and Needs
Interests are the underlying concerns, needs, desires, or fears that
motivate a negotiator to take a particular position.
• Understanding interests allows negotiators to invent a solution that
meets the interests of both sides.
• A solution that was not apparent before negotiation.
When two parties begin negotiation, they expose their position or demands.
•
In distributive bargaining, negotiators trade positions back and forth,
attempting to achieve a settlement as close to their targets as possible.
•
In integrative negotiation, both negotiators pursue the other’s thinking and
logic to determine what motivated them to arrive at their goals.
•
Presumably, if both parties understand the other’s motivating factors,
they may recognize similar interests and envision new options that
both will endorse.
© McGraw-Hill Education
11
Types of Interests
Several types of interests may be at stake, and each type may be either:
• Intrinsic – the parties value it in and of itself, or
• Instrumental – the parties value it because it helps them derive other
outcomes in the future.
Substantive interests are related to the focal issues under negotiation.
Process interests are related to how the negotiation unfolds.
Relationship interests speak to the value of the ongoing relationship
between the parties and the future of that relationship.
Interests in principle occurs when certain principles deeply held by the
parties serve as the dominant guides to their actions.
© McGraw-Hill Education
12
Some Observations on Interests
There is almost always more than
one type of interest underlying a
negotiation.
• The categories are not
exclusive.
Parties can have different types of
interests at stake.
• Parties may differ on questions
of principle or process.
Interests often stem from deeply
rooted human needs or values.
• Such as Maslow’s well-known
hierarchy of needs.
© McGraw-Hill Education
Surfacing interests.
• Ask yourself what you want
from this negotiation and why
you want it.
• Ask probing questions of the
other party to determine their
interests.
Surfacing interests is not always
easy or to one’s best advantage.
• Focusing on interests alone
oversimplifies or conceals the
real dynamics of a conflict.
13
Step 3: Generate Alternative Solutions
The objective is to create a variety of options or possible solutions to the
problem
Techniques for generating alternative solutions fall into two general
categories.
• The first requires negotiators to reframe the problem to create win-win
alternatives out of what earlier appeared to be a win-lose problem.
• The second takes the problem as given and creates a long list of
options from which the parties can choose.
• In integrative negotiation over a complex problem, both types of
techniques may be used and even intertwined.
© McGraw-Hill Education
14
Inventing Options: Generating Alternative Solutions by
Redefining the Problem or Problem Set
Techniques in this category call for the parties to define their underlying
needs and to develop alternatives to meet them.
Logroll.
• Parties trade off for preferred
outcomes on one issue.
Expand the pie.
• So both sides achieve their
objectives.
Modifying the resource pie.
• To benefit both sides.
Find a bridge solution.
• Invent new options to meet the
needs of both sides.
© McGraw-Hill Education
Nonspecific compensation.
• One side wins, the other is
compensated.
Cut the costs for compliance.
• One side wins, the other has
costs minimized.
Superordination.
• Differences are replaced by
other interests.
Compromise.
• For entrenched parties.
15
Generating Alternative Solutions to the Problem as Given
These approaches can be used by the negotiators themselves or by a
number of other parties.
Brainstorming.
• Avoid judging or evaluating solutions.
• Separate the people from the problem.
• Be exhaustive and ask outsiders.
Surveys.
• Can be conducted in a short time but parties cannot benefit from
seeing and hearing each other’s ideas.
Electronic brainstorming.
• A facilitator asks questions, participants type their anonymous
responses into a computer which aggregates and displays the entries
to the group as a whole
© McGraw-Hill Education
16
Step 4: Evaluate and Select Alternatives
There are a series of steps for guidance.
• Definitions and standards.
• Alternatives.
• Evaluation.
• Selection.
Negotiators should weigh or rank-order each option against clear criteria.
• May need to return to definitions or return to standards for clarifying.
Parties will engage in a decision-making process, debating the merits of
each negotiator’s preferred options and agree on the best options.
• Pay attention to the relationship and make sure the process does not
harm the relationship at this stage.
© McGraw-Hill Education
17
Guidelines for Evaluating and Selecting Alternatives
Narrow the range of solution
options.
Evaluate solutions on the basis of
quality, standards, and
acceptability.
Agree to the criteria in advance of
evaluating options.
Be willing to justify personal
preferences.
Be alert to the influence of
intangibles in selection options.
Use subgroups to evaluate
complex options.
Take time out to cool off.
© McGraw-Hill Education
Explore different ways to logroll.
• Explore differences in risk
preference.
• Explore differences in
expectations.
• Explore differences in time
preferences.
Keep decisions tentative and
conditional until all aspects of the
final proposal are complete.
Minimize formality and
recordkeeping until final
agreements are closed.
18
Factors That Facilitate Successful Integrative Negotiation
Successful integrative negotiation
occurs when the parties are
predisposed to finding a mutually
acceptable joint solution.
Here, we review seven factors that
facilitate successful integrative
negotiation.
• The presence of a common
goal.
• Faith in one’s own problemsolving ability.
© McGraw-Hill Education
• A belief in the validity of the
other party’s position.
• The motivation and
commitment to work together.
• Trust.
• Clear and accurate
communication.
• An understanding of the
dynamics of integrative
negotiation.
19
Some Common Objective or Goal
Three types of goals – common, shared, and joint – may facilitate the
development of integrative agreements.
A common goal is one that all parties share
equally, each one benefiting in a way that would
not be possible if they did not work together.
A shared goal is one that both parties work
toward but that benefits each party differently.
A joint goal is one that involves individuals with
different personal goals agreeing to combine
them in a collective effort.
© McGraw-Hill Education
The key element of
integrative
negotiation is the
belief that all sides
can benefit and
they will be better
off working in
cooperation than
by working
independently or
competitively.
