中国经济管理大学 Mini-MBA《商务谈判》1-6 Strategy and Tactics of Distributive Bargaining
中国经济管理大学/中國經濟管理大學
Chapter 1
The Nature of Negotiation
Chapter Overview
This chapter is the foundation for the nature of negotiations. Friends, children, businesses, police, nations, everyone negotiates almost daily.
Negotiations occur for several reasons:
to agree on how to share or divide a limited resource, such as land, or money, or time
to create something new that neither party could do on his or her own; or
to resolve a problem or dispute between the parties.
Sometimes people fail to negotiate because they do not recognize they are in a negotiation situation.
By choosing options other than negotiation, they may fail to achieve their goals, get what they need, or manage their problems as smoothly as they might like to.
People may also recognize the need for negotiation but do poorly because they misunderstand the process and do not have good negotiating skills.
o This book should prepare you to recognize negotiation situations;
o understand how negotiation works;
o know how to plan, implement, and complete successful negotiations;
o and, most importantly, be able to maximize your results.
Learning Objectives
Understand the definition of negotiation, the key elements of a negotiation process, and the distinct types of negotiation.
Explore how people use negotiation to manage different situations of interdependence – that is, that they depend on each other for achieving their goals.
Consider how negotiation fits within the broader perspective of processes for managing conflict.
Gain an overview of the organization of this book and the content of its chapters.
Chapter Outline
I. A Few Words about Our Style and Approach
II. Joe and Sue Carter
III. Characteristics of a Negotiation Situation
IV. Interdependence
A. Types of Interdependence Affect Outcomes
B. Alternatives Shape Interdependence
V. Mutual Adjustment
A. Mutual Adjustment and Concession Making
B. Two Dilemmas in Mutual Adjustment
VI. Value Claiming and Value Creation
VII. Conflict
A. Definitions
B. Levels of Conflict
C. Functions and Dysfunctions of Conflict
D. Factors That Make Conflict Easy or Difficult to Manage
VIII. Effective Conflict Management
IX. Overview of the Chapters in This Book
X. Chapter Summary
I. A Few Words about Our Style and Approach
First a brief definition of negotiation – a form of decision making in which two or more parties talk with one another in an effort to resolve their opposing interests.
o Moreover, the authors will be careful about the use of terminology in this book.
§ Bargaining: describes the competitive win-lose situations (haggling).
§ Negotiation: refers to win-win situations (to find mutually acceptable solutions).
Second, many people assume the “heart of negotiation” is the give-and-take process used to reach an agreement.
o Give-and-take is extremely important, but negotiation is a very complex social process, where many of the most important factors that shape the negotiation occur before the negotiation, or shape the context around the negotiation.
Third, the author’s insights into negotiation are drawn from three sources.
o Personal experience as negotiators on a daily basis
o Media – television, radio, newspaper, magazine, and Internet reports of negotiation
o Research conducted on numerous aspects of negotiation
II. Joe and Sue Carter
This section is an illustrative tale of daily family negotiation situations, both at work and at home. People negotiate all the time, almost daily.
III. Characteristics of a Negotiation Situation
· Negotiation is a process by which two or more parties attempt to resolve their opposing interests.
o Negotiation is one of several mechanisms by which people resolve conflicts.
· Characteristics common to all negotiation situations include the following list.
o There are two or more parties, individuals, groups or organizations.
o There is a conflict of needs and desires between two or more parties, and the parties must search for a way to resolve the conflict.
o Parties negotiate because they think they can get a better deal by negotiating than by simply accepting what the other side will voluntarily give them or let them have.
o When negotiating, a give-and-take is expected. To reach an agreement, both sides will modify their opening statement to find a middle ground; they compromise.
o The parties prefer to negotiate and search for agreement rather than to fight openly, have one side dominate and the other capitulate, permanently break off contact, or take their dispute to a higher authority to resolve it.
o Successful negotiation involves the management of tangibles and also the resolution of intangibles.
§ Tangible factors: the price or the terms of agreement
§ Intangible factors: the underlying psychological motivations that may directly or indirectly influence the parties during a negotiation.
· Examples of intangible factors include:
o The need to “win” or avoid losing
o The need to look “good” to those you’re representing
o The need to defend an important principle or precedent in a negotiation
o The need to appear “fair” or “honorable” or to protect one’s reputation
o The need to maintain a good relationship
· Intangibles are often rooted in personal values and emotions and they influence the negotiation processes and outcomes.
· It is impossible to ignore intangibles because they affect our judgment about what is fair, right, or appropriate in the resolution of the tangibles.
§ See Box 1.2 about the problems that the urge to win can create for negotiators.
IV. Interdependence
· Working interdependently allows parties to achieve a possible outcome that is better than they could achieve by working on their own.
· Most relationships between parties may be characterized in one of three ways: independent, dependent, or interdependent.
o When the parties depend on each other to achieve their own preferred outcome they are interdependent; they are characterized by interlocking goals.
o Independent parties are able to meet their own needs without the help and assistance of others.
o Dependent parties must rely on others for what they need; the dependent party must accept and accommodate to that provider’s whims and idiosyncrasies.
· See Box 1.3 for a perspective on interdependence and the importance of intangibles from a famous agent who represents professional athletes in their negotiated contracts.
A. Types of Interdependence Affect Outcomes
· The interdependence of people’s goals, and the structure of the situation in which they are going to negotiate, strongly shapes negotiation processes and outcomes.
o A zero-sum or a distributive situation is a competitive situation where there is only one winner.
o A non-zero-sum or integrative situation is a mutual-gains situation in which goals are linked to achieve a mutual gain.
B. Alternatives Shape Interdependence
· Evaluating interdependence depends heavily on the desirability of alternatives to working together.
· A negotiator’s BATNA is their Best Alternative to a Negotiated Agreement.
o This suggests a negotiator needs to understand their own BATNA and the other party’s BATNA
o The value of a person’s BATNA is always relative to the possible settlements available in the current negotiation.
o A BATNA may offer independence from, dependence on, or interdependence with someone else.
o Every possible interdependency has an alternative, negotiators can always say “no” and walk away, although the alternative might not be a very good one.
V. Mutual Adjustment
· Interdependent parties have an influence on the others’ outcomes and decisions. As parties act to influence each other in a negotiation, they engage in a mutual adjustment.
o It is important to recognize that negotiation is a process that transforms over time, and mutual adjustment is one of the key causes of the changes that occur during a negotiation.
· An example would be to look at Sue Carter’s job situation.
o She would like to leave her present employer and take an available job at a large multinational bank.
o The job description announced the salary as “competitive.”
o Her prospective manager, Max, perceives her as a desirable candidate and is ready to offer her the job.
o She did not state her minimally acceptable salary.
o She has decided the bank will pay no more than necessary and that her minimum would be accepted quickly.
§ A closer look reveals that she is making her decision on how she anticipates Max will react to her actions.
§ Sue is assessing the indirect impact of behavior on herself.
§ Sue is choosing among behavioral options with a thought: not only how they will affect Max, but also how they will then lead Max to act toward Sue.
§ Sue knows that Max believes she will act in this way and makes her decision on the basis of this belief.
· The effective negotiator needs to understand how people will adjust and readjust, and how the negotiations might twist and turn, based on one’s own moves and the others’ responses.
· The best strategy for successful mutual adjustment to the other is grounded in the assumption that the more information one has about the other person, the better.
A. Mutual Adjustment and Concession Making
· When one party alters his/her position based on the other party’s suggestion to do so, a concession has been made.
· Concessions constrain the bargaining range – the range of possible agreements between the two parties’ minimally acceptable settlements.
B. Two Dilemmas in Mutual Adjustment
· Dilemma of honesty – concerns how much of the truth to tell the other party
o Telling the other party everything about your situation may give that person the opportunity to take advantage of you.
o On the other hand, not telling the other person anything about your needs and desires may lead to a stalemate.
· Dilemma of trust – concerns how much negotiators should believe what the other party tells them
o If you believe everything the other party says, they may take advantage of you.
o If you believe nothing, you will have difficulty reaching an agreement.
o How much you should trust the other party depends on many factors, including:
§ the reputation of the other party,
§ how they treated you in the past, and
§ a clear understanding of the pressures they are presently under.
· The search for an optimal solution through the processes of giving information and making concessions is greatly aided by trust and a belief that you are being treated honestly and fairly.
· Two efforts in negotiation help to create such trust and beliefs.
o One is based on perceptions of outcomes.
o The other is based on perceptions of the process.
§ Outcome perceptions can be shaped by managing how the receiver views the proposed result.
§ Perceptions of the trustworthiness and credibility of the process can be enhanced by conveying images that signal fairness and reciprocity in proposals and concessions – See Box 1.4.
· When people make a concession, they trust the other party and the process far more if a concession is returned.
· The belief that concessions will occur during negotiations appears to be almost universal.
· The pattern of give-and-take is essential to joint problem solving in most interdependent relationships.
o Satisfaction with a negotiation is as much determined by the process through which an agreement is reached as with the actual outcome obtained.
VI. Value Claiming and Value Creation
· Distributive bargaining
o The purpose this type of negotiation is to claim value—to do whatever is necessary to claim the reward or gain the largest piece possible.
· Integrative negotiation
o The purpose of this approach to negotiation is to create value, or find a way for all parties to meet their goals and share the reward.
· Most negotiations are a combination of claiming and creating value. There are significant implications to this:
o Negotiators must be able to recognize situations that require one approach or the other
§ Generally, distributive bargaining is most appropriate when time and resources are limited, when the other is likely to be competitive, and when there is no likelihood of future interaction with the other party.
§ Approach other situations with an integrative strategy.
o Negotiators must be versatile in their comfort and use of both strategic approaches
§ Most negotiation issues or problems have components of both claiming and creating value, so negotiators must be able to use both approaches in the same deliberation.
o Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive / competitive than they really are
§ There is a tendency to assume a negotiation problem is more zero-sum than it may be and to overuse distributive strategies, leaving unclaimed value at the end of the negotiations as failed opportunities.
· Successful coordination of interdependence has the potential to lead to synergy, which is the notion that “the whole is greater than the sum of its parts.”
· Value may be created in numerous ways, and the heart of the process lies in exploiting the differences between the negotiators. The key differences among negotiators:
o Differences in interests
§ Negotiators seldom value all items equally.
§ Finding compatibility in different interests is often the key to unlocking the puzzle of value creation.
o Differences in judgments about the future
§ People differ in their evaluation of what something is worth or the future value of an item.
§ How parties see the present and what is possible that needs to be created – or avoided – can create opportunities for the parties to get together.
o Differences in risk tolerance
§ A company with a cash flow problem can assume less risk of expanding its operations than one that is cash-rich.
o Differences in time preference
§ These have the potential to create value in a negotiation.
§ For instance, a car salesman may want to close a deal by the end of the month in order to be eligible for a special company bonus, while the potential buyer intends to trade his car “sometime in the next six months.”
· While value is often created by exploiting common interests, differences can also serve as the basis for creating value.
o Differences can be seen as insurmountable, and may serve as barriers to reaching an agreement.
o As a result, negotiators must also learn to manage conflict effectively in order to manage their differences while searching for ways to maximize their joint value.
VII. Conflict
· A potential consequence of interdependent relationships is conflict.
o Conflict can result from strongly divergent needs of the two parties or from misperceptions and misunderstandings.
o Conflict can occur when the two parties are working toward the same goal and want the same outcome or when parties want different outcomes.
o Regardless of the cause, negotiation can play a role in resolving conflict effectively.
· In this section, we will
o Define conflict
o Discuss the different levels of conflict that can occur
o Review the functions and dysfunctions of conflict
o Discuss strategies for managing conflict effectively
A. Definitions
· Conflict may be defined as a sharp disagreement or opposition, as of interests, ideas, etc. and includes the perceived divergence of interest or a belief that the parties’ current aspirations cannot be achieved simultaneously.
· Conflict results from the interaction of interdependent people who perceived incompatible goals and interference from each other in achieving those goals.
B. Levels of Conflict
· Four levels of conflict are commonly identified.
o Intrapersonal or intrapsychic conflict occurs within an individual.
§ Sources of conflict can include ideas, thoughts, emotions, values, predispositions, or drives that are in conflict with each other.
§ This book generally does not address this level of conflict.
o Interpersonal conflict occurs between individuals.
§ Such as co-workers, spouses, siblings, roommates or neighbors.
§ Most of the theory in this book is drawn from interpersonal conflict studies.
o Intragroup conflict is conflict within a group – among team and work group members and within families, classes, living units, and tribes.
§ At this level, we analyze conflict as it affects the ability of the group to make decisions, work productively, resolve its differences, and continue to achieve its goals effectively.
§ Discussed later in Chapters 11, 12, and 13.
o Intergroup conflict is conflict between organizations, ethnic groups, warring nations, or feuding families, or within splintered, fragmented communities.
§ At this level, conflict is quite intricate due to the large number of people involved and the many ways they can interact with each other.
§ Negotiations at this level are also the most complex.
§ The text discusses the nature of intergroup negotiations throughout the book, particularly in Chapters 11 and 13.
C. Functions and Dysfunctions of Conflict
· Most people believe conflict is bad or dysfunctional, a belief that has two aspects.
o First, that conflict is an indication that something is wrong, broken, or dysfunctional.
o Second, that conflict creates largely destructive consequences.
· There are many elements that contribute to conflict’s destructive image.
o Competitive, win-lose goals
§ Competitive goals lead to competitive processes to obtain those goals
o Misperception and bias
§ As conflict intensifies, perceptions become distorted and thinking tends to become stereotypical and biased.
o Emotionality
§ Emotions overwhelm clear thinking and the parties may become increasingly irrational as the conflict escalates.
o Decreased communication
§ Productive communication declines with conflict.
§ Communication that does occur is often an attempt to defeat, demean, or debunk the other’s view or to strengthen one’s own prior arguments.
o Blurred issues
§ Generalizations abound and central issues become less well defined.
§ Parties become less clear about how the dispute started, what it is “really about,” or what it will take to solve it.
o Rigid commitments
§ The parties become locked into positions.
§ Parties tend to see issues as simple and “either/or” rather than as complex and multidimensional.
o Magnified difference, minimized similarities
§ As parties lock in, they tend to see each other’s positions as polar opposites.
§ This distortion leads parties to believe they are further apart than they really are, and they may work less hard to find common ground.
o Escalation of the conflict
§ Escalation of the conflict level and commitment to winning can increase so high that the parties will destroy their ability to resolve the conflict or ever be able to deal with each other again.
· Conflict has many productive aspects.
o Figure 1.1 outlines some of these productive aspects.
§ Discussing conflict makes organizational members more aware and able to cope with problems.
§ Conflict promises organizational change and adaptation.
§ Conflict strengthens relationships and heightens morale.
§ Conflict promotes awareness of self and others.
§ Conflict enhances personal development.
§ Conflict encourages psychological development—it helps people become more accurate and realistic in their self-appraisals.
§ Conflict can be stimulating and fun.
o Conflict is not simply destructive or productive, it is both.
o The objective is not to eliminate conflict but to learn how to manage it to control the destructive elements while enjoying the productive aspects.
o Negotiation is a strategy for productively managing conflict.
D. Factors That Make Conflict Easy or Difficult to Manage
· Figure 1.2 presents a conflict diagnostic model.
o This model offers some useful dimensions for analyzing any dispute and determining how easy or difficult it will be to resolve.
o Conflicts with more characteristics in the “difficult to resolve” column will be harder to settle, while those in the “easy to resolve” column should be settled quicker.
· Figure 1.2 looks at seven dimension of a negotiation and provides example of when such dimension’s would be difficult to resolve or easy to resolve.
o The first dimension is the issue in question.
§ If the issue is a matter of principle concerning values, ethics, or precedent, it will be difficult to resolve.
§ Divisible issues – issues easily divided into small parts, pieces, units – should be easy to resolve.
o The second dimension is the size of the stakes – the magnitude of what can be won or lost.
§ Large stakes with big consequences are more difficult to resolve.
§ Small, little things with insignificant consequences are easier to resolve.
o The third dimension is interdependence of the parties – the degree to which one party’s outcomes determine the other party’s outcomes.
§ A zero-sum, win-lose situation is more difficult to resolve.
§ A positive-sum situation is easier to resolve.
o The fourth dimension is continuity of interaction – whether the two principle negotiators be working together in the future.
§ A single transaction, with no past or future, is more difficult to resolve.
§ Situations involving a long-term relationship is easier to resolve.
o The fifth dimension is the structure of the parties – how cohesive and organized they are as a group.
§ The more difficult situation is when the parties are disorganized, uncohesive, with weak leadership.
§ The easier situation is if the parties are organized and cohesive with strong leadership.
o The sixth dimension is the involvement of third parties – can others get involved to help resolve the dispute?
§ If there is no neutral third party available, the situation may be more difficult to resolve.
§ Having trusted, powerful, prestigious third parties available make the situation easier to resolve.
o The final dimension is the perceived progress of the conflict – balanced (equal gains and equal harm) or unbalanced (unequal gain, unequal harm).
§ If progress is unbalanced, this makes the situation more difficult to resolve because the one party who feels harmed will want revenge whereas stronger parties want to maintain control.
§ Balanced situations should be easier to resolve because both parties suffer equal harm and equal gain – both may be more willing to call it a “draw.”
VIII. Effective Conflict Management
· The two-dimensional framework presented in Figure 1.3 is called the dual concerns model. The model postulates that individuals in conflict have two independent levels of concern:
o Concern about their own outcomes (shown on the horizontal dimension)
o Concern about the other’s outcomes (shown on the vertical dimension)
· Five major strategies for conflict management have been identified in the dual concerns model.
o Contending (also called competing or dominating)
§ This is in the lower right-hand corner.
§ Here, negotiators pursue their own outcomes strongly and show little concern for whether the other party obtains their desired outcomes.
§ Threats, punishment, intimidation, and unilateral action are consistent with a contending approach.
§ This strategy is appropriate for trivial issues needy speedy decisions, not for complex issues or issues important to you. (from Figure 1.4)
o Yielding (also called accommodating or obliging)
§ This strategy lies in the upper left-hand corner.
§ Here, negotiators show little interest or concern in whether they attain their own outcomes, but are quite interested in whether the other party attains theirs.
§ Yielding involves “letting the other win” but it has definite advantages in some situations.
§ This strategy is appropriate when you believe you may be wrong or when the issue is more important to the other party, not when the issue is important to you.
o Inaction (also called avoiding)
§ This strategy is located in the lower left-hand corner.
§ Here, negotiators show little interest in whether they attain their own outcomes, and little concern about whether the other party obtains theirs.
§ Synonymous with withdrawal or passivity, the party prefers to retreat, be silent, or do nothing.
§ This strategy is appropriate when the issue is trivial or a cooling off period is needed, but not appropriate when you are responsible for the decision.
o Problem solving (also called collaborating or integrating)
§ This strategy lies in the upper right-hand corner.
§ Here, negotiators show high concern for attaining their own outcomes and high concern for whether the other party attains their outcomes.
§ In problem solving, the two parties actively pursue approaches to maximize their joint outcome from the conflict.
§ This strategy is appropriate when issues are complex and commitment is needed from others for success, but not appropriate when the task or problem is simple or an immediate decision is required. (from Figure 1.4)
o Compromising is the strategy located in the middle of Figure 1.3.
§ Here, negotiators show a moderate effort to pursue their own outcomes and a moderate effort to help the other party achieve their outcomes.
§ This strategy is appropriate when the goals of the parties are mutually exclusive and the parties hold equal power, but not appropriate when one party is more powerful or the problem is complex enough to need a problem-solving approach.
· Much of the early writing about conflict management strategies had a strong normative value bias against conflict and toward cooperation.
o More recent writing, while still committed to problem solving, carefully stresses that each conflict management strategy has its own distinct advantages and disadvantages and can be more or less appropriate to use, given the type of interdependence and conflict context. (See Figure 1.4)
IX. Overview of the Chapters in This Book
· This book is organized into seven sections with 20 chapters, which can be viewed schematically in Figure 1.5.
o Section 1, Negotiation Fundamentals, contains five chapters and examines the basic processes of negotiation.
o In Section 2, Negotiation Subprocesses, four chapters examine the key subprocesses of negotiation that help explain why negotiations unfold as they do.
o Section 3, Negotiation Contexts, contains four chapters that place negotiations in a broader social context of multiple parties playing many different roles.
o Section 4, Individual Differences, contains two chapters that address the many ways individuals differ in their approach to negotiation as a result of their gender and personality.
o Section 5, Negotiation across Cultures, contains a single chapter, addressing the interesting questions of how negotiation processes change as we move from a Western view to other national or cultural backgrounds.
o In the three chapters of Section 6, Resolving Differences, the book explores ways that negotiators can move past impasse, deadlock, and mismatches in their negotiation styles – either on their own initiative or with the help of a third party.
o Finally, the book concludes with Section 7, Concluding Remarks, in which the authors offer 10 summary comments and observations about the wealth of material contained in the book.
· In the next two chapters (2 and 3), the book describes the two fundamental strategies of negotiation: distributive and integrative.
o Chapter 2 describes and evaluates the strategies and tactics characterizing the competitive (win-lose) distributive bargaining process.
o Chapter 3 describes and evaluates the basic strategies and tactics common to the cooperative (win-win) integrative bargaining process.
· The Negotiation Fundamentals section continues with Chapter 4, which discusses how negotiators should create strategies and plans to achieve their desired outcomes.
· Finally, in Chapter 5, the question of whether there are, or should be, accepted ethical standards for behavior in negotiations is explored.
· Section 2, Negotiation Subprocesses, has four chapters and begins with Chapter 6.
o This chapter addresses how perception, cognition, and emotion shape the way we receive and process data about the substantive issues, other parties, and negotiation dynamics.
o Chapter 7 examines the process by which negotiators communicate their own interests, positions, and goals – and in turn make sense of those of the other party and of the negotiation as a whole.
o Chapter 8 focuses on power in negotiation and the power sources that give negotiators the capacity to exert influence.
o Chapter 9 examines the way negotiators actually exert influence – the actual strategies and messages that individuals deploy to bring about desired attitudinal or behavioral chance.
· The chapters in Section 3, Negotiation Contexts, examine ways the broader social environment shapes negation processes.
o In Chapter 10, the focus is on the ways these past and future relationships impact present negotiations.
o Chapter 11 explores how negotiation changes when we move beyond simple one on one negotiations and add other parties to the process and how negotiators act as agents in the process – that is, they are not necessarily presenting their own issues and interests but are also representing the views of others who may or may not be at the table.
o In Chapter 12, the focus is on situations in which multiple parties are negotiating with one another – in essences, how parties ally into coalitions to achieve these objectives.
o Finally, in Chapter 13, the authors extend the analysis to two situations that involve multiple parties – one in which multiple parties are negotiating with one another and the other situation is when multiple individuals are present on each “side” of the negotiation.
· The two chapters in Section 4, Individual Differences, examine the way individual differences shape the approaches people take in negotiation.
o In Chapter 14, the focus is exclusively on gender differences, distinguishing between sex and gender.
o In Chapter 15, the authors examine a range of other individual difference factors, including personality traits and abilities.
· Section 5, Negotiation across Cultures, contains only a single chapter but it is an important one: International and Cross-Cultural Negotiation.
· In Section 6, Resolving Differences, the authors examine the ways that parties can deal with failures to complete negotiation successfully.
o Chapter 17 addresses situations in which negotiations become especially difficult, often to the point of impasse, stalemate, or breakdown.
o Chapter 18 turns to situations in which parties are using different models to guide their negotiation, either because they have diagnosed the situation differently or they possess different levels of negotiation sophistication, or simply from habit.
o Finally, in Chapter 19, the authors discuss the many ways that third parties can help negotiators resolve their differences.
· Section 7 contains the author’s concluding comments in the final chapter, Chapter 20, reflecting on negotiation at a broad level, providing ten “best practices.”
Chapter Summary
People negotiate almost daily, sometimes for major things like a new job, other times for relatively minor things, such as who will take out the trash. Negotiations occur to create something new or to resolve a problem or dispute between parties.
Characteristics common to all negotiation situations include two or more individuals, groups, or organizations, interpersonal, intragroup, or intergroup process. There is a conflict of interest between two or more parties. The parties negotiate because they think they can use some form of influence to get a better deal. The parties prefer to search for agreement rather than fight openly, have one side capitulate, permanently break off contact, or take their dispute to a higher authority to resolve it. When you negotiate, expect to give and take. Successful negotiation involves the management of intangibles and well as the resolving of intangibles.
Interdependent relationships are characterized by interlocking goals; the parties need each other in order to accomplish their goals. A necessary step in all negotiation is to clarify and share information about what both parties really want as outcomes. When one party accepts a change a concession has been made. When a party makes a concession, the bargaining range is confined closer to one or both sides’ limits or resistance point. Two dilemmas all negotiators face are honesty and trust. Negotiators must understand the nature of the interdependence of the parties. Negotiators are seldom identical and may include differences in interest, opinions, risk aversion, and time preferences. The other potential consequence of interdependent relationships is conflict, which has several levels including intrapersonal or intrapsychic, interpersonal, intragroup and intergroup. One of the most popular areas of conflict management research and practice has been to define the different ways that the parties themselves can manage conflict. Each conflict management strategy has its advantages and disadvantages, and is more or less appropriate given the type of conflict and situation in which the dispute occurs.
Chapter 2
Strategy and Tactics of Distributive Bargaining
Chapter Overview
The basic elements of a distributive bargaining situation, also referred to as competitive or win-lose bargaining, will be discussed.
In a distributive bargaining situation, the goals of one party are usually in fundamental and direct conflict with the goals of the other party.
Resources are fixed and limited, and both parties want to maximize their share of the resources.
One important strategy is to guard information carefully – one party tries to give information to the other party only when it provides a strategic advantage.
Distributive bargaining is basically a competition over who is going to get the most of a limited resource.
There are three reasons every negotiator should understand distributive bargaining.
First, some interdependent situations that negotiators face are distributive, and to do well in them negotiators need to understand how they work.
Second, because many people use distributive bargaining strategies and tactics almost exclusively, all negotiators will find it important to know how to counter their effects.
Third, every negotiation situation has the potential to require distributive bargaining skills when at the “claiming-value” stage.
Some of the tactics discussed in the chapter will also generate ethical concerns.
Some tactics are ethically accepted behavior whereas other tactics are generally considered unacceptable.
The discussion of strategies and tactics in this chapter is intended to help negotiators understand the dynamics of distributive bargaining and thereby obtain a better deal.
A thorough understanding of these concepts will also allow negotiators who are not comfortable with distributive bargaining to manage distributive situations proactively.
Finally, an understanding of these strategies and tactics will help negotiators at the claiming-value stage of any negotiation.
Learning Objectives
Understand the basic elements of distributive bargaining, including the strategy and tactics of distributive bargaining.
Consider the strategic impact of positions taken during a negotiation and the role of concessions.
