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50 Practical Negotiation Tactics

50 Practical Negotiation Tactics

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Published by: Rag17 on Mar 11, 2012
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Mediation and arbitration are two well-known ways of resolving sticky disputes. Both

involve the use of third parties who are objective. In mediation, which is generally vol-

untary, the mediator works with both sides to resolve certain issues but has no author-

ity to make binding decisions. In arbitration, the arbitrator is given the authority to

make the parties comply with the final and binding decision. In most arbitrations,

both sides have agreed in writing to accept the arbitrator’s decision. In final offer arbi-

tration, each party submits their final offer on each unresolved issue (usually in writ-

ing) and the arbitrator chooses one as the final settlement as it has been submitted (no

changes or compromises). Each party wants their offer chosen, so they generally give

up some ground and try to make the offer appear as fair and reasonable as possible.

Example 1

Jenny and Lynne are sisters. Jenny has an antique Singer sewing machine, which

she has kept in a barn for over ten years. One day Lynne dropped by for a visit

and the discussion turned to the old Singer. Lynne told Jenny that she and her

husband Gary have restored two other Singers, and would be able to restore hers

as well. Jenny told Lynne she could take the old Singer that she has no inter-

est in (and doubts that it is worth restoring). Six months later, Lynne and Gary

bring the restored Singer to Jenny’s house. They inform her that they put the

machine on e-Bay and have an offer of $1,000. Jenny told them to sell it. Lynne

responded that this was their intention, but they wanted to give Jenny $500 for

her “share” of the machine. The following discussion occurs:

Jenny: The old machine wasn’t worth $50 when you took it. Keep the $1,000.

Lynne: No. We have a few dollars invested in parts and we had fun working on

it. Let’s split the money.

Jenny: No, I won’t take it. I offered it to you for nothing. That was the deal.

Lynne: No! I suggest that we each write down our position and let Dad choose

one of the two as the final decision. But he isn’t allowed to try to find a

“middle ground”—just to choose one position or the other.

Reaching Agreement


Jenny: Okay. I’ll buy that.

(One week later)

Dad: I think Jenny’s position is the most reasonable. At best, the old machine

was only worth $50 when Lynne hauled it away. Any increase in value

was due to the work of Gary and Lynne. They should get the other $950.


Jenny’s final position was that she receive $50—the maximum possible value of

an old “junker.” Lynne proposed a 50-50 split. Their father found Jenny’s position

to be the most reasonable; he did not need to “haggle” with them, since he could

only choose one offer.

Example 2


Well, Tina, after six weeks of negotiating, we are down to only three

unresolved items.


Yes, but we’ve made no movement on any of them since we started.

I can’t see any way to reach an agreement.


I know. My troops are getting restless, so I am invoking the final-

offer arbitration ground rule we have in place.


Good. Then we both submit our final offers to Judge Ryan within 48

hours, and meet back here in 72 hours—3:00 p.m. on Friday.



(Friday at 3:00 p.m.)

Judge Ryan: Here is my written, binding decision on the three items. As a brief

explanation, first on the health insurance co-pay, I have chosen

management’s offer to keep it as it is under the current contract.

The union’s position could have run into millions of dollars, based


50 Practical Negotiation Tactics

on last year’s data, and an item that large should have been negoti-

ated at the table. Second, on the clothing allowance, I have chosen

the union’s final offer. It will only cost $120,000—less than 1 per-

cent of the total package. No increase has been given for six years.

Finally, on the merit pool distribution method issue, I have chosen

management’s offer because the union did not justify why the past

practice should be changed, nor why their method was superior.


Well, I’m not happy with your decisions, but we agreed to this pro-

cess. Now let’s get a signed contract.


Ralph, I’m sure you realize that we could have taken six more weeks

to reach the same point. At least we both saved time, money, and



The final-offer arbitration process enabled the parties to gain a fast, reasonable

resolution to their last three unresolved issues, and peacefully finalize a contract

that contained several important gains for both sides.

Reaching Agreement


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