20
Faith in One’s Problem-Solving Ability
Parties who believe they can work together are more likely to do so.
• Expertise in the problem area strengthens understanding of the
problem’s complexity, nuances, and possible solutions.
• Expertise increases the negotiator’s knowledge base and confidence.
• Both necessary to approach the problem with an open mind.
• Direct experience in negotiation increases the negotiator’s
understanding of the bargaining process.
• There is also evidence that knowledge of integrative tactics leads to
an increase in integrative behavior.
Taken together, these suggest that faith in one’s ability at integrative
negotiation is positively related to successful integrative negotiations.
© McGraw-Hill Education
21
A Belief in the Validity of One’s Own Position and the Other’s
Perspective
Integrative negotiation requires negotiators to accept both their own and
the other’s attitudes, interests, and desires as valid.
• You must believe in the validity of your own perspective—that what
you believe is worth fighting for and should not be compromised.
• You must also accept the validity of the other party’s perspective.
• The purpose of integrative negotiation is not to challenge the
other’s perspective but to incorporate it into the solution.
• The other’s views should be valued no less or more than your own.
© McGraw-Hill Education
22
The Motivation and Commitment to Work Together
For integrative negotiation to succeed, the parties must be willing to make
their own needs explicit, to identify similarities, and to recognize and
accept differences.
Ways to enhance motivation and commitment to problem solving.
• Negotiators agree they gain more by working together than separately.
• Negotiators can commit to each other in presettlement settlements.
• Settlement is a legally binding written agreement.
• The settlement occurs in advance of negotiations.
• The settlement resolves only a subset of the issues.
• Negotiators can create an umbrella agreement that provides a
framework for future discussions.
• This allows flexibility in the relationship and for claiming value.
© McGraw-Hill Education
23
Trust
Mistrust inhibits collaboration.
Three tactics to elicit information from the other
negotiator when they mistrust you.
• Share information and encourage reciprocity.
• Negotiate multiple issues simultaneously.
• Make multiple offers at the same time.
To develop trust effectively, each negotiator must:
• Believe that both parties choose to cooperate.
• Believe that this is a signal of the other’s
honesty, openness, and commitment to a joint
solution.
© McGraw-Hill Education
Generating trust is
a complex,
uncertain process –
it depends in part
on how the parties
behave and in part
on personal
characteristics.
24
Clear and Accurate Communication
Negotiators must be willing to share information about themselves,
revealing what they want and why.
Negotiators must understand the communication, or meaning each party
attaches to their statements.
Mutual understanding is the responsibility of both sides.
Multiple communication channels are helpful.
• They clarify the formal communication, or
• Facilitate the exchange of information if the
formal channels break down.
• Make sure messages are consistent.
© McGraw-Hill Education
When strong negative
feelings exist or when
any party is inclined to
dominate, negotiators
may create formal,
structured procedures
for communication.
25
An Understanding of the Dynamics of Integrative Negotiation
Negotiators frequently assume the distributive bargaining process is the
only way to approach negotiations.
• Several studies indicate that training in integrative negotiation
enhances the ability of the parties to successfully pursue the process.
• Also, using distributive tactics is negatively related to joint outcomes.
© McGraw-Hill Education
26
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No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
®
Because learning changes everything.®
Essentials of
Negotiation
Part 01: Fundamentals of
Negotiation
Chapter 04: Negotiation: Strategy and
Planning
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Negotiation: Strategy and Planning
With effective planning and goal setting, most negotiators can achieve
their objectives.
Without them, results occur more by chance than by effort.
Although the model suggests a linear relationship, many begin midway in
the sequence and work backward or forward until the steps are aligned.
© McGraw-Hill Education
2
Goals – The Focus That Drives a Negotiation Strategy
To determine your goals, consider the following.
•
Substantive goals – money.
•
Intangible goals – winning.
•
Procedural goals – shaping the agenda.
Effective preparation requires negotiators do the following.
•
List all goals they wish to achieve.
•
Determine the priority among these goals.
•
Identify potential multi-goal packages.
•
Evaluate possible trade-offs among multiple goals.
© McGraw-Hill Education
3
Direct Effects of Goals on Choice of Strategy
Wishes are not goals, especially in negotiation.
A negotiator’s goals may be linked to the other party’s goals.
There are limits to what realistic goals can be.
Effective goals must be concrete, specific, and measurable.
•
If not, it will be hard to communicate what you want, understand what
the other party wants, and determine if an offer satisfies your goals.
Goals can be intangible or procedural.
•
Intangible goals might include maintaining a
reputation, or establishing a precedent.
•
A procedural goal might be that the other
negotiator must make at least two concessions
to convince you of their sincerity.
© McGraw-Hill Education
Criteria used to
determine goals
depend on your
objectives and your
priorities among
multiple goals.
4
Indirect Effects of Goals on Choice of Strategy
Short-term thinking affects our choice of strategy.
We may ignore the present or future relationship with the other party in a
concern for achieving a substantive outcome only.
Goals requiring a substantial change in the other
party’s attitude may require a long-range plan.
•
Progress may be incremental and require a
strong relationship with the other party.
•
Relationship-oriented goals should motive the
negotiator toward a strategy valuing the
relationship as much as the outcome.
© McGraw-Hill Education
Relational goals
tend to support the
choice of a
collaborative or
integrative strategy.
5
Strategy versus Tactics
How are strategy and tactics related?
•
One major difference is that of scale, perspective, or immediacy.
•
Tactics are short-term, adaptive moves designed to enact broad
strategies.
•
Which in turn, provide stability, continuity, and direction for tactical
behaviors.
•
Tactics are subordinated to strategy.
• They are structured, directed, and driven by strategic considerations.
© McGraw-Hill Education
6
Accommodation, Competition, and Collaboration
Accommodation is as much a win-lose strategy as competition.