3. Appreciate the role of commitment in distributive bargaining.
4. Identify hardball tactics and learn how to counter them.
Chapter Outline
I. The Distributive Bargaining Situation
A. The Role of Alternatives to a Negotiated Agreement
B. Settlement Points
C. Bargaining Mix
D. Discovering the Other Party’s Resistance Point
E. Influencing the Other Party’s Resistance Point
II. Tactical Tasks
A. Assess the Other Party’s Target, Resistance Point, and Costs of Terminating Negotiations
B. Manage the Other Party’s Impressions of Your Target, Resistance Point, and Cost of Terminating Negotiations
C. Modify the Other Party’s Perceptions of His or Her Target, Resistance Point, and Cost of Terminating Negotiations
D. Manipulate the Actual Costs of Delaying or Terminating Negotiations
III. Positions Taken during Negotiation
A. Opening Offers
B. Opening Stance
C. Initial Concessions
D. Role of Concessions
E. Pattern of Concession Making
F. Final Offers
IV. Commitment
A. Tactical Considerations in Using Commitments
B. Establishing a Commitment
C. Preventing the Other Party from Committing Prematurely
D. Finding Ways to Abandon a Committed Position
V. Closing the Deal
A. Provide Alternatives
B. Assume the Close
C. Split the Difference
D. Exploding Offers
E. Sweeteners
VI. Assessing the Quality of the Agreement
VII. Hardball Tactics
A. Dealing with Typical Hardball Tactics
B. Typical Hardball Tactics
VIII. Distributive Bargaining Skills Applicable to Integrative Negotiations
IX. Chapter Summary
I. The Distributive Bargaining Situation
· The asking price, the buyer’s price they would like to pay, and the price above which the buyer would not buy represent key points in the analysis of any distributive bargaining situation.
o The target point is a negotiator’s optimal goal, or the point at which they would like to conclude negotiations.
§ The target is also referred to as a negotiator’s aspiration.
o The resistance point is a negotiator’s bottom line – the point beyond which a person will not go.
§ For the seller, it’s the smallest amount they will settle for.
§ It is sometimes referred to as a reservation price.
o The asking price is the initial price set by the seller.
§ The buyer may counter with their initial offer – the first number a buyer will quote to the seller
· Both parties to a negotiation should establish their starting, target, and resistance points before beginning a negotiation.
o Starting points are often in the opening statements each party makes – the seller’s listing price and the buyer’s first offer.
o The target point is usually learned or inferred as negotiations get under way.
§ People typically give up the margin between the starting points and the target points as they make concessions.
o The resistance point is not known to the other party and should be kept secret.
· Negotiator’s starting and resistance points are usually arranged in reverse order, with the resistance point being a high price for the buyer and a low price for the seller.
· The spreads between the resistance points, called the bargaining range, settlement range, or zone of potential agreement, are very important.
o It is the area where actual bargaining takes place.
o When the buyer’s resistance point is above the seller’s, they are minimally willing to pay more than the seller is minimally willing to sell for, there is a positive bargaining range.
o Negotiations that begin with a negative bargaining range are likely to stalemate.
o Because negotiators don’t talk about their resistance points, it is often difficult to know whether a positive settlement range exists until deep into negotiations.
· Target points, resistance points, and initial offers all play an important role in distributive bargaining.
o Target points influence both negotiator outcomes and negotiator satisfaction with their outcomes.
o Opening offers play a role in influencing negotiation outcomes.
o Resistance points play a very important role as a warning for the possible presence of hardball tactics.
o A positive bargaining range increases the likelihood of settlements.
A. The Role of Alternatives to a Negotiated Agreement
· In addition to opening bids, target points, and resistance points, negotiators need to consider what they will do if they do not reach agreement with the other party.
o What is their best alternative to a negotiated agreement (BATNA)?
o What is their worst alternative to a negotiated agreement (WATNA)?
· In some negotiations, the parties have only two fundamental choices:
o Reach a deal with the other party, or
o Reach no settlement at all.
o In other negotiations, one or both parties may have the possibility of an alternative deal with another party.
· BATNAs are negotiator’s best alternatives to reaching an agreement and are frequently less attractive than the preferred agreement.
o Negotiators who have a strong BATNA – that is, a very positive alternative to a negotiated agreement – will have more power throughout the negotiation and accordingly should be able to achieve more of their goals.
· Alternatives are important because they give negotiators the power to walk away from any negotiation when the emerging deal is not very good.
o Where there are many attractive alternatives, negotiators can set their goals higher and make fewer concessions.
o Negotiators with no attractive alternative have less bargaining power.
o Good distributive bargainers identify their realistic alternatives before starting discussions so they can properly decide how firm to be in the negotiation.
o Good bargainers also try to improve their alternatives while the negotiation is under way.
o Negotiators are also aware of their worst alternative, and this may become more salient as negotiation proceeds.
· Strong BATNAs can also influence how a negotiation unfolds.
o Negotiators with stronger BATNAs are more likely to make the first offer in a negotiation and appear to negotiate better outcomes.
o The positive benefits of a good BATNA appear particularly strong when the bargaining range is small because negotiations with smaller bargaining ranges are more competitive and less likely to yield agreements.
B. Settlement Point
· The fundamental process of distributive bargaining is to reach a settlement within a positive bargaining range.
o The objective of both parties is to obtain as much of the bargaining range as possible – that is, to reach an agreement as close to the other party’s resistance point as possible.
· Both parties in distributive bargaining know that they might have to settle for less than what they would prefer (their target point), but they hope that the agreement will be better than their own resistance point.
o For agreement to occur, both parties must believe that the settlement is the best that they can get (within a positive bargaining range).
o This belief is important, both for reaching agreement and for ensuring support for the agreement after the negotiation concludes.
· Another factor that will affect satisfaction with the agreement is whether the parties will see each other again.
o Negotiators blame the other party for negative negotiation outcomes, and this reduces their desire to negotiate again in the future.
o When parties expect future negotiations with the other party, they set lower target points and are less likely to bargain distributively.
C. Bargaining Mix
· The package of issues for negotiation is the bargaining mix.
o Each item in the mix has its own starting, target, and resistance points.
o Some items are of obvious importance to both parties; others are important only to one party.
o Negotiators need to understand what is important to them and to the other party, and they need to take these priorities into account during the planning process.
· As the bargaining mix gets larger, there is more opportunity for trade-offs across issues where negotiator preferences are not identical on each issue.
o When this occurs, integrative negotiation strategies and tactics may be appropriate.
D. Discovering the Other Party’s Resistance Point
· Information is the life force of negotiation
o The more you can learn about the other party’s target, resistance point, motives, feelings of confidence, and so on, the more able you will be to strike a favorable agreement. See Box 2.1.
o At the same time, you do not want the other party to have certain information about you.
§ Your resistance point, some of your targets, and confidential information about a weak strategic position or an emotional vulnerability are best concealed.
§ Alternatively, you may want the other party to have certain information – some of it factual and correct, some of it contrived to lead the other party to believe things that are favorable to you.
o Each side wants to obtain some information and to conceal other information.
o As a result, communication can become complex – often conveyed in a code that evolves during negotiation.
E. Influencing the Other Party’s Resistance Point
· Central to planning the strategy and tactics for distributive bargaining is locating the other party’s resistance point and the relationship of that resistance point to your own.
o The resistance point is established by the value expected from a particular outcome, which in turn is the product of the worth and costs of an outcome.
o Resistance points should not be changed without considerable thought.
§ They play an important role in setting negotiator’s limits, and unless there is an objective reason to change them, they should not be changed.
· A significant factor in shaping the other person’s understanding of what is possible is the other’s understanding of your own situation.
o When influencing the other’s viewpoint, you must also deal with the other party’s understanding of your value for a particular outcome, the costs you attach to delay or difficulty in negotiation, and your cost of having the negotiations aborted.
· There are four major ways to weaken the other party’s resistance point.
o Reduce the other party’s estimate of your cost of delay or impasse.
§ If the other party sees you need an agreement quickly and cannot defer it, expectations will rise and the other party will set a more demanding resistance point.
§ The more you can convince the other party that your costs of delaying or ending negotiations are low, the more modest the other’s resistance point will be.
o Increase the other party’s estimate of their own cost of delay or impasse.
§ The more a person needs an agreement, the more modest they will be in setting a resistance point.
§ The more you can do to convince the other party that delaying or ending negotiations will be costly, the more likely they will be to establish a modest resistance point.
o Reduce the other party’s perception of the value of an issue.
§ The resistance point may soften as the person reduces how valuable they consider the issue.
§ If you can convince the other party that a current negotiating position will not have the desired outcome or that the present position is not as attractive as the other believes, then they will adjust their resistance point.
o Increase the other party’s perception that you value an issue.
§ The more you can convince the other party that you value a particular issue the more pressure you put on the other party to set a more modest resistance point with regard to the issue.
§ Knowing a position is important to the other party, however, you will expect the other to resist giving up on that issue, thus, there may be less possibility of a favorable settlement in that area.
§ As a result, you may need to lower your expectations to a more modest resistance point.
§ Take care when trying to influence the other party’s resistance point.
· Feigning disinterest to signal a higher cost to the other party may insult them.
· In addition, the more attractive the other party’s BATNA, the more likely they will be to set a high resistance point.
· If negotiations are unsuccessful, the other party can move to their BATNA.
II. Tactical Tasks
· Within the fundamental strategies of distributive bargaining, there are four important tactical tasks concerned with targets, resistance points, and the costs of terminating negotiations for a negotiator in a distributive bargaining situation to consider:
o Assess the other party’s target, resistance point, and cost of terminating negotiations.
o Manage the other party’s impression of the negotiator’s target, resistance point, and cost of terminating negotiations.
o Modify the other party’s perception of their own target, resistance point, and cost of terminating negotiations.
o Manipulate the actual costs of delaying or terminating negotiations.
A. Assess the Other Party’s Target, Resistance Point, and Costs of Terminating Negotiations
· The purpose of obtaining information about the other party’s target and resistance points is to identify what the other really wants to achieve, and how much they are willing to pay.
· The negotiator can pursue two general routes to achieve this task.
o Obtain information indirectly about the background factors behind the issue.
o Obtain information directly from the other party.
o See Box 2.2 for some advice on gathering information for negotiation.
Indirect Assessment
o Indirect assessment means determining what information an individual likely used to set target and resistance points and how they interpreted this information.
§ For example, in labor negotiations, management may infer whether or not a union is willing to strike by how hard the union bargains or by the size of its strike fund.
§ The union decides whether or not the company can afford a strike based on the size of inventories, market conditions for the company’s product, and the percentage of workers who are members of the union.
o A variety of information sources can be used to assess the other party’s resistance point.
§ Observations
§ Consult readily available documents
§ Online discussion groups
§ Publication widely available on the Internet
§ Speak to knowledgeable experts
o It is important to note, these are all indirect indicators.
§ Indirect measures provide valuable information that may reflect a reality the other person will eventually have to face.
§ Remember, the same piece of information may mean different things to different people and may not tell you exactly what you think it does.
Direct Assessment
o In bargaining, the other party does not usually reveal accurate and precise information about their targets, resistance points, and expectations.
o Sometimes, the other party will provide accurate information.
§ When pushed to the absolute limit and in need of a quick settlement, the other party may explain the facts quite clearly.
· If company executives believe a wage settlement above a certain point will drive the company out of business, they may choose to state that absolute limit very clearly and even explain how it was determined.
o Most of the time, the other party is not so forthcoming, and the methods of getting direct information are more complex.
§ In labor negotiations, companies have been known to recruit informers or bug union meeting rooms, and unions have had their members collect papers from executives’ wastebaskets.
§ Additional approaches include provoking the other party into an angry outburst and putting the other party under pressure designed to cause them to make a slip and reveal valuable information.
§ Negotiators will also simulate exasperation and angrily stalk out of negotiations in the hope that the other, in an effort to avoid a deadlock, will reveal what they really want.
B. Manage the Other Party’s Impressions of Your Target, Resistance Point, and Cost of Terminating Negotiations
· An important tactical task for negotiators is to control the information sent to the other party about your target and resistance points while guiding them to form a preferred impression of those targets and points.
· Negotiators need to screen information about their own positions and to represent them as they would like the other to believe.
· Screening activities are more important at the beginning of negotiation, and direct action is more useful later on.
Screening Activities
o The simplest way to screen a position is to say as little as possible.
§ Reticence reduces the likelihood of making verbal slips or presenting any clues that the other party could use to draw conclusions.
§ Concealment is the most general screening activity.
o Another approach, available when group negotiations are conducted through a representative, is calculated incompetence.
§ Constituents do not give the negotiating agent all the necessary information, making it impossible for them to leak information.
§ Instead, the negotiator is sent with the task of simply gathering facts and bring them back to the group.
o When negotiation is carried out by a team – common in diplomacy, labor relations, and many business negotiations – channeling all communication through a team spokesperson reduces the chance of inadvertently revealing information.
§ This allows members of the negotiating team to observe and listen carefully to what the other party is saying so they can detect clues and pieces of information about their position.
o Still another screening activity is to present a great many items for negotiation, only a few of which are important to the negotiator.
§ The other party has to gather information about so many different items that it becomes difficult to detect which items are really important.
§ This tactic, called the snow job or kitchen sink, may be considered a hardball tactic if carried to the extreme.
Direct Action to Alter Impressions
o Negotiators can take many actions to present facts that will directly enhance their position or make it appear stronger to the other party.
§ One of the most obvious methods is selective presentation, in which negotiators reveal only the facts necessary to support their case.
· Used to lead the other party to form the desired impression of their resistance point or to create new possibilities for agreement that are more favorable than those that currently exist.
§ Another approach is to explain or interpret known facts to present a logical argument that shows the costs or risks to yourself if the other party’s proposals are implemented.
o Negotiators should justify their positions and desired outcomes in order to influence the other party’s impressions.
§ Negotiators can use industry standards, benchmarks, appeals to fairness, and arguments for the good of the company to draw a compelling picture for the other party to agree to what they want.
§ It is not necessary for the other to agree that the facts lead only to the conclusion you have presented – as long as the other party understands how you see things, then their thinking is likely to be influenced.
o Displaying emotional reaction to facts, proposals, and possible outcomes is another form of direct action negotiators can take to provide information about what is important to them.
§ Disappointment or enthusiasm usually suggest an issue is important.
§ Boredom or indifference suggests it is trivial.
§ A loud, angry outburst or an eager response suggests the topic is very important and may give it a prominence that will shape what is discussed.
o The length of time and amount of detail used in presenting a point or position can also covey importance.
§ Carefully checking through the details conveys the impression of importance, while casually accepting the other party’s arguments as true coveys the impression of disinterest in the topic.
o Taking direct action to alter another’s impression raises several potential hazards.
§ It is one thing to select certain facts to present and to emphasize or de-emphasize their importance accurately, but it is a different matter to fabricate and lie.
§ The former is expected and understood in distributive bargaining, the latter, even in hardball negotiations, is resented and often angrily attacked if discovered.
§ What is said and done may be seen as skill by some, and seen as dishonest by others.
o Other problems can arise when trivial items are introduced as distractions or minor issues are magnified in importance.
§ The other person may become aware of this maneuver and, with great fanfare, concede on the minor points, thereby gaining the right to demand equally generous concessions on the central points.
C. Modify the Other Party’s Perceptions of His or Her Target, Resistance Point, and Cost of Terminating Negotiations
· A negotiator can alter the other party’s impressions of their own objectives by making outcomes appear less attractive or by making the cost of obtaining them appear higher.
o The negotiator may also try to make demands and positions appear more attractive or less attractive to the other party.
· There are several approaches to modifying the other party’s perceptions.
o One approach is to interpret for the other party what the outcomes of their proposal will really be – maybe highlighting a previously overlooked item.
§ For example, in labor negotiations, management may demonstrate that a union request for a six-hour workday would, on the one hand, not increase the number of employees because it would not be worthwhile to hire people for two hours a day to make up for the hours taken from the standard eight-hour day.
§ On the other hand, if the company were to keep production at the present level, it would be necessary to use the present employees on overtime, thereby increasing the total labor cost and the price of the product.
§ The rise in product cost would reduce demand and, ultimately, the number of hours worked or the number of workers.
o Another approach to modifying the other’s perceptions is to conceal information.
§ A seller of real estate may not tell a prospective buyer that in three years a proposed highway will isolate the property from key areas of the city.
§ Concealment strategies may carry with them the ethical hazards mentioned earlier, and negotiators must ensure they negotiate in good faith.
D. Manipulate the Actual Costs of Delaying or Terminating Negotiations
· Negotiators have deadlines and extending negotiations beyond a deadline can be costly, particularly to the person who has the deadline, because that person has to either extend the deadline or go home empty-handed.
· Research shows that a large majority of agreements in distributive bargaining are reached when the deadline is near.
o In addition, time pressures in negotiation appears to reduce negotiator demands, and when a negotiator represents a constituency, time pressure appears to reduce the likelihood of reaching an agreement.
· Manipulating a deadline or failing to agree by a particular deadline can be a powerful tool in the hands of the person who does not face deadline pressure.
o In some ways, the ultimate weapon in negotiation is to threaten to terminate negotiations, denying both parties the possibility of a settlement.
· There are three ways to manipulate the costs of delay in negotiation.
o Plan disruptive action
o Form an alliance with outsiders
o Manipulate the scheduling of negotiations
Disruptive Action
o One way to encourage settlement is to increase the costs of not reaching a negotiated agreement through disruptive action.
§ In one instance, a group of unionized food-service workers negotiating with a restaurant rounded up supporters, had them enter the restaurant just prior to lunch, and had each person order a cup of coffee and drink it leisurely.
§ When regular customers came to lunch, they found every seat occupied.
o Public picketing of a business, boycotting of a product or company, and locking of negotiators in a room until they reach agreement are all forms of disruptive action that increase the costs to negotiators for not settling and bring them back to the bargaining table.
§ Such tactics can work, but they may also produce anger and escalate the conflict.
Alliance with Outsiders
o Another way to increase the costs of delay is to involve other parties who can somehow influence the outcome in the process.
§ In business transactions, a private party may suggest that if negotiations with a merchant are unsuccessful, they will go to the Better Business Bureau and protest the merchant’s actions.
o Individuals dissatisfied with the practices and policies of businesses or government agencies form task forces, political action groups, and protest organizations to bring greater collective pressure on the target.
Schedule Manipulation
o The negotiation scheduling process can often put one party at a considerable disadvantage, and the negotiation schedule can be used to increase time pressure on negotiators.
§ Businesspeople going overseas to negotiate often find that negotiations are scheduled to begin immediately after their arrival, when they are still suffering from the fatigue of travel and jet lag.
§ Automobile dealers likely negotiate differently with a customer half an hour before quitting time on Saturday than at the beginning of the workday on Monday.
o The opportunities to increase or alter the timing of negotiation vary widely across negotiation domains.
§ In some industries, it is possible to stockpile raw materials at relatively low cost or to buy in large bulk lots, while in other industries, it is essential that materials arrive at regular intervals due to a short shelf life.
o The tactic of increasing costs by manipulating deadlines and time pressures is an option that can both enhance your own position and protect you from the other party’s actions.
III. Positions Taken During Negotiation
· Effective distributive bargainers need to understand the process of taking positions during bargaining, including:
o The importance of the opening offer and the opening stance
o The role of making concessions throughout the negotiation process
· At the beginning of negotiations, each party takes a position.
o Negotiation is iterative – it provides opportunity for both sides to communicate information about their positions that may lead to changes in those positions.
· Negotiators need to be sensitive to two factors when creating offers:
o Value characteristics, which are how much the issues and options of different issues are worth to a negotiator, and
o Content characteristics, which involve the way the negotiation is constructed.
§ Be aware that parties may differ in not only the value they place on different issues but also how they construct the negotiation space itself.
A. Opening Offers
· Making the first offer is advantageous to the negotiator making the offer because he or she can anchor a negotiation, especially when information about alternative negotiation outcomes is not considered.
o Some research suggests the effect of first offers as anchors may disappear as negotiators gain experience.
o Negotiators can dampen the “first-offer effect” by the other negotiator by concentrating on their own target and focusing on the other negotiator’s resistance point.
· In general, negotiators with better BATNAs are more likely to make the first offer.
· The fundamental question is whether the opening offer should be exaggerated or modest.
o There are at least two reasons an exaggerated opening offer is advantageous.
§ First, it gives the negotiator room for movement thereby giving them time to learn about the other party’s priorities.
§ Second, an exaggerated opening offer acts as a meta-message and may create, in the other party’s mind, the impression that
· There is a long way to go before a reasonable settlement will be achieved;
· More concessions than originally intended may have to be made to bridge the difference between the two opening positions;
· The other may have incorrectly estimated their own resistance point.
o Two disadvantages of an exaggerated offer include:
§ It may be summarily rejected by the other party and halt negotiations prematurely
§ It communicates an attitude of toughness that may be harmful to long-term relationships.
B. Opening Stance
· An opening stance is the attitude the negotiator will adopt during a negotiation (competitive, belligerent, moderate, etc.).
· Negotiators should think carefully about the message they wish to signal with their opening stance and subsequent concessions as there is a tendency for negotiators to respond in kind to distributive tactics.
· To communicate effectively, a negotiator should try to send a consistent message through both the opening offer and stance.
o When the messages sent by the opening offer and stance are in conflict, the other party will find them confusing to interpret and answer.
o Timing also plays a part, as shown in Box 2.3.
C. Initial Concessions
· Opening offers are usually met with a counteroffer, and these two offers define the initial bargaining range.
o After the first round of offers, negotiators can choose to hold firm and insist on the original position, or make some concessions.
o Note that the first concession conveys a message, frequently a symbolic one, to the other party about how you will proceed.
· Opening offers, opening stances, and initial concessions are elements at the beginning of a negotiation that parties can use to communicate how they intend to negotiate.
o An exaggerated opening offer, a determined opening stance, and a very small initial concession signals a position of firmness.
§ Firmness shows negotiators attempt to capture most of the bargaining range for themselves.
§ Firmness can also create a climate in which the other party may decide that concessions are so meager they might as well capitulate and settle quickly.
§ Research shows that negotiators taking a hard line during negotiation achieve better economic outcomes, but at the cost of being perceived negatively.
· There are several good reasons for adopting a flexible position.
o First, when taking different stances throughout a negotiation, one can learn about the other party’s targets and perceived possibilities by observing how they respond to different proposals.
o Negotiators may want to establish a cooperative rather than a combative relationship, hoping to get a better agreement.
o In addition, flexibility keeps the negotiations proceeding; the more flexible one seems, the more the other party will believe that a settlement is possible.
D. Role of Concessions
· Concessions are central to negotiation – without them, negotiations would not exist.
o See Box 2.4 for twelve guidelines on how to make concessions – the first of which is to give yourself enough room to make concessions.
· Negotiators generally resent a take-it-or-leave-it approach – a concession that may have been accepted is rejected when it thrown on the table as a final offer.
· There is ample data to show that parties feel better about a settlement when the negotiation involved a progression of concessions than when it didn’t.
o The intangible factors of status and recognition may be as important as the tangible issues themselves.
· A reciprocal concession cannot be haphazard.
o After receiving an inadequate concession, negotiators may explicitly state what they expect before offering further concessions.
· To encourage further concessions from the other side, negotiators sometimes link their concessions to a prior concession made by the other.
o “Because you have reduced your demand on X, I am willing to concede on Y.”
o A powerful form of concession involves wrapping a concession in a package.
§ “If you will move on A and B, I will move on C and D.”
§ Packaging concessions can lead to better outcomes for negotiators than making concessions singly on individual issues.
E. Pattern of Concession Making
· The pattern of concessions made during a negotiation contains valuable information, though not always easy to interpret.
o When successive concessions get smaller, the obvious message is that the concession maker’s position is getting firmer and their resistance point is being approached – or they may have little room left to move late in negotiations.
· The pattern of concession making is also important.
o Consider the pattern of concessions made by two negotiators, George and Mario, shown in Figure 2.4.
o Assume the negotiators are discussing the unit price of a shipment of computer parts and each is dealing with a different client.
o Mario makes three concessions, each worth $4 per unit, for a total of $12.
o George makes four concessions, worth $4, $3, $2, and $1 per unit, for a total of $10.
o Both tell their clients they have conceded all they can but George is more likely to be believed because he has signaled through the pattern of his concessions that there is not much left to concede.
o When Mario claims to have little left to concede, his client is less likely to believe him because the pattern of Mario’s concessions suggest there is plenty left to concede, even though Mario has actually conceded more than George.
· In multi-issue negotiations, skilled negotiators will also suggest different forms of a potential settlement that are worth about the same to them – recognizing that not all issues are worth the same amount to both parties.
F. Final Offers
· Eventually, a negotiator wants to convey the message that there is no further room for movement – that the present offer is the final one.
o If a simple statement will not suffice, an alternative is to let the absence of any further concessions to covey the point.
· One way to convey the message that an offer is the last one is to make the last concession more substantial.
o This implies the negotiator is throwing in the remainder of the negotiating range.
o A concession may also be personalized to the other party, which signals this is the last concession they will get.
IV. Commitment
· One definition of commitment is the taking of a bargaining position with some explicit or implicit pledge regarding the future course of action.
o An example is a sports agent who says to the general manager of a professional sports team, “If we do not get the salary we want, my player will sit out next year.”
o The purpose of a commitment is to remove ambiguity about the negotiator’s intended course of action.
o Commitments also reduce the other party’s options, they are designed to constrain the other party to a reduced portfolio of choices.
· A commitment is often interpreted by the other party as a threat – if the other does not comply, some set of negative consequences will occur.
o Some commitments can be threats, but others are simply statements of intended action that leave the responsibility for avoiding mutual disaster in the hands of the other party.
o Commitments can also involve future promises, such as “If we get this salary increase, we’ll agree to have all other points arbitrated as you request.”
· Because of their nature, commitments are statements that usually require a follow through in action.
o Because the other party probably will understand this, a commitment, once accepted, will often have a powerful effect on what the other party believes is possible.
A. Tactical Considerations in Using Commitments
· Like many tools, commitments are two-edged.
o Commitments exchange flexibility for certainty of action, but they create difficulties if you want to move to a new position.
o When making commitments, you should also make contingency plans for a graceful exit, should it be needed – it must be kept secret.
o In Box 2.5, see examples of how to avoid premature commitments in salary negotiations.
· Commitments may be useful to you as a negotiator, but you will find it advantageous to prevent the other party from becoming committed.
o If the other party should take a committed position, it is to your advantage to keep open one or more ways for them to get out of the commitment.
B. Establishing a Commitment
· A commitment statement has three properties:
o A high degree of finality
o A high degree of specificity
o A clear statement of consequences
Public Pronouncement
o A commitment statement increases in potency when more people know about it.
o The wider the audience, the less likely the commitment will be changed.
Linking with an Outside Base
o Another way to strengthen a commitment is to link with one or more allies.
o A variation of this process occurs when negotiators create conditions that make it more difficult for them to break a commitment they have made.
Increase the Prominence of Demands
o Many things can increase the prominence of commitment statements.
§ If most offers and concessions have been made orally, write out your statement to draw attention to the commitment.
§ Repetition is one of the most powerful vehicles for making a statement prominent.
§ Using different communication channels to convey a commitment makes the point strongly.
