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(1) The Parties and Their Interests (2) The Negotiators (3) Traits of Skilled Negotiators (4) Developing Negotiating Skills (5) Bargaining Styles

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five essential elements in a negotiation

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-an exchange of something of value between two parties -such as the purchase or sale of home, or entering into construction contract

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Deal-making negotiation

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-when the object of the negotiation is to arrive at mutually beneficial decision -Ex: within a workplace- co-workers who must jointly decide on course of action

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Decision-making negotiation

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-occurs when an issue has reached an impasse and parties are attempting to resolve dispute -Ex: Settlement negotiations in litigation

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Dispute-resolution negotiation

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-refers to the extent parties focus on either: (1) their ongoing relationship (interpersonal) or (2) the subject matter of dispute (materials)

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relationship/task frame

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-reflects the degree of attention that the parties pay to the emotional components of the dispute. -emotions of other party = emotional -behaviors of other party = intellectual

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emotional/intellectual frame

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-reflects the attitude of the parties about responsibility for the dispute -share some responsibilities = cooperative -blames other party for dispute = win

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cooperate/win frame

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-are outside parties hired because they have expertise that client believes is needed to negotiate -Ex: lawyer or broker

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Independent agents

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-inside parties who are identified with/ act on behalf of principal party

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Non-independent agents

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- a process that includes: (1) gathering general information (2) learning priorities of the other side (3) assessing strengths and weaknesses of their positions

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Bargaining

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(1) Considered wider range of outcomes or options (2) Averaged twice as many discrete ideas (3) Gave three times the attention to areas in which the parties might agree (4) Referred to long-term considerations twice as often (5) Developed a range of possible settlement points rather than a single goal (6) allowed issues to be separated, dealing with them independently in order to promote both flexibility and an atmosphere of agreement (7) used neutral phrases

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Traits of Skilled Negotiators

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• Avoiding • Accommodating • Collaborating • Competing • Compromising

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Bargaining Styles

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- explains how one's behavior while bargaining or during a conflict is based on two concerns: the desire to satisfy oneself and the desire to satisfy the other party -assertiveness vs cooperation

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dual concern model

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-Associations = Anxious, depressed, worried, insecure -Opposes = Emotionally healthy, calm, free from persistent negative feelings

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Five Factor Model - Nueroticism

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Associations = Sociable, assertive, talkative, active Opposes = Introverted, quiet, low-key, deliberate

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Five Factor Model - Extroversion

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Associations = Imaginative, curious, original, open minded Opposes = Conventional, narrow-minded, straightforward, conservative

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Five Factor Model - Openness

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Associations = Courteous, flexible, trusting, cooperative, tolerant Opposes = Suspicious, unfriendly, uncooperative, critical, disciplined

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Five Factor Model - Agreeableness

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Associations = Careful, responsible, organized, persistent Opposes = Unreliable, lacking ambition, easily distracted

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Five Factor Model - Conscientiousness

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strong predisposition = defers confrontational negotiation positive = displays tact and diplomacy negative = causes stalemates weak predisposition = prefers hard nosed bargaining strategy = used when not interested in negotiating

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Avoiding

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strong predisposition = derives satisfaction from solving problems positive = good team builder negative = may make unwise concessions weak predisposition = has little patience for other parties' needs strategy = used when hostilities need to be lessened

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accomodating

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strong predisposition = views negotiation as game or sport positive = has excellent instincts for claiming value negative = focuses on issues that are easy to define as win loss weak predisposition = believes in treating people fairly and avoiding needless conflicts strategy = used when substantive interests are important, but not the relationship

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competing

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strong predisposition = enjoys participating in joint problem solving positive = instinctively tries to discover and satisfy the real interests of the parties negative = may transform a simple problem into a complex one weak predisposition = no patience strategy = used when relationship and outcome are important

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collaborating

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strong predisposition = eager to conclude negotiation on fair standards positive = best when stakes are small and time is short negative = can rush process and agree to unnecessary concessions weak predisposition = refusing to compromise on principle strategy = weak bargaining position

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compromising

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- encompassing the following five characteristics and abilities as they relate to a bargaining situation (1) self-awareness (2) self-regulation (3) self-motivation (4) empathy (5) managing relationships

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Emotional intelligence

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-ability to be aware of which emotions, moods, and impulses one is experiencing and why -also being aware of the effect one's emotions are having on others involved in the negotiation

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Emotional intelligence - self-awareness

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-the ability to keep one's emotions and impulses in check, -to remain calm in potentially volatile negotiations -and to maintain composure regardless of one's emotions