•
The imbalance is in the opposite direction – I lose, you win.
•
Used to build or strengthen a relationship.
•
They expect a future “tit for tat” accommodation from the other.
•
Reciprocity may be the glue holding social groups together.
•
For a long-term relationship, consider accommodative moves early
to build trust and to be able to ask for “reciprocity” in the future.
© McGraw-Hill Education
7
Table 4.1: Characteristics of Different Engagement Strategies
Aspect
Competition
Collaboration
Accommodation
Payoff structure
Fixed
Variable
Fixed
Goal pursuit
Your own
Joint goals
Others’
Relationships
Short-term
Long-term
Either
Primary motivation
Your outcomes
Joint outcomes
Others’ outcomes
Trust and openness Secret, closed
Trusting, open
One party is open
Know the needs
Neither knows
Both know
Repress your own
Predictability
Unpredictable
Predictable
One is predictable
Aggressiveness
Threats, bluffs
Respectful
One gives up
Solution search
Committed
Mutual
One-sided
Success measures
Other looks bad
The issues
The other wins
Unhealthy extreme
Zero-sum game
Common good wins Abdication
Key attitude
I win, you lose
Win-win
I lose, you win
If a breakdown
Mediator
Facilitator
One is bankrupt
© McGraw-Hill Education
Source: Adapted and expanded from Robert W. Johnston, “Negotiation Strategies: Different Strokes for Different Folks,” Personnel 59 (March–April 1982), pp. 38–39.
8
Drawbacks: Accommodation, Competition, and Collaboration
Consequences if applied blindly, thoughtlessly, or inflexibly.
•
•
Distributive strategies create “we-they” patterns, leading to the following.
•
Distortions in judgment about the other’s contributions and efforts.
•
Distortions in perceptions of the other’s motives, needs, positions.
Integrative negotiators may be taken advantage of.
• They may forget constituencies in favor of the process for its own sake.
•
Accommodative strategies set a pattern of avoiding conflict.
• A precedent that is hard to break.
• Efforts to restore balance may be met with resentment.
Remember, it is difficult to follow any “pure” strategy.
© McGraw-Hill Education
9
Getting Ready to Implement the Strategy: The Planning
Process
1. Define the negotiating goal.
2. Define the major issues
related to achieving the goal.
3. Assemble the issues, ranking
their importance, and define
the bargaining mix.
4. Define the interests.
5. Know your alternatives
(BATNAs).
6. Know your limits, including a
resistance point.
7. Analyze and understand the
other’s goals, issues, and
resistance points.
© McGraw-Hill Education
8. Set your own targets and
opening bids.
9. Assess the social context of
the negotiation.
10. Present the issues to the other
party – substance and
process.
Assumptions.
•
One process can be used for
both distributive and integrative.
•
Factors beyond the table may
affect strategizing.
•
Negotiations will be one-to-one.
•
The steps are linear.
10
Step 1. Defining the Negotiating Goal
Goals can be
substantive
(tangible).
Goals can be
psychological
(intangible).
Goals can have both
direct and indirect
effects on the choice
of strategy.
© McGraw-Hill Education
Goals can be
procedural
(how we get to
agreement)
Knowing your goals is
the most important step
in developing a
strategy and executing
a negotiation.
11
Step 2. Defining the Major Issue Related to Achieving the
Goal
Figure 4.2: How Issues Affect the Choice
between Distributive and Integrative Strategy
Single-issues dictate
distributive negotiations.
Multiple-issues tend more
to integrative negotiations.
The choice of pursuing
claiming-value or creatingvalue strategy is the
“negotiator’s dilemma.”
Access text alternative for this image.
© McGraw-Hill Education
Single-issues can be
made integrative and
multiple-issues may
remain distributive.
Sources: After Lax and Sebenius, 1986; Raiffa, 1982; Watkins, 2002.
12
Step 3. Assembling the Issues, Ranking Their Importance,
and Defining the Bargaining Mix
Assemble all the issues into a comprehensive list.
The combination of lists from both sides is the bargaining mix.
Prioritization includes two steps.
•
Determine which issues are most important and which less important.
•
A simple way is to use rank-order or group issues into categories.
• Another way is to weight issues by importance.
•
•
Set priorities for both tangible and intangible issues.
•
Specify a bargaining range for each issue in the mix.
Determine whether the issues are linked or separate.
•
If separate, they can be easily added or subtracted.
•
If connected, settlement on one is linked to settlement on the others.
© McGraw-Hill Education
13
Step 4. Defining the Interests
Positions are what a negotiator wants – interests are why they want them.
•
Asking “why” questions helps surface values, needs, or principles.
•
Like goals, interests may be:
•
Substantive – directly related to the focal issues under negotiation.
•
Process-based – related to how the negotiators behave.
•
Relationship-based – tied to the current or desired future relationship.
•
Interests may also be based on intangibles of negotiation.
•
Surfacing interests may be essential to understanding another side’s
position.
© McGraw-Hill Education
14
Step 5. Knowing Your Alternatives (BATNAs)
Good preparation requires you establish two clear points.
•
Your alternatives if this deal cannot be successfully completed.
•
And your limits – the least acceptable offer that you will still agree to.
BATNAs are other agreements negotiators could achieve and still meet
their needs.
•
Alternatives are very important because they define whether the
current outcome is better than another possibility.
•
The better the alternatives, the more power you have to walk away
from the current deal and still have your needs and interests met.
© McGraw-Hill Education
15
Step 6. Knowing Your Limits, Including a Resistance Point
A resistance point is where you stop negotiations as any settlement
beyond this point is not minimally acceptable.
•
A seller’s resistance point is the least they will take for an item.
•
A buyer’s resistance point is the most they will pay for an item.
Clear resistance points help keep people from agreeing to deals that they
later realize weren’t very smart.