Reinforce the Threat or Promise
o When making a threat, there is the danger of going too far.
§ Simple, direct statements of demands, conditions, and consequences are more effective.
o Several things can be done to reinforce the implicit or explicit threat in a commitment.
§ Review similar circumstances and their consequences.
§ Make obvious preparations to carry out the threat.
· Facing the prospect of a strike, companies build up their inventories and unions build strike funds.
o Create and carry out minor threats in advance, leading the other party to believe that major threats will be fulfilled.
§ A negotiator may say, “If the progress of these negotiations does not speed up, I am not going to return to the negotiating table after lunch,” and then do just that.
o Research on threats in negotiation suggests that negotiators who make threats are perceived as more powerful than negotiators who do not.
§ This does not appear to translate into higher negotiation outcomes for threat users.
§ In fact, threat users are also perceived as less cooperative, and their outcomes in integrative situations seem to be lower than those of negotiators who do not use threats.
C. Preventing the Other Party from Committing Prematurely
· All the advantages of a committed position work against a negotiator when the other party commits, so it is important to prevent the other party from committing.
o People often take committed positions when they become angry or feel pushed to the limit – pay attention to the other party’s level of irritation, anger, and impatience.
· Good, sound, deliberate commitments take time to establish.
o One way to prevent the other party from establishing a committed position is to deny them the necessary time.
· Another approach to keep the other party from taking a committed position is to ignore or downplay a threat by not acknowledging the other’s commitment, or even by making a joke about it.
o “You don’t really mean that.”
o “I know you can’t be serious about really going through with that.”
o Or simply move negotiations along as though the commitment statement was not heard or understood.
· There are times when it is to a negotiator’s advantage for the other party to become committed.
o When the other party takes a position on an issue relatively early, it may be very much to a negotiator’s advantage to solidify that position so it will not change.
o This may be handled in one of two ways.
§ By identifying the significance of a commitment when it is made
§ By taking notes and keeping track of the other’s statements
D. Finding Ways to Abandon a Committed Position
· Negotiators may want to get the other party out of a committed position, and the other party may also want a way out.
· Here are four avenues for escaping commitments.
Plan a Way Out
o When planning a commitment, a negotiator should simultaneously plan a private way out.
o The negotiator may also reword a commitment to indicate the conditions under which it applied have changed.
Let it Die Silently
o After a lapse of time, a negotiator can make a new proposal in the area of the commitment without mentioning the earlier one.
o A variation is to make a tentative step in a direction previously excluded by the other’s commitment.
Restate the Commitment
o A third route is to restate the commitment in more general terms.
o The party that wants to abandon a commitment will make a new proposal, changing some of the details to be more in line with their current needs, while appearing to still be living with the general principles of the earlier wording.
Minimize the Damage
o If the other party backs off from a committed position, it is important to help them save face, which means helping to minimize any possible damage to the their self-esteem or to their constituent relationships.
o One strategy to use in this instance is to make a public attribution about the other party’s move to some noble or higher outside cause.
§ Diplomats can withdraw from a committed position due to their deep concern for peace and humankind.
o A committed position is a powerful tool in negotiation.
§ It is also a rigid tool and must be used with care.
§ The essential effect of a committed position is to remove an issue from further discussion.
§ The committed position has to be believable, and it must appear inevitable.
§ Because of this, getting out of a committed position is not easy, but made simpler by planning.
V. Closing the Deal
· After negotiating for a period of time, and learning about the other party’s needs, positions, and perhaps resistance point, the next challenge is to close the agreement.
· Negotiators can choose from several tactics – as much art as science.
A. Provide Alternatives
· Rather than making a single final offer, provide two or three alternative packages for the other party that are roughly equal in value.
· People like to have choices, and providing them is effective for closing a negotiation.
B. Assume the Close
· Salespeople use this technique frequently.
· After having a general discussion about the needs and positions of the buyer, then act as if the decision to purchase something has already been made.
C. Split the Difference
· This may be the most popular tactic used.
· When an agreement is close, suggest that the parties split the difference.
D. Exploding Offers
· This offer contains an extremely tight deadline in order to pressure the other party to agree quickly – an extreme version of manipulating negotiating schedules.
· The purpose of an exploding offer is to convince the other party to accept the settlement and to stop considering outcomes.
· Particularly effective in situations where the party receiving the offer is still in the process of developing alternatives that may or may not be viable.
· Appear to work best for organizations with the resources to make an exceptionally attractive offer early in a negotiation in order to prevent the other party from continuing to search for a potentially superior offer.
E. Sweeteners
· Another tactic is to save a special concession for the close.
· To use this effectively, negotiators need to include the sweetener in their negotiation plans, or they may concede too much during the close.
VI. Assessing the Quality of the Agreement
· There are two categories of outcomes that are important.
o Objective outcomes
o Subjective value
· Objective outcomes include assessment of the agreement against the negotiator’s target and resistance points.
o Another way to assess agreements would be against what the other party “would have paid” – this information is not always available and even if obtained, should be treated with suspicion as it could be from self-serving motivation or strategic reasons.
· Subjective value is a cluster of psychological variables that negotiators use to evaluate negotiation outcomes.
o Feelings about the outcome – outcome satisfaction, distributive fairness
o Feelings about the self – Did you lose face? Was your behavior principled?
o Feelings about the process – Did the other party listen? Was the process fair?
o Feelings about the relationship – What impression did the other negotiator make on you? Do you trust the other negotiator?
· There is no perfect way to assess the quality of agreements, but negotiators should try.
o Both objective outcomes and subjective value appear important, with subjective value having an important influence on future negotiations.
VII. Hardball Tactics
· Designed to pressure negotiators to do things they would not otherwise do.
o Their presence usually disguises the user’s adherence to a distributive bargaining approach.
o Their effect is unproven and they can backfire.
o Many find these tactics offensive and they illicit feelings of revenge in others.
o Many negotiators consider these tactics out-of-bounds for any negotiation situation.
o The authors do not recommend the use of the following tactics.
· It is important to understand hardball tactics and how they work so you can recognize them is they are used against you.
A. Dealing with Typical Hardball Tactics
· As a negotiator, there are several choices about how to respond.
o A good strategic response is to identify the tactic quickly and understand how it works.
o No one response will work in all situations, and your response will depend on your goals and the broader context of the negotiation.
Discuss Them
o Label the tactic and indicate to the other party that you know what they are doing
§ Then offer to negotiate the negotiation process itself, such as behavioral expectations, before continuing.
§ Suggest you both use more productive methods, allowing you both to gain.
§ Separate the people from the problem and then be hard on the problem, soft on the people.
Ignore Them
o This appears as a weak response, but it can be powerful.
o Your opponent is expending much energy into their tactic, conserve yours.
o Not responding to a threat is often the best way of dealing with it.
§ Pretend you didn’t hear it.
§ Change the subject.
§ Call a break and, upon returning, switch topics.
Respond in Kind
o You can always respond to a hardball tactic with one of your own.
§ This can result in chaos but once the smoke clears, both parties may realize each other’s skill in such tactics and be willing to try something different.
o This may be most useful when dealing with another party who is testing your resolve or as a response to exaggerated positions taken in negotiations.
Co-Opt the Other Party
o Another way of dealing with negotiators using aggressive hardball tactics is to try to befriend them before they use the tactics on you.
o Stress your commonalities and find another element upon which to place the blame, and you may sidetrack the other party, preventing their hardball tactics.
B. Typical Hardball Tactics
· Here are some of the more frequent hardball tactics and their weaknesses.
· See Table 2.1
Good Cop/Bad Cop
o A subtle form of this tactic is to assign the bad cop the role of speaking only when the negotiations are headed in a direction the team does not want; as long as things are going well, the good cop does the talking.
o Weaknesses:
§ Relatively transparent
§ Easily countered by openly stating what you are doing
§ Difficult to enact – requires a lot of energy toward making the tactic work
Lowball/Highball
o Negotiators using this tactic start with a ridiculously low, or high, opening offer they know they will never achieve.
o They hope the extreme offer will cause the other party to reevaluate their own opening offer and move closer to or beyond their resistance point.
§ The risk in using this tactic is that the other party will think it is a waste of time to negotiate and stop the process.
o The best way to deal with a lowball/highball tactic is not to make a counteroffer but to ask for a more reasonable opening offer from the other party.
§ The reason this is important is that this tactic works in the split second between hearing the opening off and the delivery of your first offer.
§ If you give in, the other party has “anchored” you to this offer.
o Good preparation is critical to defend against this tactic – allowing you to choose from one of several different strategies.
§ Insist the other party start with a reasonable opening offer and refuse to negotiate further until they do
§ State your understanding of the general market value of the item being discussed, support it with facts and figures, showing the other party that you won’t be tricked
§ Threaten to leave the negotiation, either briefly or for good, demonstrating your dissatisfaction in the other party in using this tactic
§ Respond with an extreme counter offer to send a clear message you won’t be anchored by an extreme offer from the other party.
Bogey
o Negotiators using the bogey tactic pretend an inconsequential issue is quite important to them – then trade them for major concessions, which really are important to them, later in the negotiations.
o The bogey tactic is most effective when negotiators identify an issue that is quite important to the other side but of little value to themselves.
o This tactic is fundamentally deceptive, and can be difficult to enact.
§ You can waste time and effort arguing for an issue you don’t even want.
§ It can be very difficult to change gracefully and accept an offer in completely the opposite direction
§ If the maneuver cannot be undone, you may end up accepting a suboptimal deal.
§ This tactic can damage relationship if the other party reacts strongly to being mislead.
o The bogey is a difficult tactic to defend against, but being well prepared makes you less susceptible.
§ Be suspect when the other party takes a position counter to what you expect.
§ Probe with questions about why they want a particular outcome.
§ Be very cautious about sudden reversals in position, especially late in the negotiation – question them carefully and don’t concede too much.
The Nibble
o Negotiators using the nibble tactic ask for proportionally small concession on an item that hasn’t been discussed previously in order to close the deal.
§ After considerable negotiations, when an agreement is close, one party asks to include a clause not previously discussed that will cost the other party a proportionally small amount.
§ The amount is too small to lose the deal over but large enough to upset the other party.
o This is the major weakness with the nibble:
§ Many people feel that the party using the nibble did not bargain in good faith.
§ The party feeling nibbled will be motivated to seek revenge.
o Combating the nibble tactic:
§ Respond to each nibble with the question “What else do you want?”
§ Have your own nibbles prepared for exchange.
Chicken
o Negotiators using this tactic combine a large bluff with a threatened action to force the other party to “chicken out” and give them what they want.
o Weakness of chicken tactic:
§ Turns the negotiation into a serious game in which one or both parties find it difficult to distinguish reality from postured negotiation positions
§ Difficult to defend against
· It can lose its power if downplayed, reworded, or ignored.
· The riskiest response is to introduce your own chicken tactic.
· Preparation and a thorough understanding of the situations of both parties is essential for identifying where reality ends and chicken tactics begin.
· Use of external experts to verify information or to help reframe the situation is another option.
Intimidation
o Many tactics attempt to force the other party to agree by means of an emotional ploy.
o Negotiators intimidate by:
§ Deliberately using anger to indicate the seriousness of a position
§ Increasing the appearance of legitimacy, making the other party less likely to question the process being followed or the contract terms being proposed.
§ Guilt can be used as a form of intimidation by questioning the other party’s integrity or the other’s lack of trust in them – placing the other party on the defensive.
o To deal with intimidation tactics, negotiators have several options.
§ It is important to understand why you are making any concession – do not concede due to feeling threatened.
§ Discussing the negotiation process with them is a good option.
§ You can ignore the other party’s attempts to intimidate you, which influences you only if you let it.
§ Use a team to negotiate, providing two advantages over individuals.
· People are not always intimidated by the same things so not all team members will be intimidated by such tactics.
· Team members can discuss the tactics and provide mutual support if the intimidation starts to become increasingly uncomfortable.
Aggressive Behavior
o Aggressive tactics include:
§ Pushing relentlessly for further concessions
§ Asking for the best offer early in negotiations
§ Asking the other party to explain and justify their proposals
o When faced with aggressive behavior tactics, an excellent response is to halt the negotiations in order to discuss the negotiation process itself.
o Again, having a team to counter aggressive tactics can be helpful.
o Good preparation and understanding of your own and the other party’s needs and interests make responding to such tactics easier.
Snow Job
o Snow jobs occur when negotiators overwhelm the other party with so much information that they have trouble determining which facts are real or important, and which are distractions.
§ Governments use this tactic when releasing information publicly.
o Another example of a snow job is the use of highly technical language to hide a simple answer to a question asked by a non-expert.
o The snow job can backfire because providing non-diagnostic information in a negotiation interferes with the ability of negotiators to concentrate on what is important in order to reach agreement.
o Negotiators trying to counter a snow job tactic can choose from several alternative responses.
§ Do not be afraid to ask questions until you receive an answer you can understand.
§ If the matter under discussion is, in fact, highly technical, then suggest that technical experts get together to discuss the technical issues.
§ Negotiators should listen carefully to the other party and identify consistent and inconsistent information – then probe inconsistent information to undermine the effectiveness of the snow job tactic.
VIII. Distributive Bargaining Skills Applicable to Integrative Negotiations
· Many distributing bargaining skills are also applicable to integrative negotiations when negotiators need to claim value, or decide how to divide their joint gain.
· Some applicable distributive skills include:
o Setting clear target and resistance points;
o Understanding and working to improve their BATNA;
o Starting with a good opening offer;
o Making appropriate concessions;
o Managing the commitment process
Chapter Summary
This chapter examined the basic structure of competitive or distributive bargaining situations and some of the strategies and tactics used in distributive bargaining. Distributive bargaining begins with setting your own opening, target, and resistance points. All points are important, but the resistance points are the most critical. The spread between the parties’ resistance points defines the bargaining range.
It is rare that a negotiation includes only one item; more typically, there is a set of items, referred to as a bargaining mix. Each item in a bargaining mix can have opening, target, and resistance points. The bargaining mix may provide opportunities for bundling issues together, trading off across issues, or displaying mutually concessionary behavior.
Examining the structure of distributive bargaining reveals many options for a negotiator to achieve a successful resolution; most of which fall within two broad efforts: to influence the other party’s belief about what is possible and to learn as much as possible about the other party’s position, particularly about the resistance points. The negotiator’s basic goal is to reach a final settlement as close to the other party’s resistance point as possible. Negotiators work to gather information about the opposition and its positions; to convince members of the other party to change their minds about their ability to achieve their own goals; and to promote their own objectives as desirable, necessary, or even inevitable.
Distributive bargaining is basically a conflict situation, wherein parties seek their own advantage, in part through concealing information, attempting to mislead, or using manipulative actions. All these tactics can easily escalate interaction from calm discussion to bitter hostility. Yet negotiation is the attempt to resolve a conflict without force, without fighting. Further, to be successful, both parties to the negotiation must feel at the end that the outcome was the best that they could achieve and that it is worth accepting and supporting. Effective distributive bargaining is a process that requires careful planning, strong execution, and constant monitoring of the other party’s reactions.
Chapter 3
Strategy and Tactics of Integrative Negotiation
Chapter Overview
The fundamental structure of integrative negotiation allows both sides to achieve their objectives.
The goals of the parties in integrative negotiation are not mutually exclusive.
Although the situation may initially appear to the parties to be win-lose, discussion and mutual exploration will often suggest alternatives where both parties can gain.
A description of the efforts and tactics that negotiators use to discover these alternatives is the major part of this chapter.
Important characteristics of integrative negotiators are listed in Box 3.1.
Even well-intentioned negotiators can make the following three mistakes:
Failing to negotiate when they should
Negotiating when they should not
Negotiating when they should but choosing an inappropriate strategy
As suggested by the dual concerns model described in Chapter 1, being committed to the other party’s interests as well as to your own makes problem solving the strategy of choice.
In many negotiations, all parties can gain
Rather than assume that negotiations are win-lose situations, negotiators can look for win-win solutions – and often they will find them.
Integrative negotiation – variously known as cooperative, collaborative, win-win, mutual gains, or problem solving – is the focus of this chapter.
Learning Objectives
Understand the basic elements of integrative negotiation.
2. Explore the strategy and tactics of integrative negotiation.
3. Consider the key factors that facilitate successful integrative negotiation.
Gain an understanding of why successful integrative negotiations are often difficult to achieve.
Chapter Outline
I. An Overview of the Integrative Negotiation Process
A. Creating a Free Flow of Information
B. Attempting to Understand the Other Negotiator’s Real Needs and Objectives
C. Emphasizing Things in Common between the Parties and Minimizing the Differences
D. Searching for Solutions That Meet the Needs and Objectives of Both Sides
II. Key Steps in the Integrative Negotiation Process
A. Step 1: Identify and Define the Problem
B. Step 2: Surface Interests and Needs
C. Step 3: Generate Alternative Solutions
D. Step 4: Evaluate and Select Alternatives
III. Assessing the Quality of the Agreement
IV. Factors That Facilitate Successful Integrative Negotiation
A. Some Common Objective or Goal
B. Faith in One’s Problem-Solving Ability
C. The Motivation and Commitment to Work Together
D. Trust
E. Clear and Accurate Communication
F. An Understanding of the Dynamics of Integrative Negotiation
V. Why Integrative Negotiation Is Difficult to Achieve
A. The History of the Relationship between the Parties
B. A Belief That an Issue Can Only Be Resolved Distributively
C. The Mixed-Motive Nature of Most Negotiating Situations
D. Short Time Perspectives
VI. Distributive Bargaining versus Integrative Negotiation
VII. Chapter Summary
I. An Overview of the Integrative Negotiation Process
· Those wishing to achieve integrative results find that they must manage both the context and the process of the negotiation in order to gain the cooperation and commitment of all parties.
· Key contextual factors include:
o Creating a free flow of information
o Attempting to understand the other negotiator’s real needs and objectives
o Emphasizing things that parties have in common
o Searching for solutions that meet the goals and objectives of both parties
· Managing integrative negotiations involves creating a process to:
o Identify and define the problem
o Surface interests and needs
o Generate alternative solutions
o Evaluate and select alternatives
A. Creating a Free Flow of Information
· Effective information exchange promotes the development of good integrative solutions.
o For the necessary exchange to occur, negotiator must be willing to reveal their true objectives and to listen to each other carefully.
o In contrast, a willingness to share information is not a characteristic of distributive bargaining situations, in which the parties distrust one another, conceal and manipulate information, and attempt to learn about the other for their own competitive advantage.
· Creating a free flow of information includes having both parties know and share their alternatives.
o Negotiators who are aware of each other’s alternatives to negotiated agreement were more likely to soften their resistance points, improve negotiating trade-offs, and increase the size of the resource pie compared with situations in which one or both negotiators were not aware of the alternatives.
o It is the negotiator with the alternative who is responsible for expanding the pie, but both members determine its distribution.
B. Attempting to Understand the Other Negotiator’s Real Needs and Objectives
· You must understand the other’s needs before helping to satisfy them.
· Integrative agreements are facilitated when parties exchange information about their priorities for particular issues, but not necessarily about their positions on those issues.
· Throughout the information sharing process, negotiators must make a true effort to understand what the other side really wants to achieve.
o This is in contrast to distributive bargaining, where negotiators either make no effort to understand the other side’s needs and objectives or do so only to challenge, undermine, or even deny the other party the opportunity to have those needs and objectives met.
· The more experienced party may need to assist the less experienced party in discovering their underlying needs and interests.
C. Emphasizing Things in Common between the Parties and Minimizing the Differences
· To sustain a free flow of information and an effort to understand the other’s needs and objectives, negotiators may require a different outlook or frame of reference.
o Individual goals may need to be redefined through collaborative efforts directed toward a collective goal.
o At times, the collective goal is clear and obvious, and other times it is not clear or easy to keep in sight.
D. Searching for Solutions That Meet the Needs and Objectives of Both Sides
· The success of integrative negotiation depends on the search for solutions that meet the needs and objectives of both sides.
o In this process, negotiators must be firm but flexible.
§ Firm about their primary interests and needs but flexible about how these needs and interests are met.
· A low level of concern for the other’s objectives may drive one of two forms of behavior.
o First, negotiators may work to ensure that what the other obtains does not take away from their own accomplishments.
o Second, negotiators may attempt to block the other from obtaining their objectives because of a strong desire to win or to defeat the opponent.
· In contrast, successful integrative negotiation requires both negotiators not only to define and pursue their own goals but also to be mindful of the other’s goals and to search for solutions that satisfy both sides.
o Outcomes are measured by the degree to which they meet both negotiator’s goals.
o If the objective of one party is simply to get more than the other, successful integrative negotiation is very difficult – if both strive to get more than the other, integrative negotiation may be impossible.
II. Key Steps in the Integrative Negotiation Process
· There are four major steps in the integrative negotiation process:
o Identify and define the problem
o Surface interests and needs
o Generate alternative solutions to the problem
o Evaluate those alternatives and select among them. (See Table 3.1).
§ The first three steps of the integrative negotiation process are important for creating value.
§ The fourth step of the process involves claiming value – which involves many of the distributive bargaining skills discussed in Chapter 2.
· The relationship between creating and claiming value is shown graphically in Figure 3.1.
o The goal of creating value is to push the potential negotiation solutions toward the upper right-hand side of Figure 3.1
o When this is done to the fullest extent possible, the line is called the Pareto efficient frontier, and it contains a point where “there is no agreement that would make any party better off without decreasing the outcomes to any other party.
§ One way to conceptualize integrative negotiation is that it is the process of identifying Pareto efficient solutions.
· It is important the processes to create value precede those to claim value for two reasons.
o The creating-value process is more effective when it is done collaboratively and without a focus on who gets what.
o Because claiming value involves distributive bargaining processes, it may derail the focus on creating value and may even harm the relationship unless it is introduced effectively.
A. Step 1: Identify and Define the Problem
· The problem identification step is often the most difficult one, and it is even more challenging when several parties are involved.
· This is a critical step for integrative negotiation because it sets broad parameters regarding what the negotiation is “about” and provides an initial framework for approaching the discussion.
o It is important that this framework is comprehensive enough to capture complexities of the situation while not making the situation appear more complex than it actually is.
Define the Problem in a Way That Is Mutually Acceptable to Both Sides
o An understandable and widely held concern about integrative negotiation is that during the problem definition process, the other party will manipulate information to state the problem to their own advantage.
o For positive problem solving to occur, both parties must be committed to stating the problem in neutral terms.
o The parties may be required to revise the problem statement several times until they agree on its wording.
o It is critical to note that problem definition is, and should be, separate from any effort to generate or choose alternatives – problems must be defined clearly at this stage.
State the Problem with an Eye toward Practicality and Comprehensiveness
o The major focus of an integrative agreement is to solve the core problem(s).
§ Anything that distracts from this focus should be removed or streamlined to ensure this objective is achieved.
o If the problem is complex, the parties may not even be able to agree on a statement of the problem.
§ The objective should be to state the problem as succinctly as possible while ensuring that the most important dimensions and elements are included in the definition.
§ If there are several issues, the parties may want to clearly identify how the issues are linked.
§ Then they can decide whether to approach them as distinct issues that may be packaged together later or instead to treat them together as a single, larger problem.
State the Problem as a Goal and Identify the Obstacles to Attaining This Goal
o Define the problem as a specific goal to be attained rather than as a solution process.
§ Concentrate on what you want to achieve rather than how you are going to achieve it.
o Then proceed to specify what obstacles must be overcome for the goal to be attained.
§ One key issue is whether the obstacles specified can be changed or corrected by negotiating parties.
§ If the parties cannot address the obstacles effectively, the obstacles become boundary markers for the overall negotiation.
§ A clear understanding of which obstacles are addressable and which are not can be just as critical to realistic integrative negotiation as an explicit awareness of what is negotiable and what is not.
Depersonalize the Problem
o When engaged in conflict, parties tend to view their own actions, strategies, and preferences in a positive light and the other party’s actions, strategies, and preferences in a negative light.
§ Such evaluative judgments can interfere with clear and dispassionate thinking.
§ Telling the other party “your point of view is wrong and mine is right” inhibits integrative negotiating as is combines attacking the problem with attacking the other negotiator.
§ In contrast, depersonalizing the definition of the problem allows both sides to approach the issue as a problem external to the individuals rather than as a problem that belongs to one party only.
Separate the Problem Definition from the Search for Solutions
o Finally, it is important not to jump to solutions until the problem is fully defined.
§ In distributive bargaining, negotiators are encouraged to state the problem in terms of their preferred solution and to make concessions based on this statement.
§ In contrast, parties engaged in integrative negotiation should avoid stating solutions that favor one side until they have fully defined the problem and examined as many alternative solutions as possible.
o Instead of premature solutions, negotiators should develop standards by which potential solutions will be judged for how well they fit.
o Developing standards and using them as measures for evaluating alternatives will help negotiators avoid a single-minded, tunnel-vision approach.
§ With standards that both parties accept, it becomes easier to differentiate a particular favorite alternative from one that may be less favorable individually but that will accomplish a collaborative, integrative resolution.
B. Step 2: Surface Interests and Needs
· A key to achieving an integrative agreement is the ability of the parties to understand and satisfy each other’s interests.
o Identifying interests is a critical step in the integrative negotiation process.
o Interests are the underlying concerns, needs, desires, or fears that motivate a negotiator to take a particular position.
§ Consider the story of two men quarreling in a library – one wanting the window open, the other wanting it closed.
§ The librarian asks one why they want the window open – “To get fresh air.”
§ She asks the other why he wants it closed – “To avoid the draft.”
§ She opens a window in another room, providing fresh air but avoiding a direct draft.
§ This example reveals the essence of the difference between interests and positions.
· The positions are “window open” and “window closed.”
· If they continue to pursue positional bargaining, outcomes can include only a victory for one or the other.
· The librarian’s questions transform the dispute by focusing on why each man wants the window open or closed.
o In this example, the key word is why.
§ In distributive bargaining, negotiators trade positions back and forth, attempting to achieve a settlement as close to their targets as possible.
§ In integrative negotiation, both negotiators need to pursue the other’s thinking and logic to determine the factors that motivated them to arrive at their goals.
· The presumption is that if both parties understand the motivating factors for the other, they may recognize possible compatibilities in interests that permit them to invent new options that both will endorse.
Types of Interests
o There are several types of interests and each type may be
§ Intrinsic – the parties value it in and of itself, or
§ Instrumental – the parties value it because it helps them derive other outcomes in the future.
o Substantive interests are related to focal issues under negotiation
§ Economic and financial issues, such as price or rate, or
§ The substance of a negotiation, such as the division of resources
§ These may be intrinsic or instrumental or both
o Process interests are related to how the negotiation unfolds.
§ One party may pursue distributive bargaining because they enjoy the competitive game, others may enjoy integrative negotiating because they get the opportunity to voice their opinions.
§ Process interests can be both intrinsic and instrumental.
o Relationship interests involve the value of the ongoing relationship between the parties and the future of that relationship.
§ Intrinsic relationship interests exist when the parties value the relationship both for its existence and for the pleasure or fulfillment that sustaining it creates.
