Negotiations Quiz 2 – Flashcards

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The process most impaired when there is sleep debt
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Short-term (immediate) memory
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Sleep debt affects our logical reasoning processes, specifically our ability to solve ______ problems. Routine problem solving may be unaffected
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Novel (out of the ordinary)
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A ________ ____ may deliberately use sleep debt in an effort to lower the mental abilities and motivation of contract negotiators in order to reach an agreement *Trick is to do it in a way that sounds natural
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Professional mediator
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What gives a professional mediator leverage to pressure both sides to stay at the table for longer periods
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Deadline
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Does not drink coffee, keeps travel time to a minimum, and does not have to strategize with team
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How professional mediator gets sleep
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1.After sleep debt things get blurry (people get dumber) and it is hard to keep negotiating packages straight. 2. Motivation becomes flat 3. Parties are less vigilant about checking figures (less detail-oriented) *Issues that are not fully settled or written in some compromise wording or are dropped
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Psychology of sleep debt
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Issue of appearance. After approving the deal in a morning press appearance you would look stupid cancelling it later
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Why deals made in sleep debt are not broken up
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Unintentional dumb decisions because of lack of attention to detail and poor thinking skills
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Most common outcome of sleep debt
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Someone who is not directly involved in your negotiation or dispute but who can be helpful in resolving it
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Third party
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It is usually best to try everything you can to remedy the situation before you move to third-party intervention
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When to resort to third party
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If a third party is invited then negotiations usually go smoothly, however if the third party is imposed or _____ then negotiations may become more hostile
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Uninvited
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1. The emotional level between the parties is high 2. Communication between the parties is poor or has completely broken down 3. Stereotypic views of each other's position and motives are preventing resolution 4. Behavior is negative (ex: name-calling) 5. Parties have serious disagreements about what information is necessary, available, or required 6. Parties disagree on the number, order, or combination of issues 7. Differences in interests appear to be irreconcilable 8. Values differ greatly, and the parties disagree about what is fundamentally right 9. There are no established procedures for resolving the conflict, or the procedures have not been followed 10. Negotiations have completely broken down and there is an impasse
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Reasons to use a third party
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1. Resolve the dispute (outcome dimension) 2. Smooth, repair, or improve the relationship between the parties 3. Stop the dispute/separate the parties (ex: stop warring groups from fighting) *Different types of third parties are needed for each objective
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Objectives in bringing in a third party to achieve a resolution
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Alternatives to taking the conflict into the court system, hiring an attorney, and pursuing litigation *Since early 1980s there has been major social movement to take civil disputes (where there is no violation of criminal law) out of courts and refer them to third parties in ADR
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Alternative dispute resolution (ADR)
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1. Parties have more control over what happens 2. Process is often quicker and cheaper 3. Reduces burden of court system
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Why ADR has become popular
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Labor arbitrators, divorce mediators, community mediators, process consultants, ombudspersons, fact finders, referees, social workers, teachers, managers, friends
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People who perform ADR
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1. Gain time to cool off 2. Improve communication because third party slows communication, helps people be clear, and works to improve listening 3. Parties have to determine which issues are really important 4. Emotional climate can be improved 5. Parties can take steps to mend the relationship 6. Time frame for resolving the dispute can be established or reestablished 7. Escalating costs of remaining in conflict can be controlled 8. Parties can learn from third party and may be able to resolve future disputes without help 9. Actual resolution to dispute and closure may be achieved
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Advantages of ADR
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1. Parties potentially lose face when third party is called in since the parties may seem incapable of resolving their own fight (this is true when those who are judging the negotiators are others who can publicly criticize them or move to have them replaced) 2. Loss of control of the process (how the negotiation is conducted) or outcome (result of the negotiation) or both depending on the type of third party called in to help
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Disadvantages of ADR
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1. Inquisition: High level of third-party control over outcome and process 2. Arbitration: High level of third-party control over outcome but low level of third-party control over process 3. Mediation/process consultation: Low level of third-party control over outcome but high level of third-party control over process 4. Negotiation: Low level of third party control over outcome and process
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4 Types of third-party involvement
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Each party presents its position to the arbitrator who then makes a ruling on either a single issue or on a package *Ruling may be voluntary or binding *Negotiators have control of process but arbitrator has control of outcome *Most common form of third-party dispute resolution *Recommendation can be arrived at in several ways (one party may be chosen over the other a compromise solution may be recommended) *Used in business conflicts, disputes between business and union workers, labor relations, contracts (usually in public sector) and grievances *When used in formal matters such as grievances arbitrator is usually bound to a clear and strict set of policies
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Arbitration
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1. Clear solution (though it may not benefit one or both parties) 2. Solution may be mandated 3. Arbitrators are usually selected because they are wise, fair, and impartial, and therefore the solution comes from a respected and credible source 4. Costs of prolonging the dispute are avoided
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Advantages of arbritration
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Arbitrators' decisions tend to be consistent with judgments received from _______, making them "judges without robes" *Their decisions are usually governed by public law or contract law
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Courts
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1. Parties relinquish control over shaping the outcomes 2. Parties may not like the outcome and it may impose additional costs 3. If decision is voluntary parties may lose face if they choose not to follow it 4. Decision-acceptance effect 5. Chilling effect 6. Narcotic effect 7. Half-life effect 8. Biasing effect
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Disadvantages of arbitration
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Less commitment to an arbitrated resolution because: 1. Parties did not participate in process that made outcome 2. Recommended settlement may be inferior to what parties preferred *If parties are less committed to an outcome, they will be less likely to implement it *Not as big of a problem in mediation because parties are fully involved in making the decision
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Decision-acceptance effect
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Parties may behave differently in negotiation by taking a hard-line position if they expect the dispute to go arbitration where the arbitrator may split the difference in order to avoid loss from compromise *Solution: Final offer arbitration
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Chilling effect
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Solution to chilling effect where the arbitrator asks the parties to make their best final offer and then arbitrator rules for one side or the other with no split *Forces the parties to make the deal possible because the more extreme the final offer, the less likely the arbitrator may be to rule in favor of it
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Final offer arbitration
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Parties with a history of recurring arbitration tend to lose interest in trying to negotiate, become passive, and grow very dependent on the third party (they become addicted to arbitration) *Often happens when party has a strong-willed constituency and can blame arbitrator for any compromises made in arbritration
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Narcotic effect
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The results of more and more arbitration are less and less satisfaction with the outcomes because the parties have become passive in the process and have less control over the outcomes, making arbitration ritualistic and not effective *Eventually parties refuse to participate
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Half-life effect
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Arbitrators perceived not to be neutral and impartial, but to be biased *Most likely to occur when an arbitrator makes a whole sequence of decisions that favors one side over the other *Parties in strong conflict often try to bias the third party and then reject the third party for being biased *If arbitrators is seen as biased, the parties will move toward selecting another arbitrator who will be neutral or preferably will favor their position
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Biasing effect
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Mediator has control over process but not outcome *Based on established rules and procedures *Objective is to help the parties negotiate more effectively (depends on degree of cooperation of parties and skill of mediator) *Less costly than court *Major concern is to help the parties communicate *Used in labor relations, precursor to arbitration in grievance/contractual negotiations, civil suites, business disputes, international disputes, and increasingly in community disputes *Assumptions: 1. Parties can and will come up with a better solution than one that is invented by a third party 2. Relationship is important and parties want to develop their problem-solving skills
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Mediation
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1. Select mediator 2. Mediator takes active role and invites both sides to meet to set ground rules 3. Mediator takes passive role and meets with each party. In most cases mediator does this with other party in the room unless the parties cannot be candid in front of each other or conflict is about to erupt 4. Parties agree on agenda (key issues to be discussed and order of issues) 5. Parties explore possible solutions (mediator may suggest solutions but cannot impose them) 6. Agreement, which may be made public *Length of stages may vary (ex: in divorce mediation both parties usually meet together as soon as possible rather than having long individual meetings with the mediator)
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Mediation steps
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1. Parties agree to follow a procedure set forth by the mediator 2. Parties agree to listen and respect each other 3. Role of mediator is not to solve dispute but to work with parties to arrive at a negotiated outcome
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Mediation ground rules
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1. Facilitate negotiation process 2. Help parties save face when they need to make concessions 3. Assist in internal disagreements and dealing with constituencies 4. Offer incentives for agreement or negative incentives for noncooperation 5. Maintain control if parties are unable to do largely by controlling the process
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How mediators help
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_________ are taught as early as elementary school the art of mediation which stays with them throughout life
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Children
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1. Mediators need to be seen by the disputants as unbiased or they will not be trusted (it does not matter what the mediators themselves think) 2. Mediators may need some expertise in the field where dispute occurs, though less than what is needed in arbitration (industry-specific knowledge is key to industrial conflicts) 3. Certification of mediation training enhances credibility though not required by law (The Federal Mediation and Conciliation Service of the U.S. Department of Labor certifies mediators. Local groups do as well) 4. Good timing (parties must want help and be willing to compromise. When parties are not willing to compromise such as value-based issues like abortion then mediation and other techniques will likely fail until parties soften their views) 5. Conflict is moderate but not high 6. Conflict is not excessively emotional and polarized 7. High motivation by both parties to settle 8. Parties are committed to follow the process of mediation 9. Resources are not severely limited 10. Issues do not involve a basic conflict of values 11. Power is relatively equal between the parties 12. Mediation is seen as advantageous relative to arbitration or no agreement 13. Bargainers have experience and understand the process of give-and-take and costs of no agreement
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Factors necessary for success in mediation
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60-80% successful *In successful outcomes negotiators tend to be committed to the agreement and that leads to high implementation rate
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Success rate of mediation
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1. Bargainers are inexperienced and assume that if they take a hard line other party will eventually give in 2. There are many issues and parties cannot agree on priorities 3. Parties are strongly committed to their positions and are held to them by an uncompromising constituency 4. There is very strong emotion, passion, and intensity to the conflict 5. A party has an internal conflict 6. The parties differ on major social values 7. The parties differ greatly on their expectations for what is a fair and reasonable settlement 8. Parties' resistance points do not overlap (the most one party will give is still much less than the minimum the other will accept)
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When mediation is unlikely to work
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1. Can be more time consuming than arbitration 2. Mediation is not binding so parties may not commit to settlement 3. Dispute may escalate
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Disadvantages of mediation
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Process that minimizes the liabilities of each type of ADR to obtain better compromises *Pro: Parties may be more willing to modify their positions in mediation *Con: Parties may become lazy and expect arbitration to solve problems
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Mediation followed by arbitration
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1. Be cooperative 2. Give clear information about what is important to you and why 3. Be willing to make concessions or problem-solve *Success of the negotiation is your responsibility and mediator is supposed to assist (not remake) process
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How to assist the mediator
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Serve as a counselor who focuses on the process of negotiation by improving communication, reducing emotionality of the proceedings, and increasing parties' dispute resolution skills with goal of enabling parties to settle their own disputes in the future *Helpful for when relationship between parties is long term *Expertise in areas of conflcit and emotions *Similar to mediators in that he or she helps with process but different in that there is no discussion of specific issues *Used in marital therapy, family therapy, organizational development, team building, and labor-management disputes/international conflict where there are political, ethical, and cultural difficulties
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Process consultant
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1. Interview parties individually 2. Design schedule of structured meetings for the parties
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Steps of process consultant
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1. Severe, polarized disputes over large issues 2. Relationship is short-term and parties have no stake in improving it 3. Issues are fixed (competitive rather than collaborative negotiation) 4. Party's constituency is not supportive of improving the relationship 5. One or both parties are intent on retribution or revenge
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When process consultant is unlikely to work
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Person whose job is to hear and investigate conflicts between employees or between one employee and the system (rules, practices, and policies of the organization) *Trained in problem solving, dispute avoidance/resolution, and negotiation *Goal is to limit and resolve problems quickly and informally *Essential to be impartial so they are often unattached from organizational hierarchy/chain of command and may report directly to CEO *Process: Once contacted he or she engages in confidential fact-finding then informs both sides of their rights and the opportunities for resolving the conflict *May recommend a settlement but usually management is involved in final decision *Main reason to use one is to make sure process is fair and that the individual employees with very little power have a way to get a fair negotiation about their concerns *Pro: Good when power of disputing parties is out of balance and lower employee doesn't want to get fired *Con: May lead to undesired outcome *Can be first step before mediation and arbitration *Often act as change agents
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Ombudsperson (ombud)
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Mangers spend ____% of their time in conflict management
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20
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Manger conflict resolution methods tend to be ____ since most work environments do not have established rules or guidelines for how to mediate a dispute. Most managers do not have formal training settling disputes and many are uncomfortable with conflict. They need to learn some conflict is okay.
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Informal
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1. Manager's tolerance for conflict 2. Time frame (high outcome control methods are used when efficiceny and saving time are high priorities) 3. Personalities of parties involved 4. Objectivity/neutrality of manager 5. Relationship of parties (long-term or short-term) 6. Effect of how this confrontation is resolved on future negotiations 7. Expected ability of the parties to resolve conflicts for themselves in the future 8. Extent of training of the manager in conflict resolution techniques
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Manager style determinants
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1. Inquisitorial/autocratic: Control of process and outcome *Manager makes his own investigation and makes a decision *Most common style *Frequently used when issues are minor, quick decisions are needed, or management needs to implement an unpopular action 2. Arbitration like style: Control of outcome but not process *Listen to both sides but differs from autocratic in that additional information is not usually gathered 3. Mediation like style: Control of process but not outcome *More managers are learning this approach but not everyone uses it because managers traditionally consider outcome more important than process and want control over it 4. Manager does not care: No control of process or outcome *Dispute is ignored or employees told to figure it out *Similar to parent intervening between two arguing children
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Types of manager conflict resolution styles
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1. Select neutral site for the meeting 2. Be empathetic and listen 3. Be assertive (especially about deadlines) 4. Ask for cooperation and be cooperative 5. Ask what parties want you to do to help solve problem 6. Get resolutions in writing 7. Help parties plan for implementation and follow up
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Keys for managers helping employees with conflict
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______% of all civil cases are settled out of court
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95
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About _______ of state court systems require that certain civil complaints be referred to arbitration prior to trial *33 jurisdictions require that family disputes regarding custody and visitation be brought to mediation *U.S. district courts at federal level are increasingly ordering civil cases into mandatory arbitration
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1/2
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Commercial suit with a $200,000 claim will cost parties almost that much in legal fees but mediation would cost about $______ usually shared between the two parties
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2,500
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ADR was not a good solution for a rate-setting dispute with the Public Utilities Commission of Ohio (PUCO) because: 1. Intervention was involuntary-->Low commitment 2. ADR people did not have industry-specific knowledge 3. Time constraint was too tight 4. Resources were constained
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ADR is not always the perfect solution
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______ is specified as the first and preferred method for dispute resolution at NCR
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ADR
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Go to a supervisor, then to a division supervisor, then to a panel of supervisors, and to top management. If one of the parties is a union, fourth step is binding arbitration
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Line authority approach to solving problems
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Purpose of the process is to investigate, review, and resolve disputes using employee peer groups that serve on the panel and execute the process *Used by Northern States Power Company *Pros: Training with role-plays, improved accountability, communication, and problem-solving skills, stop problems before they get bigger, higher productivity and morale because employees feel heard, no retaliation because grievances are checked up on three months after settlemetn *Specific steps: 1. Employee files PGR form and submits copy to HR within 10 days of incident-->Employee submits original form to immediate supervisor who completes meeting with employee within three working days-->Supervisors writes response on form and returns it to employee within two working days-->Employee has two days to decide whether to move to step 2 2. Same as step 1 but with second-level supervisor 3. Employee chooses third-level supervisor or peer panel: Peer panel is randomly chosen from two pools (supervisory and non supervisory) with 5 from same pool as employee and 4 from other pool. Employee discards 2 names from each pool leading to five panelists who then make a binding, not open to appeal decision within 10 working days
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Peer group resolution (PGR)
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Be neutral and project neutrality in all he does *Must ignore any negative energy *Hardest task for mediator
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Most important role of mediator
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11th or 12th hour (crunch time of the negotiation) *Walking the hire wire is living. All else is waiting. (Karl Wallenda) Crunch time is when mediator is "living
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Most stressful time for mediator
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Mediator can be either the most powerful or most powerless room depending on how much power the parties will give him
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How much power mediator has
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A sweet elderly couple broke their turn signal and the repair was more than they could afford so they went to arbitration to see if auto maker would pay for it. Auto maker was very rude, but the part was not defective so the couple was now award money *Lesson: You cannot let the personalities of the parties affect the outcome. You must be neutral as a mediator
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Auto maker story
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Sit alone unless you are working and if you are working with one side let the other side know *Purpose: Maintain credibility
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How to handle idle time as a mediator
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Mediator went home to eat rosemary chicken and came back and ran into chief negotiator for union who was chef. He described the meal but all the other side saw an intense conversation and they drew conclusion that mediator was biased *Lesson: Importance of optics, people will draw conclusions from the slightest unintentional signal, you must project neutrality in all you do as a mediator
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Rosemary chicken story
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1. Project neutrality in all you do 2. Absorb conflict 3. Manage expectations/ reality check 4. Check your conscience at the door (not mediator's job to determine if deal is good or fair) 5. Don't make mediator's proposals 6. Create the atmosphere for an agreement
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Rules for mediators
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Parties' expectations rise in proportion to the time they spend awaiting their ______ _____
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Counterpart's proposal
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Most of the problems with expectations are related to _____ and the accompanying rise in hope
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Time
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Parties in a given industry tend to negotiate agreements that follow the pattern of others negotiated in that same industry (industry pattern) *Once pattern is set, it is rare for someone in that industry to break it
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Pattern bargaining
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Mediators should caution the party outside the earshot of the other party that their ______ are not realistic
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Expectations
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To a mediator, the _______ is only those things to which the parties agree
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Truth
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Mediation is like ____ ______ _____ ________
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American system of jurisprudence
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Mediator noticed that two respected negotiators had agreed on using CPI but had wrong CPI number. Mediator decided it was not his job to comment and it was the negotiators' error *Lesson: Let parties make their own mistake
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CPI story
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Union went on strike and CEO said in newspaper he would give them contract similar to that of major competitor. Union accepted deal, even though chief negotiator of other side said it wasn't a real deal (just idle chit chat by CEO). Mediator knew this but didn't think he should intervene *Lesson: Check your conscience at the door
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Strike story
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__ _____ is really the mediator's best guess of the mid-point between the two parties
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Mediator's proposal
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Mediators almost made a proposal suggesting a pay freeze but company moved first which was good because it turned out mediators did not know what pay freeze met (general wage freeze or ladder wage freeze) *Lesson: Don't make mediator proposals or the lack of clarity will be the fault of the mediator
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Pay freeze story
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Static document dropped on the parties by an impatient mediator that almost always fails
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Typical mediator proposal
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When someone from both sides (with authority to make the deal) has seen it in advance and blessed it *Process: Both sides will still publicly criticize the deal but then they should reluctantly accept it *Possible to let parties critique and tinker with it and make it a malleable process
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One circumstance when mediator should make a proposal
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1. State that settlement/making a deal is inevitable and the sooner the deal is made the better 2. Create a sense of teamwork (can do this physically by making the parties sit next to each other across from the mediator) 3. Defuse tension (humor can improve mood and give common ground such as in Dave Barry article story) 4. Create momentum (create urgency when negotiation is open-ended by imposing a deadline)
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How mediator creates right atmosphere
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____, the natural order of things favors an agreement
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Momentum
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Throw out the clock and begin working around the clock
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Easiest way to create some sense of urgency
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Work will expand to fill the _________ allowed
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Time
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Human nature seems weakest between ________ *However if deal is not signed by time sun is up send parties home for a nap
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3am-4am
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The phrase " less filling versus tastes great" refers to debate of whether mediation is an ___ ___ _ ______
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Art or science
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Mediator does not need to know details as his only job is to facilitate conversation
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Art view of mediation
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Mediator should know as much about industry as the parties as he should check the parties' numbers and offer concrete ideas for solving issues
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Science view of mediation
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Most mediators fall in the ____ of the art/science debate of mediation so mediation is one part art and one part science
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Middle
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Union said difference between positions was $1.2 million but it was only half that much because he accidentally added a $600,000 item twice. Negotiator stepped in and solved problem *Lesson: Mediation is art and science
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Union story
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1. Put things in context/keep level head 2. Float an idea 3. Keep negotiations on track and focused 4. Resource (experience, what did other parties do?) 5. Set pace of negotiation 6. Reality-check you and the other side (do not use mediator as a negotiator because most important result is one the parties make and build a relationship along the way)
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How to use a mediator
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You can have brilliant _______, but if you can't get them across your _____ won't get you anywhere *Former Chrysler Chairman and CEO Lee Iacocca
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Ideas
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To just invent something and have a great idea is a lot of work, but it is ___ ____. [You need to know] how to get people excited *Larry Page, Cofounder of Google Inc.