© McGraw-Hill Education
16
Step 7. Analyzing and Understanding the Other Party’s Goals,
Issues, and Resistance Points
Find a way to see the negotiation from the other party’s eyes.
The goal is to understand their approach to the negotiation and what they
are likely to want – then compare against your own.
•
Attempt to understand if the other party has the same goals as you.
•
The more you learn about the other party’s issues, and what they
bring to the table, the better you can predict how the likely process.
•
Get information about their current interests and needs through
discussion, anticipating, asking, or researching.
•
Understand the other party’s limits to give you an idea of how far you
can “push” them.
In distributive negotiation, the other party may not disclose information
and/or misrepresent their limits and alternatives in order to pressure you
into a deal that is better for them.
© McGraw-Hill Education
17
Step 8. Setting One’s Own Targets and Opening Bids
There are many ways to set a target but keep these principles in mind.
•
Targets should be specific, difficult but achievable, and verifiable.
•
Target setting requires proactive thinking about your own objectives.
•
Target setting may require considering how to package several issues
and objectives.
•
Target setting requires an understanding of trade-offs and
throwaways.
Similarly, there are numerous ways to set an initial asking price.
•
It may be the best possible outcome, an ideal solution, something
even better than was achieved last time.
•
It is easy to get overly confident and set an opening so unrealistic that
the other party laughs, gets angry, or walks away before responding.
© McGraw-Hill Education
18
Step 9. Assessing the Social Context of a Negotiation
When people negotiate in a professional context, there may be more than
two parties.
•
There may be more than two negotiators at the table.
•
•
Negotiators may also have constituents who will evaluate and critique
them.
•
•
Multiple parties often lead to the formation of coalitions.
There may be observers who watch and critique the negotiation.
Negotiation occurs in a context of rules.
•
A social system of laws, customs, common business practices,
cultural norms, and political cross-pressures.
© McGraw-Hill Education
19
Figure 4.3: A Field Analysis of Negotiation
One way to assess all the key parties in a negotiation is to complete a
“field analysis.”
Image you are the captain of a soccer team, envision the field and assess
all the parties who are in the soccer stadium.
Access the text alternative for this image.
© McGraw-Hill Education
20
Step 10. Presenting Issues to the Other Party: Substance and
Process
Presenting and Framing the Issues.
•
Consider how you will present your case to the other negotiator.
•
What facts support my point of view?
•
How can I present the facts so they are most convincing?
Planning the Process and Structuring the Context.
•
What agenda should we follow?
•
Consider scope, sequence, framing, packaging, and formula.
•
Where should we negotiate?
•
What is the time period of the negotiation?
•
What might be done if negotiation fails?
•
How will we keep track of what is agreed to?
•
Have we created a mechanism for modifying the deal if necessary?
© McGraw-Hill Education
21
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No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
®
Because learning changes everything.
Essentials of
Negotiation
Part 02: Critical Negotiation
Sub-processes
Chapter 06: Perception, Cognition, and
Emotion
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
®
Chapter Overview
We begin by examining how psychological perception is related to the
process of negotiation, with attention to forms of perceptual distortion.
We then look at how negotiators use information to make decisions about
tactics and strategy—the process of cognition.
• First, we focus on framing—the strategic use of information to define
and articulate a negotiating issue or situation.
• Second, we discuss cognitive biases in information processing.
We experience and express emotion when we interact with others and
negotiating is certainly no exception.
• In the final section, we discuss the role of moods and emotions in
negotiation—both as causes of behavior and as consequences of
negotiated outcomes.
© McGraw-Hill Education
2
Perception Defined
Perception is the process by which individuals connect to their
environment, by ascribing meaning to messages and events.
Perception is a “sense-making” process where people interpret their
environment so they can respond appropriately.
Environments are typically complex, so as perceivers we become
selective.
© McGraw-Hill Education
3
Perceptual Distortion
Stereotyping.
• Occurs when a person assigns
attributes to another solely on
the basis of the other’s social
or demographic category.
• Once formed, stereotypes can
be highly resistant to change.
Halo effects.
• Occur when people generalize
about a variety of attributes
based on the knowledge of one
attribute of an individual.
• Can be positive or negative.
© McGraw-Hill Education
Selective perception.
• Occurs when perceivers single
out supporting information and
filters out information that does
not confirm their beliefs.
• Perpetuates stereotypes or
halo effects.
Projection.
• Occurs when people assign to
others the characteristics or
feelings that they possess
themselves.
• Usually arises out of a need to
protect one’s own self-concept.
4
Framing
A frame is a subjective mechanism allowing people to evaluate
situations, leading them to pursue or avoid subsequent actions.
• Two or more people involved in the same situation or in a complex
problem often see it or define it in different ways.
• These frames can change depending on perspective, or they can
change over time.
How parties frame an issue is a reflection of:
• What they see as critical to the objectives.
• Their outcome expectations and preferences.
• What information they need to argue their case.
• Procedures they use to present their case.
• The manner in which they evaluate outcomes.
© McGraw-Hill Education
Frames are
inevitable,
occurring without
any real intention
by the negotiator.
5
Types of Frames
Substantive.
• What the conflict is about.
Outcome.
• A party’s predisposition to
achieving a specific result or
outcome from the negotiation.
Aspiration.
• A predisposition to satisfying a
broader set of interests or
needs in negotiation.
Process.
• How the parties will go about
resolving their dispute.
© McGraw-Hill Education
Identity.
• How the parties define “who
they are.”
Characterization.
• How the parties define the
other parties.
Loss or gain.
• How the parties define the risk
or reward associated with
particular outcomes.
6
How Frames Work in Negotiation
• Negotiators can use more than one frame.
• Mismatches in frames between parties are sources of conflict.
• Parties negotiate differently depending on the frame.
• Specific frames may be likely to be used with certain types of issues.