§ Instrumental relationship interests exist when the parties derive substantive benefits from the relationship and do not wish to endanger future benefits by souring it.
o Interests in principle are certain principles – concerning what is fair, what is right, what is acceptable, what is ethical, or what has been done in the past and should be done in the future – may be deeply held by the parties and serve as the dominant guides to their actions.
§ These principles often involve intangible factors.
§ Interests in principles can be intrinsic or instrumental.
o Bringing interests in principles to the surface will lead negotiators to discuss explicitly the principles at stake and invent solutions consistent with them.
Some Observations on Interests
o There is almost always more than one type of interest underlying a negotiation.
§ Parties will often have more than substantive interests about the issues.
§ It may be the process, the relationship, or the principles at stake.
o Parties can have different types of interests at stake.
§ One party may care about the issues, the other the process.
§ Bringing different interests to the surface may enable the parties to see that they care about different things and they may invent solutions that address the interests of both negotiators.
o Interests often stem from deeply rooted human needs or values.
§ Some experts suggest that frameworks for understanding basic human needs and values are helpful for understanding interests.
§ One has proposed a need theory of negotiation based on Maslow’s well-known hierarchy of needs.
§ They suggest that the intensity of many international disputes reflects deep underlying needs for security, protection of ethnic and national identity, and other such fundamental needs.
o Interests can change.
§ Like positions, interests can change over time.
§ Negotiator interaction may put some interests to rest, but it may raise others.
§ Negotiators must constantly be attentive to changes in their own interests and the interests of the other side.
o Surfacing interests.
§ Sometimes people are not even sure about their own interests.
§ Negotiators should ask themselves:
· What do I want from this negotiation?
· Why do I want that?
· Why is that important to me?
· What will achieving that help me do?
· What will happen if I don’t achieve my objective?
§ Listening to your own inner voices is important in order to bring your own interest to the surface.
§ The same dialogue is essential in clarifying the other party’s interests.
· Ask probing questions and pay careful attention to the other party’s language, emotions, and nonverbal behavior.
o Surfacing interests is not always easy or to one’s best advantage.
§ Critics of the “interests approach” to negotiation have identified the difficulty of defining interests and taking them into consideration.
§ In some cases, parties do not pursue their own best objective interests but instead focus on one or more subjective interests, which may mislead the other party.
C. Step 3: Generate Alternative Solutions
· The search for alternatives is the creative phase of integrative negotiation.
o Once the parties agree on a common definition of the problem and understand each other’s interests, they can proceed to generate alternative solutions.
o The objective is to create a variety of options or possible solutions to the problem; evaluating and selecting from among those options will be the task in the final phase.
· Several techniques are available, falling into two general categories.
o The first requires the negotiators to redefine, recast, or reframe the problem to create win-win alternatives out of what earlier appeared to be a win-lose problem.
o The second takes the problem as given and creates a long list of options from which the parties can choose.
§ In integrative negotiation over a complex problem, both types of techniques may be used, and even intertwined.
Inventing Options: Generating Alternative Solutions by Redefining Problem/Problem Set
o The techniques in this category call for the parties to define their underlying needs and to develop alternatives to meet them.
o The authors present eight methods for generating alternative solutions by redefining the problem or problem set.
§ Each method refocuses the issues under discussion and requires progressively more information about the other side’s true needs.
§ Solutions move from simpler, distributive agreements to more complex and comprehensive, integrative ones, and there are several paths to finding joint gain.
Logroll
o Successful logrolling requires the parties to find more than one issue in conflict and to have different priorities for those issues.
o The parties then agree to trade off among these issues so that one party achieves a highly preferred outcome on the first issue and the other person achieves a highly preferred outcome on the second issue.
o If the parties do, in fact, have different preferences on different issues and each party gets their preferred outcome on a high-priority issue, then each should receive more and the joint outcomes should be higher.
o Logrolling is frequently done by trial and error – as part of the process of experimenting with various packages of offers that will satisfy everyone involved.
§ Research suggests that negotiators reach better agreements as the number of issues being negotiated increases.
§ If it appears initially that only one issue is at stake, the parties may need to engage in “unbundling” or “unlinking,” which is the process of separating a single issue into two or more issues so that the logrolling may begin.
Expand the Pie
o Many negotiations begin with a shortage of resources and it is not possible for both sides to satisfy their interests or obtain their objectives under the current conditions.
o A simple solution is to add resources – expand the pie – in such a way that both sides can achieve their objectives.
o In expanding the pie, one party requires no information about the other party except their interests, it is a simple way to solve resource shortage problems.
o In addition, the approach assumes that simply enlarging the resources will solve the problem.
Modifying the Resource Pie
o While expanding the resource pie may be attractive, it does not always work because the environment may not be plentiful enough.
o A related approach is to modify the resource pie in a way to support both sides.
Find a Bridge Solution
o When the parties are able to invent new options that meet all their respective needs, they have created a bridge solution.
o Successful bridging requires a fundamental reformulation of the problem so that the parties are not discussing positions but, rather, disclosing sufficient information to discover their underlying interests and needs and then inventing options that will satisfy those needs.
o Bridging solutions do not always remedy all concerns but if negotiators commit themselves to a win-win negotiation, bridging solutions are likely to be highly satisfactory to both sides.
Nonspecific Compensation
o Another way to generate alternatives is to allow one person to obtain their objectives and compensate the other person for accommodating their interests.
o Compensation may be unrelated to the substantive negotiation, but the party who receives it views it as adequate for agreeing to the other party’s preferences.
o For nonspecific compensation to work, the person doing the compensating needs to know what is valuable to the other person and how seriously they are inconvenienced.
Cut the Costs for Compliance
o Through cost cutting, one party achieves their objectives and the other’s costs are minimized if they agree to go along.
o Unlike nonspecific compensation, where the compensated party simply receives something for agreeing, cost cutting is designed to minimize the other party’s costs for agreeing to a specific solution.
o The technique is more sophisticated than logrolling or nonspecific compensation because it requires a more intimate knowledge of the other party’s real needs and preferences.
Superordination
o Superordination solutions occur when the differences in interest that gave rise to the conflict are superseded or replaced by other interests.
Compromise
o A compromise solution would not further the interests of either party.
o Compromises are not considered to be a good integrative strategy except for circumstances where parties are very entrenched and it is unlikely that a more comprehensive agreement is possible.
Summary
o The successful pursuit of these eight strategies requires a meaningful exchange of information between the parties.
§ The parties must either volunteer information or ask each other questions that will generate sufficient information to reveal win-win options.
§ Table 3.2 presents a series of refocusing questions that may reveal these possibilities.
Generating Alternative Solutions to the Problem as Given
· In addition to the techniques already mentioned, there are several other approaches to generating alternative solutions.
o These approaches can be used by the negotiators or by a number of other parties, such as constituencies, audiences, bystanders, etc.
o Several of these approaches are commonly used in small groups.
Brainstorming
o Here, small groups of people work to generate as many possible solutions to the problem as they can.
§ Someone records the solutions, without comment, as they are identified.
§ Participants are urged to be spontaneous, even impractical, and not to censor anyone’s ideas, including their own.
§ Do not discuss or evaluate any solution when it is proposed so as not to stop the free flow of new ideas.
§ Success depends on the amount of intellectual stimulation that occurs as different ideas are generated.
o The following rules should be observed when engaging in brainstorming:
§ Avoid judging or evaluating solutions – creative solutions often come from ideas that initially seem wild and impractical.
§ Separate the people from the problem – negotiators must concentrate on depersonalizing the problem and treating all possible solutions as equally viable, regardless of who initiated them.
§ Be exhaustive in the brainstorming process – research shows that when brainstormers work at the process for a long time, the best ideas are most likely to surface during the latter part of the activity.
§ Ask outsiders – they can suggest options and possibilities that have not been considered, provide additional input to the list of alternatives, or help keep the process and parties on track.
Surveys
o A disadvantage of brainstorming is that it does not solicit ideas of those not present.
o A different approach is to distribute a written questionnaire to a large number of people, stating the problem and asking them to list all possible solutions they can imagine.
§ This can be done quickly with online tools.
§ However, the parties cannot benefit from seeing and hearing each other’s ideas, a key advantage to brainstorming.
Electronic brainstorming
o A facilitator uses a series of questions to guide input from participants, who type their anonymous responses into a networked device that aggregates and displays entries to the group as a whole.
§ The facilitator may then ask additional probing questions.
§ May be useful for integrative negotiations involving multiple parties or during preparation when there is disparate views within your team.
Section Summary
· This discussion of the two basic approaches to generating alternative solutions may give the impression that if negotiators simply invent enough different options, they will find a solution to their problem rather easily.
· Solutions are usually attained through hard work and pursuit of several related processes:
o Information exchange
o Focus on interests rather than positions
o Firm flexibility
§ Negotiators need to be able to signal to the other side the positions on which they are firm and the positions on which they are willing to be flexible.
§ Several tactics can be used to communicate firm flexibility, shown in Box 3.3.
D. Step 4: Evaluate and Select Alternatives
· When the challenge is a simple one, the evaluation and selection steps may be combined into a single step.
· Otherwise, there is a series of distinct steps:
o Definitions and standards
o Alternatives
o Evaluation
o Selection
· Negotiators will need to weigh or rank-order each option against clear criteria.
o If no option or set of options appears suitable and acceptable, this is a strong indication that the problem was not clearly defined (return to definitions) or
o The standards developed earlier are not reasonable, relevant, and/or realistic (return to standards).
· Finally, the parties will to engage in some form of decision-making process where they debate the relative merits of each negotiator’s preferred options and come to an agreement on the best options.
o The selection of alternatives is the claiming-value stage of integrative negotiations.
o Take care to protect the relationship during this stage.
· Use the following guidelines to evaluate options and reach a consensus.
Narrow the Range of Solution Options
o Examine the list of options generated, and focus on those that one or more negotiators strongly support.
o Solutions not strongly advocated by at least one negotiator should be eliminated at this time.
Evaluate Solutions on the Basis of Quality, Standards, and Acceptability
o Solutions should be judged on two major criteria:
§ How good they are and
§ How acceptable they will be to those who have to implement them
o Parties should appeal to objective standards for making decisions.
§ Search for precedents, industry standards, arbitration decisions, or other objectively fair outcomes and processes that can be used as benchmarks for legitimizing the fairness of the current settlement.
§ These criteria may be different from what the negotiators judge to be the most rational or the best solution – be prepared to make trade-offs to ensure the criteria of both quality and acceptability are met.
Agree to the Criteria in Advance of Evaluating Options
o Negotiators should agree to the criteria early in the process.
o Use these criteria to narrow the choice of options to a single alternative or to select the option most likely to succeed.
o If the parties agree, they may revise their criteria later to improve their choice.
o Check criteria periodically and determine whether each negotiator places the same priority on them as before.
Be Willing to Justify Personal Preferences
o People often find it hard to explain why they like what they like or dislike what they dislike.
o Negotiators gain little by pressing opponents to justify themselves – yet personal preferences often have a deep-seated rationale.
o Inquires about the other’s preferences may be an effort to probe behind a position and identify underlying interests and needs.
Be Alert to the Influence of Intangibles in Selecting Options
o Intangibles can lead the negotiator to fight harder to attain a particular solution if that option satisfies both tangible and intangible needs.
o It is useful to help the other party identify those intangibles and make them an open part of the evaluation process.
§ The other party is likely to prefer options that satisfy those intangibles, and to the degree that you can accept them, agreeing to those options may be important concessions.
Use Subgroups to Evaluate Complex Options
o Small groups may be particularly helpful when several complex options must be considered or when many people will be affected by the solution.
o Groups of six to eight people, composed of representatives from each faction, side, or subgroup, are able to work more effectively than large groups.
Take Time Out to Cool Off
o Even though the parties may have completed the hardest part of the process – generating a list of viable options – they may become upset if:
§ Communication breaks down
§ They feel their preferences are not being acknowledged, or
§ The other side pushes too hard for a particular option.
o If the parties become angry, they should take a break.
§ Make their dissatisfaction known and openly discuss reasons for it.
§ When on an even emotional keel, continue evaluating options.
o Finally, they should work as hard as possible to keep discussions on the specifics of the proposals, not on the people advocating them.
Explore Different Ways to Logroll
o The strategy of logrolling is also a mechanism to combine options into negotiated packages.
o There are a variety of approaches and three of these relate to the matters of outcome, probabilities, and timing – in other words, what is to happen, the likelihood of it happening, and when it happens.
§ Explore Differences in Risk Preference
· It may be possible to create a package that recognizes differences in risk preferences.
§ Explore Differences in Expectations
· Differences in expectations about the likelihood of future events can permit the parties to invent a solution that addresses the needs of both.
· It possible to use contingent contracts, which adjust as circumstances unfold, to manage different expectations about the future.
§ Explore Differences in Time Preferences
· Invent solutions that address the parties’ preference of either short-term needs or long-term rewards.
Keep Decisions Tentative and Conditional until All Aspects of the Final Proposal Are Complete
o Even though a clear consensus may emerge, the parties should talk about the solution in conditional terms – a sort of soft bundling.
o A tentative tone allows negotiators to suggest changes or revise the final package throughout this stage.
§ Ideally, the process should be open and flexible.
§ Nothing should be considered final until everything is final.
Minimize Formality and Recordkeeping until Final Agreements Are Closed
o Strong integrative negotiators do not want to lock themselves into specific language or written agreements until they are close to an agreement.
o In general, the fewer the formal records during the solution-generating phase, the better.
o In contrast, when the parties are close to agreement, one side should write down the terms of the agreement, and passed between the parties as often as necessary until all sides agree to the phrasing and wording of the agreement.
o Avoid the apparent expediency of voting on final agreements, and encourage continuing until a consensus is reached.
III. Assessing the Quality of the Agreement
· The quality of integrative agreements is assessed along the same two dimensions as distributive agreements:
o Objective outcomes and
o Subjective value.
· Objective outcomes should be assessed against the extent to which both parties’ interests and needs were met by the agreement.
o A comprehensive list of criteria for evaluating integrative agreement is presented in Box 3.4.
o Negotiators should consciously evaluate the objective outcomes of their integrative negotiations against these criteria.
· The subjective value of the agreement is more important in integrative negotiations than distributive bargaining because of the long-term relationship between the parties.
o In some cases, the subjective value will be more important than the objective outcomes.
o Negotiators should assess how they feel about the outcome, self, process, and relationship when they evaluate the subjective value of integrative negotiations.
IV. Factors That Facilitate Successful Integrative Negotiation
· Successful integrative negotiation occurs when the parties are predisposed to finding a mutually acceptable joint solution.
· This section reviews seven factors that facilitate successful integrative negotiation.
o The presence of a common goal
o Faith in your own problem-solving ability
o A belief in the validity of the other party’s position
o The motivation and commitment to work together
o Trust
o Clear and accurate communication
o Understanding of the dynamics of integrative negotiation
A. Some Common Objective or Goal
· Three types of goals – common, shared, and joint – may facilitate the development of integrative agreements.
o A common goal is one that all parties share equally, each one benefiting in a way that would not be possible if they did not work together.
o A shared goal is one that both parties work toward but that benefits each party differently.
o A joint goal is one that involves individuals with different personal goals agreeing to combine them in a collective effort.
B. Faith in One’s Problem-Solving Ability
· Parties who believe they can work together are more likely to do so.
o Expertise in the focal problem area strengthens the negotiator’s understanding of the problem’s complexity, nuances, and possible solutions.
o Expertise increases both the negotiator’s knowledge base and his or her self-confidence, both of which are necessary to approach the problem at hand with an open mind.
o Direct experience in negotiation increases the negotiator’s sophistication in understanding the bargaining process and approaching it more creatively.
o Finally, there is also evidence that knowledge of integrative tactics leads to an increase in integrative behavior.
· Taken together, these results suggest that a faith in one’s ability to negotiate integratively is positively related to successful integrative negotiations.
C. A Belief in the Validity of One’s Own Position and the Other’s Perspective
· Integrative negotiation requires negotiators to accept both their own and the other’s attitudes, interests, and desires as valid.
o First, you must believe in the validity of your own perspective—that what you believe is worth fighting for and should not be compromised.
o But, you must also accept the validity of the other party’s perspective and you must value them no less or more than your own position and viewpoints.
§ Believing in the validity of the other negotiator’s perspective does not mean empathizing with the other party.
D. The Motivation and Commitment to Work Together
· For integrative negotiation to succeed, the parties must be motivated to collaborate rather than compete.
o They must be willing to make their own needs explicit, to identify similarities, and to recognize and accept differences.
o They must also tolerate uncertainties and unravel inconsistencies.
· It might appear that for successful integrative negotiation to occur, each party should be just as interested in the objectives and problems of the other as they are in their own.
o This is an incorrect interpretation.
o Such behavior is more likely to be dysfunctional than successful.
o While parties strongly committed to each other are likely to yield more than they would otherwise, the result is that they may arrive at a joint outcome that is less satisfactory than one they would have reached had they remained firm in pursuing their own objectives.
· Parties in negotiation maximize their outcomes when they assume a healthy, active self-interest in achieving their own goals while also recognizing that they are in a collaborative, problem-solving relationship.
· Motivation and commitment to problem solving can be enhanced in three ways.
o Negotiators can recognize they share a common fate and discuss that there is more to be gained by working together than by working separately.
o Negotiators can engage in commitments to each other before the negotiations begin.
§ Such commitments have been called presettlement settlements and are distinguished by three major characteristics:
· The settlement results in a firm, legally binding written agreement between the parties.
· The settlement occurs in advance of the parties undertaking full-scale negotiations, but the parties intend that the agreement will be replaced by a more clearly delineated long-term agreement which is to be negotiated.
· The settlement resolves only a subset of the issues on which the parties disagree and may simply establish a framework within which the more comprehensive agreement can be defined and delineated.
o Negotiators can create an umbrella agreement that provides a framework for future discussions.
§ Umbrella agreements manage three negotiation challenges.
· They allow flexibility when the negotiating relationship between the parties is evolving.
· They provide flexibility for claiming value when the actual future gains are not known at the time of the negotiation.
· They can be used when all the issues and contingencies have yet to be identified but the parties know they wish to work together.
§ An example of an umbrella agreement is in Box 3.5.
E. Trust
· Mistrust inhibits collaboration.
· Three tactics to elicit information from the other negotiator when they mistrust you.
o Share information and encourage reciprocity.
§ Ensure there is agreement about the explicit ground rules before proceeding, and proceed incrementally to be sure.
o Negotiate multiple issues simultaneously.
§ This allows you to identify relative priorities of the other negotiator, and obtain some information about their interests.
o Make multiple offers at the same time.
§ Offers should be of the same value to you but the other’s response should provide you with information about their relative interests.
· Generating trust is a complex, uncertain process that depends in part on how the parties behave and in part on the parties’ personal characteristics.
o To develop trust effectively, each negotiator must believe that both parties will choose to behave in a cooperative manner.
o Each must believe that this behavior is a signal of the other’s honesty, openness, and a similar mutual commitment to a joint solution.
F. Clear and Accurate Communication
· A precondition for high-quality integrative negotiation is clear and accurate communication.
o First, negotiators must be willing to share information about themselves, for example, revealing what they want and why.
o Second, negotiators must understand the communication, or at least the meaning each party attaches to their statements.
o Mutual understanding is the responsibility of both sides.
§ The communicator must be willing to test whether the other side has received the message that was intended.
§ The listener must engage in active listening, testing to make sure what they received and understood is the message the sender intended.
· Multiple communication channels help negotiators clarify the formal communication or exchange information if the formal channels break down.
o Use care to make sure the multiple messages are consistent.
· Metaphors may play an important role in communicating during negotiation.
o May be defined as “talking about one thing in terms of another” and
o Are useful when direct communication is difficult or threatening.
o Metaphors play two important roles in negotiation.
§ They help negotiators understand why the other party is saying what they said.
§ They help identify areas for mutual gain as they provide insight into the other party’s needs and motives.
§ See Box 3.6.
· When there are strong negative feelings or when one or more parties are inclined to dominate, negotiators may create formal, structured procedures for communication.
o Follow a procedure that gives everyone a chance to speak.
G. An Understanding of the Dynamics of Integrative Negotiation
· Several studies indicate that training in integrative negotiation enhances the ability of the parties to successfully pursue the process.
o One study suggest that negotiators who prepare by contrasting achieving success with negotiation obstacles, along with creating “if-then” plans, have higher joint gains in integrative negotiations.
Section Summary
· The text identified seven fundamental preconditions for successful integrative negotiation.
o Some form of shared or common goals
o Faith in one’s ability to solve problems
o A belief in the validity and importance of the other’s position
o The motivation and commitment to work together
o Trust in the opposing negotiator
o The ability to accurately exchange information in spite of conflict conditions
o An understanding of the dynamics of integrative negotiation
· If the parties cannot meet these preconditions successfully, they will need to resolve the challenges as the integrative negotiation evolves.
V. Why Integrative Negotiation is Difficult to Achieve
· Integrative negotiation is a collaborative process in which the parties define their common problem and pursue strategies to solve it.
o The approach that individuals take toward conflict and negotiation is essential to understanding the differences between distributive bargaining and integrative negotiation.
o The primary reason negotiators do not pursue integrative agreements is they fail to perceive a situation as having integrative potential and are motivated primarily by their own needs.
o Four additional factors contribute to this difficulty.
§ The history of the relationship between the parties
§ The belief that an issue can only be resolved distributively
§ The mixed-motive nature of most bargaining situations
§ Short time perspectives
A. The History of the Relationship between the Parties
· The more competitive and conflict-laden their past relationship, the more likely negotiators are to approach the current negotiation with a defensive, win-lose attitude.
· Even if the parties have no history, the expectation of a competitive opponent is sufficient to create defensiveness.
o In additions, perceptions are often loaded with self-serving rationalizations which deter negotiators from initiating an integrative negotiation process.
· Negotiators can proceed past a negative history but it takes effort.
o See Box 3.7 for a successful transformation of union-management relations by using a five-step process.
B. A Belief That an Issue Can Only Be Resolved Distributively
· Conflict dynamics lead negotiators to polarize issues and see them only in win-lose terms.
o In addition, negotiators may be prone to several cognitive biases that may preclude negotiators from engaging in the behaviors necessary for integrative negotiation.
C. The Mixed-Motive Nature of Most Negotiation Situations
· Most situations contain some elements that require distributive bargaining processes and others that require integrative negotiation.
o As a general rule, because people are more likely to perceive negotiations as win-lose than win-win, conflict and competitiveness drive out cooperation and trust, making it more difficult for the parties to find common ground.
· One of the most fundamental challenges in integrative negotiation is that parties fail to recognize or search for the integrative potential in a negotiation.
o Primarily due to the desire to satisfy their own concerns without regard for the other’s concerns
o Negotiators too often assume the other party has the same objectives and goals as they do, and fail to search for information about the other’s preferences and priorities. Negotiators may also be led to this assumption when
§ They are highly accountable to someone else for their performance
§ When the parties have had a history of conflict
§ When the issues are too complex to disentangle and
§ When issues are easily interpreted into simple win-lose terms.
D. Short Time Perspectives
· Effective integrative negotiation requires sufficient time to process information, reach true understanding of your own and the other party’s needs, and manage the transition from creating value to claiming value.
· Recent research suggests that a shorter length of time between the negotiation and implementation of an agreement may contribute to suboptimal integration outcomes.
o The pace and time pressures of modern business negotiations appear to be an important factor interfering with effective integrative negotiations.
o When practical, negotiators should leave enough time before the implementation of a deal so that effective integrative negotiation can occur.
VI. Distributive Bargaining versus Integrative Negotiation
· Many would argue that the world would be a better place if all negotiations were integrative and suggest that distributive bargaining is an outdated approach to creating value and resolving differences.
· The author’s view is that a strong understanding of both is important for two reasons.
o First, some negotiators use a purely distributive approach and there is no evidence that integrative negotiating will be effective against a strong, consistent distributive bargainer.
o The second reason to understand both processes is that integrative situations involve a claiming-value portion and this may involve the use of distributive tactics.
§ A sound understanding of distributive bargaining makes it more likely you will be able to identify insincere opponents.
§ See Table 3.3.
Chapter Summary
The fundamental structure of integrative negotiation is one within which the parties are able to define goals that allow both sides to achieve their objectives. Integrative negotiation is the process of defining these goals and engaging in a set of procedures that permit both sides to maximize their objectives.
A high level of concern for both sides achieving their own objectives propels a collaborative, problem-solving approach. Negotiators frequently fail at integrative negotiation because they fail to perceive the integrative potential of the negotiating problem. However, breakdowns also occur due to distributive assumptions about the negotiating problem, the mixed-motive nature of the issues, or the negotiator’s previous relationship with each other. Successful integrative negotiation requires several processes. The parties must understand each other’s true needs and objectives and they must create a free flow of information and an open exchange of ideas. They also must focus on their similarities, emphasizing their commonalities rather than their differences and they must engage in a search for solutions that meet the goals of both sides.
The four key steps in the integrative negotiation process are identifying and defining the problem, identifying interests and needs, generating alternative solutions, and evaluating and selecting alternatives.
Various factors facilitate successful integrative negotiation. The process will be greatly facilitated by some form of common goal or objective. The goal may be one that the parties both want to achieve, one they want to share, or one they could not possibly attain unless they worked together. Also they must share a motivation and commitment to work together, to make their relationship a productive one and the parties must be willing to believe that the other’s needs are valid. They must also be able to trust each other and to work hard to establish and maintain that trust, and there must be clear and accurate communication about what each one wants and an effort to understand the other’s needs.
Chapter 4
Negotiation: Strategy and Planning
Chapter Overview
In this chapter, we discuss what negotiators should do before opening negotiations. Effective strategy and planning are the most critical precursors for achieving negotiation objectives. With effective planning and target setting, most negotiators can achieve their objectives; without them, results occur more by chance than by negotiator effort.
Regrettably, systematic planning is not something that most negotiators do willingly. Although time constraints and work pressures make it difficult to find the time to plan adequately, for many planning is simply boring and tedious, easily put off in favor of getting into the action quickly. It is clear, however, that devoting insufficient time to planning is one weakness that may cause negotiators to fail. Here are some consequences of failed planning:
Negotiators fail to set clear goals.
Negotiators fail to set clear objectives or targets that serve as benchmarks for evaluating offers and packages in progressing toward their goal.
If negotiators have not done their homework, they may not understand the strengths and weaknesses of their own positions or recognize comparable strengths and weaknesses in the other party’s arguments.
Negotiators need to consider their alternatives to doing the deal in front of them.
Negotiators cannot simply depend on being quick and clever during the give-and-take of negotiation.
One study of successful negotiators suggested that in the planning process, skilled negotiators (compared to “average” negotiators):
Explored a wider range of options for action
Worked harder to find common ground with the other party
Spent more time considering the long-term implications of the issues
Were significantly more likely to set upper and lower limits, or the boundaries of a range of acceptable settlements
The discussion of strategy and planning begins by exploring the broad process of strategy development, starting with defining the negotiator’s goals and objectives then moves to developing a strategy to address the issues and achieve one’s goals.
· Finally, we address the typical stages and phases of an evolving negotiation and how different issues and goals will affect the planning process.