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Not enough
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Kumar Chandra's problem is that he ____ _____ ___ __
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Can't sell his ideas
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Your ____ depends on how well you sell *Aristotle and Cicero considered idea selling/rhetoric one of the most important skills to learn
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Success
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Bob Bogle convinced Sam Walton to use Walmart as a name by appealing to Walton's cheap side since he didn't have a large ego. He said Walmart was just seven letters and would be cheap to put up on stores *Lesson: Sell your idea by having a specific goal, identified the decision maker and presenting to that person, draw on credibility, appeal to decision maker's core interest, and use knowledge of decision maker as a person
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Walmart story
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______ is necessary to sell ideas *Explains why trying to manipulate other people does not work when you are selling important ideas
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Credibility
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What selling ideas is about (not tricking people)
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Helping people see things you way
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1. Survey your situation 2. Confront the five barriers 3. Make your pitch 4. Secure your commitments
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4 Steps to relationship-based persuasion (woo process)
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__ ___ sold idea of first nonstop flight across the Atlantic Ocean in 1927
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Charles Lindbergh
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1. Negative/ambiguous relationships 2. Poor credibility 3. Communication mismatches 4. Hostile belief systems 5. Conflicting interests (effective sellers should focus on other party's interests) *First two relate to how people see you personally and last three make it harder for people to hear your idea clearly
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5 Barriers to relationship-based persuasion
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Persuasion at work always takes place within a network of _________
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Relationships
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Relationships need to be in place ______ you try to make the sale
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Before
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Network of people who know people who know people *You need one
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Circle of influence
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Gambit that works (when it does) by making a request that the other party is sure to reject (he slams the door in your face) then you back down immediately to a much more modest suggestion which looks so reasonably by comparison with the first one that people are more likely to say okay *Can fail due to injury of credibility *Ex: People raising money for charities get more 10 dollars donations when they ask for 10 dollars after asking for 50 dollars and being rejected than if they ask first for 10 dollars
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Door in the face
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Important part of credibility *According to Aristotle it is the antidote to becoming overly focused and the most important persuasion tool *J.P. Morgan says this cannot be bought
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Character (ethos)
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Story of Jeffrey Katzenberg (founder of Dreamworks) is about _____ _____ because he got carried away with his own message and forgot to see it from his audience's point of view *He forgot he was speaking to stock analysts once his company went public and talked up Madagascar but it only hit expectations and did not exceed them so stock dipped
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Communication mismatch
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He convinced people to man his artillery battery out in the open by appealing to their pride *Lesson: Sell ideas by appealing to other party's interests
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Napoleon story
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The ______ is especially important in selling ideas because there are few impulse buys in the market of ideas since careful deliberation is the norm *Rationality is critical in the idea-buying process but not in the way you expect. People are arrive at better decisions when they load up on as much data and reflection as possible, and then set all that aside and decide with their guts feelings *Drive deep into the data then trust your gut- Andy Grover (former CEO of Intel) *The final act of business judgment is...intuitive"- Alfred Sloan (CEO of GM in the 1920s) *Instead of putting one fact together with another, the best managers grasp a general ideas as a whole...in making decisions. This is better than one can get only through careful reasoning-Akio Mirita (cofounder of Sony Corporation)
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Pitch
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According to Malcolm Gladwell's book Blink, the final act of deciding seems to reside in the realm of ________ because the unconscious (which is source of most new and creative ideas) does better when conscious mind is processing a lot of data
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Intituion
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People must be reasonable and ______
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Rationalizing
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So convenient a thing it is to be a _____ creature, since it enables one to find or make a Reason for everything one has a mind to do *Benjamin Franklin
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Reasonable
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J.P. Morgan said everyone has two reasons for a decision: a good reason and a _____ reason
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Real
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The unconscious mind of your audience will be making the _____ decision on your idea
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Final
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Memo written by Yahoo executive Brad Garlinghouse in the Wall Street Journal to pitch ideas for changing Yahoo's business strategy *Worked because it spoke it "Yahoo-ese"and presented its thesis in a compelling way by being addressed to the right people, establishing his credibility, embracing Yahoo culture, explaining the problem, identifying its causes, and arguing vigorously *Leaking to Wall Street Journal was a political move
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Peanut Butter Manifesto
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Of all the modes of influence _____ is the one that chiefly distinguishes the behavior individuals as participants in organizations, from their behavior outside such organizations. It is _________ that gives an organization its formal structure *Herbert A. Simon
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Authority
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_____ __ serves as the basis for more influence moves at work than any other influence foundation *Authority is good and gives you credibility but it is not enough to sell ideas because big ideas always have multiple stakeholders who also have authority
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Formal authority
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An average of _____ people inside an organization are involved in the approval of most important new ideas
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20
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Relatively simply ideas require input and approval from an average of ___ people
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8
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People in high positions possess _______ if and only if the people in the lower positions cede (implicitly or explicitly) to them *People who forget they have only as much ______ as others are willing to give them are the ones who make the most mistakes in selling ideas
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Authority
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A bank president said he was a _____
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Salesman
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The _____ you go in corporate hierarchy, the less position alone determines what ideas get adopted and the more relationship and persuasion skills determine what gets done
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Higher
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Creating a ______ built on the foundation of selling ideas, rather than authority, is a competitive advantage for firms that can do it
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Culture
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According to GM leader Alfred Sloan in My Years with General Motors, the selling approach provides an important __ against ill-considered decisions
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Safeguard
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CEO Roberto Goizueta was able to introduce New Coke in 1985 unilaterally and it was a disaster because he did not listen to the customer and Coke lacked a culture of selling ideas which prevented people from stopping him
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New Coke Story
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1. Forget and polish your ideas 2. Map the decision process you face by understanding the social networks within the organization 3. Assess your persuasion styles 4. Confirm your own level of passion for the proposal
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How to survey the situation
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Transform barriers into _______
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Assets
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1. Present solid evidence and arguments 2. Use devices to give your idea a personal touch
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How to make your pitch
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Secure your _________ by dealing with politics at both the individual level and within the organization
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Commitment
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1. Preparing your strategy 2. Exchanging information 3. Opening and making concessions 4. Closing and gaining commitment *People in different cultures will spend different amount of time on each step (Westerners spend most time on 3 and non-Westerners spend most time on 2 to build relationships)
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4 Steps of negotiation process
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In all negotiations of difficulty, a man may not look to sow or reap at once, but must _____ the business and so ripen it by degree *Sir Francis Bacon (1597)
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Prepare
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For tough meat, ____ teeth *Turkish folk saying
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Sharp
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1. Bargaining style 2. Goals/expectations 3. Authoritative standards/norms 4. Relationships 5. Other party's interests 6. Leverage
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6 Foundations of negotiation
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Attitudes derived from family, gender, culture, and experience
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Psychological basis of bargaining style
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Beliefs about what is possible and what you deserve
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Psychological basis of goals and expectations
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Consistency principle and deference to authority
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Psychological basis of authoritative standards and norms
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Reciprocity principle
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Psychological basis of relationships
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Self-esteem and self-interest
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Psychological basis of the other party's interests
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Aversion to loss
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Psychological basis of leverage
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Negotiators are like _____
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Dancers
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1. Balanced concerns 2. Relationships 3. Transactions 4. Tacit coordination
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4 Types of bargaining situations (situational matrix)
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Low perceived conflict over stakes and low perceived importance of future relationship *Do not call for negotiation so much as tactful avoidance of conflict *Best strategies: Avoidance, accomodation, or compromise *Ex: Highway intersection or airplane seating
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Tacit coordination
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High perceived conflict over stakes and low perceived importance of future relationship *Usually creates need to form a working relationship *Leverage counts *Best strategies: Competition, problem solving, or compromise *Ex: Divorce, house sale, market transaction
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Transactions
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High perceived conflict over stakes and high perceived importance of future relationship between parties *Best strategies: Problem solving or compromise *Ex: Business partnership, joint venture, merger
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Balanced concerns
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Low perceived conflict over stakes and high perceived importance of future relationship *Best strategies: Accommodation, problem solving, or compromise *Rapport is most important aspect of negotiation process *Ex: Marriage, friendship, or work team
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Relationships
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Construct a specific plan of action for the situation you face
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Goal of preparation
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1. Assess the situation 2. Match situation, strategy and style 3. Examine the situation from the other party's point of view 4. Decide how to communicate (communicate with agent? If communicate by self in what medium?)
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Preparation steps
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Story that illustrates a transaction *1901: J.P. Morgan wanted to buy area of land rich in iron deposits called Mesabi ore fields. John D. Rockefeller senior owned it and did not like Morgan and did not negotiate. Eventually, he allowed John D. Rockefeller junior to negotiate with J.P. Morgan. Morgan invited Junior to his impressive office and at first ignored him. He asked Junior for a price but then Junior said Morgan made the meeting so he should make offer. Junior said they should get go-between so they got Henry Clay Frick, trusted by all, to be go-between. Frick worked with Rockefeller to come up with 80 million price, which Morgan accepted even though he only wanted to pay 75 million. It turned out being a good deal for him *Lesson: Rapport may be bypassed but only for a purpose
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J.P. Morgan and John Rockefeller Story
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Story that illustrates a relationship *Institute for Advanced Study opened in 1930s in Princeton and needed researchers. New director, Abraham Flexner, approached Albert Einstein to join and asked him what salary he wanted. Einstein said $3,000 per year unless Flexner thought he could live on less. Flexner then gave him more than triple that number, and it was a successful deal for all
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Albert Einstein story
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Story that illustrates balanced concerns *1722: Ben moved in with his brother James to learn printing. James paid monthly fee for them to eat at a boardinghouse, but Ben started refusing meat at his meals. Boardinghouse complained about making special means for him. Ben proposed deal that he would make his own meals if James would give him half of what he would pay the boardinghouse to feed them. Everyone ended up being happy
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Benjamin Franklin meat deal story
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A strategy useful in every situation, but is usually the second or third best choice so it is better to use as time runs out than as an all-purpose strategy
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Compromise
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______ ______ ______ see labor negotiations as balanced concerns, unlike their rank and file members so they have to engage in theatrical hard ball tactics to appease their constituency
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Labor union negotiations
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Professor Shell sold his house and used face-to-face and then the email medium so both sides could have time making responses *Only problem was when lawyer came into the picture but this was fixed with a few phone calls
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House sale story
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Do not use ______ unless they deliver more value than cost *Best reason for using ______ is economic in that they can sometimes get a better deal than you could get yourself *_____ can steer parties past hidden risks and may servce as gatekeepers to entire industries such as the publishing, entertainment, and sports industries *_____ are valuable when there are imbalances in bargaining styles or expertise
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Agents
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*Fee they charge (negotiate this if possible) *Agent's own agenda (in real estate listing agent is paid on commission and works for the seller which means he'd rather close many deals fast than slowly maximize each deal and may negotiate to to your bottom line sooner. In fact, real estate agents keep their homes on the market longer than yours. Opposite is true of agents paid by the hour who will try to drag out engagement as long as possible) *Bad feelings *Miscommunication (ask for direct meeting with agent present or put your message in writing) *Self-serving bias (agents suffer from overconfidence in their own abilities-->get second opinions whenever possible) *Time (agents create delays; If God had an agent, He would still be creating the Earth)
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Costs of agents
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The ____negotiation involves a face-to-face encounter
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Traditional
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Gives everyone the maximum bandwidth for communication (important because we convey over half of our meaning nonverbally) *Least convenient
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Face-to-face meetings
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Second widest communication channel after face-to-face meetings *Increasing in use as geopolitical risks such as terrorism rise and communication technology improves
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Video conferencing
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1. Face-to-face 2. Video conferencing 3. Telephone 4. Email/instant messaging
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Communication mediums in order of most bandwidth and least convenient
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*Convenience *Time to consider one's next move *Clear record of proposals *Ease in conveying large amounts of data *Leveling of the playing field between negotiators with different levels of seniority and expertise *Power to quickly mobilize large coalitions of like-minded people using group email lists *Works well for avoiders
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Benefits of email
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*Increased risk of impasse (94% of MBAs in schmoozing group made deal but only 70% of MBAs in strictly business group made deal over email) *Careless clicking *Delay (the narrower the pipeline of communication, the longer it takes to get information through it) *Polarized decisions in groups (decisions tend to be more extreme over email than inn face-to-face meetings)
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Disadvantages of email
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1. Think before you click 2. Go out of your way to engage in small talk 3. Make periodic phone calls and have a few meetings with your counterparts
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Advice for email negotiations
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_______ negotiators have an advantage when using IM (instant messaging) because their opponents find themselves at a loss for words in the rapid-fire IM environment and tend to concede points. So IM calls for extra care, preparation, and prudence than email since it is faster paced than email
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Competitive
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The single ______ important step in becoming an effective negotiator is acquiring a habit of preparation
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Most
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Failing to prepare is preparing to ____ *John Wooden (UCLA basketball coach)
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Fail
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It is ____ to sound a person with whom one deals...than to fall upon the point at first *Sir Francis Bacon (1597)
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Better
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Who is without knowledge? He who asks no _____ *Fulfulde folk saying
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Questions
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The Arusha people of Tanzania use this expression to describe the opening phase of negotiations in which the parties exchange their initial demands and counterdemands *No one takes these opening demands seriously. They are a way to fix the agenda, test expectations, and establish legitimacy of their positions. These demands are later forgotten through tolerant amnesia
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Talking to the mountain
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1. Development of rapport between individual negotiators (first duty of information-exchange) 2. Surfacing of underlying issues, interests, and perceptions (without giving up anything) 3. Signaling expectations and leverage *First opportunity to explore the Six Foundations in action
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Purpose of information exchange
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Armand Hammer (CEO of Occidental Petroleum) distinguished his bid to buy valuable Libyan oil concession from Libya in the mid-1960s by presenting it in Arab rather than a Western manner. He won the contract *Lesson: Build rapport
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Libyan oil concession story
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Find some common interest, passion, or background experience unrelated to the negotiation that you share with the other negotiatiar
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How to build rapport
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Steve Ross (who later founded Time Warner) helped a small car rental company negotiate a deal with Caesar Kimmel for parking spaces by bonding with Kimmel over horse racing *Lesson: Build rapport by seeking similarities (similarity principle)
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Steve Ross story
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We trust others a little more when we see them as familiar or similar to us, even if similarity is superficial
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Similarity principle (liking rule)
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*Establishing rapport will not and should not gain one side a significant bargaining advantage over the other *Over or underdoing it
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Rapport pitfalls
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Get the other party to think you as a unique person, not just a face coming to ask for something
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Goal of rapport
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Early 1980s Intel negotiated with Japanese company. Intel's general counsel, Roger Borovoy made comment in U.S. that "Negotiating with the Japanese is like negotiating with the Devil." After newspaper story was published negotiation became much more difficult. Intel now has a muzzle reward for individuals such as Borovoy for ill-timed remarks *Lesson: Rapport is important and everyone in a large organization is on the bargaining team, not just the people at the bargaining table
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Intel story
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The more ____ the personal acknowledgement is, the more effective it will be
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Genuine
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The _____ the stakes the more questions you should ask to gauge the other party's interests
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Higher
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1976: Sidney Sheinberg of MCA and Universal Pictures wants to stop production of Betamax (later called VCR) invented by Sony. Sony and MCA worked together on projects. Sheinberg threatened to sue Sony unless product was dropped and Morita was shocked because he thought the companies worked together. He said "When we shake hands with one hand, we will not hit you with the other hand." VCR ended up coming out despite lawsuit and everyone made money *Three mistakes Sheinberg made: 1. He thought he could gain advantage by surprising an unprepared opponent. 2. He did not ask questions and listen. 3. He ignored a potential cross-cultural difference (lawsuits are common in America but not in Japan) *Lesson: Friends don't sue
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Akio Morita VCR story
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You usually do _ when the other side is prepared to deal with the real issues instead of them being tricked
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Better
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1. Asking questions: *Skilled negotiators: 21.3% *Average negotiators: 9.6% 2. Testing for understanding *Skilled negotiators: 9.7% *Average negotiators: 4.1% 3. Summarizing: *Skilled negotiators: 7.5% *Average negotiators: 4.2% 4. Total: *Skilled negotiators: 38.5% *Average negotiators: 17.9% *Study by Neil Rackham and John Carlisle *Results confirmed by study of lawyers and study of bankers which said willingness to prepare (#1), knowledge of subject matter being negotiated/ability to think clearly under pressure (#2) and ability to express one's thoughts/listening skill (#3) were most important skills
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Information-gathering behavior as a percentage of all behavior observed
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Skilled negotiators focus more on receiving, as opposed to delivering, _______ *Probe first, discuss later
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Information
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Information, especially information about what people want is ______
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Power
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Every _____ that the other side wants or needs an agreement is my leverage-provided that I know those _____ *Bob Woolf
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Reason
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Negotiators failed to correctly identify shared priorities _____% of the time, mostly because of bluffing *20% of negotiators will end up agreeing to options that neither side wanted due to backfired bluffs
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50
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Realize that it is a strategic process and take it slowly *It almost never hurts to talk less
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Best way to manage flow of information
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Early, clearly, and credibly
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Best way to deliver bad news
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Your ________ is a matter of perception as much as reality
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Leverage
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*You have strong leverage: 1. Firm: Make confident demands and credible threats; display your alternatives and leave the decision up to the other party (Morita story, but went wrong. Should have been more tactfully) 2. Flexible: Show the other party you are invested in the relationship; be generous (ex: J.P. Morgan giving two checks to Andrew Carnegie because of mistake) *You have weak leverage: 1. Firm: Emphasize the uncertain future (appeal to other party's desire to minimize risk by closing deal now) and bluff (act strong when you are not, high-risk strategy) -Emphasizing the uncertain future is usually the better way to go 2. Soft: Acknowledge the other party's power and stress the potential gains from future cooperation (ex: HBJ watch story); appeal to the other party's sympathy (what would they do in your position?)