• Particular types of frames may lead to particular types of agreements.
• Parties are likely to assume a particular frame because of various
factors.
• Differences in values, personality, power, or background and social
context may lead parties to adopt different frames.
© McGraw-Hill Education
7
Another Approach to Frames: Interests, Rights, and Power
An influential approach to framing disputes suggests that parties in
conflict use one of three frames:
• Interests.
• People are often concerned about what they need, desire, or want.
• Rights.
• People may also be concerned about who is “right”—that is, who
has legitimacy, who is correct, or what is fair.
• Power.
• Power is sometimes based on who is physically stronger, but more
often, it is about imposing other types of costs – economic
pressures, expertise, legitimate authority, and so on.
The way a party frames the problem will likely influence how the other
party responds.
© McGraw-Hill Education
8
The Frame of an Issue Changes as the Negotiation Evolves
Disputes tend to transform through “naming, blaming, and claiming.”
• Naming occurs when parties in a dispute label or identify a problem
and characterize what it is about.
• Blaming occurs next, as the parties try to determine who or what
caused the problem.
• Finally, claiming occurs when the individual who has the problem
decides to confront, file charges, or take some other action against the
individual or organization that caused the problem.
Frames are shaped by the bargaining mix.
• Arguing stock issues.
• Arguing the best possible case.
• They may define major shifts and transitions.
• Finally, multiple agenda items shape frames.
© McGraw-Hill Education
Critical to issue
development is the
process of reframing
—changes to the
thrust, tone, and focus
of a conversation.
9
Cognitive Biases – Irrational Escalation of Commitment
An “escalation of commitment” is making
decisions that stick with a failing course of action.
• Even when that commitment constitutes
irrational behavior.
Due in part to biases in perception and judgment.
• Negotiators seek supportive evidence and
ignore disconfirming evidence.
• Initial commitments become set in stone.
• A desire for consistency prevents changing
them—made worse by a desire to save face.
© McGraw-Hill Education
Fight the bias.
• Use an adviser to
serve as a reality
check.
• There may be
less desire to
escalate if regret
is felt following a
previous
escalation
situation.
10
Cognitive Biases – Mythical Fixed-Pie Beliefs
Negotiators may assume all negotiations involve
a fixed pie.
• They may approach integrative negotiation
opportunities as zero-sum situations or winlose exchanges.
Negotiators focusing on personal gain are most
likely to come under the influence of fixed-pie
beliefs.
• While those focusing on values are less likely
to see a fixed-pie.
© McGraw-Hill Education
Fight the bias.
Chapter 3 provided
some advice, here
are two more.
• Focus on
underlying
interests and you
may see your
fixed-pie
perception is
misguided.
• And hold
negotiators
accountable for
the way they
negotiate.
11
Cognitive Biases – Issue Framing and Risk
“Prospect theory” holds that:
• People are more risk-averse when a problem is
framed as a possible gain.
• And risk-seeking when framed as a loss.
When risk-averse, negotiators are likely to accept
any offer simply because they are afraid of losing.
• In contrast, when risk-seeking, negotiators may
wait for a better offer or further concessions.
This process is important as the same offer can
elicit markedly different courses of action
depending on how it is framed in gain-loss terms.
© McGraw-Hill Education
Fight the bias.
• Awareness.
• Sufficient
information.
• Thorough
analysis.
• Reality checks.
• Can be difficult
to fight as
frames may be
tied to deep
values or to
anchors that are
hard to detect.
12
Cognitive Biases – Anchoring and Adjustment
These biases are related to the effect of the
standard (or anchor) against which subsequent
adjustments are made during negotiation.
• Anchors can be a trap as the choice of an
anchor may be based on faulty or incomplete
information and therefore misleading.
• Once the anchor is defined, parties tend to
treat it as a benchmark by which to adjust
other judgments.
• Goals—whether realistic or not—can serve as
anchors and may be public or private, as well
as conscious or unconscious.
© McGraw-Hill Education
Fight the bias.
• Thorough
preparation.
• The use of a
devil’s advocate
or reality check.
• Both can help
prevent errors
of anchoring
and adjustment.
13
Cognitive Biases – Availability of Information
Negotiators must also be concerned with the
potential bias caused by the availability of
information or how easy information is to retrieve.
• This also affects negotiation through the use
of established search patterns and
overvaluation of information resulting from
those searches.
© McGraw-Hill Education
Fight the bias.
• Check
everything for
accuracy.
14
Cognitive Biases – The Winner’s Curse
This refers to the tendency to settle quickly on an
item and then subsequently feel discomfort about
a negotiation win that comes too easily.
• The negotiator may suspect the other party
has an unseen advantage; and think they
could have done better, or the deal is bad.
© McGraw-Hill Education
Fight the bias.
• The best
remedy for the
winner’s curse
is to prevent it
from occurring
in the first place.
• Prepare
adequately to
prevent making
an offer that is
unexpectedly
accepted.
15
Cognitive Biases – Overconfidence
Overconfidence has a double-edged effect:
• It can solidify a negotiator’s support of
incorrect or inappropriate options, and
• It can lead negotiators to discount the worth or
validity of the judgments of others.
© McGraw-Hill Education
Fight the bias.
• Study results
are mixed.
• So, negotiators
should not
always
suppress
confidence or
optimism.
16
Cognitive Biases – The Law of Small Numbers
In negotiation, this applies to the way negotiators
learn and extrapolate from their own experience.
• If experience is limited, the tendency is to
project that experience onto future
negotiations.
• This may lead to a self-fulfilling prophecy.
• People who expect to be treated in a
distributive manner will:
• Be more likely to perceive the other party’s
behaviors as distributive, and
• Treat the other party in a more distributive
manner – who then may reciprocate.
© McGraw-Hill Education
Fight the bias.