· Figure 4.1 shows how these elements are related.
· Although the model suggests the relationships are linear, in fact, many parties often begin midway in the sequence, working backward or forward until the three steps are aligned.
Learning Objectives
1. Understand the importance of setting goals for an upcoming negotiation.
Explore the major elements of a process for selecting a negotiation strategy and how to execute that strategy.
3. Consider how most negotiations evolve through understandable stages and phases.
Develop a comprehensive set of tools to plan effectively for an upcoming negotiation and evaluate progress.
Chapter Outline
I. Goals – The Focus That Drives a Negotiation Strategy
A. Direct Effects of Goals on Choice of Strategy
B. Indirect Effects of Goals on Choice of Strategy
II. Strategy – The Overall Plan to Achieve One’s Goals
III. Strategy versus Tactics
A. Unilateral versus Bilateral Approaches to Strategy
B. The Dual Concerns Model as a Vehicle for Describing Negotiation Strategies
IV. Understanding the Flow of Negotiations: Phases
V. Getting Ready to Implement the Strategy: The Planning Process
A. Defining the Negotiating Goal
B. Defining the Major Issue Related to Achieving the Goal
C. Assembling the Issues, Ranking Their Importance, and Defining the Bargaining Mix
D. Defining the Interests
E. Knowing Your Alternatives (BATNAs)
F. Knowing Your Limits, Including a Resistance Point
G. Analyzing and Understanding the Other Party’s Goals, Issues, and Resistance Points
H. Setting One’s Own Targets and Opening Bids
I. Assessing the Social Context of Negotiation
J. Presenting the Issues to the Other Party: Substance and Process
VI. Chapter Summary
I. Goals – The Focus That Drives a Negotiation Strategy
The first step in developing and executing a negotiation strategy is to determine your goals.
o As noted in Chapter 1, negotiators may consider:
§ Substantive goals – money or a specific outcome
§ Intangible goals – winning, beating the other party, or getting a settlement at all costs
§ Procedural goals – shaping the agenda or simply having a voice at the table
o Effective preparation requires a thorough, thoughtful approach to these goals – negotiators should specify their goals and objectives clearly.
§ This includes listing all goals you wish to achieve in the negotiation
§ Determining the priority among these goals
§ Identifying potential multi-goal packages
§ Evaluating possible trade-offs among multiple goals
A. Direct Effects of Goals on Choice of Strategy
· There are four ways that goals affect negotiation.
o Wishes are not goals, especially in negotiation.
§ A wish is a hope that something might happen; a goal is a specific, focused target that a negotiator can realistically develop a plan to achieve.
o A negotiator’s goals may be, but not necessarily, linked to the other party’s goals.
§ Linkage between the goals defines an issue to be settled and is often the source of conflict.
o There are limits to what realistic goals can be.
§ If what you want exceeds these limits, you must either change your goals or end the negotiation.
§ Goals must be attainable.
§ There are times when goals can trigger destructive, rather than constructive, behavior – See Box 4.1.
o Effective goals must be concrete, specific and measurable.
§ If they are not, then it will be hard to:
· Communicate to the other party what you want;
· Understand what the other party wants;
· Determine whether an offer on the table satisfies your goals.
· Goals can be tangible or procedural. In negotiations:
o Intangible goals might include maintaining a reputation as tough but principled negotiator, establishing a precedent for future negotiations, or conducting the negotiations in a manner that is fair to all sides and assures each party fair treatment.
o Procedural goals might be to make sure that the other party makes at least two concessions from their opening price, to convince you that they are negotiating “seriously.”
· The chosen criteria depends on you: your specific objectives and your priorities among multiple goals.
o Trade-offs are inevitable so start by defining what you want to achieve right up front.
B. Indirect Effects of Goals on Choice of Strategy
· Short-term thinking affects our choice of strategy
o In developing and framing our goals, we may ignore the present or future relationship with the other party in a concern for achieving a substantive outcome.
· Other negotiation goals – particularly difficult ones or ones requiring a substantial change in the other party’s attitude – may require you to develop a long-range plan for goal attainment.
o In these cases, progress will be made incrementally, and may depend on establishing a relationship with the other party.
o Relational goals tend to support the choice of a collaborative or integrative strategy.
II. Strategy – The Overall Plan to Achieve One’s Goals
After negotiators articulate goals, they move to the second element in the sequence: selecting and developing a strategy.
o Business strategy experts define strategy as “the pattern or plan that integrates an organization’s targets, policies, and action sequences into a cohesive whole.”
o Applied to negotiations, strategy refers to the overall plan to accomplish one’s goals in a negotiation and the action sequences that will lead to the accomplishment of those goals.
III. Strategy versus Tactics
· A major difference between strategy and tactics is that of scale, perspective or immediacy.
o Tactics are short-term, adaptive moves designed to enact or pursue broad strategies, which in turn provide stability, continuity, and direction for tactical behaviors.
o Tactics are subordinate to strategy; they are structured, directed, and driven by strategic considerations.
A. Unilateral versus Bilateral Approaches to Strategy
· A unilateral choice is made without the active involvement of the other party.
o Unilaterally pursued strategies are completely one-sided and sometimes intentionally ignorant of any information about the other negotiator’s goals or strategy.
o Unilateral strategies should evolve into ones that fully consider the impact of the other’s strategy on your own.
B. The Dual Concerns Model as a Vehicle for Describing Negotiation Strategies
· In Chapter 1, the dual concerns model described the basic orientation that people take toward conflict – proposing that individuals in conflict have two levels of related concerns: a concern for their own outcomes, and a level of concern for the other’s outcomes.
· A similar model is proposed for the choice of a negotiation strategy.
o A negotiator’s unilateral choice of strategy is reflected in the answers to two simple questions:
§ How much concern does the negotiator have for achieving the substantive outcomes at stake in this negotiation?
§ How much concern does the negotiator have for the current and future quality of the relationship with the other party?
o The answers to these questions result in the mix of alternative strategies presented in Figure 4.2.
Alternative Situational Strategies
o As Figure 4.2 shows, there are at least four different types of initial strategies for negotiators: competitive, collaboration, accommodation, and avoidance.
§ A strong interest in achieving only substantive outcomes tends to support a competitive (distributive) strategy.
§ A strong interest in achieving only the relationship goals suggests an accommodation strategy.
§ If both substance and relationship are important, the negotiator should pursue a collaborative (integrative) strategy.
§ Finally, if achieving neither substantive outcomes nor an enhanced relationship is important, the party might be best served by avoiding negotiation.
o Each of these approaches has different implications for negotiation planning and preparation.
o Next, the discussion of both nonengagement and engagement strategies.
The Nonengagement Strategy: Avoidance
o Avoidance may serve a number of strategic negotiation purposes and there are many reasons negotiators might choose not to negotiate.
§ If you can meet your needs without negotiating at all, it may make sense to use an avoidance strategy;
§ It simply may not be worth the time and effort to negotiate (although there are sometimes reasons to negotiate in such situations; see the section on accommodation)
§ The decision to negotiate is closely related to the attractiveness of available alternatives – the outcomes that can be achieved if negotiations don’t work out.
o A negotiator with very strong alternatives has considerable power because they do not need this negotiation to succeed in order to achieve a satisfactory outcome.
§ Having a weak alternative puts a negotiator at a disadvantage.
§ The presence of a strong alternative can influence the decision about whether to avoid negotiation.
· The negotiator with a strong alternative may wish to avoid negotiation strictly on efficiency grounds – it is simply quicker and easier to take the alternative than to get involved in a negotiation.
· But having a weak alternative may also suggest avoiding negotiation.
o Once negotiations begin, the pressure of the negotiation process may lead to a poor outcome, which the negotiator may feel obligated to accept because the alternative is also very poor.
o Alternatively, they might gain the desired outcome, but perhaps at a significant cost. See Box 4.2.
Active-Engagement Strategies: Accommodation, Competition, and Collaboration
o Competition is described throughout this book as distributive or win-lose bargaining and collaboration as integrative or win-win negotiation.
o Accommodation is as much a win-lose strategy as competition, although it has a decidedly different image – it involves an imbalance of outcomes, but in the opposite direction.
§ “I lose, you win” as opposed to “I win, you lose.”
§ An accommodative strategy may be appropriate when the negotiator wants to let the other win, keep the other happy, or not endanger the relationship by pushing hard to achieve some goal on the substantive issues.
§ Often used when the primary goal of the exchange is to build or strengthen the relationship and the negotiator is willing to sacrifice the outcome just to benefit the other party.
§ Also used if the negotiator expects the relationship to extend past a single negotiation episode.
§ Used early in a long-term relationship building process – both to build trust and to allow asking for reciprocity as the relationship develops.
o How do these three strategies – competition, collaboration, and accommodation – differ?
§ Table 4.1 summarizes the three types of strategies (distributive, integrative, and accommodative) and compares and contrasts them across a number of different dimensions.
o In addition to their positive characteristics shown in the table, each of these three negotiation strategies also has certain predictable drawbacks if applied blindly, thoughtlessly or inflexibly.
§ Distributive strategies tend to create “we-they” or “superiority-inferiority” patterns, which may result in a distortion of the other side’s contributions, as well as distortions in perceptions of their motives, needs and positions.
§ If a negotiator pursues an integrative strategy without regard to the other’s reciprocity, then the other may manipulate and exploit the collaborator and take advantage of the good faith and goodwill being demonstrated.
§ Accommodative strategies may generate a pattern of constantly giving in to keep the other happy or to avoid a fight.
o Just as most conflicts are neither purely competitive nor purely cooperative, most negotiation strategies reflect a variety of goals, intentions, and situational constraints that tend to make any “pure” strategy difficult to follow.
IV. Understanding the Flow of Negotiations: Stages and Phases
Before exploring the specific planning processes for negotiation, it is important to understand the typical sequence of steps, or flow, in a negotiation in order to understand how negotiations are likely to evolve and why planning at the front end is so important.
Several researchers have studied the flow of negotiation which proceeds through distinct phases. Phase research typically addresses three types of questions:
o How does the interaction between parties change over time?
o How do the interaction processes relate to inputs and outcomes over time?
o How do the tactics used by parties affect the development of the negotiation?
Recent years have seen a marked increase in work on modeling the phases of negotiation.
o This work has been both descriptive and prescriptive.
§ Some authors describe what they have observed in natural settings.
§ Others advise or prescribe certain activity sequences they feel should lead to more effective negotiation.
o Much of this work is summarized in Table 4.2.
§ As the table shows, the various models fit into a simple structure of three phases, or stages:
· A beginning (or initiation) phase.
· A middle (bargaining or problem-solving) phase.
· A closing (or resolution) phase.
· One stage model of negotiation is particularly relevant to integrative negotiation and suggests seven key steps to an ideal negotiation process.
Preparation: deciding what is important, defining goals, thinking ahead how to work together with the other party.
Relationship building: getting to know the other party, understanding how you and the other are similar and different, and building trust and commitment toward achieving a mutually beneficial set of outcomes. This may be a critical stage for satisfactorily moving the other stages forward.
Information gathering: learning what you need to know about the issues, about the other party and their needs, about the feasibility of possible settlements, and about what might happen if you fail to reach agreement with the other side.
Information using: assembling the case you want to make for your preferred outcomes and settlement, one that will maximize your own needs. This presentation is often used to “sell” your preferred outcome to the other party.
Bidding: making moves from your initial, ideal position to the actual outcome.
Closing the deal: building commitment to the agreement achieved in the previous phase. Both you and the other party have to assure yourselves that you have reached a deal that you can be happy with, or at least accept.
Implementing the agreement: determining who needs to do what once the agreement is reached. Not uncommonly, parties discover the agreement is flawed, key points were missed, or the situation has changed and new questions exist. Flaws in moving through the earlier phases arise here, and the deal may have to be reopened or issues settled by mediators, arbitrators, or the courts.
· While this model is largely prescriptive, examination of negotiator’s actual practice shows they frequently deviate from this model.
V. Getting Ready to Implement the Strategy: The Planning Process
· The primary determinant for success in negotiation is in the planning that takes place prior to the dialogue.
· Effective planning requires hard work through considering the following points:
1. Defining the negotiating goal
2. Defining the major issues related to achieving that goal
3. Assembling the issues, ranking their importance, and defining the bargaining mix
4. Defining the interests
5. Knowing your alternatives (BATNAs)
6. Knowing your limits, including a resistance point
7. Analyzing and understanding the other party’s goals, issues, and resistance points
8. Setting your own targets and opening bids
9. Assessing the social context of negotiation
10. Presenting the issues to the other party: substance and process
· The rest of the chapter discusses the steps – also shown as a planning guide in Table 4.3.
· Before beginning, the authors want to make four observations.
o First, the authors assume a single planning process can be followed for both a distributive and an integrative process.
o Second, there are several structural and contextual factors beyond the bargaining table that may also affect the strategizing and planning process.
o Third, the authors assume that negotiations will be conducted primarily one to one – that is, you and another individual negotiator.
o Finally, while the text describes these steps in a relatively linear fashion, complete and up-to-date planning will require a certain degree of shuttling back and forth between steps to ensure alignment of strategy and plan.
A. Defining the Negotiating Goal
· Remember that goals can be substantive (tangible), psychological (intangible), or procedural (how to get to an agreement).
o Goals can have both direct and indirect effects on the choice of strategy.
o Knowing your own goals is the first and most important step in developing a strategy and executing a negotiation.
B. Defining the Major Issue Related to Achieving the Goal
· This step usually begins with an analysis of the key issues to be discussed in the negotiation.
· The number of issues in a negotiation, along with the relationship between the negotiator and the other party, are often the primary determinant of whether a negotiator uses a distributive or integrative strategy.
o Single-issue negotiations tend to dictate distributive negotiations as the only real issue is the price or “distribution” of that issue.
o In contrast, multiple-issue negotiations lend themselves more to integrative negotiations as parties can use processes such as logrolling to create issue “packages” that are mutually beneficial.
§ A simple representation of this is presented in Figure 4.4.
· The vertical axis represents increasingly valuable outcomes for the buyer, and the horizontal axis represents increasingly valuable payoffs to the seller.
· If the buyer dominates, they will receive an outcome high on the buyer’s axis, not advantageous to the seller – point A.
· If the seller dominates, they will receive an outcome high on the seller’s axis, not advantageous to the buyer – point B.
· If they are equally strong, the best they can do is some point along a line between points A and B – point C.
· Any point along the A-C-B line represents a possible solution to the single-issue negotiation.
o Multiple issues may allow the parties to “create value” by finding solutions that improve the outcomes for both parties.
o The choice of whether to pursue a claiming-value or creating-value strategy is described as the “negotiator’s dilemma.”
§ Single-issue negotiations and the absence of a long-term relationship with the other party are the strongest drivers of claiming-value (distributive) strategies.
§ Multiple-issue negotiations and the importance of a long-term relationship with the other party are the strongest drivers of creating-value (integrative) strategies.
· While the number of issues affects strategy, it does not preclude the possibility that single-issue negotiations can be made integrative or that multiple-issue negotiations will remain distributive.
o Single-issue negotiations can often be made integrative by working to increase the number of issues.
o Even in multiple-issue negotiations, the opportunity to create value may be lost in competitive dynamics that minimize trust and information sharing and that treat each issue in a distributive manner.
· In any negotiation, a complete list of the issues at stake is best derived from the following sources:
o An analysis of all the possible issues that need to be decided
o Previous experience in similar negotiations
o Research conducted to gather information
o Consultation with experts in that industry
C. Assembling the Issues, Ranking Their Importance, and Defining the Bargaining Mix
· The next step in the planning is to assemble all the issues that have been defined into a comprehensive list.
o The combination of lists from each side in a negotiation determines the bargaining mix.
o Large bargaining mixes allow many possible combination for settlement, thus increasing the likelihood that a particular “package” of component elements will meet both parties’ needs and therefore lead to a successful settlement.
o At the same time, large bargaining mixes can lengthen negotiations as they present too many possible combinations of issues to consider.
· After assembling issues on an agenda, the negotiator next must prioritize them.
· Prioritization includes three steps:
o Determine which issues are most important and which are less important.
§ A simple way is for the negotiator to rank-order the issues.
§ An even simpler process is to group issues into categories of high, medium, or low importance.
§ A third, more precise method is to award a total of 100 points to the total package of issues and then to divide the points among the issues in proportion to each issue’s relative importance.
§ It is also important to set priorities for both tangible and intangible issues.
· Intangible issues are often difficult to discuss and rank-order, yet if they remain subjective, negotiators may overemphasize or underemphasize them.
§ Finally, negotiators may also wish to specify a bargaining range for each issue in the mix.
o Determine whether the issues are linked together or separate.
§ If separate, they can be easily added or subtracted – here is where points can help.
§ If connected, then settlement on one will be linked to settlement on the others and making concessions on one issue will inevitably be tied to some other issue.
o Be willing to use “carrots” and “sticks.”
§ Be willing to create incentives to motivate the other toward your high-priority issues and disincentives to motivate them away from you less preferred alternatives.
D. Defining the Interests
· After defining the issues, the negotiator must proceed to define the underlying interests and needs.
o Positions – an opening bid or a target point – are what a negotiator wants.
o Interests are why they want them.
· Like goals, interests may be:
o Substantive, that is, directly related to the focal issues under negotiation.
o Process-based, that is, related to how the negotiators behave as they negotiate.
o Relationship-based, that is, tied to the current or desired future relationship between the parties.
· Interests may also be based on the intangibles of negotiation.
E. Knowing Your Alternatives (BATNAs)
· Good preparation requires you establish two clear points:
o Your alternatives if this deal cannot be successfully completed
o Your limits – the least acceptable offer from the other you will agree to sign.
· Alternatives (i.e., best alternatives to this negotiated agreement, or BATNAs) are other agreements negotiators could achieve and still meet their needs.
o Alternatives are very important in both distributive and integrative processes because they define whether the current outcome is better than another possibility (with a different negotiating partner).
o The better the alternatives, the more power you have as you can walk away from the current deal and still know your needs and interests can be met.
F. Knowing Your Limits, Including a Resistance Point
· A resistance point is the place you decide you should stop the negotiation as any settlement beyond this point is not minimally acceptable.
· Setting resistance points is a critical part of planning.
· Clear resistance points help keep people from agreeing to deals that they later realize were not very smart.
G. Analyzing and Understanding the Other Party’s Goals, Issues, and Resistance Points
· Earlier in this section, we discussed the importance of assigning priorities to your own goals and objectives but gathering information about the other party is also a critical step in preparing for negotiation.
o Learning the other’s issues, preferences, priorities, interests, alternatives and constraints is almost as important as determining one’s own.
o The goal is to understand how the other party is approaching the negotiation and what they are likely to want.
o By comparing this assessment against your own, you can begin to define areas where they may be strong conflict, simple trade-offs, or no conflict at all.
· Several key pieces of background information will be of great importance, including their:
o Broad, overall goals and objectives
o Issues and the likely bargaining mix
o Interests and needs
o Resistance point and alternative(s)
· In theory, it would be useful to have as much of this information as possible before negotiations.
o In reality, it may not be possible to obtain this information before the negotiation starts.
o If this is the case, negotiators should plan to collect as much of this information as possible during the opening stages of deliberations – discussed below.
The Other Party's Goals
· Asking the other party to discuss their goals (either at the table or before negotiations begin), or gathering data about the other party prior to negotiations, are two common ways to gather this data.
· Most importantly, you should attempt to understand whether the other party has the same goals as you do.
The Other Party's Issues and Bargaining Mix
· The more information you can gather about the other party through initial research, the better.
o Relevant data will depend on the issues and elements in the bargaining mix.
§ The other party’s business history or previous negotiations might provide useful clues.
§ Financial data may be obtained through the internet, financial statements, company records, stock reports, interviews and court documents, or legal judgments.
§ You can investigate the other party’s inventories.
§ You can learn a great deal simply by visiting the other party.
§ Ask questions of people who have done business with the other party.
· The more the negotiator can get even a general sense of how much the other is capable of addressing and meeting the party’s issues or needs, and of what issues they will bring to the bargaining table, the better we can predict how the process is likely to unfold.
The Other Party's Interests and Needs
· In addition to learning about the party’s major issues and resources, you also need to get information about their current interests and needs.
· This information may be obtained through a variety of approaches:
o Ask for a preliminary meeting, in order to have a broad discussion of what the other party would like to achieve in the upcoming negotiations (focus on broad interests, not just issues).
o Anticipate the other party’s interests (as if you were “in their shoes”).
o In that meeting, share your own interests.
o Ask others who know or have negotiated with the other party.
o Read how the other party portrays themselves in the media.
· The importance of the issues or interests, along with the nature of the past relationship, will influence the depth you will probe to get information.
The Other Party's Resistance Point and Alternatives
· Understanding the other party’s limits and alternatives is important as it will give you some information about how far you can “push” them.
· If the other party has a strong and viable alternative, they will probably be confident in negotiation, set high objectives, and be willing to push hard for those objectives.
· In contrast, if the other party has a weak alternative, then they will be more dependent on achieving a satisfactory agreement with you and be less likely to push as hard.
· In a distributive negotiation, the other party may be less likely to disclose this information and/or may misrepresent their limits and alternatives.
· There may be more openness between parties in an integrative negotiation.
· See Box 4.3 for some helpful advice on how to do an investigative negotiation.
H. Setting One's Own Targets and Opening Bids
· After negotiators have defined the issues, assembled a tentative agenda, and consulted others as appropriate and necessary, the next step is to define two other key points:
o The specific target point, where one realistically expects to achieve a settlement
o And the opening bid, representing the best deal one can hope to achieve.
Setting a Target
· There are numerous ways to set a target – and several principles to keep in mind:
o Targets should be specific, difficult but achievable, and verifiable.
§ First, goals need to specific – in salary negotiations, a specific number ($75,000) is better than a more general goal (anything over $60,000).
§ Second, goals should be difficult but achievable – it should attain for an improvement over the current situation, but not so difficult it cannot be achieved.
§ Finally, it should be possible to define a goal so that it is clear when it is or is not achieved.
o Target setting requires proactive thinking about your own objectives.
§ If negotiators focus attention on the other party to the exclusion of themselves, they may set their goals strictly as a reaction to the other’s anticipated goals and targets.
§ Reactive strategies are likely to make negotiators feel threatened and defensive and lessen their flexibility and creativity.
§ In contrast, being proactive about target setting permits negotiators to be flexible in what they will accept and improves the likelihood of arriving at a mutually satisfactory outcome.
o Target setting may require considering how to package several issues and objectives.
§ To package issues effectively, negotiators need to understand the issues, the relative priorities across the issues, and the bargaining mix.
§ Packages involving intangibles are more difficult to evaluate and compare but efforts should be made to do so.
o Target setting requires an understanding of trade-offs and throwaways.
§ Negotiators may want to consider giving away “something for nothing” if such an item can be part of a transaction.
§ Even if an issue is unimportant or inconsequential to you, it may be valuable or attractive to the other party.
§ Awareness of the actual or likely value of such concessions in a package can considerably enrich the value of what you offer to the other party at little or no cost to yourself.
§ To evaluate packages, negotiators need to have some idea of what each item in the bargaining mix is worth in terms that can be compared or traded-off across issues.
§ If intangibles are a key part of the bargaining mix, negotiators must know the point at which they are willing to abandon the pursuit of an intangible in favor of substantial gains on tangibles.
Setting an Opening Bid
· An opening bid may be the best possible outcome, an ideal solution, something even better than was achieved last time.
· It is easy to get overly confident, however, and to set an opening that is so unrealistic that the other party immediately laughs, gets angry, or walks away before responding.
· See Box 4.4 for helpful advice on the setting of an opening bid.
I. Assessing the Social Context of Negotiation
· When people negotiate in a professional context, there may be more than two parties.
o There may be more than two negotiators at the table – multiple parties often lead to the formation of coalitions.
o Negotiators also have constituents (and/or observers) who will evaluate and critique the solution.
o Negotiation occurs in a context of rules – a social system of laws, customs, common business practices, cultural norms, and political cross-pressures.
· “Field analysis” can be used to assess all the key parties in a negotiation – See Figure 4.5.
o Who is, or should be, on our team on our side of the field? (Side A)
o Who is on the other side of the field? (Side B)
o Who is on the sidelines and can affect the play of the game? (Side C)
§ Who are the negotiation equivalents of owners, managers and strategists?
§ This includes your direct superior or the person who must approve or authorize the agreement reached.
o Who is in the stands? (D)
§ Who is watching the game, is interested in it, but can only indirectly affect what happens?
§ This might include senior managers, shareholders, competitors, financial analysts, the media, or others.
o What is going on in the broader environment in which the negotiation takes place? (Space E)
o A number of context issues can affect negotiation:
§ What is the history of the “game” relationship with the other party, and how does it affect the overall expectations they bring to this negotiation?
§ What kind of a relationship with the other party is expected or desired for the future, and how do these expectations affect the current negotiation?
§ How often do you expect to negotiate in the future – that is, how many rounds of negotiation will there be?
§ What are the deadlines or time limits?
§ What are the “rules of the game” by which this agreement will be managed?
§ What is common and acceptable practice in the ethical system in which the deal is being done?
o Considering these questions is important to the progress of the negotiation process.
§ A negotiator bargaining on behalf of others must consult with them so that their concerns and priorities are included in the mix.
§ A negotiator representing a constituency is accountable and must include their wishes in proposals – either fulfilling them or explaining why they were not met.
§ When representing a large constituency, the process of consulting can be elaborate and exhaustive.
§ It is also critical to understand what happens when the two parties get close to an agreement – does the negotiator have authority to reach agreement, or does the approval of the constituents have to be obtained?
J. Presenting Issues to the Other Party: Substance and Process
· Having worked your way through the previous planning steps, the last step is to think through the execution of your plan.
· There are two major components to consider here:
o How you will present and frame the issues and interests
o How you should structure the process by which this information is presented
Presenting and Framing the Issues
o First, consider how you will present your case to the other negotiator.
§ In addition, consider how to provide ample supporting facts and arguments for your case and be able to anticipate and refute the other party’s arguments with counterarguments.
o Because of the breadth and diversity of issues that can be included in negotiations, it is not possible to specify all the procedures that can be used to assemble information.
§ There are, however, some good general guides that can be used.
§ A negotiator can ask these questions:
· What facts support my point of view?
· Whom may I consult or talk with to help me elaborate or clarify the facts?
· Have these issues been negotiated before by others under similar circumstances?
· What is the other party’s point of view likely to be?
· How can I develop and present the facts so they are most convincing?
Planning the Process and Structuring the Context by which Information Is Presented
o When planning the process and structuring the context a negotiator should consider a number of elements of protocol and process.
§ What agenda should we follow?
· The unilateral list of issues constitutes a preliminary agenda for negotiation.
· Five major concerns to be considered in developing a negotiation agenda:
o Scope: What issue should be considered?
o Sequence: In what order should those issues be addressed?
o Framing: How should the issues be presented?
o Packaging: Should the issues be taken one at a time, or in various groupings/packages?
o Formula: Should we strive to first get an agreement on general principles, or should we immediately begin to discuss each of the issues?