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How to signal leverage
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The long they keep you _______, the more they want the deal *Leslie H. Wexner
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Waiting
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Information exchange process is first stage of the _____ phase of negotiations *Should be handled differently in different situations (the more the stakes matter relative to the relationship, the more strategic the parties are likely to be)
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Interactive
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One side makes a concrete plausible opening offer that requires a reciprocal response
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When information exchange has ended
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Life cannot subsist in society but by reciprocal ________ *Samuel Johnson
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Concessions
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Most researched part of negotiation process
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Opening and making concessions
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Good tactics depend on the ________
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Situation
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Chandler opened and said he wanted $150 per week for salary (he knew nothing about movie business) but the other side was willing to pay $720 a week. Since the other side valued the relationship they were willing to start over *Lesson: Be careful about opening
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Chandler story
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Beatles manager Brian Epstein (he knew nothing about movie business) was negotiating Beatles financial share of A Hard Day's Night. He opened and got 7.5% of the movies profit but the other side was willing to give up 25% *Lesson: Be careful about openning
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Beatles story
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The never open rule is not always _______ advice *It depends on how much information you have
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Good
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______ _____ if you do not know the market value of what you are buying or selling
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Don't open
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If you are well informed about the bargaining range then you gain important ________ from opening *Why: 1. By naming the first number you have a chance to set the zone of realistic expectations for the deal and force the other side to rethink its goals 2. Anchor and adjustment effect
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Advantage
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Human tendency to be affected by first impression numbers thrown into our field of vision. We tend to make adjustments from these often arbitrary reference points *Ex: People who see 8*7*6*5*4*3*2*1 think product is higher than people who see 1*2*3*4*5*6*7*8 even though it is the same product
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Anchor and adjustment effect
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Open if you think your information about market value is as good or better than your counterpart's. Otherwise guard against the anchor effect and ask the other party to open
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When to open
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Best _______ against making a mistake at the opening is negotiating with someone who cares about his or her relationship with you
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Protection
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*If you are in a relationship situation a fair or accommodating opening is the right move *If you are in a transaction and have some leverage you should open optimistically (hard-line bargaining strategy which opening high and conceding slowly is best approach to transactional bargaining especially if direct communication between the parties is limited)
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When to open optimistically or reasonably
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The highest or lowest number for which there is a supporting standard or argument enabling you to make a presentable (not necessarily the best) case *Different from an outrageous offer because an outrageous offer has no justification *In some cultures such as South America, Middle East, and Africa, anything other than a ________ _____ _____ is a serious social mistake and bargaining blunder because bargaining is a form of recreation in these places *Take advantage of contrast principle and norm of reciprocity
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Optimistic first offer
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An optimistic (but not outrageous) opening sets the other party up to feel both relief and satisfaction (and thus more willing to say yes) when the realistic settlement range comes into view *Explains add-on warranty sales
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Contrast principle
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1. When you lack leverage 2. When the other side won't bargain 3. When it's more than just a (bad to use optimistic opening for balanced concerns)
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When optimistic opening will not work
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Wayne Huizenga always opens within 5-10% of final price he is willing to pay because he is not a haggler and he doesn't want to insult a business owner's pride when trying to buy their business by lowballing them
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Wayne Huizenga story
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1990s American automobile dealers set no haggle one-low-price selling policies for new cars but it was a disaster because only about 15% of Americans hate to haggle, people want to use bargaining power, and people like having satisfaction talking about the great deals they made *Lesson:People receiving concessions often feel better about the bargaining process than people who get a single firm fair price even when they end up paying more than they otherwise might
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Car dealer story
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People receiving ________ often feel better about the bargaining process than people who get a single firm fair price even when they end up paying more than they otherwise might *Starting high than gradually conceding to moderate point is more effective (higher level of satisfaction from other side and higher money made per transaction) than starting high then refusing to move and starting moderately then refusing to move
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Concessions
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Concessions are the language of _____ because they tell the other party you accept the legitimacy of their demands
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Cooperation
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Don't worry about it. Just solve the problem and go first if you have to
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Concession strategy for tacit coordination
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Accomodation *Goal is to find out what the other party wants and give it to him with interest. Money is not the issue *If accommodation is not possible do self-sacrificing compromise *Competitive people should get help from other people to do this. For people dealing with competitive people keep your humor, accomodate, and consider stop dealing within the person *Ex: Einstein story
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Concession strategy for relationships
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Firm concession strategy/ classic haggling/ progressively smaller concessions *Hagglers' concessions initially converge on their expectation levels (not bottom lines) because declining size of hagglers' concessions sends a powerful signal that they are getting to a resistance point. They want you to think that their expectations level is their bottom line which a bluff. If this happens keep pressing and they will make concessions to actual bottom line *Do not make big concessions too early because they can confuse the other side by showing that you really want the deal (which has leverage implications, leading the other side to a higher expectation) and that the issues you conceded you were not important and you get 0 credit for the concession (concession devaluation)
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Concession strategy for transactions
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Concessions given too easily or early are not valued and are given 0 credit *What we obtain too cheaply, we esteem too lightly
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Concession devaluation
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If _____ issues are on the table, concession making in high-stakes negotiations often takes the form of issue trading and package bargaining *Classic hagglers will attack each issue one at a time using distributive procedure but this leads to a higher risk of impasse than issue trading
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Many
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Dividing the pie/simple haggling
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Distributive bargaining
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More complex process of trading off between issues or making the pie larger *Done by identifying what is most important to each side and logrolling (accommodating each other's most important interests and priorities in exchange for reciprocal accommodation) *By dealing with entire packages and agreeing that no issued is closed until all issues have been decided, both parties retain a high degree of flexibility (if then formula to make concessions) *More skillful than haggling but no less competitive
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Integrative bargaining
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Start high and concede slowly
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Concession rule for haggling
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Make big moves on your little (less important) issues and little moves on your big (most important issues)
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Concession rule for integrative bargianing
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Goal is to address as many priorities as possible, make sure that each side gets its fair share, and maintain good working relationship *All trades should be reciprocal *Use high expectations *Use conditional if...then formulation for concession making and concede on less important issues first *Try proposing several different packages at the same time and have the other side identify what it prefers and maybe adjust packages *Be creative *Genuine conflict may help energize collaborative problem-solving process in a Balanced Concerns situation
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Concession strategy for balanced concerns
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Other side's representative tells you that your demands sound reasonable to her but that someone who isn't there would never agree *Good guy based off similarity principle *Bad guy takes over at opening *Works because of conflict effect *Way to overcome: Name the tactic publicly at the table and demand clarification on the issue of authority. Fight fire with fire. If bad guy is a lawyer or adviser throw him out and let the deal makers take over from the deal breakers
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Good guy/bad guy routine
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1. Situation 2. Leverage 3. Style (yours and your counterpart)
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3 Determinants of strategy and tactics
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As your leverage decreases, your need to soften your approach ______. And as your leverage _________ you need to accommodate decrees, regardless of the situation you are in
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Rises
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Make every _______ clear and plain that none may afterwards complain *English rhyme
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Bargain
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The ___ is not he who begins but he who finishes *Slovakian folk saying
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Master
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*Transactions: 1. Should I open: When in doubt, don't. But OK if you have good information 2. How to open: Optimistically (highest or lowest figure supported by presentable argument) 3. Concession strategy: Firmness (concede slowly in diminishing amounts toward expectation level) *Balanced concerns: 1. Should I open: When in doubt, don't. But OK if you have good information 2. How to open: Fairly (highest or lowest figure supported by solid argument) 3. Concession strategy: Big moves on little issues, little moves on big issues, brainstorm options, present several packages at once *Relationships: 1. Should I open: Yes 2. How to open: Generously 3. Concession strategy: Accommodation or fair compromise *Tacit coordination: 1. Should I open: Yes, but avoid conflict if possible 2. How to open: Do whatever if takes to solve the problem 3. Concession strategy: Accomodation
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Opening and concession-making summary
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Splitting the difference, walkouts, ultimatiums
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Closing gambits
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1988 sale of RJR Nabisco detailed in Barbarians at the Gate *RJR chairman Ross Johnson set sale in motion by proposing leveraged buyout (LBO). Sale came down to Johnson and Shearson vs. Henry Karvis of Kohlber Kravis Roverts (KKR). KKR gave RJR 30 minutes to decide on offer. Johnson also made close offer but its value was uncertain so time was needed to analyze it. KKR gave extension but at rate of $1M per minute. KKR made another bid and won deal, though they likely paid too much *Lesson: Scarcity effect and overcommitment *Example of a transaction
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Calling the barbarians story
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1. Scarcity effect 2. Overcommitment
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2 Closing factors
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Human tendency to want things more when we think the supply is running out *Appeal to this effect starting at beginning of information exchange stage *Most common at end of negotiation *Scarcity enhances the value of anything that can be possessed, is useful to its possessor, and its transferable from one person to another *Can be caused by competition, walkouts, or time running out (deadline or exploding offers) *Doubles if a credible deadline combines in the other party's mind with scarcity based on high demand (concessions skyrocket in amount and frequency when this happens) *Emotional response (not rational) *Used to create urgency *Matter of judgement whether to yield to effect or call a bluff *Ex: People rush to the store to buy milk when a storm is coming
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Scarcity effect
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________ are common, especially in transactions, and work because they trigger the scarcity effect
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Bluffs
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Create the sense that time is running out on the opportunity *Deadlines are most effective when they are linked to events in the outside world that the parties do not control (ex: regulatory filing deadline)
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Goal of a deadline
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Time limits set on certain elements of an existing offer which once time runs out explodes leaving a less attractive offer on the table *Ex: Many employment offers
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Exploding offer
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Donald Trump has walked out of deals so often he has this name for his style *Wayne Huizenga also walks out on many deals
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Trump walkout
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Derives from our human desire to avoid admitting failure or accepting loss when we have invested heavily in a prior course of action or decision *The more time someone invests in an initially sensible activity, the more committed he or she becomes to seeing through, even though the decision may no longer make sense *Can happen spontaneously even when other side is acting in good faith *Best antidote is to monitor your commitment and ask yourslf if the other party is as invested as you are *Ex: If you stand in line for 45 min you are more likely to stand in line for another 45 min than if you only stood in line for a few minutes even though additional waiting time is the same
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Overcommitment
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Explains why people play slot machines after losing and why inexperienced investors won't sell losing stocks *As we invest increasingly significant amounts of time, energy, and other resources in the actual negotiation process, we become more committed
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Loss aversion
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Modest requests of small favors just before a deal closes *Works because people do not want to spoil deal over small items *Nibblers can add 3-5% value to their deal over a year *If you know you are deadling with a nibbler hold somethng to the end to give them. If you do not know and they end up being a nibbler, do not respond sympathetically. At the very least demand reciprocal concessions *Explained by overcommitment and contrast effect
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Nibble
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_____ closing techniques are the rule when the relationship matters *Goal is to assure the other party of your goodwill * Accommodate, then close quickly and amiably
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Softer
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By far the _____ number of our negotiations relate to people and firms with which we have ongoing relationships
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Largest
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Leave the other side feeling good but be careful to achieve your fair share of the substantive benefits from the deal
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Closing in balanced concenrs
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Most likely settlement point in any given transaction, especially for people who favor compromise *Good when the relationship is important *Popular because it appears to our sense of fairness/reciprocity, simple/easy to understand, and quick *2 reasons not to split the difference: 1. Midpoint may not be fair to your side if you opened at a reasonable price and other side opened at an aggressive one 2. May leave additional, creative options on the table *Alternative: Obtain a neutral valuation or appraisal nominated by each party and split the difference bewteen those; also postsettlement settlement
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Splitting the difference
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Approach by Howard Raiffa where the parties reach an agreement that works for everyone then agree to continue searching for trade-offs that may make at least one side better off without making any side worse off *Hard to implement in practice because: 1. People are tired after they are done negotiating 2. People change their preferences too quickly for this to have time to work 3. Worry that other side will back out of original deal because of what happened in postsettlement settlement process
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Postsettlement settlement
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A no deal is sometimes the _____ answer because a no deal is better than a bad deal
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Right
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1969 two negotiators respecting U.N. command (James B. Knapp) and North Korea (General Yi Chhon Sun) were called to meet by North Korea. Tradition was that neither side is allowed to leave unless side the calls the meeting ends meeting. Yi left without saying anything and Knapp said meeting was over *Lesson: No deal was a mistake here and the worst impasses are the products of emotional escalation that builds on itself
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Korean war story
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______ way to overcome impasse is to leave yourself a back door through which to return to the table when you get up to leave it *Use words such as "at this time" *Consider thinking of ways to let other side back in so he does not lose face (build him a golden bridge to return to table by forgetting his last ultimatum)
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Easiest
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When miscommunication is the problem an ____ may be all that is needed to jump-start negotiations otherwise new negotiators may be needed
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Apology
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Professional baseball lost nearly two full seasons in the 1990s because of an impasse in negotiations between the players' union and the club owners. Breakthrough came when new negotiator Randy Levine was hired and broke the dam of mistrust. He banned the press in order to stop public commitments. *Lesson: Public commitments can be problematic and sometimes new negotiator is necessary to restart negotiation
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Baseball story
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The ______impasses are the products of emotional escalation that builds on itself *Solution: Small step procedure: one side needs to make a very small, visible move in the other side's direction, then wait for reciprocation
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Worst
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Way to overcome impasses where one side needs to make a very small, visible move in the other side's direction, then wait for reciprocation *Works by restarting norm of reciprocity Ex: Anwar Sadat (Egypt's late prime minister) used the technique to deescalate the Arab-Israeli conflict when he flew to Jerusalem in 1977 because simply getting off a plane in Israel was considered a small step. eventually led to Camp David peace accords and Israel's return of Sinai Peninsula to Egypt; also M&M story (get one M&M for each concession, or two for large concessions)
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GRIT (small step procedure, graduated and reciprocated initiatives in tension reduction)
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When parties reach an _____ it is usually because each sees the other's demands as leaving it below its legitimate expectations *Frame of reference must be changed to make process and impasse must last long enough to allow this change to happen
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Impasse
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If all else fails in resolving an impasse, you may need to call in a neutral _____ _______; otherwise parties may have to go to court to resolve dispute
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Third party
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To secure commitment, not merely agreement *Different kinds of commitment are necessary for different kinds of nogiations Ex: Discover and Morgan Stanley Group included provision in their deal that one would have to pay the other if one backed out and Doug Flutie's agent required the deal be announced immediately to the press
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Goal of all negotiations
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Theresa ran a volunteer organization that took children out on Saturdays. Adult volunteers often failed to show up after saying they would. To fix the commitment problem she gave each adult volunteer one specific thing to bring. Now that they had a concrete image of what their volunteering meant they were more likely to go *Lesson: Secure commitment through accountability
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Theresa story
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The big _____ between agreements and genuine commitments is the risk of loss faced by parties for nonperformance
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Difference
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1. Social ritual: How commitment process begins in virtually every negotiation (ex: handshake) 2. Public announcement 3. Accountability: Promisor's personal reputation is at risk if his performance falls short (ex: put deal in writing, which also gains strength because of consistency principle) 4. Simultaneous exchange: Exchange good and money at the same time
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4 degrees of commitment
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Most ______ agreements are legally enforceable but can be hard to provide in court *Exceptions: Must be in writing and signed by the party against whom performance in sought 1. Good worth over $50 2. Multiyear contract 3. Contract involving real estate
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Oral
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The ____ is a place set apart where people may deceive each other *Anacharsis (600 B.C.)