• Remember, if you
have less
experience, you
may use that
experience
erroneously in the
future.
• Styles and
strategies that
worked in the past
may not work in the
future.
• Especially if the
negotiations differ,
which they will.
17
Cognitive Biases – Self-Serving Biases
People often explain another’s behavior by
making attributions.
• Either to the person (internal factors).
• Or the situation (external factors).
In explaining other’s behavior, we often
overestimate the role of internal factors and
underestimate the role of external factors.
• People attribute their own behavior to
situational factors but other’s to personal ones.
This bias may also involve distortions in the
evaluation of information.
• The false-consensus effect means
overestimating support and consensus for
your own position, opinions, or behaviors.
© McGraw-Hill Education
Fight the bias.
• Negotiators may
make faulty
judgments
regarding
tactics or
outcome
probabilities.
• Just be aware
of the bias.
• Use a reality
check.
18
Cognitive Biases – Endowment Effect
The endowment effect is the tendency to
overvalue something you own or believe you
possess.
• In negotiation, this can lead to inflated
estimations of value that interfere with
reaching a good deal.
• Negotiators are fine with using the status quo
as an anchor, making concessions difficult.
© McGraw-Hill Education
Fight the bias.
• This is very
difficult to fight
or defend
against.
• Use a devil’s
advocate to
make sure you
are not initiating
this effect.
19
Cognitive Biases – Ignoring Others’ Cognitions
Fight the bias.
Failure to consider the other party’s cognitions
allows negotiators to simplify their thinking about • Training and
otherwise complex processes.
awareness
• This may lead to a distributive strategy and
moderately reduce
effects.
cause a failure to recognize the contingent
nature of both sides’ behaviors and
• This can only be
responses.
avoided if you
explicitly focus on
In contrast, when negotiators are able to consider
forming an
things from the other party’s viewpoint
accurate
(perspective taking),
understanding of
• The risk of impasse is reduced and the
the other’s
chances for integrative outcomes via logrolling
interests, goals,
is enhanced.
and perspectives.
© McGraw-Hill Education
20
Cognitive Biases – Reactive Devaluation
This is the process of devaluing the other
party’s concessions simply because the other
party made them. Leads negotiators to:
• Minimize the magnitude of a concession
made by a disliked other.
• Reduce their willingness to respond with a
concession of equal size.
• Seek even more from the other party once
a concession has been made.
© McGraw-Hill Education
Fight the bias.
• You (or a colleague)
should maintain an
objective view of the
process.
• Clarify each side’s
preferences on
options and
concessions before
any are made.
• Use a third party to
mediate or filter
concession-making
processes.
21
Managing Misperceptions and Cognitive Biases
Misperceptions and cognitive biases typically arise out of conscious
awareness as negotiators gather and process information.
• The first level of managing such distortions is to be aware that they
can occur.
• Awareness may not be enough—simply knowing about them does
little to counteract their effects.
• Be aware of the existence of these biases.
• Understand their negative effects.
• Be prepared to discuss them when appropriate with your own team
and with counterparts.
© McGraw-Hill Education
22
Mood, Emotion, and Negotiation
The role of mood and emotion in negotiation has been an increasing
body of theory and research during the last two decades.
• The distinction between mood and emotion is based on three
characteristics: specificity, intensity, and duration.
• Mood states are more diffuse, less intense, and more enduring than
emotion states, which tend to be more intense and targeted.
• Emotions play important roles at various stages of negotiation.
© McGraw-Hill Education
23
Research Findings in the Study of Mood, Emotion, and
Negotiation
• Negotiations create both
positive and negative
emotions.
• Positive emotions generally
have positive consequences.
• Aspects of the process can
lead to positive emotions.
• Negative emotions generally
have negative consequences.
• They may lead to defining
the situation as competitive.
• They may undermine the
ability to analyze the
situation accurately.
© McGraw-Hill Education
• Negative emotions may lead
parties to escalate the conflict.
• Negative emotions may lead to
retaliation and discourage
integrative outcomes.
• Not all negative emotions have
the same effect.
• Negotiators make smaller
demands of worried or
disappointed opponents.
• But fewer concessions to
guilty or regretful
opponents.
24
The Effects of Positive and Negative Emotion in Negotiation
Positive feelings may have negative consequences.
• Negotiators in a positive mood may be susceptible to deceptive tactics.
• And achieve less-optimal outcomes.
• If there is no agreement, defeat may be harsh and counterproductive.
Negative feelings may create positive outcomes.
• Generally, well expressed anger can lead to positive outcomes.
• Negative emotion has information value as a danger signal.
Anger may signal toughness, but not always.
• Can work in your favor if the anger is seen
as appropriate but it can backfire.
• Less likely to work with a deceiver or one
who has little at stake to begin with.
© McGraw-Hill Education
Negative emotion can
benefit powerful
negotiators, but provides
less focus and poorer
outcomes for low-power
negotiators.
25
Emotions Can Be Used Strategically as Negotiation Gambits
Emotions may be used strategically as influence tactics in negotiation.
• Negotiators exhibiting positive emotionality were more likely to induce
compliance with ultimatum offers.
• A negotiator displaying sadness elicits concern from the other party
and can extract concessions and claim value.
• Works only when displayed by those with low-power.
• Emotional manipulation does not work for high-power negotiators.
Negotiators may also engage in the regulation or management of the
emotions of the other party.
• Effective negotiators adjust their messages to adapt to what they
perceive as the other party’s emotional state.
• Known as emotional intelligence.
© McGraw-Hill Education
26
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Because learning changes everything.
Essentials of
Negotiation
Part 02: Critical Negotiation
Processes
Chapter 07: Communication
© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
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®
Chapter Overview
Chapter 07 examines the process by which negotiators communicate
their interests, positions, and goals.
• We first consider what is communicated in a negotiation.
• Followed by exploring how people communicate in negotiation.