· While the negotiator may propose agendas unilaterally, this approach has a potential risk.
o The negotiator’s list may bring issues to the table that the other party is unprepared to discuss or may define priorities that cannot be achieved realistically.
o Negotiators do not welcome surprises and may ask for a recess to get information and prepare themselves on the new issue, creating delays.
o For this reason, many professional negotiators often exchange and negotiate the agenda in advance.
§ Where should we negotiate?
· If negotiators want to minimize the advantage that comes with home turf, then they need to select neutral territory in which neither party will have an advantage.
· Negotiators can choose the degree of formality of the environment, with formal deliberations held in a board room and informal deliberations held in restaurants.
§ How should we begin?
· The tone set by the negotiators in the first five minutes can influence how the negotiation evolves.
§ What is the time period of the negotiation?
· If negotiators expect long, protracted deliberation, they might want to negotiate the time and duration of sessions.
§ What might be done if negotiation fails?
· What will happen if we deadlock? Can we “redo” the deal?
§ How will we keep track of what is agreed to?
· Being a recording secretary may be tedious and uninteresting but the role is critical.
· First, the person with the best notes often becomes the “memory” of the session as their notes are later consulted to determine what was said.
· Second, the person with the best notes may also volunteer to draft the initial agreement, having some latitude in how the agreement is stated and what points are emphasized or deemphasized.
· Finally, if the agreement is highly technical or complex, the agreement should be reviewed by experts and specialists.
· In a new bargaining relationship, these procedural issues should occur before the major substantive issues are raised.
§ Have we created a mechanism for modifying the deal if necessary?
· We cannot anticipate all the future situations we might run into, nor can we get every detail right the first time.
· We may periodically want to evaluate how our deal compares with:
o Our initial plan
o How things are working out as we try to implement the agreement
o See Box 4.5 for some advice on how to “fix” imperfect agreements.
Chapter Summary
Planning is a critically important activity in negotiation. As we noted at the outset, however, negotiators frequently fail to plan for a variety of reasons. Effective planning allows negotiators to design a road map that will guide them to agreement. While this map may frequently need to be modified and updated as discussions with the other side proceed, and as the world around the negotiation changes, working from the map is far more effective than attempting to work without it.
We began this chapter with a basic understanding of the concepts of strategy, and we presented a model of negotiation strategy choice, returning to the familiar framework of the dual concerns model. Having described the model, we then discussed the importance of setting clear goals, based on the key issues at stake.
When negotiators are able to consider and evaluate each of ten factors of protocol, they will know what they want and will have a clear sense of direction on how to proceed. This sense of direction, and the confidence derived from it, is a very important factor in affecting negotiating outcomes.
Chapter 5
Ethics in Negotiation
Chapter Overview
This chapter explores the question of whether there are, or should be, accepted ethical standards for behavior in negotiations.
This topic has received increased attention from researchers in recent years.
It is the author’s view that fundamental questions of ethical conduct arise in every negotiation.
The effective negotiator must recognize when the questions are relevant and what factors must be considered to answer them.
The authors want to be clear that it is not their intention to advocate a specific ethical position for all negotiators or for the conduct of all negotiations.
Many treatises on business ethics take a strongly prescriptive or normative position, advocating what a person should or should not do.
Instead, the aim in this chapter is to describe the ethical issues that arise in negotiations.
The chapter identifies the major ethical dimensions raised in negotiations, describe how people tend to think about these ethical choices, and provide a framework for making informed ethical decisions.
Along the way, the text will highlight research that has yielded worthwhile findings in this area.
Learning Objectives
Understand whether there are commonly accepted ethical standards that apply to negotiations.
Explore the factors that determine how ethics affect negotiation processes.
Survey the different types of ethically problematic tactics and how they are perceived.
Consider how potentially unethical tactics will be received by others in a negotiation and how to detect others’ use of deceptive tactics.
Chapter Outline
I. A Sampling of Ethical Quandaries
II. What Do We Mean by “Ethics,” and Why Do They Matter in Negotiation?
A. Ethics Defined
B. Applying Ethical Reasoning to Negotiation
C. Ethics versus Prudence versus Practicality versus Legality
III. Four Approaches to Ethical Reasoning
A. End-Result Ethics
B. Duty Ethics
C. Social Contract Ethics
D. Personalistic Ethics
IV. What Questions of Ethical Conduct Arise in Negotiation?
A. Ethically Ambiguous Tactics: It’s (Mostly) All about the Truth
B. Identifying Ethically Ambiguous Tactics and Attitudes toward Their Use
C. Deception by Omission versus Commission
D. The Decision to Use Ethically Ambiguous Tactics: A Model
V. Why Use Deceptive Tactics? Motives and Consequences
A. The Power Motive
B. Other Motives to Behave Unethically
C. The Consequences of Unethical Conduct
D. Explanations and Justifications
VI. What Factors Shape a Negotiator’s Predisposition to Use Unethical Tactics?
A. Demographic Factors
B. Personality Differences
C. Moral Development and Personal Values
D. Contextual Influences on Unethical Conduct
VII. How can Negotiators Deal with the Other Party’s Use of Deception?
VIII. Chapter Summary
I. A Sampling of Ethical Quandaries
· The text offers five hypothetical situations which present real problems for negotiators.
· People in and out of organizations are routinely confronted with important decisions about the strategies they will use to achieve important objectives, particularly when a variety of influence tactics are open to them.
o These decisions frequently carry ethical implications.
· The major ethical questions that arise in negotiation can be worked out through consideration of these questions:
o What are ethics and why do they apply to negotiation?
o What major approaches to ethical reasoning are relevant to negotiation?
o What questions of ethical conduct are likely to arise in negotiation?
o What motivates unethical behavior, and what are the consequences?
o What factors shape a negotiator’s predisposition to use unethical tactics?
o How can negotiators deal with the other party’s use of deception?
II. What Do We Mean by “Ethics” and Why Do They Matter in Negotiation?
A. Ethics Defined
· Ethics are broadly applied social standards for what is right or wrong in a particular situation, or a process for setting those standards.
o Ethics grow out of particular philosophies, which purport to:
§ Define the nature of the world in which we live, and
§ Prescribe rules for living together.
· The goal is to distinguish among different criteria, or standards, for judging and evaluating a negotiator’s actions, particularly when questions of ethics might be involved.
o An ethical dilemma exists for a negotiator when possible actions or strategies put the potential economic benefits of doing a deal in conflict with a negotiator’s social or moral obligations to other involved parties or the broader community.
· There are four standards for evaluating strategies and tactics in business and negotiation:
o Choose a course of action on the basis of results I expect to achieve.
§ Such as the greatest return on investment.
o Choose a course of action on the basis of my duty to uphold appropriate rules and principles.
§ Such as the law or regulations in my industry.
o Choose a course of action on the basis of the norms, values, and strategy of my organization or community.
§ The usual way you do things at your firm.
o Choose a course of action on the basis of my personal convictions.
§ What my conscience tells me to do.
· Each of these approaches reflects a fundamentally different approach to ethical reasoning.
o The first may be called end-result ethics, in that the rightness of an action is determined by evaluating the pros and cons of its consequences.
o The second is an example of what may be called duty ethics, in that the rightness of an action is determined by your obligation to adhere to consistent principles, laws, and social standards that define what is right and wrong and where the line is.
o The third represents a form of social contract ethics, in that the rightness of an action is based on the customs and norms of a particular community.
o Finally, the fourth may be called personalistic ethics, in that the rightness of the action is based on your own conscience and moral standards.
B. Applying Ethical Reasoning to Negotiation
· Each of these approaches could be used to analyze the five hypothetical situations at the beginning of the chapter.
o In the first situation, an individual is selling an e-bike and stating to a prospective buyer that they already have a potential buyer, when they do not.
§ If you believe in end-result ethics, you might do whatever is necessary to get the best possible outcome – including lying about an alternative buyer.
§ If you believe in duty ethics, you might perceive an obligation never to engage in subterfuge and might, therefore, reject a tactic that involves an outright lie.
§ If you believe in social contract ethics, you base your tactical choices on your view of appropriate conduct for behavior in your community – if others would use deception is this situation, you will lie.
§ If you believe in personalistic ethics, you consult your conscience and decide whether your need for cash is justified using deceptive or dishonest tactics.
· What this shows is that your approach to ethical reasoning affect the kind of ethical judgment you make, and the consequent behavior you choose, in a situation that has an ethical dimension to it.
· The four approaches to ethical reasoning (above) are the basis for the in-depth treatment of ethics in the upcoming chapter discussions.
C. Ethics versus Prudence versus Practicality versus Legality
· Discussion of business ethics frequently confuse the following terms:
o Ethical – appropriate as determined by some standard of moral conduct.
o Prudent – wise, based on trying to understand the efficacy of the tactic and the consequences it might have on the relationship with the other.
o Practical – what a negotiator can actually make happen in a given situation.
o Legal – what the law defines as acceptable practice.
· There are other criteria that come into play.
o Some people want to be ethical for intrinsic reasons – they feel better.
o Others may judge ethical behavior in more instrumental terms – good ethics makes good business.
o Negotiators see some tactics as marginal but show marked agreement that certain tactics are clearly unethical.
o Examining ethics encourages negotiators to examine their own decision-making processes.
· Figure 5.1 presents a helpful way to think about what it means to comprehend and analyze an ethical dilemma.
o Before we can ponder solutions, the first step is developing a complete understanding of the moral problem at hand.
§ On the left side of Figure 5.1, this means grasping the various subjective moral standards in play among involved parties, including individual values and beliefs as well as social norms.
§ It also means recognizing the mix of potential harms, benefits, and rights that are involved in the situation.
o With the problem fully defined, the path to a convincing solutions travels through the three modes of analysis shown on the right side of the figure:
§ A determination of economic outcomes of potential courses of action
§ A consideration of legal requirements that bear on the situation
§ An assessment of the ethical obligations to other involved parties regarding what is “right” and “just” and “fair.”
· This last element – ethical reasoning – benefits from a basic, working knowledge of ethical philosophy.
III. Four Approaches To Ethical Reasoning
Those who write about business ethics tend to approach the subject from the perspectives of major philosophical theories – see Table 5.1.
We now take a closer look at the four ethical standards for making decisions in negotiation introduced earlier: end-result ethics, duty ethics, social contract ethics, and personalistic ethics.
A. End-Result Ethics
· Many of the ethically questionable incidents in business that upset the public involve people who argue that the ends justify the means.
o Who deem it acceptable to break a rule or violate a procedure in the service of some greater good for the individual, the organization, or even society at large.
· In the negotiation context, when negotiators have noble objectives to attain for themselves or their constituencies, they might argue that they can use whatever strategies they want.
o They are drawing on a view of ethics known as consequentialism – a view that the moral worth of a particular action should be judged on the basis of the consequences it produces.
· For those who judge morality by the goodness or badness of consequences, utilitarianism whose followers believe the best moral choice is the one that maximizes the greatest good for the greatest number of people.
· Debate about end-result ethics centers on several key questions.
o First, how do people define happiness or pleasure or maximum utility, and how can each be measured?
o Second, how do actors trade off between short-term consequences and long-term consequences, particularly when the short-term results are damaging to the long-term results or vice versa?
o Third, if people cannot create utility for everyone, is it adequate for them to create it for a large number of people, even if other people will not benefit or will even suffer?
o How does utilitarianism balance the benefits for a majority with the protection of the rights of a minority?
B. Duty Ethics
· In contrast to end-result ethics, duty ethics emphasize that individuals ought to commit themselves to a series of moral rules or standards and make decisions based on those principles.
o The term deontology – derived from the Greek word for obligation – is used commonly to label this school of thought.
o Deontologists argue that a decision based on the utilitarian standards is flawed as outcomes may be too uncertain at the time of the decision.
o Besides, they argue, the ethical merits of an action should be linked more to the intentions of the actor than to the outcomes of the act.
o Deontologists believe an action is wrong because of the principle, not the consequence.
· Deontology has its critics as well.
o Who sets the standards, chooses the principles, and makes the rules?
o What are the rules that apply in all circumstances?
C. Social Contract Ethics
· Social contract ethics hold that the rightness of an action is determined by the customs and social norms of a community.
o Social contract ethicists argue that societies, organizations, and cultures determine what is ethically appropriate and acceptable for themselves and then indoctrinate new members as they are socialized into the fabric of the community.
· As applied to negotiation, social contract ethics would prescribe which behaviors are appropriate in a negotiation context in terms of what people owe one another.
· As noted in Table 5.1, social contract ethics are not without problems.
o How do we decide what implicit rules should apply to a given relationship, particularly when we have not explicitly spelled out those rules?
o Who makes these social rules, and how are they evaluated and changed?
D. Personalistic Ethics
· A fourth standard of ethics is that, rather than attempting to determine what is ethical based on ends, duties, or the social norms of a community, people should simply consult their own conscience.
o The very nature of human existence leads individuals to develop a personal conscience, an internal sense of right and wrong
· As applied to negotiation, personalistic ethics maintain that everyone ought to decide for themselves what is right based on their conscience.
o Critics argue that no one is pure and individual conscience is too narrow and limited as a standard to apply to a broader social context.
o Some critics argue that social institutions have declined in their roles as teachers of character and developers of conscience.
o In addition, personalistic ethics provides no mechanism for resolving disputes when they lead to conflicting view between individuals as to what is right or proper.
E. Section Summary
· This section reviewed four major approaches to ethical reasoning.
o End-result or consequentialist ethics, which include principles of utilitarianism
o Duty ethics, or the principles of deontology
o Social contract ethics, or the principles of community-based socially acceptable behavior
o Personalistic ethics, or the principles of determining what is right by turning to your own conscience.
· Negotiators may use each of these approaches to evaluate appropriate strategies and tactics.
IV. What Questions of Ethical Conduct Arise in Negotiation?
· Why do some negotiators choose to use tactics that may be unethical?
o The first answer – they are corrupt, degenerate, or immoral – may be much too simplistic.
o We know from the psychology of attribution that people tend to regard other people’s unsavory behavior as caused by disposition or personality while attributing the causes of their own behavior to factors in the social environment.
o So, a negotiator might consider an adversary who uses an ethically questionable tactic unprincipled, profit-driven, or willing to use any tactic to get what they want.
o In contrast, when attempting to explain why they, as the negotiator, might use the same tactic, they would tend to say they had very good reasons for deviating from their principles just this one time.
· In this section, we first discuss tactics that are “ethically ambiguous,” and link negotiator ethics to the fundamental issue of truth telling.
A. Ethically Ambiguous Tactics: It’s (Mostly) All about the Truth
· Ethically ambiguous tactics are ones that may or may not be improper, depending on an individual’s ethical reasoning and circumstances.
· The focus here is on what negotiators say (communicate about) or what they say they will do (and how they say it) rather than on what they actually do (although negotiators may act unethically as well).
o Some negotiators may cheat or steal, but most of the attention in negotiator ethics has been on lying and deception.
· Questions about truth telling are straightforward, but the answers are not so clear.
o First, how do you define truth?
o Second, how do you define and classify deviations from the truth?
· Questions and debate regarding the ethical standards for truth telling in negotiation are ongoing.
o Negotiation is based on information dependence – the exchange of information regarding the true preferences and priorities of the other negotiator.
o Effective agreements depend on the sharing of accurate information but negotiators also want to disclose as little as possible about their positions.
o This results in fundamental negotiation dilemmas involving trust and honesty.
§ The dilemma of trust is that a negotiator who believes everything the other says can be manipulated by dishonesty.
§ The dilemma of honesty is that a negotiator who tells the other party all of their exact requirements and limits will, inevitably, never do better than their walkaway point.
o To keep the negotiation relationship on constructive footing, each party has to strike a balance between extremes of openness and deception.
· As a final point on the subject of truth telling, there is, beyond ethics, the matter of legal obligations to be truthful.
o See Box 5.1 for a guide to the (il)legality of lying in negotiation under U.S. law.
B. Identifying Ethically Ambiguous Tactics and Attitudes toward Their Use
What Ethically Ambiguous Tactics are There?
o Six clear categories of tactics emerged through research – listed below and in Table 5.2.
§ Traditional competitive bargaining – not disclosing your walkaway; making an inflated opening offer
§ Emotional manipulation – faking anger, fear, disappointment, elation, satisfaction
§ Misrepresentation – distorting information or negotiation events in describing them to others
§ Misrepresentation to opponent’s networks – corrupting your opponent’s reputation with their peers
§ Inappropriate information gathering – bribery, infiltration, spying, etc
§ Bluffing – insincere threats or promises
o Of the six categories, two – emotional manipulation and the use of “traditional competitive bargaining” tactics – are viewed as generally appropriate and likely to be used.
o The other four categories of tactics are more widely regarded as inappropriate and unethical in negotiation.
o It is crucial to remember that these judgments are subjective – for any given tactic, some will see its use as ethically wrong and others will have little or no ethical problem with it.
Does Tolerance for Ethically Ambiguous Tactics Lead to Their Actual Use?
o Saying you think a tactic is acceptable and actually using that tactic are two different things – here are study findings on just that subject.
§ There is a positive relationship between an attitude toward the use of each specific tactic and the intention to use it.
§ There is a positive relationship between an attitude toward the use of a specific tactic and actually using that tactic.
§ Using unethical tactics early in a negotiation leads to greater frequency of use of these tactics, elevating the likelihood the other party will follow suit.
§ Hiding your bottom line was the tactic most frequently used, exaggerating an opening offer was second, followed by stalling for time and misrepresenting information – making empty promises was used only 10% of the time.
§ Hiding your bottom line improved negotiator performance in role-play.
Is It Acceptable to Use Ethically Ambiguous Tactics?
o The studies summarized here indicate that there are tacitly agreed-on rules of the game in negotiation.
o In these rules, some minor forms of untruths—misrepresentation of your true position to the other party, bluffs, and emotional manipulations—may be seen as ethically acceptable and within the rules.
o In contrast, outright deception and falsification are generally seen as outside the rules.
o The authors want to place some strong cautionary notes on these conclusions.
§ First, these statements are based on ratings by large groups of people (mostly business students); in no way do they, or should they, predict how any one individual negotiator will perceive and use the tactics.
§ Second, these observations are based primarily on what people said they would do, rather than what they actually did.
§ Third, by engaging in research and reporting these results, the authors do not mean to endorse the use of any marginally ethical issue – instead the objective is to focus debate among negotiators on when these tactics might be appropriate or should be used.
§ Finally, the authors acknowledge that this is a Western view and that in some other cultures, a group or an organization would decide on ethics, and in still other cultures, ethical constraints may be minimal or hard to determine clearly – “let the buyer beware” at all times.
C. Deception by Omission versus Commission
· The use of deceptive tactics can be active or passive.
o Researchers examined the tendency for negotiators to misrepresent their interests on a common-value issue – an issue for which both parties are seeking the same outcome.
o They discovered that negotiators used two forms of deception in misrepresenting the common-value issue:
§ Misrepresentation by omission – failing to disclose information that would benefit the other
§ Misrepresentation by commission – actually lying about the common-value issue
· Another study involved students in a role-play involving the sale of a car with a defective transmission.
o Students could lie by omission – by failing to mention the defect – or by commission – by denying the defect.
o Far more students were willing to lie by omission than by commission.
D. The Decision to Use Ethically Ambiguous Tactics: A Model
· This section ends with a relatively simple model that helps explain how a negotiator decides whether to employ one or more deceptive tactics – see Figure 5.2.
o The model puts a negotiator in a situation where they need to decide which tactics to use to influence the other party.
o They identify possible influence tactics that could be effective, some of which might be deceptive, inappropriate, or marginally ethical.
o Once identified, the negotiator may decide to use one or more tactics – the selection and use are likely influenced by the negotiator’s own motivations and their judgment of the tactic’s appropriateness.
o Once employed, the negotiator will assess consequences on three standards:
§ Whether the tactic worked (produced the desired result)
§ How the negotiator feels about themselves after using the tactic
§ How the individual may be judged by the other party or by neutral observers
o Negative or positive conclusions on any of these three standards may lead the negotiator to try to explain or justify use of the tactic, and they will eventually affect a decision to employ similar tactics in the future.
V. Why Use Deceptive Tactics? Motives and Consequences
· We have discussed the nature of ethics and the kinds of negotiation tactics that might be regarded as ethically ambiguous.
· Now we turn to the reasons such tactics are tempting and the consequences of succumbing to that temptation.
· We begin with motives, and motives inevitably begin with power.
A. The Power Motive
· The purpose of using ethically ambiguous negotiating tactics is to increase the negotiator’s power in the bargaining environment.
o Information is a major source of leverage in negotiation – it has power.
o Often, whoever has better information, or uses it more persuasively, stands to “win” the negotiation.
· Such a view assumes that the information is accurate and truthful.
o Investigating someone else’s truthfulness and honesty consumes time and energy.
o Any inaccurate and untruthful statements manipulate information in favor of the introducer.
o Through the tactics described earlier, the liar gains advantage.
o The receiver either accepts the information at face value or has to decide whether to challenge the other’s accuracy, credibility, and intentions.
· If deception is a way to gain power, that suggests that negotiators operating from a position of weakness are more likely to be tempted to engage in deception.
o There is some suggestive evidence to back this up in a study showing that envy promotes deception by increasing psychological benefits and decreasing psychological costs of engaging in deceptive behavior.
· A final observation about how power is related to ethical choices is that having power (or not having it) may affect the style of reasoning a person uses to judge the ethics of a situation.
o On study found that people with power are more likely to work their way through moral dilemmas with rule-based or principle-based thinking (deontological ethics) because stability is in their interest and is therefore cognitively appealing.
o A lack of power disposes individuals to focus more on consequences (end-result ethics) in deciding whether an action is right or wrong.
§ Due to this difference, negotiators with unequal power may encounter frustration with each other when it comes to ethics.
B. Other Motives to Behave Unethically
· The motivation of a negotiator can clearly affect their tendency to use deceptive tactics – see Box 5.2 for a discussion of the motives of cheaters in running.
o The simplest motivational hypothesis is an instrumental one: negotiators will be inclined to deceive to achieve their goals and will avoid being deceptive when there are other ways to get there.
· Goal pursuit aside, negotiators are motivated to avoid being exploited by another party and may use deception to diminish the risk.
o Concern about exploitation triggers decisions to deceive, especially when there is a lack of mutual dependence or trust between the parties.
· In Chapter 15, we consider individual differences, and point out how motivational orientation can affect the strategies and tactics negotiators pursue.
o Competitive negotiators were more likely to use misrepresentation as a strategy.
o Cultural differences may also map into motivational influences, where individuals in highly individualistic cultures (the U.S.) were more likely to use deception for personal gain than those in a more collectivist culture, such as Israel.
· The impact of motives may be more complex.
o Negotiators may rationalize the use of marginally ethical tactics in anticipation of the other’s expected conduct rather than take personal responsibility for using these tactics in the service of their own competitive orientation.
· People may be more motivated to appear moral, rather than to actually act morally, because to act morally may have costs attached to it.
o One potential cost is damage to your reputation if others become aware of and disapprove of your use of questionable tactics.
· While the four philosophical approaches discussed earlier – end-result, duty, social contract, and personalistic ethics – provide a framework for analyzing ethical issues, they also speak to the ways that individuals actually think about ethical dilemmas.
o A study found that negotiators who prefer an ends-based framework or a focus on community norms described themselves as more likely to engage in marginally unethical behavior such as making false promises or misrepresenting information.
o On the other hand, those inclined to adhere to rules and moral principles (duty ethics) were less comfortable with these tactics and less likely to engage in ethically questionable practices.
C. The Consequences of Unethical Conduct
· A negotiator who employs an unethical tactic will experience consequences that may be positive or negative, based on three aspects of the situation:
o Whether the tactic is effective
o How the other person, constituencies, and audiences evaluate the tactic
o How the negotiator evaluates the tactic
Effectiveness
o If effectiveness is taken to mean the production of economic benefit, then there is evidence pointing to the effectiveness of deceptive tactics in certain circumstances.
§ Misrepresenting one party’s interest on an issue that both parties value in the same way can induce concessions that lead to favorable outcomes.
o People are more likely to rate an action as unethical when that action results in a negative rather than a positive outcome.
§ If a lie in negotiation yields economic benefit for the deceiver and becomes known to the other party, the other party will view it outcome negatively and judge the tactic as unethical.
o In addition to influencing the other party’s perceptions, a tactic’s effectiveness will have some impact on whether it is used in the future.
§ If used successfully, unethical conduct is likely to increase as the negotiator believes they can get away with it.
Reactions of Others
o A second set of consequences may come from the judgments and evaluations of those who are the “targets” of the tactic.
§ Targets may include not just the other negotiator but also others who observe or become aware of the tactic, such as members of the negotiating team, a negotiator’s constituency, or other bystanders.
§ If the target person is unaware of the deception, they may show no reaction.
§ If the target discovers the deception, a stronger reaction is likely.
o People who discover they have been deceived or exploited are typically angry.
§ In addition to having “lost” the negotiation, they feel foolish for being deceived and inclined to seek retaliation and revenge.
§ A strong experience of being exploited may sour a victim’s perception of negotiation contexts in the future.
o Research into the negative consequences of deception suggests the following.
§ Victims had a strong emotional reaction to deception when they had an intimate relationship with the subject, when the information was very important, and when they saw lying as an unacceptable behavior.
§ The more the deception was serious, personal, and highly consequential for trust between the parties, the more destructive it was to the relationship.
§ One study showed that the effects of untrustworthy actions on credibility can be remedied with subsequent truthful behavior, as long as the previous actions that breached the trust did not involve deception.
o One interesting exception to the tendency to resent a person who deceives is rooted in the relative power of the deceiver.
§ When a party who was lying had little power in the situation, the deceived party regarded the lie as understandable.
§ Those deceived by powerful opponents did not want to interact further, but those who were lied to by a weak opponent were fine with subsequent interaction.
Reactions of Self
o Very little research has explored the third set of consequences: the negotiator’s own reactions to the use of unethical tactics.
§ When the other party has truly suffered, a negotiator may feel some discomfort, stress, guilt, or remorse.
§ This can lead to a negotiator seeking ways to reduce the psychological discomfort.
§ One study found that individuals who had lied during a simulated negotiation made larger concessions later in the negotiation to compensate – if they rated themselves highly on “moral attributes.”
§ On the other hand, those with no personal qualms about lying behaved no differently after lying, with no subsequent concession.
o Although the use of ethically questionable tactics may have severe consequences for the negotiator’s reputation, parties seldom appear to take these outcomes into consideration in the short term.
§ However, if the tactic has worked in the past, the negotiator may be able to rationalize and justify the use of the tactic.
D. Explanations and Justifications
· When a negotiator uses an ethically ambiguous tactic, they must prepare to defend the tactic’s use to themselves, to the victim, or to constituencies and audiences.
o The primary purpose of these explanations and justifications is to rationalize, explain, or excuse the behavior – to verbalize some good, legitimate reason this tactic was necessary.
o Rationalization is often motivated by the desire to ease distress or dissonance over what the individual has just done.
· Here are some rationalizations:
o The tactic was unavoidable.