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Market
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Most people I play _ with I trust, but I still want to count the ____John K O'Loughlin (Allstate Insurance Company)
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Cards
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Darrell Sifford, a Philadelphia newspaper columnist, haggled for a globe and _____ about the price he saw it for in a discount catalog. He ended up getting the price he wanted. What he did may have been unethical *Not fraud *Stretching the truth was the way to play the game *Pragmatist and Poker Schools would say this was ethical, Idealist School would not
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Lied
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According to a study done in the 1990s on Harvard MBAs, students were quite _____with traditional competitive bargaining tactics, including bluffing about bottom lines, opening demands, time constraints, promises of future relationships, and other offers
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Comfortable
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Your personal beliefs about ethics come with a ___ _ since the stricter your ethical standards, the higher the financial cost you must be willing to pay to uphold them in any given transaction, and the lower your ethical standards the higher the reputation costs you will suffer
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Price tag
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Obeying the law is the ______ standard of ethics
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Minimum
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American law disclaims any general duty of ___ ____ in negotiation of commercial agreements
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Good faith
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1. Knowing (can include reckless disregard for truth) 2. Misrepresentation of a (usually positive but can be affirmative/negative) 3. Material (not about bottom lines) 4. Fact 5. On which the victim reasonably relies 6. Causing damage (quantifiable and economic)
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6 Elements of fraud
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Car deal commits __ when he resets a car odometer and sells one of his company cars as if it were brand new
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Fraud
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Avoid _________ by "be silent and be safe" unless there are affirmative disclosure duties
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Misrepresentation
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1. When the negotiator makes a partial disclosure that is or becomes misleading in light of all the facts 2. When the parties stand in a fiduciary relationship to each other 3. When the nondisclosing party has vital information about the transaction not accessible to the other side (greater duty for sellers than buyers) 4. When special codified disclosure duties, such as those regarding contracts of insurance or public offerings of securities apply *Best test is one of conscience and fairness
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4 Affirmative disclosure duties
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Bluffing about ____ ____ can be helpful because it allows the parties to assert the legitimacy of their preferences and set the boundaries of the bargaining range without incurring a risk of loss. It also is a test of the other side's commitment to their expressed preferences
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Bottom lines
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Lying about ______ may or may not be fraud depending on the relative power of the negotiators (unlikely to be fraud in cases of equals) *Buyer lying about getting something somewhere cheaper is usually not fraud *Landlord lying about having another tenant ready to pay rent increase when there really is no other tenant is fraud *Real estate agent lying about having another buyer willing to pay full listing price on same day when there really isn't one is fraud
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Alternatives
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Usually false _____ cannot be considered fraud, but not always *Touchstone of law of fraud is not whether the statement at issue was one of pure fact but whether the statement succeeded in concealing a set of facts the negotiator preferred to keep out of sight
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Opinions
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Lies regarding intention *Key element is proof that the speaker knew he could not live up to his promise at the time the promise was made. Also important that promise be material
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Promissory fraud
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Lies are a feature of everyday social life in _________ culture
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Every
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____ come first, not last
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Ethics
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Negotiate consistently, using a thoughtful set of personal values that could be explained and defended to others *One of the four most effective factors for a negotiator
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Personal integrity
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Nearly everyone is sincerely convinced that they are acting ____ most of the time, whereas they often think others are acting either naively or unethically
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Ethically
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1. Poker School 2. Idealist School 3. Pragmatist School
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3 Schools of bargaining ethics
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Negotiating is a game with rules defined by the law *Any action within the law is ethical and any action outside hte law is unethical *Modern founder: Albert Z. Carr who wrote Business as a Game *Before lying ask if lie can be easily found out and if it is the best way to gain leverage *3 Problems: 1. Presumes that everyone treats bargaining as a game but research disagrees since idealists and pragmatists don't consider it a game (____ ____ still says its okay to play game with these people) 2. Everyone is supposed to know the rules code but rules differ around the world and by industry 3. Law is not certain
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Poker School
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Do the right thing even if it hurts *Bargaining is an aspect of social life (not a special activity with its own rules) *Use same ethics that apply at home *Lies are never ethical *Can do some deception by not answering questions but prefer not to, even if some advantage will be lost *Draws its strength from philosophy and religion (Immanuel Kant who said you should not lie or treat people merely as means) *Tactics: 1. Refuse to discuss any offer (must make it a policy) 2. Refuse to answer question 3. Answer honestly *School Professor Shell is in *Problem: Their standards sometimes make it difficult to proceed in a realistic way at the bargaining table (skepticism is needed)
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Idealist School
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What goes around comes around *Views deception as necessary (like Poker School) but not if there is a serious, practical alternative (unlike Poker School) *Concern for the potential negative effects of deceptive conduct on present and future relationships (lying and other tactics are wrong if they cost the user more in the long run than they gain in the short run) *Pragmatist will lie more than the idealist will however if there is even a remote chance of a lie coming back to haunt to you, you should not do it *False justifications and rationales are acceptable *More flexible with blocking techniques (ex: Saying I don't know when you really know): 1. Declare the question out of bounds 2. Answer a different question 3. Dodge the question 4. Ask a question of your own 5. Change the subject
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Pragmatist School
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Aim as high as you can since people tend to slip downwards than upwards in regard to ethics
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Shell's advice on ethics
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Realistic, attractive, difficult-to-check (but false) alternatives or authoritative (but false) supporting standards because negotiators always attempt to disclose a good hand if they one (unlike poker players)
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Most effective bluffs
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Tactics to avoid answering questions that threaten to expose a weak bargaining position *Preserve some leverage while reducing the risk of acquiring a reputation for deception
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Blocking techniques
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Dale Singer went to buy his daughter a used car. Price was haggled to $9,000 and then salesman asked if Singer would buy it today for $8,500? Singer said yes but salesman said price was $8,900 but $8,500 was just a personal price, which the manager did not approve. Singer ended up getting the car for $8,500 *Lesson: Singer was lowballed (but he rejected it) because he was tricked into becoming committed to the car at a bargain price, then the price was nudged up to exploit his rising interest in the vehicle
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Used-car purchase story
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1997: Apartment is on sale for $1.7 million by Bonnie Chajet of Warburg Associates. Men put in bids for $1.4M, 1.3M, and 1.275 M. It turns out the second and third bidders were friends with the first one. Chajet saw through the scheme and sold the apartment a few days later for full price *Lesson: Be careful of big rigging (phony bids are designed to signal to seller they should take the falsely high offer)
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Bidding war story
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Bargaining situation most likely to involve deception, especially when price is the primary issue and there are limited prospects for future dealings *Be on guard whenever the stakes matter and the relationship does not
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Transactions
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Leverage imbalances at the bargaining table encourage_______ behavior in both the stronger and the weaker party (stronger can be intoxicated with leverage and weaker can use deceit to gain advantage)
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Unethical
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1. Watch out for transactions 2. Rely on relationships whenever possible 3. Probe, probe, probe 4. Be assertive and persistent 5. Maintain your own standards and don't sink to theirs
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Techniques for dealing with unethical tactics
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Prospect of an ongoing relationship raises people's ____ _______
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Ethical standards
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In dealing with cunning people, we must ever consider their ___ to interpret their speeches *Sirt Francis Bacon
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Needs
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It is very difficult to detect __, and even when you do it is hard to know what it is about
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Lying
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As soon as you begin acting __ , you lose the right to protest other people's conduct
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Unethically
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Whenever you are tempted to lie about somethig, stop, think for a moment, and then find anything to tell the ____ about
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Truth
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Blocking maneuvers: *Ask about their bottom like *Say " It's not your business" *Say "I'm not free to disclose that" *Tell the truth about your goal *Focus on your problems/needs
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Alternatives to lying about bottom line
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*Obtain only limited authority in the first place *Require ratification by your group
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Alternatives to lying about lack of authority
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*Initiate efforts to improve alternatives *Stress opportunities and uncertainties *Be satisfied with the status quo
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Alternatives to lying about availability of alternatives
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*Commit to general goals *Commit to standards *Commit to addressing the other side's interests
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Alternatives to lying about commitment to posititions
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Inject new issues with real value or make a true wish list
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Alternatives to lying about phony issues
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*Use cooling-off periods *Suggest third-party help *Discuss use of a formula
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Alternatives to lying about threats
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Make only promises you can and will keep
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Alternatives to lying about intentions
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*Focus on uncertainty regarding the facts *Use language carefully *Express your opinion
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Alternatives to lying about facts
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1.Lies about bottom lines and alternatives 2. Lowballing 3. Phony issues 4. Fake authority ploys 5. Overcommitment 6. Good guy/bad guy 7. Consistency traps 8. Reciprocity ploys 9. The nibble *Not all are unethical
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Common manipulative tactics
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Lies about bottom lines and alternatives
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Most common lies
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Too good to be true offer; the other side gets you committed to the deal before revealing the full, true cost. After you say yes they know you want what they are selling and they work the price back in their favor by adding terms *Works in sales and other situations (ex: child can play in soccer team but practices are at 6am)
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Lowballing
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Decoy/red herring technique; one side lists four or fives issues as being very important when really only one or two matter *Serious risk of impasse *Ex: Sony story where Guber and Peters added two phony issues then later dropped them so they could win on third issue which would give them more time to get out of current contract with Steve Ross
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Phony issues
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Two types: 1. People lie and say they have authority when they do not (good for lowballing)-->When in doubt ask for proof of authority 2. People lie and say they have no authority when they do-->Avoid dealing with agents if you can *Defer to authority if you must, but make sure the authority is real
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Fake authority ploys
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Other negotiator gets you to agree to an innocent-sounding standard or norm then he springs the trap by showing you that his proposal is the logical consequence of your admission *Solution: See it coming before you agree to the standard and hedge your commitment to the standard
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Consistency trap
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People who refuse to reciprocate or who only appear to do so without giving substantive answers *Insist on reciprocity
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Recirprocity ploys
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Do not be so __that people will eat you up, nor so bitter that they will spit you out *Pashto folk saying
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Sweet
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Everyone lives by _____ something *Robert Louis Stevenson
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Selling
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Bill saved a historic building by convincing the city to give him the money they were going to use to demolish it to him so he could renovate it. He succeeded by making profit himself and increasing city tax base by leveraging a temporary tax abatement given to him by the city officials to gain commercial tenants *Lesson: Have clear, specific goals, use relationship network, use leverage
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Bil Siegel story
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To improve the way you negotiate the ______ step is to make a commitment to work on this area of activity
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First
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1. Willingess to prepare 2. High expectations 3. Patience to listen 4. Commitment to personal integrity
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4 Effectiveness factors
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1. Avoid concentrating too much on your bottom line-spend extra time preparing your goals and developing high expectations (people who expect more get more) 2. Develop a specific alternative as a fallback if the negotiation falls (if you can't walk away you can't say no) 3. Get an agent and delegate the negotiation task or have a competitive person join your team (especially if opponent is competitive) 4. Bargain on behalf of someone else, not yourself (people bargain harder when they act as agents for other people's interests) 5. Create an audience (people negotiate more assertively when other people are watching them. Explains why labor negotiators are so tough) 6. Say " You'll have to do better than that, because..." (Any truthful reason will do. Compliance rate for requests increases 50-100% just by giving a dummy reason for the request according to Harvard photocopying study) 7. Insist on commitments, not just agreements (set the agreement up so they hav esomethign to lose if they fail to perform) *Must become more assertive, confident, and prudent
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7 Tools for highly cooperative people
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1. Think win-win, not just win 2. Ask more questions than you think you should 3. Rely on standards (standards-based approach vs. leverage-based approach) especially when relationships are important 4. Hire a relationship manager 5. Be scrupulously reliable. Keep your word 6. Don't haggle when you can negotiate (try integrative bargaining) 7. Always acknowledge the other party and protect his self-esteem *Must become more aware of other people and their legitimate needs
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7 Tools for highly competitive people
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Effective negotiation is 10% technique and 90% _____
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Attitude
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1. Realism 2. Intelligence 3. Self-respect
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Requirements of right attitude
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Key to success in negotiation
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Information
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1. Deceit 2. Violence
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2 Forms of deliberative assault on human beings
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There must be a minimal degree of ___ in communication for language and action to be more than stabs in the dark and for society to function *Even the devils themselves do not lie to one another because then society of Hell could not function
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Trust
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Perspective of the ____ leads us to be wary of all deception *Though only a single person may be ___, many others may be harmed as a result *Falsehood is in itself mean and culpable, and truth noble and full of praise
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Deceived
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Denies the possibiltiy of knowledge
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Skepticism
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Denies the possibility of freedom
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Determinism
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Requires knowledge and freedom to act on it
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Reasonable choice
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Lying requires a ___, while truth-telling does not
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Reason
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Liars ____ with those they deceive the desire not to be deceived so they would prefer a free-rider status, giving them (and perhaps close friends, as long as most people are not included) the benefits of lying without the risks of being lied to
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Share
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1. Free-loading liar 2. Liar whose deception is a strategy for survivial in a corrupt society
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2 Types of liars
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Liars usually weigh only the _ harm to others from the lie against the benefits they want to achieve. *Problem: Ignores 2 other types of harm that are cumulative and hard to reverse 1. Harm lying does to liars themselves (while no one lie always carry harm for the liar, there is risk of such harm in most since liars cannot determine which lies are trivial. Also lies tend to come together and the more lies the harder it is to keep them straight) 2. Harm done to the general level of trust and social cooperation
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Immediate
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1. The deceived 2. The deceiver
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2 Perspectives of lying
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Expression of initial imbalance in our weighing of truthfulness and lying *Trust is needed for institutions to function *Truth need so no reason but lying does *Does not ban all lies. Only limitation this imposes it that one must first seek truthful alternatives before lying. If lies and truth have same result, do not lie.
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Principle of veracity
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The state of affairs when there does not exist an alternative action that is at lease acceptable to all and definitely preferred by some
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Pareto optimality
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The foundation of ______, moreover is good faith- that is truth and fidelity to promises and agreements *Cicero
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Justice
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Person's bottom-line price, the price such that she would walk away from a negotiation rather than accept a worse price *Bargaining opponent's perception of one's ____ ___ serves to anchor her expectations about the negotiation's outcome so seller should convey a high __ __ and buyer should convey a low _ _
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Reservation price
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Deception in negotiation is best understood int terms of a person's right to defend herself against the possibility of wrongful or potentially harmful conduct by her bargaining opponent *Does not always work because when deception in negotiation makes sense, it is ordinarily not a way of fending off a prospective attacker or wrongdoer, but instead because of its promise as a mutually beneficial solution to a problem confronted by negotiators who, for morally benign reasons, cannot trust each other
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Self-defense model of deception
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___ __ is wrong because of the way it harms the deceived or interferes with access to information essential in autonomous choice-making *Deception in negotiation does not always meet this criteria
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Ordinary deception
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In negotiation people seek ways to limit their exposure to the risk that a bargaining opponent will exploit information about settlement preferences to gain strategic advantage, and argue the dishonesty is an accepted tactic for defending oneself against a potentially dishonest bargaining opponent *Do not endorse mutual trust principle but consider it in their arguments. They instead focus on how we may change the environment of negotiation so we will trust one another more
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Dees and Cramton view of deception
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It is unfair to require an individual to take a significant risk or incur significant cost out of respect for the moral rights of others, if that individual has no reasonable grounds for trusting that the relevant others will take the same risk or make the same sacrifice *Not very plausible because it allows one to do anything to one's opponent no matter how horrible, so long as one thinks that the opponent will do the same horrible thing. It is also not realistic (people do not follow this in reality)
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Mutual trust principle
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Defensive dishonesty is justified only when it is necessary to protect oneself against harmful deceptions of one's bargaining opponent *Emphasis on necessity *Costs of finding an object may be high enough so that one reasonably refuses to bear them *Problem: Does not explain when is deception necessary and self-defense argument suggests you can use physical force in negotiations, which is an absurd result
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Carson view of deception
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Dees, Cramton, and Carson all say ____ is prima facie wrong *Strudler disagrees
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Deception
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1. Deception may undermine trust *Problem: Deception ofter occurs because of a lack of trust in the first place. Deception may actually enhance trust 2. Deception may cause economic harm (losses created and benefits missed) *Problem: Costs are not a problem in itself. Costs must be measured relative to those incurred in alternatives. Also harm almost always happen in economic situations, so one must say why that particular harm was wrong 3. Deception may violate Kantian strictures against using a person as a mere means *Problem: Personal autonomy is not always impaired by deception (ex: taxi box story where taxi guy said moving boxes was impossible but it wasn't. He just did that to emphasize the difficulty so he could get a higher price). The symmetry of informational opportunity preserves autonomy
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3 Reasons deception is wrong
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Howard Raiffa advises people that not even after a successful negotiation one should not tell the other party about one's _____ ___because such information will only be a source of resentment
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Reservation price
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Possibility of deception to help solve problem of communication shared by parties to a negotiation. Provides benefit of safe device for indirect communication. *Strudler's view of deception *More than self-defense because deception can solve a mutual problem *Both more permissive and less permissive than self-defense view because it allows you to initiate deception (which self-defense would not) but does not allow force (which self-defense does)
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Mutual advantage view
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____is normal. Our minds and bodies secrete deceit. Few people can make it through a typical day without ____, often _______ 30-50% of the time *60% of newly introduced individuals lie to one another within minutes to meeting in order to create a favorable impression. Dating couples lie more *25% of resumes contain significant lies *_____ starts early, at age 3 or 4
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Lying
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What you lie about is often illegal to lie about
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Practical reason not to lie
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Not all _____ are lies
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Deceptions
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Averting eye contact, pulling on one's ear, sweating, changing vocal pitch, change in amount of smiling, long pauses between answers, rubbing one's arm or fingers, heavy breathing *Many of these are false such as averting eye contact, posture shift, head movement, smile changes, and foot/leg movements *Most people are incompetent lie detectors and detecting lies rarely exceed random chance *People are better lie detectors when reading transcript than when watching a video tape *Trained professionals do not better in detecting lies even though they are more confident in lie detecting ability
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Presumed indicators of lying
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Study that had videos of suspects lying and telling the truth *Results: There is no typical indicator of deceptive behavior, but the most reliable indicator is longer pauses and less blinking
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British police study
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Lie detectors which relate changes in heart rate, blood pressure, and electrodermal reactivity to a subject's truthfulness *1988: Congress banned its use in most routine business settings and limited its use to cases of national security *If given to 10,000 people that included 10 spies, 1,600 innocent people would fail and 2 spies would pass *Alternative: look for microexpressions (involuntarily displayed fleeting facial expressions) according to Paul Ekman
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Polygraph machines
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*Research other side's character and bona fides (at minimum check sources of public information) *Anticipate scenarios that might play out during negotiation *Set ground rules (ex: agree to disclose all material facts) *Look for potential signs of deception (some people are really incompetent liars. Notice sudden changes of behavior) *Ask questions in different ways (try to get question answered with a yes or no-if other side will not do that be suspicious) *Ask the opponent to come clean (although someone might not have a legal duty to volunteer the information by denying that he is withholding anything he exposes himself to possible legal damages for fraudulent nondisclosure) *Ask questions to which you already know the answer (ex: 1962 Cuban missile crisis where Russians lied about missiles located in Cuba) *Take notes during negotiations *Include written claims as part of the final agreement *Use contingent agreements for protections *Trust but verify (parties are more likely to trust each other when they have a means of determining whether the other party's representations are accurate)
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How to protect against deception
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We don't see things as they are. We things as ___are. *Anais NIn
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We
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Common advice to get rid of ___ is infeasible and unwise
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Emotions
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1. Emotions may divert our attention from substantive matters 2. Revelation of emotions may open us up to being manipulated 3. Thinking may take a subordinate role to feeling 4. Emotions can take charge of us if we are not careful
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How emotions can harm negotiation
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Human beings are in a state of perpetual ____
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Emotion
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Strong desire to do a particular behavior now, without much thought about possible consequences
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Impulse
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_____are unavoidable and are the short-lived reactions to thoughts and behaviors of ourselves and others *Different from impulses in that they motivate general kinds of behavior but not a specific behavior *Lived experience *Not possible to suppress feeling but expression of feeling can be surpressed *Includes an action tendency, which is the type of behavioral urge associated with that emotion (ex: anger action tendency is to attack and guilt action tendency is to repent) Action tendencies do not need to be acted upon
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Emotions
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____can be affected by impulses, emotions, moods, and attitudes
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Negotiators
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Low intensity affective states, background music to our thoughts and actions
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Moods
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Positive or negative evaluations of a person, institution, policy, or event
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Attitudes
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1. Negative emotional experience remains, leaving internal state of tension which can negatively affect behavior 2. Effort to suppress display of emotion consumes important cognitive energy, which is limited 3. Negotiator who suppresses his or her emotions may be more likely to stereotype that counterpart as an adversary, leading to competitive behavior 4. Increases physiological arousal in negotiator and counterpart-->Reduced attentional capacity-->Stereotypical thinking more likely
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Why suppressing expression of emotion hurts negotiator
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General level of satisfaction with the emotions experienced during an interaction *Meta-emotions
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Affective satisfaction
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1. Affective satisfaction 2. Instrumental satisfaction *Likelihood of attaining these goals increases when ability to deal effectively with emotions increases
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2 Goals of negotiation
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Extent to which substantive work requirements are fulfilled
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Instrumental satisfaction
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Emotions amplify ____ according to Silvan Tomkins because they signal importance of issues and give them urgency
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Motivation
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Emotions are not only internal, they may have a _____function as well because by expressing your emotion you provide the other negotiator with important information about you want to be treated *Even if you suppress expression of emotions they still communicate to one person (you)
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Communicative
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Emotional manipulation ________works but can cause damage to relationships
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Sometimes
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______ emotions are not completely useless in a negotiation because they a communicate a willingness to get demands met, but they leave emotional residue and make finding value-creating options difficult. Positive emotions are better for motivating a collaborative interaction
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Negative
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Negotiators in a ____ mood achieve more optimally integrative outcomes and use fewer aggressive behaviors. They also enjoy negotiation more and may experience flow (a peak motivational experience that is intrinsically, personally rewarding) *_______ emotions contribute to the long-term sustainability of each party's commitments and foster cognitive expansion (finding of creative options) because they trigger release of dopamine
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Positive
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What the American Paper Institute, National Coffee Association, Milk Industry Foundation, and American Council on Education have in common that led to forming a successful coalition even though they seemed like unlikely allies
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Interest in sewer use charges
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To join forces together behind a mutual interest, generally a policy issue, and work together for common effectiveness and results *Coalitions are becoming more popular. especially as power decentralizes in Congress
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Purpose of a coalition
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A coalition functions only when __ person is given responsibility to call the shots, and the coalition is the leader's primary occupation *Selecting this person is often a process of elimination *Leader usually represents the one association that has the most to gain or lose
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1