• The chapter concludes with discussions of how to improve
communication in negotiation.
• And of special communication considerations at the close of
negotiations.
© McGraw-Hill Education
2
What is Communicated during Negotiation?
When studied, 70% of verbal tactics are integrative.
Also, buyers and sellers tend to behave reciprocally.
Most of the communication during negotiation is not about preferences.
• The blend of integrative versus distributive content varies as a
function of the issues being discussed.
• And of the expectation parties have for their future relationship.
• Yet communication content is only partly responsible for negotiation
outcomes.
© McGraw-Hill Education
3
Table 7.1: What Is Communicated during Negotiation?
Category of Communication
Why It Is Important
Offers and counteroffers
Offers convey the negotiator’s motives and
preferences, which in turn influence actions of
the other party.
Information about alternatives
Strong alternatives confer a strategic advantage,
but only if the other party is aware of those
alternatives.
Information about outcomes
Negotiators’ evaluations of their own outcomes
will vary depending on what they know about
how well the other party did.
Social accounts/explanations
The negative effects of relatively poor outcomes
can be alleviated when the other party offers
social accounts.
Communication about process
When conflict intensifies, risking progress,
conversation about process may interrupt a
conflict spiral and restore a constructive tone or
approach.
© McGraw-Hill Education
4
Offers, Counteroffers, and Motives
Preferences are communicated during a negotiation and can have an
influence on the actions of the other party and on outcomes.
Communication may also convey emotions experienced in relation to the
exchange of positions and offers.
A communication framework is
based on the assumptions that:
• The communication of offers
is dynamic.
• The offer process is
interactive.
• Various internal and external
factors drive the interaction
and motivate a bargainer to
change their offers.
© McGraw-Hill Education
The offer-counteroffer process is
dynamic, interactive, and subject to
situational and environmental
constraints.
• The process constantly revises
the parameters of the
negotiation.
• Eventually narrowing the
bargaining range and guiding the
discussion toward a settlement.
5
Information about Alternatives
The existence of a BATNA changes several things in a negotiation.
• Negotiators with attractive BATNAs set higher reservation prices.
• When the other party has attractive BATNAs, negotiators set lower
reservations points for themselves.
• When both parties are aware of one party’s attractive BATNA, that
negotiator receives a more positive outcome.
Negotiators with attractive BATNAs should tell the other party if they
expect to receive its full benefits—but style and tone matter.
• Politely, or subtly, make the other party aware of your good BATNA
which can provide leverage without alienating the other party.
• Waving a strong BATNA is the other’s face may be construed as
aggressive and threatening.
© McGraw-Hill Education
6
Information about Outcomes
One study found that winners and losers evaluate their own outcomes
equally when unaware how well the other party did.
But, if they find out the other did better, or was pleased with their
outcome, then negotiators felt less positive about their own outcome.
Another study suggests that
even when negotiators learn the
other party did poorly, they are
less satisfied with the outcome
than when they have no
comparison information.
© McGraw-Hill Education
Be cautious about sharing your
outcome or even your positive
reaction to an outcome.
• Especially if you will negotiate
with that party again in the
future.
7
Social Accounts
Communication during negotiation consists of “social accounts,” which
are explanations made to the other party.
Especially when negotiators need to justify bad news.
Three types of explanations are important.
• Explanations of mitigating circumstances
where negotiators suggest they had no
choice in taking the positions they did.
• Explanations of exonerating circumstances
explain positions from a broad perspective.
• While current positions appear negative,
it derives from positive motives.
• Reframing explanations, where outcomes
can be explained by changing the context.
© McGraw-Hill Education
Negotiators who use
multiple explanations
are more likely to have
better outcomes.
The negative effects of
poor outcomes can be
alleviated by
communicating
explanations for them.
8
Communication about Process
Some communication is about the process itself.
• Some takes the form of small talk, but some communication about
process is critical—as when conflict intensifies and hostilities
progress.
• One strategy is calling attention to contentious actions and labeling
them as counterproductive.
• More generally, negotiators should resist reciprocating contentious
communication.
• Sometimes a break in the substantive conversation and attention to
the process is precisely what’s needed.
© McGraw-Hill Education
9
What is Communication in Negotiation?
Are negotiators consistent or adaptive?
• Negotiators are more likely to be consistent in their strategies than to
vary their approach.
• They react to smaller proportions of cues as negotiations proceed.
Does it matter what is said early in the negotiation?
• Evidence suggests that joint gains are influenced by what happens
early on.
Is more information always better?
• Negotiators who know the complete preferences of both parties may
have difficulty determining fair outcomes.
• The influence of the exchange of accurate information does not
automatically lead to better understanding of the other party’s
preferences or to better negotiation outcomes.
© McGraw-Hill Education
10
How People Communicate in Negotiation
It may seem obvious that how negotiators communicate is as important
as what they have to say.
• Here we address three aspects related to the “how” of communication.
• The characteristics of language that communicators use.
• The use of nonverbal communication in negotiation.
• The selection of a communication channel for sending and
receiving messages.
© McGraw-Hill Education
11
Characteristics of Language
Language operates on two levels: the logical and the pragmatic.
We respond to the substance of threats and the unspoken message.
Communication
depends on the
speaker’s ability to
The degree of language intensity.
encode thoughts, and
the listener’s ability to
The degree of lexical diversity.
understand and decode
The extent of a high-power language style.
the intended
• Threats are more credible and compelling
message(s).
when using negatively polarized, high
immediacy, high intensity, high lexical diversity A negotiator’s choice of
words may signal a
and a high-power style of language.
position and also shape
• It is not just what is threatened but how the
and predict the
threat is conveyed.
resulting conversation.
The use of polarized language.
The conveyance of verbal immediacy.