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Emotional intelligence - self-regulation

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-the ability to remain focused on one's goals in the negotiation despite setbacks -to operate from a hope of success rather than a fear of failure -and to accept change as necessary to attain goals

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Emotional intelligence - self-motivation

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-the ability to understand the feelings being transmitted at the negotiations through verbal and nonverbal messages -to provide emotional support when needed -and to understand the link between others' emotions and their behavior

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Emotional intelligence - empathy

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-the ability to deal with problems without demeaning the opponents -not to let others' negative feelings prevent collaboration -and to handle conflict with tact and diplomacy

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Emotional intelligence - managing relationships

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-none means there's no reason to bargain -total dependency from one on the other = dictator -total dependency on each other = no need to negotiate

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interdependency

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-the substance of the issue, -such as getting a development plan approved, landing a client, or satisfying neighbors

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content goal

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-defines how the parties intend to relate to each other

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relationship goal

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-that is, the goal they identify at the start of a negotiation -may change or emerge as the negotiation progresses

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prospective goal

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-those that either arise or become apparent during the negotiations, not before or after

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Transactional goals

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-those that emerge after a negotiation has concluded

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Retrospective goals

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-attempt to identify and satisfy mutual goals -part of integrative negotiation

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collaborative goals

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-framework or structure for one's beliefs about a particular issue. -Through the use of ___, people can quickly organize most everyday situations and act effectively without effort

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schema

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-refers to the process of assimilating information to make rational choices

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Cognition

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-occurs when the negotiator estimates the probability of an outcome based on how easy that particular outcome is to imagine -how readily it comes to mind

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availability bias

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-stereotyping

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representativeness bias

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-egocentric -occurs when people believe an uncertain option will more likely be beneficial to them than is objectively true, because their perceptions and expectations are biased in a self-serving manner

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self-serving bias

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-occurs when one party to a conflict views his or her behavior as more constructive and less distructive than that of the opponent—again, seeing oneself in the best light

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self-enhancement bias

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-which occurs when a person—who may accurately predict that he or she will feel positively or negatively about a certain outcome—overestimates the intensity and duration of those feelings

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impact bias

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-negotiator's preference for particular outcome distributions between the parties—either selfish or prosocial

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Social motivation

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-refers to the effort a negotiator uses to process information relevant to the negotiation

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Epistemic motivation

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-the desire to make a good impression and to get along

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Impression motivation

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(1) Coalitions (2) Trade Offs (3) Majority rule (4) finding consensus (5) communication

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Multiparty Negotiations

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(1) Preparation (2) Opening Session (3) Bargaining (4) Settlement

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The Basic Stages of Negotiation

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-Best Alternative To a Negotiated Agreement—or "walk-away" value.

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BATNA

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-Issues that must be gained for a settlement, or else you will accept your BATNA, and not accept the agreement

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Set Priorities - Level 1 - essential items

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-Items that you would like to gain but are willing to trade to achieve essential or other important items

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Set Priorities - Level 2 - Important items

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-Issues that have secondary value and could be exchanged for essential or important issues

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Set Priorities - Level 3 - Desirable items

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-Items that you are perfectly willing to concede, that may have value only to the other party

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Set Priorities - Level 4 - Throwaway items

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-Who speaks for each party—is authorized to make offers, and accept or reject offers made by the other party?

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Ground Rules - Who

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-What form of agreement is acceptable?

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Ground Rules - What

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-Where will the negotiators meet, and what will be the seating arrangement?

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Ground Rules - Where

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-When will meetings begin, and how long will sessions last?

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Ground Rules - When

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-How will formal proposals be made and issues be presented?

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Ground Rules - How

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-Full, Open, Truthful Exchange -can be achieved with third party mediator

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FOTE

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-Full, Open-Throttle Negotiations

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FOTN

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-Partial, Open, Truthful Exchange -usually occurs in initial session -Concealment of objectives.

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POTE

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-the dramatic presentation by one side of its view of the issues, facts, and feelings about the other side - can become heated and involve emotional outbursts, name-calling, finger-pointing, and other nonproductive behaviors

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posturing

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-private meeting with its own members -After a proposal or counterproposal is received, a team usually asks for a ___

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caucus

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-zero sum outcome

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two parties - one issue

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-auction process

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3+ parties - one issue

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-Efficient outcomes

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two parties - multiple issues

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-Consensus by all parties on all issues, or only some issues resolved by some parties following their BATNAs

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3+ parties - multiple issues

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-defined as the seller's minimum price (or BATNA), and the buyer's maximum price (or BATNA)

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resistance points

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-is a common negotiating process of moving toward a middle point between the opening offers (or brackets) -two parties will most likely reach a settlement by using either distributive bargaining or integrative bargaining

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Bracketing

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-(win-lose) bargaining both sides view their own goals as being in direct conflict with those of the other side—with any one of the multiple issues, whatever one side gains, the other side loses.