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*Commitment by members to work, not in their own self-interest, but in the group interest *Expertise on the part of all members on the subject matter and its ramifications *Knowledge of how the state/federal legislature works *Ability to plan strategy and have enough time to develop it *Good communication with members *Focus on offensive (not defensive), use facts, data, and public opinion to build on your important points. It's not necessary to attack your opposition *Involved members/grassroots campaign *Latitude from you and your board of directors (only get approval when issue is controversial or stance involves change in previous policy)
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Successful coalitions
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Dissenting party removes his name and endorsement from that specific letter but continues to endorse the remainder of the issue *Trade-offs are important and preferable
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How to deal with dissent among coalition members
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____ negotiations are necessary to present a united front to those you are dealing with
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Internal
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A coalition takes ____ by the participants. Publicity may be given to the coalition and not to your association. Accept that there will be trade-offs
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Goodwill
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The common end of the ____ is more important the the priority of any one association *Glory for members will not lead to success. Spotlight must be shared and coalition must have its own identity *Coalitions are not perfect *Some coalitions are permanent and others are temporary (disbanded as soon as their cause is settled)
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Allies
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1. One member dominates 2. Jealousy between members (usually occurs at outset until members realize they achieve more by pooling resources) 3. Conflicting goals (choose greatest good for greatest number) 4. Conflicting strategy (occurs most often when two or more members have significant legislative experience) 5. Minor disagreements 6. Too formal (coalition cannot replace the members associations. You can never have enough organization but you can have too much formalization) 7. Too many meetings (unless a crisis happens permanent coalitions can meet once a month or use phone to exchange information between meetings) 8. Lack of follow-through *With negotiation, respect, and planning, all can be overcome
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Potential problems of coalitions
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Coalitions are not limited to _______. Almost all groups are involved in some type of coalition because chances of victory are better through unity and sometimes a coalition is the only way to do something. The days of trying to do it all yourself are long gone
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Associations
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1. Clearly define issues and strategy 2. Determine a timetable and needs 3. Identify both allies and opposition 4. Build constituency and recruit allies 5. Select leadership from within allies 6. Devise a clear plan of action 7. Determine resources, budget, and meet those needs 8. Divide up tasks within the coalition 9. Establish a working task force or executive committee 10. Keep coalition members involved and informed 11. Establish a communication program plan; clearly distribute tasks 12. Build supportive case materials 13. Develop an internal communication program with each association involving its members 14. Enlist experts to support the coalition's case 15. Explain the issue in economic impact terms when possible; use public opinion 16. Utilize all pertinent media for greatest impact 17. Remember to keep all coalition constituents informed and involved 18. If it's a legislative issue, review the congressional strategy on a regular basis 19. Determine if the coalition leadership is serving as a catalyst for communication 20. Provide the results and communicate them to the member constituencies
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20 Tips for coalitions
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question
The process most impaired when there is sleep debt
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Short-term (immediate) memory
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Sleep debt affects our logical reasoning processes, specifically our ability to solve ______ problems. Routine problem solving may be unaffected
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Novel (out of the ordinary)
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A ________ ____ may deliberately use sleep debt in an effort to lower the mental abilities and motivation of contract negotiators in order to reach an agreement *Trick is to do it in a way that sounds natural
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Professional mediator
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What gives a professional mediator leverage to pressure both sides to stay at the table for longer periods
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Deadline
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Does not drink coffee, keeps travel time to a minimum, and does not have to strategize with team
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How professional mediator gets sleep
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1.After sleep debt things get blurry (people get dumber) and it is hard to keep negotiating packages straight. 2. Motivation becomes flat 3. Parties are less vigilant about checking figures (less detail-oriented) *Issues that are not fully settled or written in some compromise wording or are dropped
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Psychology of sleep debt
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Issue of appearance. After approving the deal in a morning press appearance you would look stupid cancelling it later
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Why deals made in sleep debt are not broken up
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Unintentional dumb decisions because of lack of attention to detail and poor thinking skills
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Most common outcome of sleep debt
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Someone who is not directly involved in your negotiation or dispute but who can be helpful in resolving it
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Third party
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It is usually best to try everything you can to remedy the situation before you move to third-party intervention
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When to resort to third party
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If a third party is invited then negotiations usually go smoothly, however if the third party is imposed or _____ then negotiations may become more hostile
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Uninvited
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1. The emotional level between the parties is high 2. Communication between the parties is poor or has completely broken down 3. Stereotypic views of each other's position and motives are preventing resolution 4. Behavior is negative (ex: name-calling) 5. Parties have serious disagreements about what information is necessary, available, or required 6. Parties disagree on the number, order, or combination of issues 7. Differences in interests appear to be irreconcilable 8. Values differ greatly, and the parties disagree about what is fundamentally right 9. There are no established procedures for resolving the conflict, or the procedures have not been followed 10. Negotiations have completely broken down and there is an impasse
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Reasons to use a third party
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1. Resolve the dispute (outcome dimension) 2. Smooth, repair, or improve the relationship between the parties 3. Stop the dispute/separate the parties (ex: stop warring groups from fighting) *Different types of third parties are needed for each objective
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Objectives in bringing in a third party to achieve a resolution
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Alternatives to taking the conflict into the court system, hiring an attorney, and pursuing litigation *Since early 1980s there has been major social movement to take civil disputes (where there is no violation of criminal law) out of courts and refer them to third parties in ADR
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Alternative dispute resolution (ADR)
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1. Parties have more control over what happens 2. Process is often quicker and cheaper 3. Reduces burden of court system
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Why ADR has become popular
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Labor arbitrators, divorce mediators, community mediators, process consultants, ombudspersons, fact finders, referees, social workers, teachers, managers, friends
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People who perform ADR
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1. Gain time to cool off 2. Improve communication because third party slows communication, helps people be clear, and works to improve listening 3. Parties have to determine which issues are really important 4. Emotional climate can be improved 5. Parties can take steps to mend the relationship 6. Time frame for resolving the dispute can be established or reestablished 7. Escalating costs of remaining in conflict can be controlled 8. Parties can learn from third party and may be able to resolve future disputes without help 9. Actual resolution to dispute and closure may be achieved
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Advantages of ADR
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1. Parties potentially lose face when third party is called in since the parties may seem incapable of resolving their own fight (this is true when those who are judging the negotiators are others who can publicly criticize them or move to have them replaced) 2. Loss of control of the process (how the negotiation is conducted) or outcome (result of the negotiation) or both depending on the type of third party called in to help
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Disadvantages of ADR
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1. Inquisition: High level of third-party control over outcome and process 2. Arbitration: High level of third-party control over outcome but low level of third-party control over process 3. Mediation/process consultation: Low level of third-party control over outcome but high level of third-party control over process 4. Negotiation: Low level of third party control over outcome and process
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4 Types of third-party involvement
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Each party presents its position to the arbitrator who then makes a ruling on either a single issue or on a package *Ruling may be voluntary or binding *Negotiators have control of process but arbitrator has control of outcome *Most common form of third-party dispute resolution *Recommendation can be arrived at in several ways (one party may be chosen over the other a compromise solution may be recommended) *Used in business conflicts, disputes between business and union workers, labor relations, contracts (usually in public sector) and grievances *When used in formal matters such as grievances arbitrator is usually bound to a clear and strict set of policies
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Arbitration
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1. Clear solution (though it may not benefit one or both parties) 2. Solution may be mandated 3. Arbitrators are usually selected because they are wise, fair, and impartial, and therefore the solution comes from a respected and credible source 4. Costs of prolonging the dispute are avoided
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Advantages of arbritration
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Arbitrators' decisions tend to be consistent with judgments received from _______, making them "judges without robes" *Their decisions are usually governed by public law or contract law
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Courts
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1. Parties relinquish control over shaping the outcomes 2. Parties may not like the outcome and it may impose additional costs 3. If decision is voluntary parties may lose face if they choose not to follow it 4. Decision-acceptance effect 5. Chilling effect 6. Narcotic effect 7. Half-life effect 8. Biasing effect
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Disadvantages of arbitration
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Less commitment to an arbitrated resolution because: 1. Parties did not participate in process that made outcome 2. Recommended settlement may be inferior to what parties preferred *If parties are less committed to an outcome, they will be less likely to implement it *Not as big of a problem in mediation because parties are fully involved in making the decision
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Decision-acceptance effect
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Parties may behave differently in negotiation by taking a hard-line position if they expect the dispute to go arbitration where the arbitrator may split the difference in order to avoid loss from compromise *Solution: Final offer arbitration
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Chilling effect
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Solution to chilling effect where the arbitrator asks the parties to make their best final offer and then arbitrator rules for one side or the other with no split *Forces the parties to make the deal possible because the more extreme the final offer, the less likely the arbitrator may be to rule in favor of it
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Final offer arbitration
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Parties with a history of recurring arbitration tend to lose interest in trying to negotiate, become passive, and grow very dependent on the third party (they become addicted to arbitration) *Often happens when party has a strong-willed constituency and can blame arbitrator for any compromises made in arbritration
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Narcotic effect
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The results of more and more arbitration are less and less satisfaction with the outcomes because the parties have become passive in the process and have less control over the outcomes, making arbitration ritualistic and not effective *Eventually parties refuse to participate
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Half-life effect
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Arbitrators perceived not to be neutral and impartial, but to be biased *Most likely to occur when an arbitrator makes a whole sequence of decisions that favors one side over the other *Parties in strong conflict often try to bias the third party and then reject the third party for being biased *If arbitrators is seen as biased, the parties will move toward selecting another arbitrator who will be neutral or preferably will favor their position
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Biasing effect
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Mediator has control over process but not outcome *Based on established rules and procedures *Objective is to help the parties negotiate more effectively (depends on degree of cooperation of parties and skill of mediator) *Less costly than court *Major concern is to help the parties communicate *Used in labor relations, precursor to arbitration in grievance/contractual negotiations, civil suites, business disputes, international disputes, and increasingly in community disputes *Assumptions: 1. Parties can and will come up with a better solution than one that is invented by a third party 2. Relationship is important and parties want to develop their problem-solving skills
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Mediation
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1. Select mediator 2. Mediator takes active role and invites both sides to meet to set ground rules 3. Mediator takes passive role and meets with each party. In most cases mediator does this with other party in the room unless the parties cannot be candid in front of each other or conflict is about to erupt 4. Parties agree on agenda (key issues to be discussed and order of issues) 5. Parties explore possible solutions (mediator may suggest solutions but cannot impose them) 6. Agreement, which may be made public *Length of stages may vary (ex: in divorce mediation both parties usually meet together as soon as possible rather than having long individual meetings with the mediator)
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Mediation steps
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1. Parties agree to follow a procedure set forth by the mediator 2. Parties agree to listen and respect each other 3. Role of mediator is not to solve dispute but to work with parties to arrive at a negotiated outcome
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Mediation ground rules
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1. Facilitate negotiation process 2. Help parties save face when they need to make concessions 3. Assist in internal disagreements and dealing with constituencies 4. Offer incentives for agreement or negative incentives for noncooperation 5. Maintain control if parties are unable to do largely by controlling the process
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How mediators help
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_________ are taught as early as elementary school the art of mediation which stays with them throughout life
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Children
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1. Mediators need to be seen by the disputants as unbiased or they will not be trusted (it does not matter what the mediators themselves think) 2. Mediators may need some expertise in the field where dispute occurs, though less than what is needed in arbitration (industry-specific knowledge is key to industrial conflicts) 3. Certification of mediation training enhances credibility though not required by law (The Federal Mediation and Conciliation Service of the U.S. Department of Labor certifies mediators. Local groups do as well) 4. Good timing (parties must want help and be willing to compromise. When parties are not willing to compromise such as value-based issues like abortion then mediation and other techniques will likely fail until parties soften their views) 5. Conflict is moderate but not high 6. Conflict is not excessively emotional and polarized 7. High motivation by both parties to settle 8. Parties are committed to follow the process of mediation 9. Resources are not severely limited 10. Issues do not involve a basic conflict of values 11. Power is relatively equal between the parties 12. Mediation is seen as advantageous relative to arbitration or no agreement 13. Bargainers have experience and understand the process of give-and-take and costs of no agreement
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Factors necessary for success in mediation
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60-80% successful *In successful outcomes negotiators tend to be committed to the agreement and that leads to high implementation rate
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Success rate of mediation
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1. Bargainers are inexperienced and assume that if they take a hard line other party will eventually give in 2. There are many issues and parties cannot agree on priorities 3. Parties are strongly committed to their positions and are held to them by an uncompromising constituency 4. There is very strong emotion, passion, and intensity to the conflict 5. A party has an internal conflict 6. The parties differ on major social values 7. The parties differ greatly on their expectations for what is a fair and reasonable settlement 8. Parties' resistance points do not overlap (the most one party will give is still much less than the minimum the other will accept)
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When mediation is unlikely to work
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1. Can be more time consuming than arbitration 2. Mediation is not binding so parties may not commit to settlement 3. Dispute may escalate
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Disadvantages of mediation
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Process that minimizes the liabilities of each type of ADR to obtain better compromises *Pro: Parties may be more willing to modify their positions in mediation *Con: Parties may become lazy and expect arbitration to solve problems
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Mediation followed by arbitration
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1. Be cooperative 2. Give clear information about what is important to you and why 3. Be willing to make concessions or problem-solve *Success of the negotiation is your responsibility and mediator is supposed to assist (not remake) process
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How to assist the mediator
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Serve as a counselor who focuses on the process of negotiation by improving communication, reducing emotionality of the proceedings, and increasing parties' dispute resolution skills with goal of enabling parties to settle their own disputes in the future *Helpful for when relationship between parties is long term *Expertise in areas of conflcit and emotions *Similar to mediators in that he or she helps with process but different in that there is no discussion of specific issues *Used in marital therapy, family therapy, organizational development, team building, and labor-management disputes/international conflict where there are political, ethical, and cultural difficulties
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Process consultant
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1. Interview parties individually 2. Design schedule of structured meetings for the parties
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Steps of process consultant
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1. Severe, polarized disputes over large issues 2. Relationship is short-term and parties have no stake in improving it 3. Issues are fixed (competitive rather than collaborative negotiation) 4. Party's constituency is not supportive of improving the relationship 5. One or both parties are intent on retribution or revenge
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When process consultant is unlikely to work
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Person whose job is to hear and investigate conflicts between employees or between one employee and the system (rules, practices, and policies of the organization) *Trained in problem solving, dispute avoidance/resolution, and negotiation *Goal is to limit and resolve problems quickly and informally *Essential to be impartial so they are often unattached from organizational hierarchy/chain of command and may report directly to CEO *Process: Once contacted he or she engages in confidential fact-finding then informs both sides of their rights and the opportunities for resolving the conflict *May recommend a settlement but usually management is involved in final decision *Main reason to use one is to make sure process is fair and that the individual employees with very little power have a way to get a fair negotiation about their concerns *Pro: Good when power of disputing parties is out of balance and lower employee doesn't want to get fired *Con: May lead to undesired outcome *Can be first step before mediation and arbitration *Often act as change agents
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Ombudsperson (ombud)
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Mangers spend ____% of their time in conflict management
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20
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Manger conflict resolution methods tend to be ____ since most work environments do not have established rules or guidelines for how to mediate a dispute. Most managers do not have formal training settling disputes and many are uncomfortable with conflict. They need to learn some conflict is okay.
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Informal
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1. Manager's tolerance for conflict 2. Time frame (high outcome control methods are used when efficiceny and saving time are high priorities) 3. Personalities of parties involved 4. Objectivity/neutrality of manager 5. Relationship of parties (long-term or short-term) 6. Effect of how this confrontation is resolved on future negotiations 7. Expected ability of the parties to resolve conflicts for themselves in the future 8. Extent of training of the manager in conflict resolution techniques
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Manager style determinants
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1. Inquisitorial/autocratic: Control of process and outcome *Manager makes his own investigation and makes a decision *Most common style *Frequently used when issues are minor, quick decisions are needed, or management needs to implement an unpopular action 2. Arbitration like style: Control of outcome but not process *Listen to both sides but differs from autocratic in that additional information is not usually gathered 3. Mediation like style: Control of process but not outcome *More managers are learning this approach but not everyone uses it because managers traditionally consider outcome more important than process and want control over it 4. Manager does not care: No control of process or outcome *Dispute is ignored or employees told to figure it out *Similar to parent intervening between two arguing children
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Types of manager conflict resolution styles
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1. Select neutral site for the meeting 2. Be empathetic and listen 3. Be assertive (especially about deadlines) 4. Ask for cooperation and be cooperative 5. Ask what parties want you to do to help solve problem 6. Get resolutions in writing 7. Help parties plan for implementation and follow up
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Keys for managers helping employees with conflict
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______% of all civil cases are settled out of court
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95
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About _______ of state court systems require that certain civil complaints be referred to arbitration prior to trial *33 jurisdictions require that family disputes regarding custody and visitation be brought to mediation *U.S. district courts at federal level are increasingly ordering civil cases into mandatory arbitration
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1/2
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Commercial suit with a $200,000 claim will cost parties almost that much in legal fees but mediation would cost about $______ usually shared between the two parties
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2,500
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ADR was not a good solution for a rate-setting dispute with the Public Utilities Commission of Ohio (PUCO) because: 1. Intervention was involuntary-->Low commitment 2. ADR people did not have industry-specific knowledge 3. Time constraint was too tight 4. Resources were constained
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ADR is not always the perfect solution
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______ is specified as the first and preferred method for dispute resolution at NCR
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ADR
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Go to a supervisor, then to a division supervisor, then to a panel of supervisors, and to top management. If one of the parties is a union, fourth step is binding arbitration
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Line authority approach to solving problems
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Purpose of the process is to investigate, review, and resolve disputes using employee peer groups that serve on the panel and execute the process *Used by Northern States Power Company *Pros: Training with role-plays, improved accountability, communication, and problem-solving skills, stop problems before they get bigger, higher productivity and morale because employees feel heard, no retaliation because grievances are checked up on three months after settlemetn *Specific steps: 1. Employee files PGR form and submits copy to HR within 10 days of incident-->Employee submits original form to immediate supervisor who completes meeting with employee within three working days-->Supervisors writes response on form and returns it to employee within two working days-->Employee has two days to decide whether to move to step 2 2. Same as step 1 but with second-level supervisor 3. Employee chooses third-level supervisor or peer panel: Peer panel is randomly chosen from two pools (supervisory and non supervisory) with 5 from same pool as employee and 4 from other pool. Employee discards 2 names from each pool leading to five panelists who then make a binding, not open to appeal decision within 10 working days
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Peer group resolution (PGR)
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Be neutral and project neutrality in all he does *Must ignore any negative energy *Hardest task for mediator
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Most important role of mediator
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11th or 12th hour (crunch time of the negotiation) *Walking the hire wire is living. All else is waiting. (Karl Wallenda) Crunch time is when mediator is "living
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Most stressful time for mediator
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Mediator can be either the most powerful or most powerless room depending on how much power the parties will give him
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How much power mediator has
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A sweet elderly couple broke their turn signal and the repair was more than they could afford so they went to arbitration to see if auto maker would pay for it. Auto maker was very rude, but the part was not defective so the couple was now award money *Lesson: You cannot let the personalities of the parties affect the outcome. You must be neutral as a mediator
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Auto maker story
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Sit alone unless you are working and if you are working with one side let the other side know *Purpose: Maintain credibility
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How to handle idle time as a mediator
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Mediator went home to eat rosemary chicken and came back and ran into chief negotiator for union who was chef. He described the meal but all the other side saw an intense conversation and they drew conclusion that mediator was biased *Lesson: Importance of optics, people will draw conclusions from the slightest unintentional signal, you must project neutrality in all you do as a mediator
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Rosemary chicken story
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1. Project neutrality in all you do 2. Absorb conflict 3. Manage expectations/ reality check 4. Check your conscience at the door (not mediator's job to determine if deal is good or fair) 5. Don't make mediator's proposals 6. Create the atmosphere for an agreement
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Rules for mediators
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Parties' expectations rise in proportion to the time they spend awaiting their ______ _____
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Counterpart's proposal
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Most of the problems with expectations are related to _____ and the accompanying rise in hope
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Time
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Parties in a given industry tend to negotiate agreements that follow the pattern of others negotiated in that same industry (industry pattern) *Once pattern is set, it is rare for someone in that industry to break it
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Pattern bargaining
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Mediators should caution the party outside the earshot of the other party that their ______ are not realistic
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Expectations
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To a mediator, the _______ is only those things to which the parties agree
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Truth
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Mediation is like ____ ______ _____ ________
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American system of jurisprudence
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Mediator noticed that two respected negotiators had agreed on using CPI but had wrong CPI number. Mediator decided it was not his job to comment and it was the negotiators' error *Lesson: Let parties make their own mistake
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CPI story
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Union went on strike and CEO said in newspaper he would give them contract similar to that of major competitor. Union accepted deal, even though chief negotiator of other side said it wasn't a real deal (just idle chit chat by CEO). Mediator knew this but didn't think he should intervene *Lesson: Check your conscience at the door
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Strike story
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__ _____ is really the mediator's best guess of the mid-point between the two parties
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Mediator's proposal
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Mediators almost made a proposal suggesting a pay freeze but company moved first which was good because it turned out mediators did not know what pay freeze met (general wage freeze or ladder wage freeze) *Lesson: Don't make mediator proposals or the lack of clarity will be the fault of the mediator
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Pay freeze story
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Static document dropped on the parties by an impatient mediator that almost always fails
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Typical mediator proposal
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When someone from both sides (with authority to make the deal) has seen it in advance and blessed it *Process: Both sides will still publicly criticize the deal but then they should reluctantly accept it *Possible to let parties critique and tinker with it and make it a malleable process
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One circumstance when mediator should make a proposal
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1. State that settlement/making a deal is inevitable and the sooner the deal is made the better 2. Create a sense of teamwork (can do this physically by making the parties sit next to each other across from the mediator) 3. Defuse tension (humor can improve mood and give common ground such as in Dave Barry article story) 4. Create momentum (create urgency when negotiation is open-ended by imposing a deadline)
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How mediator creates right atmosphere
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____, the natural order of things favors an agreement
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Momentum
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Throw out the clock and begin working around the clock
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Easiest way to create some sense of urgency
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Work will expand to fill the _________ allowed
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Time
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Human nature seems weakest between ________ *However if deal is not signed by time sun is up send parties home for a nap
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3am-4am
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The phrase " less filling versus tastes great" refers to debate of whether mediation is an ___ ___ _ ______
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Art or science
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Mediator does not need to know details as his only job is to facilitate conversation
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Art view of mediation
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Mediator should know as much about industry as the parties as he should check the parties' numbers and offer concrete ideas for solving issues
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Science view of mediation
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Most mediators fall in the ____ of the art/science debate of mediation so mediation is one part art and one part science
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Middle
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Union said difference between positions was $1.2 million but it was only half that much because he accidentally added a $600,000 item twice. Negotiator stepped in and solved problem *Lesson: Mediation is art and science
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Union story
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1. Put things in context/keep level head 2. Float an idea 3. Keep negotiations on track and focused 4. Resource (experience, what did other parties do?) 5. Set pace of negotiation 6. Reality-check you and the other side (do not use mediator as a negotiator because most important result is one the parties make and build a relationship along the way)
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How to use a mediator
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You can have brilliant _______, but if you can't get them across your _____ won't get you anywhere *Former Chrysler Chairman and CEO Lee Iacocca
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Ideas
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To just invent something and have a great idea is a lot of work, but it is ___ ____. [You need to know] how to get people excited *Larry Page, Cofounder of Google Inc.
