Chapter 1: The nature of negotiation
People negotiate all the time. It is something that everyone does.
Negotiations occur for several reasons:
(1) to agree on how to share or divide a limited resource, such as land, property, or time;
(2) to create something new that neither party could do on his or her own; or
(3) to resolve a problem or dispute between the parties.
People fail to negotiate because:
a) they do not recognize that they are in a negotiation situation; or
b) because they negotiate poorly because of misunderstanding the process or not having
good negotiation skills.
Negotiation: a form of decision making in which two or more parties talk with one another in
an effort to resolve their opposing interests:
➔ Bargaining → competitive, win-lose situations
➔ Negotiation → win-win situation, parties are trying to find a mutually acceptable
solution
People assume that the heart of negotiation is the give-and-take process used to reach an
agreement. This is extremely important, but most of the important factors that shape a
negotiation-result occur before the parties start to negotiate, or shape the context around the
negotiation.
The insight in negotiation are drawn from three sources:
1) our experience as negotiators ourselves; and
2) the rich number of negotiations that occur every day; media that report on actual
negotiations every day; and
3) the wealth of social science research that has been conducted on numerous aspects
of negotiation (from several different perspectives).
CHARACTERISTICS OF A NEGOTIATION SITUATION
The basic characteristics of negotiation situations are:
a) There are two or more parties – between individuals, within groups and between
groups. You need something from the other.
b) There is a conflict of needs and desires between two or more parties – what one
wants is not necessarily what the other one wants.
c) The parties negotiate by choice – they think they can get a better deal than simply
accepting.
d) A give-and-take process is expected – ultimately both sides will modify their
opening position in order to reach an agreement.
e) The parties prefer to negotiate and search for agreement rather than fight openly,
have one side dominate and the other capitulate, permanently break off contact, take
their dispute to a higher authority (third party) to resolve it.
f) You need to manage the tangibles (e.g. money or terms of agreement) as well as
the
> intangibles: underlying psychological motivations that may (in)directly influence
the parties during a negotiation
- e.g. emotions; or
needs to win/look good/appear fair; or
- maintain a good relationship/defend; or
- important principal.
, > for successful negotiation, you need to understand the intangibles. Our judgment of
what is fair, right or appropriate for the tangibles is affected
> When win overwhelms the logic: Intangibles can become a major problem in
negotiation when the urge to win overwhelms logic.
> Several key factors are identified: rivalry;
- time pressure; the spotlight – if audiences are watching/evaluating
- the presence of attorneys – lawyers are more oriented toward winning and losing.
INTERDEPENDENCE
Interdependence: people depend on each other for achieving their goals. There can be
different goals. The relationship between people and groups lead them to the need to
negotiate;
> The interdependence of goals and the structure of the situation shapes the process and
outcomes (the structure of interdependence);
a) Competitive situation, zero-sum or distributive situation = there is a negative
correlation between their goal attainments
b) Mutual-gains or non-zero-sum or integrative situation = there is a positive correlation
between goals
> Alternatives shape interdependence. Whether you should or should not agree on
something in a negotiation depends entirely upon the attractiveness to you of the best
available alternative: BATNA: Best Alternative To a Negotiated Agreement – The more
alternatives you have, the better the negotiation;
> The BATNA can be one of the three characterized relationships between parties:
- Interdependent: parties are characterized by interlocking goals - the parties need
each other in order to accomplish their objectives and hence have the potential to
influence each other; but they can also be:
- Dependent: parties must rely on others for what they need; or
- Independent: parties are able to meet their own needs without assistance of others
dependent (parties must rely on others for what they need),
> Negotiators need to understand their own and the other party’s BATNA.
MUTUAL ADJUSTMENT
> When parties are interdependent, they have to find a way to resolve their differences;
> 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;
> The effective negotiator needs to understand how people will adjust and readjust based on
one’s own moves and the others’ responses.