§ The situation made it necessary so the negotiator should not be held responsible.
o The tactic was harmless.
§ This particular justification interprets the harm from the actor’s point of view; the victim may not agree and may have experienced significant harm or costs.
o The tactic will help to avoid negative consequences.
§ Negotiators are really arguing the ends justify the means – the tactic helped avoid greater harm.
o The tactic will produce good consequences, or the tactic is altruistically motivated.
§ Again, the end justifies the means, but in a positive sense – in reality, most negotiators use deceptive tactics for their own advantage, not for the general good.
o “They had it coming,” or “They deserve it,” or “I’m just getting my due.”
§ These are all variations on the theme of using lying and deception either against an individual who may have taken advantage of you in the past or against some generalized source of authority – “the system.”
o “They were going to do it anyway, so I will do it first.”
§ This anticipation may reflect a general sense of the others’ dishonesty or be based on specific judgments about the other party.
o “He started it.”
§ This is a variation on the anticipatory justification from the last point but in this case, the rationale is that others have already violated the rules, therefore legitimizing the negotiator’s right to violate them as well.
§ Here, unethical tactics are employed in a tit-for-tat manner, to restore balance, or to give others their due.
o The tactic is fair or appropriate to the situation.
§ This uses a kind of moral (situational) relativism as a rationale or justification
§ Most social situations, including negotiations, are governed by a set of well-understood rules of proper conduct and behavior.
§ As a general matter, ethical relativism – the idea that moral standards shift with changing circumstances – frequently comes under fire as an unacceptable take on morality.
VI. What Factors Shape a Negotiator’s Predisposition to Use Unethical Tactics?
· Earlier we talked about the use of ethically ambiguous tactics in terms of the simple model presented in Figure 5.2.
· That model describes a rational calculation process in which the negotiator selects a tactic, uses the tactic, evaluates the consequences, and attempts to manage the consequences (if the tactic is detected) through explanations and justifications.
· A number of other factors can affect the sequences described in the model:
o The background and demographic characteristics of the negotiators.
o The personality characteristics and level of moral development of the negotiators.
o The elements of the social contract that encourage or discourage unethical conduct.
· This section briefly mentions how each of these factors might influence the predisposition to use ethically questionable tactics.
o The factors are included in an expanded version of the model, presented in Figure 5.3.
o It should be clear that the fundamental debate here is the “nature versus nurture” argument about what causes individuals to behave as they do.
o However, situational influences can predispose ethical people to do marginally ethical things.
A. Demographic Factors
· As we discuss the next few topics, the authors want to be clear they are not suggesting that all people of a particular group will necessarily act in a specified manner.
· They are discussing these demographics because the trends appear to be reliable and consistent across a number of different ethical choice situations.
Sex
o Studies have shown that women tend to make more ethically rigorous judgments than men.
o Returning to the ethically ambiguous tactics described earlier, studies show that men are more egocentric in their moral reasoning about ethics in negotiation, and hence more lenient in their judgments about the ethical appropriateness of these tactics.
§ There is evidence that men are more likely than women to harbor intentions to use some unethical tactics.
§ This did not hold for tactics classified as “traditional competitive bargaining.”
o A later study suggests differences may exist in the way that men and women are perceived as ethical decision makers.
§ In a simulation, female actors were perceived to be formalistic in their decision and male actors were perceived to be more end-result-oriented.
o There is also insight into a parallel question: Do men and women differ as recipients (or victims) of unethical tactics?
§ Researchers found that female negotiators are lied to more than male negotiators.
§ The female negotiators did not perceive their opponents as any less honest than the male negotiators did.
§ Another study looking at the negotiating dyad found that negotiators are more “morally pragmatic” in mixed-sex and all-female pairs.
Age and Experience
o Study results here found the following:
§ Both men and women behaved more ethically as they aged.
§ Older parties tended to see bluffing as more acceptable and deception as less acceptable.
§ There was a strong negative correlation between age and the endorsement of unethical negotiating tactics – and individuals with more direct work experience were less likely to use unethical negotiating tactics.
Professional Orientation
o One study compared ratings by MBA students, business alumni, and clergy of perceived appropriateness of categories of deceptive negotiation tactics.
§ All groups indicated that traditional competitive bargaining and misrepresentation were ethically acceptable, the clergy the most conservative.
§ Deception was seen as moderately unethical, and all groups believed that outright falsification was highly unethical.
o A separate study of district attorneys and public defenders looked at their use of tactics.
§ Public defenders saw ethically ambiguous tactics as more appropriate than district attorneys.
§ Both groups increased their approval of the tactics when they thought the other party was likely to use them.
§ Public defenders increased their approval as a “defensive move” more than district attorneys.
Nationality and Culture
o It is apparent there are cultural differences in attitudes toward ethically ambiguous tactics in negotiation, here are some of the findings.
§ Americans and Asians were more likely to use bluffing, and eastern Europeans were less likely to do so.
§ Those with a Middle Eastern heritage were more likely to endorse misrepresentation to an opponent’s network, and Americans less likely.
§ Managers from the U.S. and Brazil both rated traditional competitive bargaining tactics as acceptable, but managers from Brazil were more likely to rate other ethically ambiguous tactics involving deception as acceptable.
§ Managers from the U.S. and Brazil were similar in their use of tactics involving third parties, but Brazilians were willing to be more deceptive in dealing with their immediate opponent.
§ Mexican managers saw the same tactics as less appropriate than U.S. managers.
§ People in a more individualistic culture (U.S.) were more likely to use deception for personal gain than people in a more collectivist culture (Israel).
§ Negotiations were more likely to endorse the use of ethically ambiguous tactics when negotiating with someone from another country than with someone from the same country.
o Clearly there are cultural differences in perceptions of what is or isn’t appropriate in negotiations – but it is clearly hazardous, and wrong, to assume that any one individual would actually behave a certain way.
o Not everyone acts in ways that are culturally representative, some negotiators may go out of their way to avoid doing so.
§ When it comes to negotiator ethics, differences across cultures may be a function not so much of different beliefs about ethics, but rather variations in the role of personal relationships in different societies.
o The complications involved in understanding ethics in cross-cultural negotiation are illustrated in Box 5.3.
B. Personality Differences
· The inclination to simply be honest and direct may itself represent a kind of stable personality trait – labeled “straightforwardness.”
o This trait leads negotiators to act with greater concern for the other party’s interests, which can enhance integrative outcomes.
· Researchers identified several other dimensions of personality that may predict the likelihood that negotiators will endorse the use of ethically ambiguous tactics or actually behave unethically – four are discussed here.
Competitiveness versus Cooperativeness
o Researchers found that students who rated themselves as aggressive were significantly more likely to use bluffing, misrepresentation, and a variety of other dishonest tactics than students who rated themselves as cooperative.
o Another study found that pro-social individuals were more honest with a cooperative partner than were selfish individuals, and used more deceptive tactics when dealing with a competitive partner.
Empathy and Perspective Taking
o Empathy is an aspect of personality in the sense that we can measure a stable tendency to experience feelings of compassion, sympathy, and concern for others.
§ Individuals high in empathy were more inclined to reject the use of lying and misrepresentation in negotiation and to disapprove of gaming emotions to gain an advantage.
o The related personality trait of perspective-taking is the tendency to imagine yourself in the other person’s position and entertain their point of view.
§ While people high in emotional empathy were apt to disapprove of ethically questionable tactics, the more cognitive trait of perspective-taking was not related to approval or disapproval of these tactics.
Machiavellianism
o Machiavellians adhere to a pragmatic and expedient view of human nature – “The best way to handle people is to tell them what they want to hear” or “It is hard to get ahead without cutting corners here and there.”
o A number of studies have shown that individuals who are high in Machiavellianism are more willing and able con artists, more likely to lie when they need to, better able to tell a lie without feeling anxious about it, and more persuasive and effective in their lies.
o This appears to be a predictor of unethical conduct – or at least of a tendency to be tolerant of the use of ethically questionable strategies in order to achieve desired goals.
Locus of Control
o Locus of control is the degree to which a person believes that the outcomes they obtain are largely a result of their own ability and effort (internal control) versus fate, chance, or circumstance (external control).
o Studies have generally predicted that individuals who are high in internal control are more likely to do what they think is right (i.e., they have a stronger personal value system or ethical code) and to feel that they had more control over producing the outcomes they wanted to achieve in a situation in which there were temptations to be unethical.
C. Moral Development and Personal Values
· Many researchers have explored the relationship of an individual’s level of moral development to ethical decision making.
· One proposed six stages of moral development, grouped into three levels.
o A preconventional level (stages 1 and 2), where the individual is concerned with concrete outcomes that meet their own immediate needs, particularly external rewards and punishments.
o A conventional level (stages 3 and 4), where the individual defines what is right on the basis of what their immediate social situation and peer group endorses or what society in general seems to want.
o A postconventional level (stages 5 and 6), where the individual defines what is right on the basis of some broader set of universal values and principles.
§ The higher the stage a person achieves, the more complex their moral reasoning should be and the more ethical their decisions should be.
· Many studies have demonstrated the power of measuring ethical orientation in this way.
D. Contextual Influences on Unethical Conduct
· The last set of factors that should influence a negotiator’s willingness to act unethically are contextual factors – aspects of the situation that elicit or encourage the use of ethically troubling behaviors.
· Here, we briefly examine a number of contextual elements:
o The negotiator’s past experience with using unethical tactics
o Incentives to use the tactics
o Characteristics of the other party
o The quality of the relationship with the other party
o Differences in power and status between the parties
o Types of negotiation situations
o Modes of communication
o Whether a negotiator is acting as the principal actor or an agent
o The social norms that govern the negotiation process
Past experiences
o The simple impact of past experience – particularly failure – can increase the likelihood that a negotiator might attempt to use unethical tactics.
Role of Incentives
o One study demonstrated that greater incentives influenced a negotiator’s inclination to misrepresent to the other party, and they enhanced the negotiator’s expectation that the other party would misrepresent.
Characteristics of the Other Party
o Negotiators may use ethically ambiguous behavior when it is perceived the other party is vulnerable to such tactics – tactics are used opportunistically.
o When a partner was perceived as benevolent, trustworthy, or having integrity, a negotiator was more likely to deceive by omitting or misrepresenting information.
o When an opponent has a powerful disposition, negotiators were more likely to misrepresent information, possibly as a defensive move.
Relationship between the Negotiator and the Other Party
o Two aspects of the negotiator’s relationship with the other party affect the tendency to use certain tactics:
§ What the relationship has been like in the past, and
§ What the parties would like it to be in the future
o The presence of interpersonal trust among the parties tends to inhibit the use of competitive or distributive tactics.
o Another factor is if the relationship is expected to be long-term or short-term.
§ Negotiators are more willing to use ethically precarious tactics if they do not anticipate having to live with the consequences of doing so.
Relative Power between the Negotiators
o We have already mentioned that negotiators use deception as a way to gain temporary information power over the other party.
o Which would suggest that lower-power negotiators are more likely to act unethically in order to overcome a disadvantage – but the evidence is mixed.
§ One study found negotiators in a low-power position were likely to use deception to try to get a better offer.
§ Another study found negotiators with more power bluffed more often and communicated less than those with less power.
§ Why would those with more power act unethically when they can get what they want?
§ The answer lies in an “intoxication” theory of power, which holds that power corrupts the thinking of the powerful.
o A balance of power should lead to more ethical conduct than an imbalance does.
Types of Negotiation
o The structure of the negotiation situation – for instance, distributive or integrative – may alter the ethics negotiators bring to the table.
Mode of communication
o Advances in technology have affected the way negotiators communicate.
§ There is evidence that deception is viewed differently when it occurs over email compared with other modes of communication.
o The relevant question is whether negotiators are more or less likely to use ethically ambiguous tactics when they are physically removed from each other than when they are face-to-face – research results are mixed.
Acting as an Agent versus Representing Your Own Views
o Acting as an agent for another party often puts you in a different ethical frame of mind than negotiating for yourself.
o Acting as an agent may release people from their own personal ethical code, giving them the moral latitude to do whatever is necessary to maximize the results for the constituent.
Group and Organizational Norms and Pressures
o Many negotiators look to the social norms of a particular situation to decide how to behave.
§ Norms are the informal social rules – the dos and don’ts – that govern social behavior.
§ Research suggests that group and organizational norms may play a key role in legitimizing inappropriate behavior.
· Companies differ in how they value and endorse ethical conduct or appear to condone and tolerate marginally ethical behavior in the service of achieving corporate objectives at any price.
· The actions and practices of key managers within work groups or departments play a large role in determining what employees believe is appropriate behavior.
· The more loyalty and commitment people feel toward an organization, the more likely they may be to suspend their own ethical judgment and engage in any and all behavior – even unethical or illegal – to demonstrate their loyalty.
· Norms have to be salient – immediate and relevant to the negotiator – to have an impact.
o The pressure to obey authority is very strong, and can undermine individual integrity.
Section Summary
o Research shows that a number of individual attributes and situational factors can lead negotiators to suspend their own personal and ethical standards and commit acts that are ethically questionable.
o Any of these factors appear to be sufficient, under the right circumstances, to trigger individuals to suspend their own good moral judgment in the service of doing what the organization appears to need, want, or request.
II. How Can Negotiators Deal with the Other Party’s Use of Deception?
· People lie – quite frequently, in fact – so this chapter notes some of the things you can do as a negotiator when you believe the other party is using deceptive tactics.
· Table 5.3 presents a variety of verbal strategies for trying to determine if others are being deceptive.
· And what if they are? Here are some options.
Ask probing questions
o Many negotiators fail to ask enough questions yet asking questions can reveal a great deal of information, some of which the other negotiator might otherwise have intentionally left undisclosed.
o While questions can help a negotiator determine whether another is being deceptive, cross-examination may actually increase the other’s tendency to be deceptive in areas where questions are not being asked.
Phrase Questions in Different Ways
o A question posed a certain way may elicit an answer that is technically true but shirts the actual truth the questioner seeks to uncover.
§ If, when buying a house, you ask “How is the heating system?” and are told “It works fine,” you draw the conclusion there are no problems.
§ If you ask “When was the last time the heating system was inspected, and what was the result?” You may learn it is actually on its final year of service.
Force the Other Party to Lie or Back Off
o If you suspect the other party is being cagey or deceptive but is not making a clear statement in plain language, pose a question that forces them to tell a direct lie or else abandon or qualify the assertion.
o This can be a useful strategy as research shows people are more inclined to lie by omission than by commission.
o The timely use of a sharp, direct question will induce some adversaries to back off rather than fib to your face.
Test the Other Party
o Not sure if the other party is the kind of person to lie?
o Ask a question to which you already know the answer.
o If the answer you get is evasive or deceptive, you have learned something important about the other party’s trustworthiness.
o If untrustworthy, take good notes during negotiation, and invite them to confirm the accuracy of your notes, in order to create and preserve later accountability.
“Call” the Tactic
o Indicate to the other side you know they are bluffing or lying.
o Be tactful, but firm, and indicate your displeasure.
o Spotting lies is not always easy – see Box 5.6.
Ignore the Tactic
o If you are aware the other party is bluffing or lying, simply ignore it, especially if the deception concerns a relatively minor aspect of the negotiation.
o They may be lying or bluffing because they think that is what you are supposed to do in negotiations.
o Negotiators at times make unwise commitments and it is in the best interest of the other party to help that negotiator escape the commitment and save face.
o If deception is due to lack of knowledge, let it pass and avoid embarrassing the other person.
o Table 5.3 has additional suggestions for dealing with suspected deception.
Discuss What You See and Offer to Help the Other Party Shift to More Honest Behaviors
o This is a variation on calling the tactic, but it tries to assure the other party that telling the truth is, in the long term, more likely to get them what they want than any form of bluffing or deception will.
Respond in Kind
o If the other party bluffs, you bluff more.
o If they misrepresent, you misrepresent.
o This course of action simply escalates the destructive behavior and drags you into the mud with the other party, but, if they recognize what you are doing, they may realize their tactics will not work.
o In general, this approach is best treated as a last-resort strategy.
Chapter Summary
The process of negotiation raises frequent and critical ethical issues. In this chapter, we have discussed factors that negotiators consider when they decide whether particular tactics are deceptive and unethical. Although a lot of writing on negotiation is strongly normative about ethical dos and don’ts, we prefer an analytical approach that focuses on how negotiators actually make decisions about when and where to use specific tactics. Accordingly, we approached the study of ethically ambiguous tactics from a decision-making framework, examining the ethical overtones of the choices that negotiators make.
We began by drawing on a set of hypothetical scenarios to discuss how ethical questions are inherent in the process of negotiation. We then presented four fundamental approaches to ethical reasoning and showed how each might be used to make decisions about what is ethically appropriate in negotiations. We proposed that a negotiator’s decision to use ethically ambiguous (or flatly unethical) tactics typically grows out of a desire to increase one’s negotiating power by manipulating the landscape of (presumably accurate) information in the negotiation. We discussed the different forms that ethically ambiguous tactics take, and we reviewed relevant research about the use of those tactics.
Working from a simple model of ethical decision making, we analyzed the motives for and consequences of engaging in unethical negotiation behavior. We then expanded the model to identify individual differences and contextual factors that influence the likelihood that negotiators will use such tactics. Finally, we addressed how negotiators can respond to another party that may be using tactics of deception or subterfuge.
Negotiators frequently overlook the fact that, although unethical or expedient tactics may get them what they want in the short run, these same tactics typically lead to tarnished reputations and diminished effectiveness in the long run.
Chapter 6
Perception, Cognition, and Emotion
Chapter Overview
Perception, cognition, and emotion are the basic building blocks of all social encounters.
A working knowledge of how humans perceive the world around them, process information and experience emotions is important in understanding why people behave the way they do during negotiations.
We begin the chapter by examining how psychological perception is related to the process of negotiation, with particular attention to forms of perceptual distortion that can cause problems of understanding and meaning making for negotiators.
We then look at how negotiators use information to make decisions about tactics and strategy—the process of cognition.
o Our discussion here pursues two angles.
o First, we focus on framing – the strategic use of information to define and articulate a negotiating issue or situation.
o Second, we discuss the various kinds of systematic errors, or cognitive biases, in information processing that negotiators are prone to make and that may compromise negotiator performance.
This section will also consider how negotiators can manage misperceptions and cognitive biases in order to maximize strategic advantage and minimize their adverse effects.
Social encounters are, however, more than just occasions for perception and cognition.
We experience and express emotion when we interact with others and negotiating is certainly no exception.
In the final major section of this chapter, we discuss the role of moods and emotions in negotiation—both as causes of behavior and as consequences of negotiated outcomes.
Learning Objectives
Examine the important role played by perceptions, cognitions, and emotions in negotiation.
Explore how perceptions can become distorted and lead to biases in negotiation and judgment.
Consider the ways that cognition (information processing) in negotiation can be affected by biases and framing processes.
Understand the role that emotions and mood play in shaping negotiation processes and outcomes.
Gain advice on how to manage perception, cognition, and emotions in negotiation situations.
Chapter Outline
Perception
A. Perception Defined
B. Perceptual Distortion
Framing
A. Types of Frames
B. How Frames Work in Negotiation
C. Another Approach to Frames: Interest, Rights, and Power
D. The Frame of an Issue Changes as the Negotiation Evolves
Cognitive Biases in Negotiation
1. Irrational Escalation of Commitment
2. Mythical Fixed-Pie Beliefs
3. Anchoring and Adjustment
4. Issue Framing and Risk
5. Availability of Information
6. The Winner’s Curse
7. Overconfidence
8. The Law of Small Numbers
9. Self-Serving Biases
10. Endowment Effect
11. Ignoring Others’ Cognitions
12. Reactive Devaluation
Managing Misperceptions and Cognitive Biases in Negotiation
Mood, Emotion, and Negotiation
Chapter Summary
I. Perception
A. Perception Defined
· Perception is the process by which individuals connect to their environment.
o Negotiators approach each situation guided by their perceptions of past situations and current attitudes and behaviors.
o The goal is to perceive and interpret with accuracy what the other party is saying and meaning.
· Perception is a “sense-making” process; people interpret their environment so they can respond appropriately. See Figure 6.1.
o Environments are typically complex with many stimuli, each having different properties – making it impossible to process all the available information.
o As perceivers, we become selective, tuning in on some stimuli while tuning out others.
o Selective perception occurs through many perceptual “shortcuts,” that may come at the expense of accuracy.
· We now look at forms of perceptual distortion that are particularly relevant for negotiation.
B. Perceptual Distortion
· In any given negotiation, the perceiver’s own needs, desires, motivations, and personal experiences may create a preconceived notion about the other party.
o This is a cause for concern when they lead to biases and errors in perception and subsequent communication.
· Here, we discuss four major perceptual errors: stereotyping, halo effects, selective perception, and projection.
o Stereotyping and halo effects are examples of perceptual distortion by generalization – small amounts of information are used to draw large conclusions about individuals.
o Selective perception and projection are, in contrast, forms of distortion that involve anticipating certain attributes and qualities in another person.
§ The perceiver filters and distorts information to arrive at a predictable and consistent view of the other person.
Stereotyping
o This is a very common distortion occurring when one individual assigns attributes to another solely on the basis of the other’s membership in a particular social or demographic category.
§ No matter which group is targeted, stereotypes tend to be formed in the same way.
· People assign an individual to a group based on one piece of perceptual information, such as age
· Then they assign a broad range of other characteristics of the group to this individual – “old people are conservative” or “young people are disrespectful.”
· The conclusion is based on the generalization of qualities that have been attributed – accurately or not – to the larger group.
o Once formed, stereotypes can be highly resistant to change.
§ The simple process of dividing people into groups encourages group members to define themselves as “we” and the other group as “they” and then compare the groups.
§ Individuals are more likely to resort to stereotyping under certain conditions.
· Time pressure, cognitive stress, and mood
· Also conflicts involving values, ideologies, and direct competition for resources among groups increases the likelihood of stereotyping.
Halo Effects
o Similar to stereotypes but rather than using a person’s group membership as a basis for classification, halo effects occur when people generalize about a variety of attributes based on the knowledge of one attribute of an individual.
§ A smiling person is judged to be more honest than a frowning person.
§ Halo effects may be positive or negative.
o Research shows halo effects are most likely to occur in perception when:
§ There is very little experience with a person along some dimension
§ The person is well known
§ The qualities have strong moral implications
o Halo effects and stereotyping are common hazards in negotiation.
§ Negotiators are apt to form rapid impressions of each other based on very limited initial information – such as appearance, group membership, or initial statements.
§ Negotiators tend to maintain these judgments as they get to know each other better.
Selective perception
o Selective perception occurs when the perceiver singles out certain information that supports or reinforces a prior belief and filters out information that does not confirm that belief.
§ This has the effect of perpetuating stereotypes or halo effects.
§ After forming quick judgments about someone on the basis of limited information, a person may then filter out further evidence that might disconfirm the judgment.
· If an initial smile leads the other negotiator to believe that person is honest, they might downplay any statements that demonstrate a crafty intent.
· If the negotiator perceives the same initial smile as a smirk, the negotiator may downplay the other party’s offers to establish an honest relationship.
· In both cases, the negotiator’s own biases may affect how the other party’s behavior is perceived and interpreted.
Projection
o Projection occurs when people assign to others the characteristics or feelings that they possess themselves.
§ Usually arises out of a need to protect one’s own self-concept— to see oneself as consistent and good.
§ Negotiators may assume the other party will respond in the same manner they would if positions were reversed.
· For instance, if a negotiator expects they would be frustrated if the two parties’ positions were reversed, then that negotiator is likely to perceive that the other party is frustrated.
§ People respond differently to similar situations, however, and projecting your feelings and beliefs onto the other negotiator may be incorrect.
· A delay in negotiations may lead one negotiator to become frustrated and believe the other negotiator is frustrated as well, while the other negotiator may welcome the delay as an opportunity to complete work on a different project.
§ The tendency to project may lead a negotiator to overestimate how much the other party knows about their preferences or desires.
· Negotiators tend to think their preferences are more obvious to the other party than they actually are.
Section Summary
o Perceptual distortions can influence many aspects of the negotiation process and can be quite persistent once they are formed.
o These shortcuts may lead to perceptual errors, which typically occur without people being aware they are happening and which can have unfortunate consequences.
o If the initial assumptions are incorrect, the negotiator may not be able to reverse their effects.
II. Framing
· A frame is the subjective mechanism through which people evaluate and make sense out of situations, leading them to pursue or avoid subsequent actions.
o Framing is about focusing, shaping, and organizing the world around us – it is about making sense of a complex reality and defining it in terms that are meaningful to us.
o Frames, in short, define a person, an event, or a process and separate it from the complex world around it.
· Because people have different backgrounds, experiences, expectations, and needs, they frame people, events, and processes differently.
o Moreover, these frames can change depending on perspective, or they can change over time.
§ A quarterback is a “hero” when throwing a game-winning touchdown, but a “loser” when throwing an interception.
· Frames are important in negotiation because disputes are often open to different interpretations.
o The frame that ultimately takes hold in a given situation matters because individuals’ perceptions and reactions will likely be affected.
· Frames are critical in negotiation because how parties frame and define a negotiating issue or problem is a clear and strong reflection of what they define as critical to negotiating objectives,
o what their expectations are,
o what information they seek and will use to argue their case,
o the procedures they use to present their case, and
o the manner they use to evaluate the outcomes
· Frames are inevitable. You cannot avoid framing.
o The process often occurs without any real intention by the negotiator.
o The negotiators frames a situation based on past experiences, deep-seated attitudes and values, or strong emotions.
o Frames can also be shaped by the type of information chosen or the setting and context in which the information is presented.
· Now, we will discuss several aspects of frames:
o Different types of frames
o How frames work in negotiation situations
o The interests/rights/power approach to negotiation framing
o How frames changes as a negotiation encounter evolves
A. Types of Frames
· Substantive
o What the conflict is about.
o Parties taking a substantive frame have a particular disposition about the key issue or concern in the conflict.
· Outcome
o A party’s predisposition to achieving a specific result or outcome from the negotiation.
o Parties with a strong outcome frame that emphasizes self-interest and downplays concern for the other party are more likely to engage primarily in distributive (win-lose or lose-lose) negotiations than in other types of negotiation.
· Aspiration
o A party’s predisposition toward satisfying a broader set of interests and needs in negotiation – rather than focusing on a specific outcome.
o Parties with a strong aspiration frame are more likely to be primarily engaged in integrative (win-win) negotiation than in other types.
· Process
o How the parties will go about resolving their dispute.
o Negotiators with a strong process frame are less concerned about the specific negotiation issues and more concerned about how the deliberations will proceed, or how the dispute should be managed.
o When the major concerns are largely procedural rather than substantive, process frames will be strong.
· Identity
o How the parties define “who they are.”
o People can use various categories to construct an identity frame that defines them and distinguishes them from others.
§ Gender, religion, ethnic origin, place of birth, current place of residence, etc.
· Characterization
o How the parties define the other parties.
o In conflict, identity frames tend to be positive, characterization frames tend to be negative.
· Loss or gain
o How the parties define the risk or reward associated with particular outcomes.