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Not enough
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Kumar Chandra's problem is that he ____ _____ ___ __
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Can't sell his ideas
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Your ____ depends on how well you sell *Aristotle and Cicero considered idea selling/rhetoric one of the most important skills to learn
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Success
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Bob Bogle convinced Sam Walton to use Walmart as a name by appealing to Walton's cheap side since he didn't have a large ego. He said Walmart was just seven letters and would be cheap to put up on stores *Lesson: Sell your idea by having a specific goal, identified the decision maker and presenting to that person, draw on credibility, appeal to decision maker's core interest, and use knowledge of decision maker as a person
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Walmart story
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______ is necessary to sell ideas *Explains why trying to manipulate other people does not work when you are selling important ideas
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Credibility
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What selling ideas is about (not tricking people)
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Helping people see things you way
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1. Survey your situation 2. Confront the five barriers 3. Make your pitch 4. Secure your commitments
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4 Steps to relationship-based persuasion (woo process)
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__ ___ sold idea of first nonstop flight across the Atlantic Ocean in 1927
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Charles Lindbergh
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1. Negative/ambiguous relationships 2. Poor credibility 3. Communication mismatches 4. Hostile belief systems 5. Conflicting interests (effective sellers should focus on other party's interests) *First two relate to how people see you personally and last three make it harder for people to hear your idea clearly
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5 Barriers to relationship-based persuasion
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Persuasion at work always takes place within a network of _________
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Relationships
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Relationships need to be in place ______ you try to make the sale
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Before
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Network of people who know people who know people *You need one
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Circle of influence
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Gambit that works (when it does) by making a request that the other party is sure to reject (he slams the door in your face) then you back down immediately to a much more modest suggestion which looks so reasonably by comparison with the first one that people are more likely to say okay *Can fail due to injury of credibility *Ex: People raising money for charities get more 10 dollars donations when they ask for 10 dollars after asking for 50 dollars and being rejected than if they ask first for 10 dollars
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Door in the face
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Important part of credibility *According to Aristotle it is the antidote to becoming overly focused and the most important persuasion tool *J.P. Morgan says this cannot be bought
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Character (ethos)
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Story of Jeffrey Katzenberg (founder of Dreamworks) is about _____ _____ because he got carried away with his own message and forgot to see it from his audience's point of view *He forgot he was speaking to stock analysts once his company went public and talked up Madagascar but it only hit expectations and did not exceed them so stock dipped
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Communication mismatch
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He convinced people to man his artillery battery out in the open by appealing to their pride *Lesson: Sell ideas by appealing to other party's interests
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Napoleon story
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The ______ is especially important in selling ideas because there are few impulse buys in the market of ideas since careful deliberation is the norm *Rationality is critical in the idea-buying process but not in the way you expect. People are arrive at better decisions when they load up on as much data and reflection as possible, and then set all that aside and decide with their guts feelings *Drive deep into the data then trust your gut- Andy Grover (former CEO of Intel) *The final act of business judgment is...intuitive"- Alfred Sloan (CEO of GM in the 1920s) *Instead of putting one fact together with another, the best managers grasp a general ideas as a whole...in making decisions. This is better than one can get only through careful reasoning-Akio Mirita (cofounder of Sony Corporation)
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Pitch
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According to Malcolm Gladwell's book Blink, the final act of deciding seems to reside in the realm of ________ because the unconscious (which is source of most new and creative ideas) does better when conscious mind is processing a lot of data
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Intituion
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People must be reasonable and ______
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Rationalizing
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So convenient a thing it is to be a _____ creature, since it enables one to find or make a Reason for everything one has a mind to do *Benjamin Franklin
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Reasonable
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J.P. Morgan said everyone has two reasons for a decision: a good reason and a _____ reason
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Real
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The unconscious mind of your audience will be making the _____ decision on your idea
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Final
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Memo written by Yahoo executive Brad Garlinghouse in the Wall Street Journal to pitch ideas for changing Yahoo's business strategy *Worked because it spoke it "Yahoo-ese"and presented its thesis in a compelling way by being addressed to the right people, establishing his credibility, embracing Yahoo culture, explaining the problem, identifying its causes, and arguing vigorously *Leaking to Wall Street Journal was a political move
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Peanut Butter Manifesto
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Of all the modes of influence _____ is the one that chiefly distinguishes the behavior individuals as participants in organizations, from their behavior outside such organizations. It is _________ that gives an organization its formal structure *Herbert A. Simon
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Authority
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_____ __ serves as the basis for more influence moves at work than any other influence foundation *Authority is good and gives you credibility but it is not enough to sell ideas because big ideas always have multiple stakeholders who also have authority
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Formal authority
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An average of _____ people inside an organization are involved in the approval of most important new ideas
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20
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Relatively simply ideas require input and approval from an average of ___ people
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8
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People in high positions possess _______ if and only if the people in the lower positions cede (implicitly or explicitly) to them *People who forget they have only as much ______ as others are willing to give them are the ones who make the most mistakes in selling ideas
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Authority
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A bank president said he was a _____
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Salesman
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The _____ you go in corporate hierarchy, the less position alone determines what ideas get adopted and the more relationship and persuasion skills determine what gets done
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Higher
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Creating a ______ built on the foundation of selling ideas, rather than authority, is a competitive advantage for firms that can do it
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Culture
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According to GM leader Alfred Sloan in My Years with General Motors, the selling approach provides an important __ against ill-considered decisions
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Safeguard
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CEO Roberto Goizueta was able to introduce New Coke in 1985 unilaterally and it was a disaster because he did not listen to the customer and Coke lacked a culture of selling ideas which prevented people from stopping him
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New Coke Story
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1. Forget and polish your ideas 2. Map the decision process you face by understanding the social networks within the organization 3. Assess your persuasion styles 4. Confirm your own level of passion for the proposal
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How to survey the situation
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Transform barriers into _______
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Assets
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1. Present solid evidence and arguments 2. Use devices to give your idea a personal touch
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How to make your pitch
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Secure your _________ by dealing with politics at both the individual level and within the organization
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Commitment
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1. Preparing your strategy 2. Exchanging information 3. Opening and making concessions 4. Closing and gaining commitment *People in different cultures will spend different amount of time on each step (Westerners spend most time on 3 and non-Westerners spend most time on 2 to build relationships)
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4 Steps of negotiation process
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In all negotiations of difficulty, a man may not look to sow or reap at once, but must _____ the business and so ripen it by degree *Sir Francis Bacon (1597)
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Prepare
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For tough meat, ____ teeth *Turkish folk saying
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Sharp
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1. Bargaining style 2. Goals/expectations 3. Authoritative standards/norms 4. Relationships 5. Other party's interests 6. Leverage
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6 Foundations of negotiation
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Attitudes derived from family, gender, culture, and experience
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Psychological basis of bargaining style
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Beliefs about what is possible and what you deserve
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Psychological basis of goals and expectations
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Consistency principle and deference to authority
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Psychological basis of authoritative standards and norms
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Reciprocity principle
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Psychological basis of relationships
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Self-esteem and self-interest
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Psychological basis of the other party's interests
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Aversion to loss
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Psychological basis of leverage
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Negotiators are like _____
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Dancers
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1. Balanced concerns 2. Relationships 3. Transactions 4. Tacit coordination
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4 Types of bargaining situations (situational matrix)
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Low perceived conflict over stakes and low perceived importance of future relationship *Do not call for negotiation so much as tactful avoidance of conflict *Best strategies: Avoidance, accomodation, or compromise *Ex: Highway intersection or airplane seating
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Tacit coordination
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High perceived conflict over stakes and low perceived importance of future relationship *Usually creates need to form a working relationship *Leverage counts *Best strategies: Competition, problem solving, or compromise *Ex: Divorce, house sale, market transaction
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Transactions
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High perceived conflict over stakes and high perceived importance of future relationship between parties *Best strategies: Problem solving or compromise *Ex: Business partnership, joint venture, merger
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Balanced concerns
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Low perceived conflict over stakes and high perceived importance of future relationship *Best strategies: Accommodation, problem solving, or compromise *Rapport is most important aspect of negotiation process *Ex: Marriage, friendship, or work team
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Relationships
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Construct a specific plan of action for the situation you face
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Goal of preparation
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1. Assess the situation 2. Match situation, strategy and style 3. Examine the situation from the other party's point of view 4. Decide how to communicate (communicate with agent? If communicate by self in what medium?)
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Preparation steps
question
Story that illustrates a transaction *1901: J.P. Morgan wanted to buy area of land rich in iron deposits called Mesabi ore fields. John D. Rockefeller senior owned it and did not like Morgan and did not negotiate. Eventually, he allowed John D. Rockefeller junior to negotiate with J.P. Morgan. Morgan invited Junior to his impressive office and at first ignored him. He asked Junior for a price but then Junior said Morgan made the meeting so he should make offer. Junior said they should get go-between so they got Henry Clay Frick, trusted by all, to be go-between. Frick worked with Rockefeller to come up with 80 million price, which Morgan accepted even though he only wanted to pay 75 million. It turned out being a good deal for him *Lesson: Rapport may be bypassed but only for a purpose
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J.P. Morgan and John Rockefeller Story
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Story that illustrates a relationship *Institute for Advanced Study opened in 1930s in Princeton and needed researchers. New director, Abraham Flexner, approached Albert Einstein to join and asked him what salary he wanted. Einstein said $3,000 per year unless Flexner thought he could live on less. Flexner then gave him more than triple that number, and it was a successful deal for all
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Albert Einstein story
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Story that illustrates balanced concerns *1722: Ben moved in with his brother James to learn printing. James paid monthly fee for them to eat at a boardinghouse, but Ben started refusing meat at his meals. Boardinghouse complained about making special means for him. Ben proposed deal that he would make his own meals if James would give him half of what he would pay the boardinghouse to feed them. Everyone ended up being happy
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Benjamin Franklin meat deal story
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A strategy useful in every situation, but is usually the second or third best choice so it is better to use as time runs out than as an all-purpose strategy
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Compromise
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______ ______ ______ see labor negotiations as balanced concerns, unlike their rank and file members so they have to engage in theatrical hard ball tactics to appease their constituency
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Labor union negotiations
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Professor Shell sold his house and used face-to-face and then the email medium so both sides could have time making responses *Only problem was when lawyer came into the picture but this was fixed with a few phone calls
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House sale story
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Do not use ______ unless they deliver more value than cost *Best reason for using ______ is economic in that they can sometimes get a better deal than you could get yourself *_____ can steer parties past hidden risks and may servce as gatekeepers to entire industries such as the publishing, entertainment, and sports industries *_____ are valuable when there are imbalances in bargaining styles or expertise
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Agents
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*Fee they charge (negotiate this if possible) *Agent's own agenda (in real estate listing agent is paid on commission and works for the seller which means he'd rather close many deals fast than slowly maximize each deal and may negotiate to to your bottom line sooner. In fact, real estate agents keep their homes on the market longer than yours. Opposite is true of agents paid by the hour who will try to drag out engagement as long as possible) *Bad feelings *Miscommunication (ask for direct meeting with agent present or put your message in writing) *Self-serving bias (agents suffer from overconfidence in their own abilities-->get second opinions whenever possible) *Time (agents create delays; If God had an agent, He would still be creating the Earth)
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Costs of agents
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The ____negotiation involves a face-to-face encounter
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Traditional
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Gives everyone the maximum bandwidth for communication (important because we convey over half of our meaning nonverbally) *Least convenient
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Face-to-face meetings
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Second widest communication channel after face-to-face meetings *Increasing in use as geopolitical risks such as terrorism rise and communication technology improves
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Video conferencing
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1. Face-to-face 2. Video conferencing 3. Telephone 4. Email/instant messaging
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Communication mediums in order of most bandwidth and least convenient
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*Convenience *Time to consider one's next move *Clear record of proposals *Ease in conveying large amounts of data *Leveling of the playing field between negotiators with different levels of seniority and expertise *Power to quickly mobilize large coalitions of like-minded people using group email lists *Works well for avoiders
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Benefits of email
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*Increased risk of impasse (94% of MBAs in schmoozing group made deal but only 70% of MBAs in strictly business group made deal over email) *Careless clicking *Delay (the narrower the pipeline of communication, the longer it takes to get information through it) *Polarized decisions in groups (decisions tend to be more extreme over email than inn face-to-face meetings)
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Disadvantages of email
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1. Think before you click 2. Go out of your way to engage in small talk 3. Make periodic phone calls and have a few meetings with your counterparts
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Advice for email negotiations
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_______ negotiators have an advantage when using IM (instant messaging) because their opponents find themselves at a loss for words in the rapid-fire IM environment and tend to concede points. So IM calls for extra care, preparation, and prudence than email since it is faster paced than email
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Competitive
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The single ______ important step in becoming an effective negotiator is acquiring a habit of preparation
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Most
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Failing to prepare is preparing to ____ *John Wooden (UCLA basketball coach)
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Fail
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It is ____ to sound a person with whom one deals...than to fall upon the point at first *Sir Francis Bacon (1597)
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Better
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Who is without knowledge? He who asks no _____ *Fulfulde folk saying
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Questions
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The Arusha people of Tanzania use this expression to describe the opening phase of negotiations in which the parties exchange their initial demands and counterdemands *No one takes these opening demands seriously. They are a way to fix the agenda, test expectations, and establish legitimacy of their positions. These demands are later forgotten through tolerant amnesia
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Talking to the mountain
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1. Development of rapport between individual negotiators (first duty of information-exchange) 2. Surfacing of underlying issues, interests, and perceptions (without giving up anything) 3. Signaling expectations and leverage *First opportunity to explore the Six Foundations in action
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Purpose of information exchange
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Armand Hammer (CEO of Occidental Petroleum) distinguished his bid to buy valuable Libyan oil concession from Libya in the mid-1960s by presenting it in Arab rather than a Western manner. He won the contract *Lesson: Build rapport
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Libyan oil concession story
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Find some common interest, passion, or background experience unrelated to the negotiation that you share with the other negotiatiar
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How to build rapport
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Steve Ross (who later founded Time Warner) helped a small car rental company negotiate a deal with Caesar Kimmel for parking spaces by bonding with Kimmel over horse racing *Lesson: Build rapport by seeking similarities (similarity principle)
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Steve Ross story
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We trust others a little more when we see them as familiar or similar to us, even if similarity is superficial
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Similarity principle (liking rule)
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*Establishing rapport will not and should not gain one side a significant bargaining advantage over the other *Over or underdoing it
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Rapport pitfalls
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Get the other party to think you as a unique person, not just a face coming to ask for something
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Goal of rapport
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Early 1980s Intel negotiated with Japanese company. Intel's general counsel, Roger Borovoy made comment in U.S. that "Negotiating with the Japanese is like negotiating with the Devil." After newspaper story was published negotiation became much more difficult. Intel now has a muzzle reward for individuals such as Borovoy for ill-timed remarks *Lesson: Rapport is important and everyone in a large organization is on the bargaining team, not just the people at the bargaining table
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Intel story
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The more ____ the personal acknowledgement is, the more effective it will be
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Genuine
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The _____ the stakes the more questions you should ask to gauge the other party's interests
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Higher
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1976: Sidney Sheinberg of MCA and Universal Pictures wants to stop production of Betamax (later called VCR) invented by Sony. Sony and MCA worked together on projects. Sheinberg threatened to sue Sony unless product was dropped and Morita was shocked because he thought the companies worked together. He said "When we shake hands with one hand, we will not hit you with the other hand." VCR ended up coming out despite lawsuit and everyone made money *Three mistakes Sheinberg made: 1. He thought he could gain advantage by surprising an unprepared opponent. 2. He did not ask questions and listen. 3. He ignored a potential cross-cultural difference (lawsuits are common in America but not in Japan) *Lesson: Friends don't sue
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Akio Morita VCR story
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You usually do _ when the other side is prepared to deal with the real issues instead of them being tricked
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Better
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1. Asking questions: *Skilled negotiators: 21.3% *Average negotiators: 9.6% 2. Testing for understanding *Skilled negotiators: 9.7% *Average negotiators: 4.1% 3. Summarizing: *Skilled negotiators: 7.5% *Average negotiators: 4.2% 4. Total: *Skilled negotiators: 38.5% *Average negotiators: 17.9% *Study by Neil Rackham and John Carlisle *Results confirmed by study of lawyers and study of bankers which said willingness to prepare (#1), knowledge of subject matter being negotiated/ability to think clearly under pressure (#2) and ability to express one's thoughts/listening skill (#3) were most important skills
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Information-gathering behavior as a percentage of all behavior observed
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Skilled negotiators focus more on receiving, as opposed to delivering, _______ *Probe first, discuss later
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Information
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Information, especially information about what people want is ______
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Power
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Every _____ that the other side wants or needs an agreement is my leverage-provided that I know those _____ *Bob Woolf
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Reason
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Negotiators failed to correctly identify shared priorities _____% of the time, mostly because of bluffing *20% of negotiators will end up agreeing to options that neither side wanted due to backfired bluffs
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50
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Realize that it is a strategic process and take it slowly *It almost never hurts to talk less
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Best way to manage flow of information
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Early, clearly, and credibly
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Best way to deliver bad news
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Your ________ is a matter of perception as much as reality
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Leverage
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*You have strong leverage: 1. Firm: Make confident demands and credible threats; display your alternatives and leave the decision up to the other party (Morita story, but went wrong. Should have been more tactfully) 2. Flexible: Show the other party you are invested in the relationship; be generous (ex: J.P. Morgan giving two checks to Andrew Carnegie because of mistake) *You have weak leverage: 1. Firm: Emphasize the uncertain future (appeal to other party's desire to minimize risk by closing deal now) and bluff (act strong when you are not, high-risk strategy) -Emphasizing the uncertain future is usually the better way to go 2. Soft: Acknowledge the other party's power and stress the potential gains from future cooperation (ex: HBJ watch story); appeal to the other party's sympathy (what would they do in your position?)