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distributive

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1. Making extreme or even ridiculous opening offers 2. Claiming limited authority 3. Making emotional outbursts 4. Offering few concessions 5. Resisting deadlines

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common tactics used by distributive or win-lose negotiators

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(1) Lowball (or Highball) Offer (2) Good Guy/Bad Guy Routine (3) The Whole Pie Versus Single Slices (4) The Nibble

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Four Common Negotiating Tactics

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-win-win approach to multiple-issue negotiations the parties do not assume they want to triumph over the other side at all costs, but instead seek a reasonable settlement of the issues

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integrative

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-Negotiators fail to reach an agreement when one party simply walks away from the deal and the process ends, or when both sides still desire a settlement but realize they have reached a stalemate

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impasse

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-Settlement facilitation -Mediation -Arbitration

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Third-party interventions

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-negotiation method in which two parties strive to divide a fixed pool of resources, often money, each party trying to maximize its share of the distribution -a fixed-sum game, and the limited resource is often termed a fixed pie

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Distributive bargaining

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-the absolute minimum price that the seller will accept or the absolute maximum price that the buyer is willing to pay

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reservation price

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-bargaining range, negotiating latitude, or settlement range because any offer outside of the range will be quickly rejected by one of the parties -exists because the buyer is willing to meet or exceed the seller's minimum price

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zone of possible agreement (ZOPA)

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- one party making an opening offer, the other party responding with a counteroffer, and then possible multiple counteroffers, until an agreement price, X, is reached

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negotiation dance

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-Facts, beliefs, and feelings about the relationships between the parties

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Relational information

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-Facts, pertinent data, and questions about the other party's offer, utilizing reason and logic

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Substantive information

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-Open discussion of the negotiation process that helps understand and manage the process

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Procedural information

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-many experienced negotiators often prefer to make the opening offer and thus ___ the discussion at their chosen point

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anchor

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-you achieve your offer, but you are "cursed" with worry over why they quickly accepted your opening offer without even proposing a counteroffer

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winner's curse

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-Desires to maintain a positive long-term relationship -can easily cause tension between the desire to maximize outcomes and the desire to maintain a positive relationship

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Relational Norm

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-Evenly splits the difference between offers (50-50) -fair only if the initial offers were equally fair to both parties, which is highly unlikely

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Fairness Norm - Equality

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-Splits the difference between offers based on proportional inputs of the parties

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Fairness Norm - Equity

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-Splits the difference between offers based on proportional perceived needs of the parties -a powerful social norm

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Fairness Norm - Need

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-Leaves the current situation unchanged -which keeps all significant issues in their current state.

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Fairness Norm - Status quo

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-Responds to a counteroffer or action with one of equal value -the human tendency to respond to the actions of others with equal or similar actions

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Reciprocity Norm

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-Will: (1) honor and not retract an offer (2) meet and discuss issues (3) make sincere proposals (4) provide honest information and share sources of information

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Good faith bargaining

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-refers to the wording and context of the offer

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framing

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(1) Information: What do you know about the priorities, limits, and strategy of the other side? (2) Time: Is either side operating under a deadline? Is there pressure from an outside party to settle quickly? (3) Power: Who has the ability to exercise control over the situation?

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issues should be presented in terms of three critical elements

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Purpose = Change buyer's context from a purchase decision to investment decision Ex = Seller: "This work is a solid investment— the only other Ireland piece by this artist just sold at auction for $20,000!"

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Reframing

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Purpose = Change buyer's context from a simple purchase decision by focusing on the uniqueness of the painting Ex = Seller: "This is the only painting of a lake the artist has done, and he'll probably never get back to Ireland to paint another."

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Focus framing

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Purpose = Change buyer's context from a single price of $12,000 to much smaller, affordable monthly installments. Ex = Seller: "If you pay for it over 24 months, the cost per month is less than the price of four tickets to a first-run play, but you will enjoy the painting for many years."

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Contrast framing

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Purpose = Because humans are loss averse, frame buyer's decision in terms of avoiding a loss. Ex = Seller: "You can wait to decide—but another couple looked at it earlier today and said they would be back."