> The more information one has about the other person, the better. However, too much
knowledge only confuses (e.g. als je weet wat voor salaris iedereen krijgt, maakt het voor jou
lastig om jouw punt te bepalen)
,> Both parties have defined outer limits for acceptable settlement, but within the range
probably no one has a preferred number
Making concessions:
1) Negotiations start with a statement of opening positions;
2) Each party hopes the other side will just say ‘yes’, but key element of negotiation is
give-and-take so this doesn’t happen often;
3) They will defend their own proposals and critique other proposals;
4) Each party’s rejoinder (= reply) usually suggests alterations to the other party’s
proposal and perhaps changes to their own position THEN a concession is made
5) When a concession is made, the bargaining rage is further constrained (= beperkt)
Dus toegeven/opgeven/ingeven, it constrains the bargaining range (the difference between
the preferred acceptable settlements)
> There are two dilemmas when concessions signals have to be used and read:
1) Dilemma of honesty: how much truth to tell the other party: Telling everything will give
the other person advantages (I), not telling anything will lead to a stalemate (II) (= a situation
in which neither side in an argument or contest can win or in which no progress is possible).
2) Dilemma of trust: how much negotiators believe what the other parties tell them:
Believing everything will give the other person advantages (I), believing nothing will not lead
to an agreement (II);
> Trust depends on past experiences and understanding the pressure of the other party, two
efforts in negotiation help to create such trust and beliefs:
1) Based on perception of outcome: this can be shaped by managing the receiver's views
of the proposed result (e.g. a generous bonus if you want someone to accept the
salary-offer).
2) Based on perception of process: creating trustworthiness and credibility of the process
can be enhanced by conveying images that signal fairness and reciprocity in proposals and
concessions: e.g. when people make a concession, they trust the party and the process far
more if a concession is returned (give-and-take)
> Satisfaction with negotiation is as much determined by the process through which an
agreement is reached as with the actual outcome obtained
VALUE CLAIMING AND VALUE CREATION: The structure of interdependence shapes the
strategies and tactics that negotiators employ
a) Distributive bargaining: employing win-lose strategies (zero-sum): claim value – the
object is to gain the largest piece of resource.
b) On the opposite, integrative negotiation = finding solutions so both parties can do
well: create value – find a way to meet both objectives.
> Most actual negotiations are a combination of claiming and creating value
processes.
> The implications for this are significant:
1) Negotiators must be able to recognize situations that require more of one approach than
the other:
➔ Distributive bargaining is most appropriate when: (I) resources are limited, (II) when
the other is likely to be competitive, (III) when there is no likelihood of future
interaction with the other party. Otherwise integrative strategy;
, 2) Negotiators must be versatile in their comfort and use of both major strategic approaches,
but if necessary negotiators need to be able to use both approaches deliberate;
3. Negotiator perceptions of situations tend to be biased toward seeing problems as more
distributive / competitive than they really are. This is the predominant bias: seeing
interdependent situations as more distributive or competitive then they really are.
➔ If you overuse distributive strategies fir solving the problem, a consequence is that
the negotiators often leave unclaimed value at the end of their negotiations because
they failed to recognize opportunities of value;
➔ This suggests that many negotiations yield suboptimal outcomes;
Satisfaction with negotiation is as much determined by the process through which an
agreement is reached as with the actual outcome obtained. (give-and-take pattern and
honesty and trust)
Value can be created in multiple ways, in the heart of the process lies exploiting the
differences between negotiators: key differences among negotiators:
a) There will be differences in interests;
b) in judgments about the future
c) in risk tolerance
d) in time preference
> These differences play a role in the negotiation process: value is often created by
common interest, but differences can also serve as the basis for creating value
> These differences can be seen as insurmountable (= to great to overcome) and
form a barrier to reaching an agreement. So negotiators must also learn to manage
conflict, in order to manage their differences while searching for maximizing their joint
venture!
CONFLICT
Conflict: a sharp disagreement or opposition and includes the perceived divergence of
interest, or a belief that the parties' current aspirations cannot be achieved simultaneously.
> A potential consequence of interdependent relationships is conflict;
> It can result from divergent needs, misperceptions or misunderstandings;
> Conflicts can occur when both parties want to achieve the same (I) or very different
outcomes (II);
> Negotiations can play an important role in resolving it effectively;
Four levels of conflict:
1. Intrapersonal or intrapsychic: within an individual (e.g. we want candy bars, but know it is
fattening)
2. Interpersonal: between individuals (e.g. roommates, neighbors)
3. Intragroup: within a group (e.g. families, work teams, tribes)
4. Intergroup: between groups (e.g. ethnic groups, organizations)
Functions and dysfunctions of conflict: Most people initially believe that conflict is bad or
dysfunctional;