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How to signal leverage
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The long they keep you _______, the more they want the deal *Leslie H. Wexner
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Waiting
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Information exchange process is first stage of the _____ phase of negotiations *Should be handled differently in different situations (the more the stakes matter relative to the relationship, the more strategic the parties are likely to be)
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Interactive
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One side makes a concrete plausible opening offer that requires a reciprocal response
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When information exchange has ended
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Life cannot subsist in society but by reciprocal ________ *Samuel Johnson
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Concessions
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Most researched part of negotiation process
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Opening and making concessions
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Good tactics depend on the ________
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Situation
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Chandler opened and said he wanted $150 per week for salary (he knew nothing about movie business) but the other side was willing to pay $720 a week. Since the other side valued the relationship they were willing to start over *Lesson: Be careful about opening
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Chandler story
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Beatles manager Brian Epstein (he knew nothing about movie business) was negotiating Beatles financial share of A Hard Day's Night. He opened and got 7.5% of the movies profit but the other side was willing to give up 25% *Lesson: Be careful about openning
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Beatles story
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The never open rule is not always _______ advice *It depends on how much information you have
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Good
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______ _____ if you do not know the market value of what you are buying or selling
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Don't open
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If you are well informed about the bargaining range then you gain important ________ from opening *Why: 1. By naming the first number you have a chance to set the zone of realistic expectations for the deal and force the other side to rethink its goals 2. Anchor and adjustment effect
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Advantage
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Human tendency to be affected by first impression numbers thrown into our field of vision. We tend to make adjustments from these often arbitrary reference points *Ex: People who see 8*7*6*5*4*3*2*1 think product is higher than people who see 1*2*3*4*5*6*7*8 even though it is the same product
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Anchor and adjustment effect
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Open if you think your information about market value is as good or better than your counterpart's. Otherwise guard against the anchor effect and ask the other party to open
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When to open
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Best _______ against making a mistake at the opening is negotiating with someone who cares about his or her relationship with you
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Protection
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*If you are in a relationship situation a fair or accommodating opening is the right move *If you are in a transaction and have some leverage you should open optimistically (hard-line bargaining strategy which opening high and conceding slowly is best approach to transactional bargaining especially if direct communication between the parties is limited)
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When to open optimistically or reasonably
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The highest or lowest number for which there is a supporting standard or argument enabling you to make a presentable (not necessarily the best) case *Different from an outrageous offer because an outrageous offer has no justification *In some cultures such as South America, Middle East, and Africa, anything other than a ________ _____ _____ is a serious social mistake and bargaining blunder because bargaining is a form of recreation in these places *Take advantage of contrast principle and norm of reciprocity
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Optimistic first offer
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An optimistic (but not outrageous) opening sets the other party up to feel both relief and satisfaction (and thus more willing to say yes) when the realistic settlement range comes into view *Explains add-on warranty sales
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Contrast principle
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1. When you lack leverage 2. When the other side won't bargain 3. When it's more than just a (bad to use optimistic opening for balanced concerns)
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When optimistic opening will not work
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Wayne Huizenga always opens within 5-10% of final price he is willing to pay because he is not a haggler and he doesn't want to insult a business owner's pride when trying to buy their business by lowballing them
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Wayne Huizenga story
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1990s American automobile dealers set no haggle one-low-price selling policies for new cars but it was a disaster because only about 15% of Americans hate to haggle, people want to use bargaining power, and people like having satisfaction talking about the great deals they made *Lesson:People receiving concessions often feel better about the bargaining process than people who get a single firm fair price even when they end up paying more than they otherwise might
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Car dealer story
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People receiving ________ often feel better about the bargaining process than people who get a single firm fair price even when they end up paying more than they otherwise might *Starting high than gradually conceding to moderate point is more effective (higher level of satisfaction from other side and higher money made per transaction) than starting high then refusing to move and starting moderately then refusing to move
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Concessions
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Concessions are the language of _____ because they tell the other party you accept the legitimacy of their demands
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Cooperation
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Don't worry about it. Just solve the problem and go first if you have to
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Concession strategy for tacit coordination
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Accomodation *Goal is to find out what the other party wants and give it to him with interest. Money is not the issue *If accommodation is not possible do self-sacrificing compromise *Competitive people should get help from other people to do this. For people dealing with competitive people keep your humor, accomodate, and consider stop dealing within the person *Ex: Einstein story
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Concession strategy for relationships
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Firm concession strategy/ classic haggling/ progressively smaller concessions *Hagglers' concessions initially converge on their expectation levels (not bottom lines) because declining size of hagglers' concessions sends a powerful signal that they are getting to a resistance point. They want you to think that their expectations level is their bottom line which a bluff. If this happens keep pressing and they will make concessions to actual bottom line *Do not make big concessions too early because they can confuse the other side by showing that you really want the deal (which has leverage implications, leading the other side to a higher expectation) and that the issues you conceded you were not important and you get 0 credit for the concession (concession devaluation)
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Concession strategy for transactions
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Concessions given too easily or early are not valued and are given 0 credit *What we obtain too cheaply, we esteem too lightly
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Concession devaluation
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If _____ issues are on the table, concession making in high-stakes negotiations often takes the form of issue trading and package bargaining *Classic hagglers will attack each issue one at a time using distributive procedure but this leads to a higher risk of impasse than issue trading
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Many
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Dividing the pie/simple haggling
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Distributive bargaining
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More complex process of trading off between issues or making the pie larger *Done by identifying what is most important to each side and logrolling (accommodating each other's most important interests and priorities in exchange for reciprocal accommodation) *By dealing with entire packages and agreeing that no issued is closed until all issues have been decided, both parties retain a high degree of flexibility (if then formula to make concessions) *More skillful than haggling but no less competitive
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Integrative bargaining
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Start high and concede slowly
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Concession rule for haggling
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Make big moves on your little (less important) issues and little moves on your big (most important issues)
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Concession rule for integrative bargianing
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Goal is to address as many priorities as possible, make sure that each side gets its fair share, and maintain good working relationship *All trades should be reciprocal *Use high expectations *Use conditional if...then formulation for concession making and concede on less important issues first *Try proposing several different packages at the same time and have the other side identify what it prefers and maybe adjust packages *Be creative *Genuine conflict may help energize collaborative problem-solving process in a Balanced Concerns situation
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Concession strategy for balanced concerns
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Other side's representative tells you that your demands sound reasonable to her but that someone who isn't there would never agree *Good guy based off similarity principle *Bad guy takes over at opening *Works because of conflict effect *Way to overcome: Name the tactic publicly at the table and demand clarification on the issue of authority. Fight fire with fire. If bad guy is a lawyer or adviser throw him out and let the deal makers take over from the deal breakers
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Good guy/bad guy routine
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1. Situation 2. Leverage 3. Style (yours and your counterpart)
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3 Determinants of strategy and tactics
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As your leverage decreases, your need to soften your approach ______. And as your leverage _________ you need to accommodate decrees, regardless of the situation you are in
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Rises
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Make every _______ clear and plain that none may afterwards complain *English rhyme
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Bargain
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The ___ is not he who begins but he who finishes *Slovakian folk saying
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Master
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*Transactions: 1. Should I open: When in doubt, don't. But OK if you have good information 2. How to open: Optimistically (highest or lowest figure supported by presentable argument) 3. Concession strategy: Firmness (concede slowly in diminishing amounts toward expectation level) *Balanced concerns: 1. Should I open: When in doubt, don't. But OK if you have good information 2. How to open: Fairly (highest or lowest figure supported by solid argument) 3. Concession strategy: Big moves on little issues, little moves on big issues, brainstorm options, present several packages at once *Relationships: 1. Should I open: Yes 2. How to open: Generously 3. Concession strategy: Accommodation or fair compromise *Tacit coordination: 1. Should I open: Yes, but avoid conflict if possible 2. How to open: Do whatever if takes to solve the problem 3. Concession strategy: Accomodation
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Opening and concession-making summary
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Splitting the difference, walkouts, ultimatiums
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Closing gambits
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1988 sale of RJR Nabisco detailed in Barbarians at the Gate *RJR chairman Ross Johnson set sale in motion by proposing leveraged buyout (LBO). Sale came down to Johnson and Shearson vs. Henry Karvis of Kohlber Kravis Roverts (KKR). KKR gave RJR 30 minutes to decide on offer. Johnson also made close offer but its value was uncertain so time was needed to analyze it. KKR gave extension but at rate of $1M per minute. KKR made another bid and won deal, though they likely paid too much *Lesson: Scarcity effect and overcommitment *Example of a transaction
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Calling the barbarians story
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1. Scarcity effect 2. Overcommitment
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2 Closing factors
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Human tendency to want things more when we think the supply is running out *Appeal to this effect starting at beginning of information exchange stage *Most common at end of negotiation *Scarcity enhances the value of anything that can be possessed, is useful to its possessor, and its transferable from one person to another *Can be caused by competition, walkouts, or time running out (deadline or exploding offers) *Doubles if a credible deadline combines in the other party's mind with scarcity based on high demand (concessions skyrocket in amount and frequency when this happens) *Emotional response (not rational) *Used to create urgency *Matter of judgement whether to yield to effect or call a bluff *Ex: People rush to the store to buy milk when a storm is coming
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Scarcity effect
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________ are common, especially in transactions, and work because they trigger the scarcity effect
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Bluffs
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Create the sense that time is running out on the opportunity *Deadlines are most effective when they are linked to events in the outside world that the parties do not control (ex: regulatory filing deadline)
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Goal of a deadline
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Time limits set on certain elements of an existing offer which once time runs out explodes leaving a less attractive offer on the table *Ex: Many employment offers
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Exploding offer
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Donald Trump has walked out of deals so often he has this name for his style *Wayne Huizenga also walks out on many deals
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Trump walkout
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Derives from our human desire to avoid admitting failure or accepting loss when we have invested heavily in a prior course of action or decision *The more time someone invests in an initially sensible activity, the more committed he or she becomes to seeing through, even though the decision may no longer make sense *Can happen spontaneously even when other side is acting in good faith *Best antidote is to monitor your commitment and ask yourslf if the other party is as invested as you are *Ex: If you stand in line for 45 min you are more likely to stand in line for another 45 min than if you only stood in line for a few minutes even though additional waiting time is the same
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Overcommitment
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Explains why people play slot machines after losing and why inexperienced investors won't sell losing stocks *As we invest increasingly significant amounts of time, energy, and other resources in the actual negotiation process, we become more committed
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Loss aversion
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Modest requests of small favors just before a deal closes *Works because people do not want to spoil deal over small items *Nibblers can add 3-5% value to their deal over a year *If you know you are deadling with a nibbler hold somethng to the end to give them. If you do not know and they end up being a nibbler, do not respond sympathetically. At the very least demand reciprocal concessions *Explained by overcommitment and contrast effect
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Nibble
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_____ closing techniques are the rule when the relationship matters *Goal is to assure the other party of your goodwill * Accommodate, then close quickly and amiably
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Softer
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By far the _____ number of our negotiations relate to people and firms with which we have ongoing relationships
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Largest
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Leave the other side feeling good but be careful to achieve your fair share of the substantive benefits from the deal
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Closing in balanced concenrs
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Most likely settlement point in any given transaction, especially for people who favor compromise *Good when the relationship is important *Popular because it appears to our sense of fairness/reciprocity, simple/easy to understand, and quick *2 reasons not to split the difference: 1. Midpoint may not be fair to your side if you opened at a reasonable price and other side opened at an aggressive one 2. May leave additional, creative options on the table *Alternative: Obtain a neutral valuation or appraisal nominated by each party and split the difference bewteen those; also postsettlement settlement
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Splitting the difference
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Approach by Howard Raiffa where the parties reach an agreement that works for everyone then agree to continue searching for trade-offs that may make at least one side better off without making any side worse off *Hard to implement in practice because: 1. People are tired after they are done negotiating 2. People change their preferences too quickly for this to have time to work 3. Worry that other side will back out of original deal because of what happened in postsettlement settlement process
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Postsettlement settlement
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A no deal is sometimes the _____ answer because a no deal is better than a bad deal
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Right
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1969 two negotiators respecting U.N. command (James B. Knapp) and North Korea (General Yi Chhon Sun) were called to meet by North Korea. Tradition was that neither side is allowed to leave unless side the calls the meeting ends meeting. Yi left without saying anything and Knapp said meeting was over *Lesson: No deal was a mistake here and the worst impasses are the products of emotional escalation that builds on itself
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Korean war story
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______ way to overcome impasse is to leave yourself a back door through which to return to the table when you get up to leave it *Use words such as "at this time" *Consider thinking of ways to let other side back in so he does not lose face (build him a golden bridge to return to table by forgetting his last ultimatum)
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Easiest
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When miscommunication is the problem an ____ may be all that is needed to jump-start negotiations otherwise new negotiators may be needed
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Apology
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Professional baseball lost nearly two full seasons in the 1990s because of an impasse in negotiations between the players' union and the club owners. Breakthrough came when new negotiator Randy Levine was hired and broke the dam of mistrust. He banned the press in order to stop public commitments. *Lesson: Public commitments can be problematic and sometimes new negotiator is necessary to restart negotiation
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Baseball story
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The ______impasses are the products of emotional escalation that builds on itself *Solution: Small step procedure: one side needs to make a very small, visible move in the other side's direction, then wait for reciprocation
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Worst
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Way to overcome impasses where one side needs to make a very small, visible move in the other side's direction, then wait for reciprocation *Works by restarting norm of reciprocity Ex: Anwar Sadat (Egypt's late prime minister) used the technique to deescalate the Arab-Israeli conflict when he flew to Jerusalem in 1977 because simply getting off a plane in Israel was considered a small step. eventually led to Camp David peace accords and Israel's return of Sinai Peninsula to Egypt; also M&M story (get one M&M for each concession, or two for large concessions)
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GRIT (small step procedure, graduated and reciprocated initiatives in tension reduction)
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When parties reach an _____ it is usually because each sees the other's demands as leaving it below its legitimate expectations *Frame of reference must be changed to make process and impasse must last long enough to allow this change to happen
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Impasse
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If all else fails in resolving an impasse, you may need to call in a neutral _____ _______; otherwise parties may have to go to court to resolve dispute
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Third party
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To secure commitment, not merely agreement *Different kinds of commitment are necessary for different kinds of nogiations Ex: Discover and Morgan Stanley Group included provision in their deal that one would have to pay the other if one backed out and Doug Flutie's agent required the deal be announced immediately to the press
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Goal of all negotiations
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Theresa ran a volunteer organization that took children out on Saturdays. Adult volunteers often failed to show up after saying they would. To fix the commitment problem she gave each adult volunteer one specific thing to bring. Now that they had a concrete image of what their volunteering meant they were more likely to go *Lesson: Secure commitment through accountability
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Theresa story
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The big _____ between agreements and genuine commitments is the risk of loss faced by parties for nonperformance
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Difference
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1. Social ritual: How commitment process begins in virtually every negotiation (ex: handshake) 2. Public announcement 3. Accountability: Promisor's personal reputation is at risk if his performance falls short (ex: put deal in writing, which also gains strength because of consistency principle) 4. Simultaneous exchange: Exchange good and money at the same time
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4 degrees of commitment
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Most ______ agreements are legally enforceable but can be hard to provide in court *Exceptions: Must be in writing and signed by the party against whom performance in sought 1. Good worth over $50 2. Multiyear contract 3. Contract involving real estate
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Oral
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The ____ is a place set apart where people may deceive each other *Anacharsis (600 B.C.)