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Negative framing

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-an agreement that specifies how a future event will change specific issues contained in the contract -If such a future issue cannot be foreseen, a contingency contract can allow the parties to reach agreement on all other issues, and then provide for exactly how the terms will be finalized once the future event is known

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contingency contract

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D: One (or with several issues, one at a time) I: Several

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Distributive vs Integrative - Number of Issues

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D: "Win-lose" I: "Win-win"

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Distributive vs Integrative - Technique

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D: Maximize share of a "fixed pie" I: Expand the pie" by creating value and claiming a share

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Distributive vs Integrative - General Strategy

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D: One time only I: Continuing, long-term

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Distributive vs Integrative - Relationship of Parties

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D: Keep interests hidden I: Share interests with other party

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Distributive vs Integrative - Interests

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D: One expressed position (for each issue) I: Many options—create new options for maximum mutual gain

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Distributive vs Integrative - Possible Options

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D: Keep information hidden I: Share information with other party— explain the "why" of an interest

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Distributive vs Integrative - Options

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-Exceeds both parties' reservation points or BATNA

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Level 1: Agreement

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-Create additional value for both parties

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Level 2: Superior Agreement

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-Maximum value for both parties

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Level 3: Pareto Optimal

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-Exchange information and identify all of the issues to be negotiated. -Each side explains its interests and concerns on the issues.

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categorization method - Step 1

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-Develop a common list of all issues that were discussed by either side during the first step, and seek to classify each issue as: (1) compatible— similar interests (2) exchange—approximately equal value, which may be traded (3) distributive—not compatible, cannot be traded, and therefore whose value must be distributed.

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categorization method - Step 2

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-Reach final agreement on each of the compatible issues and remove them from further negotiation.

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categorization method - Step 3

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-Trade or exchange issues of approximately equal value—in some cases including several issues in a single exchange.

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categorization method - Step 4

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-Resolve any remaining issues—often accomplished through distributive bargaining on each separate issue

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categorization method - Step 5

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Purpose = To generate useful information on interests, define issues, provide rationale for positions Ex = "What type of clientele would this advanced course attract?"

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Open-ended

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Purpose = So that question will seem less confrontational or intrusive than simply asking the open-ended question Ex = "The basic course targets entry level IT employees." "What type of clientele would this advanced course attract?"

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Open-ended w explanation

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Purpose = To shift negotiations from debate over an issue to a discussion of the underlying issues or needs Ex = What profit margin do you need for the advanced course to be successful?"

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Moving form debate to dialogue

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Purpose = To identify underlying differences on an issue Ex = "You're clearly concerned about taking on additional risks, so what exactly do you see as the risk to you in offering the advanced course?"

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broad based, clarification

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Purpose = To expand discussion beyond the immediate situation to a larger context; to clarify positions Ex = "How do you conduct a marketing campaign?" / "So how does marketing both courses together affect the campaign of each course?"

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circular

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Purpose = To state a position, causing the other party to confirm your position Ex = Can you see that my firm is taking all the risks in this proposal?

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leading

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Purpose = To trigger an emotional or defensive response Ex = Are you saying these unfair payment terms are the only ones you will accept?

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loaded (avoid)

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Purpose = To shift discussion from one of competition to mutual recognition of concerns Ex = What type of payment arrangement would reward you for the risk and provide your firm an adequate profit?"

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uncovering underlying concerns

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Purpose = To generate proposals that meet the needs of both parties on an issue (compatible outcomes) Ex = "Why is it essential to offer the classes on different days?"

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seeking creative solutions

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-Sharing of information -Willingness to forgo power or leverage -Brainstorming to create options -Focusing on issues, not personalities -Leaving past issues behind -Expressing interests, not positions -Both parties committing

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interest-based bargaining (IBB): Principles and steps

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-the ability to induce the other party to settle for less than it wanted

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power

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-the use of that power to achieve your aims - relational, not personal

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Leverage

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-Controlling resources that could reward -Ex: Only dealer in region to sell popular sports car.

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Reward power

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-Controlling resources that could punish -Ex: Managers assigning undesirable tasks at work

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Coercive power

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-Authority vested in you by your position or through an ally -Ex: Manager's role in approving employee's raise.

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Legitimate power

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-Controlling necessary knowledge or information. -Ex: Being a recognized "expert" on a subject.

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Expert power

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-Being attractive to others so they seek you out -Ex: Building consensus by understanding people.

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Reference power

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