§ A buyer can view the transaction in loss terms (cost) or in gain terms (value).
B. How Frames Work in Negotiation
· Research in this area is difficult to conduct.
o It is difficult to know what frame a party is using unless the party tells you or unless you make inferences from the party’s behavior.
o Such interpretations may be difficult and prone to error.
o Also, the frames of those who hear or interpret communication may create biases of their own.
· Linguistic analyses of negotiation transcripts provides insight into how parties define a negotiation, and how frames are used in the process:
o Negotiators can use more than one frame.
o Mismatches in frames between parties are sources of conflict.
§ Mismatches cause ambiguity, which may create misunderstanding, leading to conflict escalation and even stalemate.
§ Or lead one or both parties to reframe the conflict into more compatible frames that may lead to resolution.
§ Highly polarized disputes may need the help of a third party for mutual reframing.
o Parties negotiate differently depending on the frame.
§ For example, when parties are prompted to frame a negotiation in emotional terms, they tend to be more highly involved and behave competitively, leading to higher impasse rates.
o Specific frames may be likely to be used with certain types of issues.
§ Parties discussing salary may be likely to use outcome frames, while parties discussing relationship issues may be likely to use characterization frames.
o Particular types of frames may lead to particular types of agreements.
§ For example, parties striving for integrative agreements will benefit from using aspiration frames and discussing a large number of issues.
§ In contrast, parties using outcome or negative characterization frames may likely hold negative views of the other party and strong preference for specific outcomes, which may in turn lead to intensified conflict and distributive outcomes – or no agreement at all.
o Parties are likely to assume a particular frame because of various factors.
§ Value differences between the parties, differences in personality, power differences, and differences in the background and social context of the negotiators may lead the parties to adopt different frames.
§ As an example, see Box 6.1.
C. Another Approach to Frames: Interests, Rights, and Power
· One proposed approach to framing disputes views parties in conflict as using one of three frames:
Interests
§ People are often concerned about what they need, desire, or want.
§ People talk about their negotiating “positions,” but often what is at stake is their underlying interests.
§ Parties who focus on interests in a dispute are often able to find ways to resolve that dispute.
Rights
§ People may also be concerned about who is “right”—that is, who has legitimacy, who is correct, or what is fair.
§ Often resolved by helping the parties find a fair way to determine who is right, or that they can both be right.
§ Disputes over rights are sometimes referred to formal or informal arbitrators to decide whose standards or rights are more appropriate.
Power
§ Negotiations resolved by power are sometimes based on who is physically stronger or is able to coerce the other, but more often, it is about imposing other types of costs – economic pressures, expertise, legitimate authority, and so on.
§ Disputes framed as contests of power usually create clear winners and losers, with all the consequences that come from polarizing the dispute and resolving it in this manner.
· Parties have a choice about how they approach a negotiation in terms of interests, rights, and power – the same negotiation can be framed in different ways and will likely lead to different consequences.
o The different frames are likely to lead to very different discussions between parties.
o The way a party approaches the problem will likely influence how the other party responds.
D. The Frame of an Issue Changes as the Negotiation Evolves
· The definition of issues at stake in a negotiation may change as the discussion evolves.
o Rather than focus on the frames the parties held at the beginning of a negotiation, it is important to consider patterns of change (transformation) that occur as parties communicate with each other.
§ A classic study of legal disputes and grievances suggests that disputes tend to be transformed through a process of “naming, blaming, and claiming.”
· Naming occurs when parties in a dispute label or identify a problem and characterize what it is about.
· Blaming occurs next, as the parties try to determine who or what caused the problem.
· Claiming occurs when the individual who has the problem decides to confront, file charges, or take some other action against the individual or organization that caused the problem.
· Frames are shaped by conversations the parties have with each other about the issues in the bargaining mix.
o Several factors can affect how the conversations and frames are shaped:
§ Negotiators tend to argue for stock issues, or concerns that are raised every time the parties negotiate.
· Negotiations over stock issues can be restructured to include more or fewer issues, increasing the likelihood that a resolution can be found.
· Conflicts framed as “nationalist, ethnic, or ideological” may be quite difficult to resolve, and a major task for mediators is to provide creative new frames in these situations.
§ Each party attempts to make the best possible case for his or her preferred position or perspective.
· Early in the negotiation, it is not uncommon for the parties to “talk past each other” in an attempt to control the conversation with a certain frame or perspective rather than listening to and engaging with the other’s case.
· Eventually, arguments and frames begin to shift as the parties focus on either refuting the other’s case or modifying their own arguments on the basis of the other’s.
§ Frames may define major shifts and transitions in a complex overall negotiation.
· One researcher, studying diplomatic negotiations, suggested that successful bargaining results from a two-stage process he called “formula/detail.”
o Parties start by developing a broad framework of principles and objectives upon which they can agree.
o After that is accomplished, they work toward detailed points of agreement.
· Later research elaborated on the formula/detail model to propose three stages:
o Diagnosis in which the parties recognize the need for change or improvement, review relevant history, and prepare positions.
o Formula, in which the parties attempt to develop a shared perception of the conflict, including common terms, referents, and fairness criteria, and
o Detail, in which the parties work out operational details consistent with the basic formula
§ Finally, multiple agenda items operate to shape the issue development.
· Aside from major objectives, there are often a number of secondary items.
· These secondary concerns can transform the conversation about the primary issues.
· Critical to issue development is the process of reframing – changes to the thrust, tone, and focus of a conversation as the parties engage in it.
o Issues are shaped and reframed by several things, including:
§ Arguments attacking the significance or stability of problems or the feasibility of solutions
§ The ways parties “make a case” to others concerning the logic of needs or positions, and
§ The management and interaction (e.g., addition, deletion, packaging) of multiple issues on the negotiation agenda
o Reframing is a dynamic process that may occur many times in a conversation as parties challenge each other or search for ways to reconcile seemingly incompatible perspectives.
o Reframing may be done intentionally, or emerge from the conversation.
o In either case, the parties often propose a new way to approach the problem.
Section Summary
o Framing is about focusing, shaping, and organizing the world around us.
o We discussed the different types of frames and their importance for understanding strategic choices in negotiation.
o The way a negotiation problem is defined and the manner in which a conversation between negotiators leads to a reframing of the issues are critical elements to consider as negotiators develop and implement their strategy.
o The authors offer the following prescriptive advice about problem framing for the negotiator:
§ Frames shape what the parties define as the key issues and how they talk about them.
· Strive to ensure your own preferred frames are accepted and acknowledged by the other.
§ Both parties have frames.
· When the frames match, the parties are more likely to focus on common issues and a common definition of the situation.
· When they do not match, communication between the parties is likely to be difficult and incomplete.
· Reframing for a match does not guarantee a cooperative process.
§ Frames are controllable, at least to some degree.
· You may be able to shift the conversation toward the frame you would like the other to adopt.
§ Conversations transform frames in ways negotiators may not be able to predict but may be able to manage.
· As parties discuss an issue, introduce arguments and evidence, and advocate a course of action, the conversation changes and the frame may change.
· It is critical for negotiators to be ready for and track these shifts and to understand where they may lead.
§ Certain frames are more likely than others to lead to certain types of processes and outcomes.
· Recognizing these tendencies empowers negotiators to reframe their views of themselves, the other, or the dispute in order to pursue a constructive outcome.
III. Cognitive Biases in Negotiation
· We have examined how information is perceived, filtered, distorted, and framed.
o In this section, we examine how negotiators use information to make decisions during the negotiation.
o Systematic errors while processing information, collectively labeled cognitive biases, are numerous, with researchers identifying 20 or so.
o Here, we will discuss a dozen cognitive biases that are particularly apt to interfere with negotiator performance – summarized in Table 6.1.
A. Irrational Escalation of Commitment
· An “escalation of commitment” is the tendency for an individual to make decisions that stick with a failing course of action.
o These situations are defined by repeated, rather than one-shot, decision making in the face of negative feedback, uncertainty of goal attainment, and choice of continuing.
· Escalation of commitment is due in part to biases in individual perception and judgment.
o Once a course of action is decided, negotiators often filter through confirming evidence while ignoring disconfirming evidence.
o Desires for consistency and saving face prevents negotiators from change.
· Overconfidence is another factor that can result in escalation of commitment.
o Overconfident negotiators escalate commitment when making a decision publicly, and less likely to escalate when deciding in private – an interesting lesson.
· One way to combat these tendencies is to have an adviser serve as a reality check.
o Also, those who felt regret after escalating a previous conflict will be less likely to do so in the future.
o Just imagining escalation-related regret induces some to de-escalate.
B. Mythical Fixed-Pie Beliefs
· Many negotiators assume that all negotiations involve a fixed pie.
o Those who believe in the mythical fixed pie assume there is no possibility for integrative settlements and mutually beneficial trade-offs, and they suppress efforts to search for them.
· The tendency to see negotiation in fixed-pie terms varies depending on how people view the nature of a given conflict situation.
o Stressful conditions such as time constraints may lead to less integrative agreements – fixed-pie beliefs may also vary with cultural values.
· Chapter 3 provided advice on minimizing this fixed-pie belief through procedures for inventing options.
o Two additional approaches are offered here.
§ First, by focusing on underlying interests rather than merely on the issues being negotiated, you are more likely to see that your fixed-pie perception is misguided.
§ Second, fixed-pie perceptions can be diminished by holding negotiators accountable for the way they negotiate.
· Fixed-pie bias is more effectively defused when negotiators are held accountable for how they negotiate (the process) than when they are held accountable for what they achieve (the outcome).
C. Anchoring and Adjustment
· Anchoring and adjustment are related to the effect of the standard (or anchor) against which subsequent adjustments are made during negotiation.
o Anchors (e.g., an initial offer or an intended goal) can become a trap if the choice of an anchor is based on faulty or incomplete information and becomes misleading in and of itself.
o Once the anchor is defined, parties tend to treat it as a real, valid benchmark by which to adjust other judgments, such as the size of one side’s counteroffer.
· Goals in negotiation – whether set realistically or carelessly – can serve as anchors.
o These may be visible or invisible, conscious or unconscious.
· Preparation, along with the use of a devil’s advocate or reality check, can help prevent errors of anchoring and adjustment.
D. Issue Framing and Risk
· A frame is a perspective or point of view that people use when they gather information and solve problems.
o Frames can lead people to seek, avoid, or be neutral about risk in negotiation.
· The way an issue is framed influences how negotiators perceive risk and behave in relation to it.
o Prospect theory holds that people are more risk-averse when a decision problem is framed as a possible gain, and more risk-seeking when framed as a loss.
· The tendency to either seek or avoid risk may be based on the reference point against which offers and concessions are judged.
o The reference point is the number against which you may evaluate negotiation progress and success.
· Two things to keep in mind about the effect of frames on risk in negotiation are:
o negotiators are not usually indifferent to risk, but
o they should not necessarily trust their intuitions regarding it.
· When negotiators are risk-averse, they are more likely to accept any viable offer as they are afraid of losing.
o In contrast, risk-seeking negotiators are apt to wait for a better offer or for further concessions.
· This positive/negative framing process is important because the same offer can elicit markedly different courses of action depending on how it is framed in gain-loss terms.
o Remedies are the same for other cognitive biases – awareness, sufficient information, thorough analysis, and reality checks.
o Remedy may be difficult as frames are often tied to deeply held values and beliefs or to other anchors that are hard to detect.
E. Availability of Information
· Negotiators must be concerned with the potential bias caused by the availability of information or how easy information is to retrieve – that is, how easily it can be recalled and used to inform or evaluate a process or a decision.
o Information presented through a clear message, diagram, or formula will likely be believed more readily than the same information presented in a confusing or detailed format.
· The availability of information also affects negotiation through the use of established search patterns.
o If negotiators have a favorite way of collecting information or looking for key signals, they will use these patterns repeatedly and may overvalue the information that comes from them.
o Negotiators who do not plan properly run the risk of being overwhelmed by the availability bias and lose the benefits of thorough analysis.
o The remedy is clear: do not assume that the first information, however persuasive, is complete information or the best information.
F. The Winner’s Curse
· The winner’s curse is the tendency of negotiators, particularly in an auction setting, to settle quickly on an item and then subsequently feel discomfort about a negotiation win that comes too easily.
o The negotiator may suspect that the other party knows too much or has insight into an unseen advantage – thus, either “I could have done better” or “This must be a bad deal.”
· Recent research suggests that the winner’s curse stems, in part, from counterfactual thought processes that involve entertaining the possibility of “what might have been” if the offer hadn’t been accepted.
o The easier it is to imagine a better alternative to an agreement, the less satisfied the negotiator will be.
o Counterfactual thinking may also affect future behavior.
· The best remedy for the winner’s curse is to prevent it from occurring in the first place by doing advance work to avoid making an offer that is unexpectedly accepted.
G. Overconfidence
· Overconfidence is the tendency of negotiators to believe that their ability to be correct or accurate is greater than is actually true.
o Overconfidence has a double-edged effect:
§ It can solidify the degree to which negotiators support positions or options that are incorrect or inappropriate, and
§ It can lead negotiators to discount the worth or validity of the judgments of others, in effect shutting down other parties as sources of information, interests, and options necessary for a successful integrative negotiation.
· Overconfidence can lead to a particularly troublesome form of persistence: escalation of commitment.
o It can undermine the prospects for finding and exploiting integrative potential.
o Do not suppress confidence or optimism, but avoid overconfidence.
H. The Law of Small Numbers
· The law of small numbers refers to the tendency of people to draw conclusions from small sample sizes.
o In negotiation, this applies to the way negotiators learn and extrapolate from their own experience.
o This tendency often leads to a self-fulfilling prophecy – people who expect to be treated in a distributive manner will:
§ Be more likely to perceive the other party’s behaviors as distributive, and
§ Treat the other party in a more distributive manner.
§ The other party will likely respond in kind.
o Styles and strategies that worked in the past may not work in the future.
§ Box 6.3 summarizes some intriguing research insights into how time influences negotiation behavior.
· An example of the law of small numbers in action is the “hot hand” fallacy – the incorrect belief that a streak of events is due to momentum and will continue.
o Research examining the presence of hot-hand streaks in sports shows no statistical evidence of this phenomenon.
I. Self-Serving Biases
· People often explain another person’s behavior by making attributions, either to the person or the situation.
o In explaining another’s behavior, the tendency is to overestimate the causal role of personal or internal factors and underestimate the causal role of situational or external factors.
o This tendency is known as the fundamental attribution error.
o Perceptual biases are often exacerbated by the actor-observer effect, in which people tend to attribute their own behavior to situational factors but attribute others’ behaviors to personal factors.
· Research has documented the effects of self-serving biases on several aspects of the negotiation process. Here are the results of four relevant studies.
o Negotiators in different school districts chose comparison districts in a self-serving way – the districts that made theirs look most favorable.
o Negotiators believed they used more constructive tactics than their counterparts and that the strength of this self-serving bias increased with the strength of the conflict between the parties.
o People involved in a negotiation saw things in self-serving ways compared to individuals who were merely observing.
o Self-serving biases influence perceptions of fairness in negotiation – egocentric perceptions achieved lower profits and reached fewer agreements.
· Perceptual error of a self-serving nature may also involve distortion in the evaluation of information. Here are three examples.
o The false-consensus effect is a tendency to overestimate the degree of support and consensus that exists for your own position, opinions, or behaviors.
o The base-rate fallacy occurs when a person ignores statistical information about the likelihood that some event will occur and instead is swayed by other information that isn’t really relevant – such as isolated examples of recent or past experience.
o There is a tendency to assume our own personal beliefs or opinions are based on credible information, while opposing beliefs are based on misinformation – suggesting that though individuals desire judgment accuracy, the desire can often result in perceived accuracy rather than objective accuracy.
· Any of these self-serving biases can damage a negotiation effort.
J. Endowment Effect
· The endowment effect is the tendency to overvalue something you own or believe you possess.
o The most widely accepted explanation for why this occurs has to do with loss aversion – the owner frames the sale of an item as a loss and as a result assigns it higher value than a buyer does.
· In negotiation, the endowment effect can lead to inflated estimations of value that interfere with reaching a good deal.
o The endowment effect is seen as an inflated personal attachment to the status quo.
· A similar process occurs upon accepting an offer in a negotiation – where, once accepted, a proposal was liked more by negotiators than proposals they offered themselves.
o To reduce dissonance, negotiators add more subjective value to the outcomes just received.
K. Ignoring Others’ Cognitions
· Failure to consider others’ cognitions allows negotiators to simplify their thinking about otherwise complex processes.
o This usually leads to a more distributive strategy and causes a failure to recognize the contingent nature of both sides’ behaviors and responses.
o In contrast, when negotiators are able to consider things from the other party’s viewpoint – a cognitive capacity known as “perspective taking” – the risk of impasse is reduced and the chances of achieving integrative outcomes through logrolling are enhanced.
· The drive to ignore others’ cognitions is very deep-seated, and it can be avoided only if negotiators explicitly focus on putting in the effort needed to form an accurate understanding of the other party’s interests, goals, and perspectives.
L. Reactive Devaluation
· Reactive devaluation is the process of devaluing the other party’s concessions simply because the other party made them.
o Reactive devaluation leads negotiators to:
§ Minimize the magnitude of a concession made by a disliked other;
§ Reduce their willingness to respond with a concession of equal size; or
§ Seek even more from the other party once a concession has been made.
o Reactive devaluation may be minimized by
§ maintaining an objective view of the process,
§ assigning a colleague to do this task,
§ clarifying each side’s preferences on options and concessions before any are made, or
§ using a third party to mediate or filter concession-making processes.
IV. Managing Misperceptions and Cognitive Biases in Negotiation
· Misperceptions and cognitive biases typically arise out of conscious awareness as negotiators gather and process information.
o Box 6.4 presents a sizable inventory of the variety of decision traps that can occur.
o The result for negotiators can be overreliance on faulty assumptions and data, ultimately leading to deals that are suboptimal.
· The question of how best to manage perceptual and cognitive bias is a difficult one.
o The first level of managing such distortions is to be aware that they occur.
o Awareness may not be enough as research shows that simply telling people about misconceptions and cognitive biases does little to counteract their effects.
· Some of the biases we have discussed pertain to the framing of negotiations, such as the effects of positive (gain) and negative (loss) frames on how negotiators deal with risk.
o When frames are mismatched between negotiators, agreement can be difficult.
o Reframing is a potentially effective remedy.
§ Rather than perceiving a particular outcome as a loss, the negotiator might reframe it as an opportunity to gain.
§ Trying to perceive or understand the situation in a different way or from a different perspective.
o Because reframing requires negotiators to be flexible during the negotiation itself, they should anticipate—during planning—that multiple contingencies may arise during negotiations.
· Clearly, telling people about a perceptual or cognitive bias, or having them discuss things in a group setting, does not make the bias go away.
o For example, both problem definition and problem evaluation are important components of reducing fixed-pie bias.
o Careful discussion of the issues and preferences by both negotiators may reduce the effects of perceptual biases.
· Another avenue for overcoming cognitive biases involves the intervention of outside parties.
o When third parties are involved as mediators, negotiators are less susceptible to judgment biases and perceived the process as more value-creating and more fair.
· More research is needed to provide negotiators with advice about how to overcome the negative effects of misperception and cognitive biases in negotiation.
o Until then, be aware of the existence of these biases, understand their negative effects, and be prepared to discuss them when appropriate with your own team and counterparts.
IV. Mood, Emotion, and Negotiation
Research on negotiation has been dominated by views favoring rational, cognitive, economic analyses of the negotiation process.
o Negotiators are portrayed as rational beings who seem calculating, calm, and in control – overlooking the role played by emotions in the negotiation process.
The role of mood and emotion in negotiation has been the subject of an increasing body of theory and research during the last two decades.
o The distinction between mood and emotion is based on three characteristics:
§ Specificity
§ Intensity
§ Duration
· Mood states are more diffuse, less intense, and more enduring than emotion states, which tend to be more intense and directed at specific targets.
Below are selected research findings of the study of mood, emotion, and negotiation.
Negotiations Create Both Positive and Negative Emotions
· A cognitive assessment of a “good outcome” leads parties to feel happy and satisfied.
o Many positive emotions are classified under the single term happiness, but we tend to discriminate more precisely among negative emotions.
· Negative emotions can result from being turned off by the other party, feeling bad about the development of the negotiation process and the progress being made, or disliking the results.
o Some negative emotions may tend to be based in dejection, while others are based in agitation.
o Dejection-related emotions may lead negotiators to act aggressively, while agitation-related emotions may lead negotiators to try to retaliate or get out of the situation.
Positive Emotions Generally Have Positive Consequences for Negotiations.
· Positive feelings are more likely to lead the parties toward more integrative processes.
o Negotiators feeling positive emotions are more likely to be flexible in how they arrive at a solution and less likely to get caught up in escalating commitment.
· Positive feelings also create a positive attitude toward the other side.
o This increases flexibility and concession making and lessens hostility.
· Positive feelings promote persistence in addressing issues and concerns in the negotiation and achieve better outcomes.
· Positive feelings set the stage for successful subsequent negotiations.
Aspects of the Negotiation Process Can Lead to Positive Emotions
· Positive feelings result from fair procedures during negotiation.
· Positive feelings result from favorable social comparisons.
o This finding for so-called external social comparisons do not hold for internal social comparisons.
Negative Emotions Generally Have Negative Consequences for Negotiations
· Negative feelings may be based either in dejection or in agitation, one or both parties may feel the emotions, and the behavior of one may prompt the emotional reaction to the other.
· See Box 6.5 for some advice on how to deal with an opponent who brings negative emotion to the table.
o Negative emotions may lead parties to define the situation as competitive or distributive.
o Negative emotions may undermine a negotiator’s ability to analyze the situation accurately, which adversely affects individual outcomes.
o Negative emotions may lead parties to escalate the conflict.
§ When the mood is negative – more specifically, when both parties are dejected and frustrated and blame the other – conflict is more likely to become personal, the number of issues in the conflict may expand, and other parties may become drawn into the dispute.
o Negative emotions may lead parties to retaliate and may thwart integrative outcomes.
o Not all negative emotions have the same effect.
§ Anger may tend to escalate conflict and foster retaliation, but what about less “hot” negative emotions, such as worry, disappointment, guild, and regret?
§ Negotiators made smaller demands of worried or disappointed opponents, but fewer concessions to guilty or regretful opponents.
Aspects of the Negotiation Process Can Lead to Negative Emotions
· Negative emotions may result from a competitive mind-set.
o This may stem from the perception that when a negotiation is viewed as zero-sum, the other party’s gain means an equivalent loss for you.
· Negative emotions may result from impasse.
o People with more confidence in their negotiating ability were less likely to experience negative emotion in the wake of impasse.
o This is important because impasse is not necessarily a bad thing – the goal is achieving a good outcome, not merely reaching an agreement.
· Negative emotions may result merely from the prospect of beginning a negotiation.
o Doubts about your competence
o Concerns about the opponents’ attitudes or likely behaviors
o And “the inevitable uncertainty about what path negotiation will take
§ Anxiety is not all bad – it may spark creativity that can help produce constructive outcomes.
The Effects of Positive and Negative Emotion in Negotiation
· Positive feelings may have negative consequences.
o First, negotiators in a positive mood may be less likely to examine closely the other party’s arguments – and more susceptible to deceptive tactics.
o In addition, because negotiators with positive feelings are less focused on the arguments of the other party, they may achieve less-than-optimal outcomes.
o Finally, if positive feelings create strong positive expectations, parties who are not able to find an integrative agreement are likely to experience the defeat more strongly and perhaps treat the other party more harshly.
· Negative feelings may create positive outcomes.
o Anger and other negative emotions can serve as a danger signal that motivates both parties to confront the problem directly and search for a resolution.
· Anger may also signal a person is tough or ambition, and researchers have found that negotiators concede more often to an angry opponent than to a happy or unemotional partner.
· Anger does not necessarily induce the other party to give in – sometimes it provokes an angry or competitive response, potentially leading to an escalation of conflict.
o Research indicates it depends on the appropriateness of the anger.
o Anger is less likely to elicit concessions when the party on the receiving end of anger either
§ Has the opportunity to respond with deception – such as misrepresent their own interests.
§ Or has little at stake, meaning little to fear from having the angry opponent say no to an offer.
· There is also evidence that negative emotion can benefit the negotiator who experiences the emotion.
o Negotiators who were relatively powerful (by virtue of their BATNA) benefited from being angry – they were more focused and assertive and, as a result, claimed more value in the deal.
o For low-power negotiators, being angry made them less focused, leading to poorer outcomes.
Emotions Can Be Used Strategically as Negotiation Gambits
· Given the power that emotions may have in swaying the other side toward one’s own point of view, emotions may also be used strategically and manipulatively as influence tactics within negotiation.
o For example, negotiators may intentionally manipulate emotion in order to get the other side to adopt certain beliefs or take certain actions.
o Keep in mind that there are ethical implications to the use of contrived emotion as a vehicle for deception, just as for any other form of deception.
· One series of experiments found that negotiators who were coached to implement a positive emotional tone were more likely to reach agreements that incorporated a future business relationship compared to those with a negative emotional strategy.
o Another study found that a negotiator who displays sadness can extract concessions and claim value – but only for negotiators with low power.
· Another study found that negotiators track the emotions of the other party and adjust their strategy accordingly.
o When subjects negotiated with an angry party, they tended to make lower demands and smaller concessions when the other party’s anger seemed to threaten the negotiation outcome.
o They also make smaller demands of negotiators who expressed anger in a previous negotiation, suggesting the effects spill over from one encounter to the next.
· Negotiators may also engage in the regulation or management of the emotions of the other party.
o Effective negotiators are able to adjust their messages to adapt to what they perceive as the other party’s emotional state – a process labeled “emotional tuning.”
o Some psychologists regard the ability to perceive and regulate emotions as a stable individual difference that has come to be known as emotional intelligence.
· In summary, emotions are critical features of negotiation encounters that supplement the classical view that negotiation is primarily a rational process of decision making under risk and uncertainty.
o The role of emotions in negotiation is complex because, as Box 6.6 highlights, human emotions themselves are dynamic and complicated.
Chapter Summary
In this chapter we have taken a multifaceted look at the role of perception, cognition, and emotion in negotiation. The first portion of the chapter presented a brief overview of the perceptual process and discussed four types of perceptual distortions: stereotyping, halo effects, selective perception, and projection. We then turned to a discussion of how framing influences perceptions in negotiation and how reframing and issue development both change negotiator perceptions during negotiations.
The chapter then reviewed the research findings from one of the most important recent areas of inquiry in negotiation, that of cognitive biases in negotiation. The effects of 12 different cognitive biases were discussed: irrational escalation of commitment, mythical fixed-pie beliefs, anchoring and adjustment, framing, availability of information, the winner’s curse, overconfidence, the law of small numbers, self-serving biases, endowment effects, ignoring others’ cognitions, and reactive devaluation. This was followed by consideration of ways to manage misperception and cognitive biases in negotiation, an area that has received relatively little research attention. In a final section of the chapter we considered mood and emotion in negotiation, which provides an important alternative to cognitive and perceptual processes for understanding negotiation behavior.
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