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Market
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Most people I play _ with I trust, but I still want to count the ____John K O'Loughlin (Allstate Insurance Company)
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Cards
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Darrell Sifford, a Philadelphia newspaper columnist, haggled for a globe and _____ about the price he saw it for in a discount catalog. He ended up getting the price he wanted. What he did may have been unethical *Not fraud *Stretching the truth was the way to play the game *Pragmatist and Poker Schools would say this was ethical, Idealist School would not
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Lied
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According to a study done in the 1990s on Harvard MBAs, students were quite _____with traditional competitive bargaining tactics, including bluffing about bottom lines, opening demands, time constraints, promises of future relationships, and other offers
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Comfortable
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Your personal beliefs about ethics come with a ___ _ since the stricter your ethical standards, the higher the financial cost you must be willing to pay to uphold them in any given transaction, and the lower your ethical standards the higher the reputation costs you will suffer
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Price tag
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Obeying the law is the ______ standard of ethics
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Minimum
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American law disclaims any general duty of ___ ____ in negotiation of commercial agreements
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Good faith
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1. Knowing (can include reckless disregard for truth) 2. Misrepresentation of a (usually positive but can be affirmative/negative) 3. Material (not about bottom lines) 4. Fact 5. On which the victim reasonably relies 6. Causing damage (quantifiable and economic)
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6 Elements of fraud
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Car deal commits __ when he resets a car odometer and sells one of his company cars as if it were brand new
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Fraud
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Avoid _________ by "be silent and be safe" unless there are affirmative disclosure duties
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Misrepresentation
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1. When the negotiator makes a partial disclosure that is or becomes misleading in light of all the facts 2. When the parties stand in a fiduciary relationship to each other 3. When the nondisclosing party has vital information about the transaction not accessible to the other side (greater duty for sellers than buyers) 4. When special codified disclosure duties, such as those regarding contracts of insurance or public offerings of securities apply *Best test is one of conscience and fairness
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4 Affirmative disclosure duties
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Bluffing about ____ ____ can be helpful because it allows the parties to assert the legitimacy of their preferences and set the boundaries of the bargaining range without incurring a risk of loss. It also is a test of the other side's commitment to their expressed preferences
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Bottom lines
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Lying about ______ may or may not be fraud depending on the relative power of the negotiators (unlikely to be fraud in cases of equals) *Buyer lying about getting something somewhere cheaper is usually not fraud *Landlord lying about having another tenant ready to pay rent increase when there really is no other tenant is fraud *Real estate agent lying about having another buyer willing to pay full listing price on same day when there really isn't one is fraud
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Alternatives
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Usually false _____ cannot be considered fraud, but not always *Touchstone of law of fraud is not whether the statement at issue was one of pure fact but whether the statement succeeded in concealing a set of facts the negotiator preferred to keep out of sight
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Opinions
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Lies regarding intention *Key element is proof that the speaker knew he could not live up to his promise at the time the promise was made. Also important that promise be material
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Promissory fraud
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Lies are a feature of everyday social life in _________ culture
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Every
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____ come first, not last
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Ethics
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Negotiate consistently, using a thoughtful set of personal values that could be explained and defended to others *One of the four most effective factors for a negotiator
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Personal integrity
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Nearly everyone is sincerely convinced that they are acting ____ most of the time, whereas they often think others are acting either naively or unethically
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Ethically
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1. Poker School 2. Idealist School 3. Pragmatist School
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3 Schools of bargaining ethics
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Negotiating is a game with rules defined by the law *Any action within the law is ethical and any action outside hte law is unethical *Modern founder: Albert Z. Carr who wrote Business as a Game *Before lying ask if lie can be easily found out and if it is the best way to gain leverage *3 Problems: 1. Presumes that everyone treats bargaining as a game but research disagrees since idealists and pragmatists don't consider it a game (____ ____ still says its okay to play game with these people) 2. Everyone is supposed to know the rules code but rules differ around the world and by industry 3. Law is not certain
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Poker School
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Do the right thing even if it hurts *Bargaining is an aspect of social life (not a special activity with its own rules) *Use same ethics that apply at home *Lies are never ethical *Can do some deception by not answering questions but prefer not to, even if some advantage will be lost *Draws its strength from philosophy and religion (Immanuel Kant who said you should not lie or treat people merely as means) *Tactics: 1. Refuse to discuss any offer (must make it a policy) 2. Refuse to answer question 3. Answer honestly *School Professor Shell is in *Problem: Their standards sometimes make it difficult to proceed in a realistic way at the bargaining table (skepticism is needed)
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Idealist School
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What goes around comes around *Views deception as necessary (like Poker School) but not if there is a serious, practical alternative (unlike Poker School) *Concern for the potential negative effects of deceptive conduct on present and future relationships (lying and other tactics are wrong if they cost the user more in the long run than they gain in the short run) *Pragmatist will lie more than the idealist will however if there is even a remote chance of a lie coming back to haunt to you, you should not do it *False justifications and rationales are acceptable *More flexible with blocking techniques (ex: Saying I don't know when you really know): 1. Declare the question out of bounds 2. Answer a different question 3. Dodge the question 4. Ask a question of your own 5. Change the subject
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Pragmatist School
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Aim as high as you can since people tend to slip downwards than upwards in regard to ethics
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Shell's advice on ethics
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Realistic, attractive, difficult-to-check (but false) alternatives or authoritative (but false) supporting standards because negotiators always attempt to disclose a good hand if they one (unlike poker players)
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Most effective bluffs
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Tactics to avoid answering questions that threaten to expose a weak bargaining position *Preserve some leverage while reducing the risk of acquiring a reputation for deception
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Blocking techniques
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Dale Singer went to buy his daughter a used car. Price was haggled to $9,000 and then salesman asked if Singer would buy it today for $8,500? Singer said yes but salesman said price was $8,900 but $8,500 was just a personal price, which the manager did not approve. Singer ended up getting the car for $8,500 *Lesson: Singer was lowballed (but he rejected it) because he was tricked into becoming committed to the car at a bargain price, then the price was nudged up to exploit his rising interest in the vehicle
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Used-car purchase story
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1997: Apartment is on sale for $1.7 million by Bonnie Chajet of Warburg Associates. Men put in bids for $1.4M, 1.3M, and 1.275 M. It turns out the second and third bidders were friends with the first one. Chajet saw through the scheme and sold the apartment a few days later for full price *Lesson: Be careful of big rigging (phony bids are designed to signal to seller they should take the falsely high offer)
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Bidding war story
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Bargaining situation most likely to involve deception, especially when price is the primary issue and there are limited prospects for future dealings *Be on guard whenever the stakes matter and the relationship does not
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Transactions
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Leverage imbalances at the bargaining table encourage_______ behavior in both the stronger and the weaker party (stronger can be intoxicated with leverage and weaker can use deceit to gain advantage)
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Unethical
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1. Watch out for transactions 2. Rely on relationships whenever possible 3. Probe, probe, probe 4. Be assertive and persistent 5. Maintain your own standards and don't sink to theirs
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Techniques for dealing with unethical tactics
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Prospect of an ongoing relationship raises people's ____ _______
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Ethical standards
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In dealing with cunning people, we must ever consider their ___ to interpret their speeches *Sirt Francis Bacon
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Needs
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It is very difficult to detect __, and even when you do it is hard to know what it is about
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Lying
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As soon as you begin acting __ , you lose the right to protest other people's conduct
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Unethically
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Whenever you are tempted to lie about somethig, stop, think for a moment, and then find anything to tell the ____ about
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Truth
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Blocking maneuvers: *Ask about their bottom like *Say " It's not your business" *Say "I'm not free to disclose that" *Tell the truth about your goal *Focus on your problems/needs
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Alternatives to lying about bottom line
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*Obtain only limited authority in the first place *Require ratification by your group
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Alternatives to lying about lack of authority
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*Initiate efforts to improve alternatives *Stress opportunities and uncertainties *Be satisfied with the status quo
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Alternatives to lying about availability of alternatives
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*Commit to general goals *Commit to standards *Commit to addressing the other side's interests
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Alternatives to lying about commitment to posititions
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Inject new issues with real value or make a true wish list
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Alternatives to lying about phony issues
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*Use cooling-off periods *Suggest third-party help *Discuss use of a formula
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Alternatives to lying about threats
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Make only promises you can and will keep
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Alternatives to lying about intentions
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*Focus on uncertainty regarding the facts *Use language carefully *Express your opinion
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Alternatives to lying about facts
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1.Lies about bottom lines and alternatives 2. Lowballing 3. Phony issues 4. Fake authority ploys 5. Overcommitment 6. Good guy/bad guy 7. Consistency traps 8. Reciprocity ploys 9. The nibble *Not all are unethical
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Common manipulative tactics
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Lies about bottom lines and alternatives
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Most common lies
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Too good to be true offer; the other side gets you committed to the deal before revealing the full, true cost. After you say yes they know you want what they are selling and they work the price back in their favor by adding terms *Works in sales and other situations (ex: child can play in soccer team but practices are at 6am)
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Lowballing
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Decoy/red herring technique; one side lists four or fives issues as being very important when really only one or two matter *Serious risk of impasse *Ex: Sony story where Guber and Peters added two phony issues then later dropped them so they could win on third issue which would give them more time to get out of current contract with Steve Ross
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Phony issues
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Two types: 1. People lie and say they have authority when they do not (good for lowballing)-->When in doubt ask for proof of authority 2. People lie and say they have no authority when they do-->Avoid dealing with agents if you can *Defer to authority if you must, but make sure the authority is real
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Fake authority ploys
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Other negotiator gets you to agree to an innocent-sounding standard or norm then he springs the trap by showing you that his proposal is the logical consequence of your admission *Solution: See it coming before you agree to the standard and hedge your commitment to the standard
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Consistency trap
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People who refuse to reciprocate or who only appear to do so without giving substantive answers *Insist on reciprocity
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Recirprocity ploys
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Do not be so __that people will eat you up, nor so bitter that they will spit you out *Pashto folk saying
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Sweet
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Everyone lives by _____ something *Robert Louis Stevenson
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Selling
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Bill saved a historic building by convincing the city to give him the money they were going to use to demolish it to him so he could renovate it. He succeeded by making profit himself and increasing city tax base by leveraging a temporary tax abatement given to him by the city officials to gain commercial tenants *Lesson: Have clear, specific goals, use relationship network, use leverage
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Bil Siegel story
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To improve the way you negotiate the ______ step is to make a commitment to work on this area of activity
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First
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1. Willingess to prepare 2. High expectations 3. Patience to listen 4. Commitment to personal integrity
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4 Effectiveness factors
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1. Avoid concentrating too much on your bottom line-spend extra time preparing your goals and developing high expectations (people who expect more get more) 2. Develop a specific alternative as a fallback if the negotiation falls (if you can't walk away you can't say no) 3. Get an agent and delegate the negotiation task or have a competitive person join your team (especially if opponent is competitive) 4. Bargain on behalf of someone else, not yourself (people bargain harder when they act as agents for other people's interests) 5. Create an audience (people negotiate more assertively when other people are watching them. Explains why labor negotiators are so tough) 6. Say " You'll have to do better than that, because..." (Any truthful reason will do. Compliance rate for requests increases 50-100% just by giving a dummy reason for the request according to Harvard photocopying study) 7. Insist on commitments, not just agreements (set the agreement up so they hav esomethign to lose if they fail to perform) *Must become more assertive, confident, and prudent
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7 Tools for highly cooperative people
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1. Think win-win, not just win 2. Ask more questions than you think you should 3. Rely on standards (standards-based approach vs. leverage-based approach) especially when relationships are important 4. Hire a relationship manager 5. Be scrupulously reliable. Keep your word 6. Don't haggle when you can negotiate (try integrative bargaining) 7. Always acknowledge the other party and protect his self-esteem *Must become more aware of other people and their legitimate needs
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7 Tools for highly competitive people
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Effective negotiation is 10% technique and 90% _____
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Attitude
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1. Realism 2. Intelligence 3. Self-respect
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Requirements of right attitude
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Key to success in negotiation
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Information
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1. Deceit 2. Violence
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2 Forms of deliberative assault on human beings
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There must be a minimal degree of ___ in communication for language and action to be more than stabs in the dark and for society to function *Even the devils themselves do not lie to one another because then society of Hell could not function
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Trust
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Perspective of the ____ leads us to be wary of all deception *Though only a single person may be ___, many others may be harmed as a result *Falsehood is in itself mean and culpable, and truth noble and full of praise
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Deceived
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Denies the possibiltiy of knowledge
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Skepticism
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Denies the possibility of freedom
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Determinism
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Requires knowledge and freedom to act on it
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Reasonable choice
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Lying requires a ___, while truth-telling does not
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Reason
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Liars ____ with those they deceive the desire not to be deceived so they would prefer a free-rider status, giving them (and perhaps close friends, as long as most people are not included) the benefits of lying without the risks of being lied to
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Share
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1. Free-loading liar 2. Liar whose deception is a strategy for survivial in a corrupt society
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2 Types of liars
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Liars usually weigh only the _ harm to others from the lie against the benefits they want to achieve. *Problem: Ignores 2 other types of harm that are cumulative and hard to reverse 1. Harm lying does to liars themselves (while no one lie always carry harm for the liar, there is risk of such harm in most since liars cannot determine which lies are trivial. Also lies tend to come together and the more lies the harder it is to keep them straight) 2. Harm done to the general level of trust and social cooperation
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Immediate
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1. The deceived 2. The deceiver
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2 Perspectives of lying
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Expression of initial imbalance in our weighing of truthfulness and lying *Trust is needed for institutions to function *Truth need so no reason but lying does *Does not ban all lies. Only limitation this imposes it that one must first seek truthful alternatives before lying. If lies and truth have same result, do not lie.
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Principle of veracity
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The state of affairs when there does not exist an alternative action that is at lease acceptable to all and definitely preferred by some
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Pareto optimality
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The foundation of ______, moreover is good faith- that is truth and fidelity to promises and agreements *Cicero
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Justice
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Person's bottom-line price, the price such that she would walk away from a negotiation rather than accept a worse price *Bargaining opponent's perception of one's ____ ___ serves to anchor her expectations about the negotiation's outcome so seller should convey a high __ __ and buyer should convey a low _ _
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Reservation price
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Deception in negotiation is best understood int terms of a person's right to defend herself against the possibility of wrongful or potentially harmful conduct by her bargaining opponent *Does not always work because when deception in negotiation makes sense, it is ordinarily not a way of fending off a prospective attacker or wrongdoer, but instead because of its promise as a mutually beneficial solution to a problem confronted by negotiators who, for morally benign reasons, cannot trust each other
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Self-defense model of deception
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___ __ is wrong because of the way it harms the deceived or interferes with access to information essential in autonomous choice-making *Deception in negotiation does not always meet this criteria
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Ordinary deception
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In negotiation people seek ways to limit their exposure to the risk that a bargaining opponent will exploit information about settlement preferences to gain strategic advantage, and argue the dishonesty is an accepted tactic for defending oneself against a potentially dishonest bargaining opponent *Do not endorse mutual trust principle but consider it in their arguments. They instead focus on how we may change the environment of negotiation so we will trust one another more
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Dees and Cramton view of deception
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It is unfair to require an individual to take a significant risk or incur significant cost out of respect for the moral rights of others, if that individual has no reasonable grounds for trusting that the relevant others will take the same risk or make the same sacrifice *Not very plausible because it allows one to do anything to one's opponent no matter how horrible, so long as one thinks that the opponent will do the same horrible thing. It is also not realistic (people do not follow this in reality)
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Mutual trust principle
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Defensive dishonesty is justified only when it is necessary to protect oneself against harmful deceptions of one's bargaining opponent *Emphasis on necessity *Costs of finding an object may be high enough so that one reasonably refuses to bear them *Problem: Does not explain when is deception necessary and self-defense argument suggests you can use physical force in negotiations, which is an absurd result
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Carson view of deception
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Dees, Cramton, and Carson all say ____ is prima facie wrong *Strudler disagrees
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Deception
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1. Deception may undermine trust *Problem: Deception ofter occurs because of a lack of trust in the first place. Deception may actually enhance trust 2. Deception may cause economic harm (losses created and benefits missed) *Problem: Costs are not a problem in itself. Costs must be measured relative to those incurred in alternatives. Also harm almost always happen in economic situations, so one must say why that particular harm was wrong 3. Deception may violate Kantian strictures against using a person as a mere means *Problem: Personal autonomy is not always impaired by deception (ex: taxi box story where taxi guy said moving boxes was impossible but it wasn't. He just did that to emphasize the difficulty so he could get a higher price). The symmetry of informational opportunity preserves autonomy
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3 Reasons deception is wrong
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Howard Raiffa advises people that not even after a successful negotiation one should not tell the other party about one's _____ ___because such information will only be a source of resentment
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Reservation price
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Possibility of deception to help solve problem of communication shared by parties to a negotiation. Provides benefit of safe device for indirect communication. *Strudler's view of deception *More than self-defense because deception can solve a mutual problem *Both more permissive and less permissive than self-defense view because it allows you to initiate deception (which self-defense would not) but does not allow force (which self-defense does)
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Mutual advantage view
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____is normal. Our minds and bodies secrete deceit. Few people can make it through a typical day without ____, often _______ 30-50% of the time *60% of newly introduced individuals lie to one another within minutes to meeting in order to create a favorable impression. Dating couples lie more *25% of resumes contain significant lies *_____ starts early, at age 3 or 4
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Lying
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What you lie about is often illegal to lie about
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Practical reason not to lie
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Not all _____ are lies
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Deceptions
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Averting eye contact, pulling on one's ear, sweating, changing vocal pitch, change in amount of smiling, long pauses between answers, rubbing one's arm or fingers, heavy breathing *Many of these are false such as averting eye contact, posture shift, head movement, smile changes, and foot/leg movements *Most people are incompetent lie detectors and detecting lies rarely exceed random chance *People are better lie detectors when reading transcript than when watching a video tape *Trained professionals do not better in detecting lies even though they are more confident in lie detecting ability
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Presumed indicators of lying
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Study that had videos of suspects lying and telling the truth *Results: There is no typical indicator of deceptive behavior, but the most reliable indicator is longer pauses and less blinking
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British police study
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Lie detectors which relate changes in heart rate, blood pressure, and electrodermal reactivity to a subject's truthfulness *1988: Congress banned its use in most routine business settings and limited its use to cases of national security *If given to 10,000 people that included 10 spies, 1,600 innocent people would fail and 2 spies would pass *Alternative: look for microexpressions (involuntarily displayed fleeting facial expressions) according to Paul Ekman
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Polygraph machines
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*Research other side's character and bona fides (at minimum check sources of public information) *Anticipate scenarios that might play out during negotiation *Set ground rules (ex: agree to disclose all material facts) *Look for potential signs of deception (some people are really incompetent liars. Notice sudden changes of behavior) *Ask questions in different ways (try to get question answered with a yes or no-if other side will not do that be suspicious) *Ask the opponent to come clean (although someone might not have a legal duty to volunteer the information by denying that he is withholding anything he exposes himself to possible legal damages for fraudulent nondisclosure) *Ask questions to which you already know the answer (ex: 1962 Cuban missile crisis where Russians lied about missiles located in Cuba) *Take notes during negotiations *Include written claims as part of the final agreement *Use contingent agreements for protections *Trust but verify (parties are more likely to trust each other when they have a means of determining whether the other party's representations are accurate)
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How to protect against deception
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We don't see things as they are. We things as ___are. *Anais NIn
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We
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Common advice to get rid of ___ is infeasible and unwise
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Emotions
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1. Emotions may divert our attention from substantive matters 2. Revelation of emotions may open us up to being manipulated 3. Thinking may take a subordinate role to feeling 4. Emotions can take charge of us if we are not careful
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How emotions can harm negotiation
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Human beings are in a state of perpetual ____
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Emotion
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Strong desire to do a particular behavior now, without much thought about possible consequences
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Impulse
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_____are unavoidable and are the short-lived reactions to thoughts and behaviors of ourselves and others *Different from impulses in that they motivate general kinds of behavior but not a specific behavior *Lived experience *Not possible to suppress feeling but expression of feeling can be surpressed *Includes an action tendency, which is the type of behavioral urge associated with that emotion (ex: anger action tendency is to attack and guilt action tendency is to repent) Action tendencies do not need to be acted upon
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Emotions
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____can be affected by impulses, emotions, moods, and attitudes
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Negotiators
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Low intensity affective states, background music to our thoughts and actions
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Moods
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Positive or negative evaluations of a person, institution, policy, or event
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Attitudes
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1. Negative emotional experience remains, leaving internal state of tension which can negatively affect behavior 2. Effort to suppress display of emotion consumes important cognitive energy, which is limited 3. Negotiator who suppresses his or her emotions may be more likely to stereotype that counterpart as an adversary, leading to competitive behavior 4. Increases physiological arousal in negotiator and counterpart-->Reduced attentional capacity-->Stereotypical thinking more likely
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Why suppressing expression of emotion hurts negotiator
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General level of satisfaction with the emotions experienced during an interaction *Meta-emotions
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Affective satisfaction
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1. Affective satisfaction 2. Instrumental satisfaction *Likelihood of attaining these goals increases when ability to deal effectively with emotions increases
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2 Goals of negotiation
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Extent to which substantive work requirements are fulfilled
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Instrumental satisfaction
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Emotions amplify ____ according to Silvan Tomkins because they signal importance of issues and give them urgency
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Motivation
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Emotions are not only internal, they may have a _____function as well because by expressing your emotion you provide the other negotiator with important information about you want to be treated *Even if you suppress expression of emotions they still communicate to one person (you)
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Communicative
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Emotional manipulation ________works but can cause damage to relationships
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Sometimes
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______ emotions are not completely useless in a negotiation because they a communicate a willingness to get demands met, but they leave emotional residue and make finding value-creating options difficult. Positive emotions are better for motivating a collaborative interaction
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Negative
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Negotiators in a ____ mood achieve more optimally integrative outcomes and use fewer aggressive behaviors. They also enjoy negotiation more and may experience flow (a peak motivational experience that is intrinsically, personally rewarding) *_______ emotions contribute to the long-term sustainability of each party's commitments and foster cognitive expansion (finding of creative options) because they trigger release of dopamine
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Positive
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What the American Paper Institute, National Coffee Association, Milk Industry Foundation, and American Council on Education have in common that led to forming a successful coalition even though they seemed like unlikely allies
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Interest in sewer use charges
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To join forces together behind a mutual interest, generally a policy issue, and work together for common effectiveness and results *Coalitions are becoming more popular. especially as power decentralizes in Congress
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Purpose of a coalition
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A coalition functions only when __ person is given responsibility to call the shots, and the coalition is the leader's primary occupation *Selecting this person is often a process of elimination *Leader usually represents the one association that has the most to gain or lose
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1
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*Commitment by members to work, not in their own self-interest, but in the group interest *Expertise on the part of all members on the subject matter and its ramifications *Knowledge of how the state/federal legislature works *Ability to plan strategy and have enough time to develop it *Good communication with members *Focus on offensive (not defensive), use facts, data, and public opinion to build on your important points. It's not necessary to attack your opposition *Involved members/grassroots campaign *Latitude from you and your board of directors (only get approval when issue is controversial or stance involves change in previous policy)
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Successful coalitions
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Dissenting party removes his name and endorsement from that specific letter but continues to endorse the remainder of the issue *Trade-offs are important and preferable
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How to deal with dissent among coalition members
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____ negotiations are necessary to present a united front to those you are dealing with
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Internal
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A coalition takes ____ by the participants. Publicity may be given to the coalition and not to your association. Accept that there will be trade-offs
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Goodwill
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The common end of the ____ is more important the the priority of any one association *Glory for members will not lead to success. Spotlight must be shared and coalition must have its own identity *Coalitions are not perfect *Some coalitions are permanent and others are temporary (disbanded as soon as their cause is settled)
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Allies
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1. One member dominates 2. Jealousy between members (usually occurs at outset until members realize they achieve more by pooling resources) 3. Conflicting goals (choose greatest good for greatest number) 4. Conflicting strategy (occurs most often when two or more members have significant legislative experience) 5. Minor disagreements 6. Too formal (coalition cannot replace the members associations. You can never have enough organization but you can have too much formalization) 7. Too many meetings (unless a crisis happens permanent coalitions can meet once a month or use phone to exchange information between meetings) 8. Lack of follow-through *With negotiation, respect, and planning, all can be overcome
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Potential problems of coalitions
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Coalitions are not limited to _______. Almost all groups are involved in some type of coalition because chances of victory are better through unity and sometimes a coalition is the only way to do something. The days of trying to do it all yourself are long gone
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Associations
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1. Clearly define issues and strategy 2. Determine a timetable and needs 3. Identify both allies and opposition 4. Build constituency and recruit allies 5. Select leadership from within allies 6. Devise a clear plan of action 7. Determine resources, budget, and meet those needs 8. Divide up tasks within the coalition 9. Establish a working task force or executive committee 10. Keep coalition members involved and informed 11. Establish a communication program plan; clearly distribute tasks 12. Build supportive case materials 13. Develop an internal communication program with each association involving its members 14. Enlist experts to support the coalition's case 15. Explain the issue in economic impact terms when possible; use public opinion 16. Utilize all pertinent media for greatest impact 17. Remember to keep all coalition constituents informed and involved 18. If it's a legislative issue, review the congressional strategy on a regular basis 19. Determine if the coalition leadership is serving as a catalyst for communication 20. Provide the results and communicate them to the member constituencies
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20 Tips for coalitions