© McGraw-Hill Education
12
Use of Nonverbal Communication
Much of what is communicated is transmitted nonverbally through facial
expressions, body language, head movements, and tone of voice.
• Attending behaviors let the other know that you are listening and
prepare the other party to receive your message.
Make eye contact.
• Make eye contact when delivering the most important part of the
message and when receiving information.
Adjust body position.
• Hold your body erect, lean slightly forward, and face the other
person.
Nonverbally encourage or discourage what the other says.
• Brief eye contact, a smile, or a nod provides encouraging cues.
• Frowns or scowls signal disapproval of the other’s message.
© McGraw-Hill Education
13
Selection of a Communication Channel
Virtual negotiation or e-negotiation uses different channels.
• The key variation distinguishing one communication channel from
another is social bandwidth.
There are important distinctions between email and other forms of written
communication—seen as informal and may use emoticons.
• Negotiation through written channels is more likely to end in impasse.
Developing rapport and sharing information are aspects of face-to-face
communication, which may also allow conveyance of toughness.
• Email can mask or reduce power differences between negotiators.
• Email negotiations lack schmoozing.
Email has a “slow-tempo” while texting is a “fast-tempo” medium more
closely approximating oral communication.
• Sellers do better with complex arguments in the “quick” medium.
© McGraw-Hill Education
14
10 Rules for Virtual Negotiation
• Create a face-to-face
relationship before negotiation.
• Be explicit about the normative
process to be followed during
the negotiation.
• If others are present, make
sure everyone knows who is
there and why.
• Pick the channel effective at
getting details on the table for
consideration by both sides.
• Avoid “flaming” by labeling
emotion so others know what it
is and what’s behind it.
© McGraw-Hill Education
• Formal turn-taking is not strictly
necessary, but synchronize
offers and counter-offers.
• Check out assumptions as
inferences will get you in
trouble, so ask questions.
• Be careful not to make unwise
commitments.
• Unethical tactics may be easier
to use in virtual negotiation, but
resist the urge.
• Develop a negotiation style
that is a good fit with the
channel you use.
15
How to Improve Communication in Negotiation
Failures and distortions in perception, cognition, and communication are
the paramount contributors to breakdowns and failures in negotiation.
• Just as we evaluate the quality of a deal, we can evaluate the quality
of communication—its efficiency and effectiveness—that occurs.
Three main techniques are available for improving communication in
negotiation.
• The use of questions.
• Listening.
• Role reversal.
© McGraw-Hill Education
16
The Use of Questions
Asking questions enables negotiators to secure information about the
other party’s position, supporting arguments, and needs.
Manageable questions cause attention.
• They prepare the other person’s thinking for
further questions.
• They get information and generate thoughts.
Unmanageable questions cause difficulty.
• They give information.
• And bring discussions to a false conclusion.
• They are more likely to elicit defensiveness
and anger from the other party.
© McGraw-Hill Education
Negotiators can
also use questions
to manage difficult
or stalled
negotiations.
17
Table 7.2: Questions in Negotiation
Manageable Questions.
• Open-ended questions.
• Open questions.
•
•
•
•
•
•
Leading questions.
Cool questions.
Planned questions.
Treat questions.
Unmanageable Questions.
• Close-out questions.
• Loaded questions.
• Heated questions.
• Impulse questions.
• Trick questions.
• Reflective trick questions.
Window questions.
Direct questions.
• Gauging questions.
© McGraw-Hill Education
18
Table 7.3: Questions for Tough Situations
The Situation
Possible Question
“Take it or leave it” ultimatum
Are you feeling pressure to bring the
negotiation to a close?
Pressure to respond to an
unreasonable deadline
Why can’t we negotiate about this deadline?
Highball or lowball tactics
What’s your reasoning behind this position?
An impasse
What else can we do to close the gap
between out positions?
Indecision between accepting and
rejecting a proposal
What’s your best alternative to accepting my
offer right now?
A question about whether the offer
Do you believe that I think it’s in my best
you just made is the same as that
interest to be unfair to you?
offered to others
Attempts to pressure, control, or
manipulate
© McGraw-Hill Education
Shouldn’t we both walk away from this
negotiation feeling satisfied?
19
Listening
There are three major forms of listening.
Passive listening involves receiving the message
while providing no feedback about accuracy.
• If your counterpart is talkative, the best
strategy may be to sit and listen.
Acknowledgement is slightly more active than
passive listening.
• Receivers may nod, maintain eye contact, or
interject responses like “I see.”
Active listening is the third form of listening.
• Receivers restate or paraphrase the sender’s
message in their own language.
© McGraw-Hill Education
Active listening is a
skill that
encourages others
to speak more fully
about their
feelings, priorities,
frames of
reference, and, by
extension, the
positions they are
taking.
20
Role Reversal
Role reversal allows negotiators to understand the other party’s position
by arguing these positions until the other party is sure they understand.
• The impact and success of the role-reversal techniques point to two
implications for negotiators.
• First, the party using role reversal may understand the other party’s
position, which can lead to convergence between positions.
• Second, the technique may end up sharpening perceptions of
differences if the positions are fundamentally incompatible.
Role reversal can be most useful during the preparation stage of
negotiation or during a team caucus when things are not going well.
© McGraw-Hill Education
21
Special Communication Considerations at the Close of
Negotiations
Avoid fatal mistakes.
• Know when to shut up.
• Refrain from making “dumb remarks.”
• Don’t respond to other party’s dumb remarks.
• Watch out for nitpicking or second-guessing.
• Put agreement in written form.
Achieving closure involves decisions on: framing, gathering intelligence,
coming to conclusions, and learning from feedback.
• Feedback is largely a communication issue.
• Track your expectations and incorporate feedback into similar
future decisions.
• Decision traps resulting from perceptual and cognitive biases may
occur at the end of negotiations.
© McGraw-Hill Education
22
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