Negotiation

CHAPTER 7
“You often get not what you deserve, but what you
negotiate.”
John Mariotti
 What Is Negotiation and Why Is It
Important?

 Negotiation is a process in which two or more people or groups share their concerns and
interests to reach an agreement of mutual benefit.
 It occurs when all parties have both shared interests (meaning they’re committed to a
resolution) and opposed interests (meaning they don’t agree on everything) on reaching a
shared agreement.
 Sometimes we use the terms bargaining and negotiating interchangeably, although
bargaining is an informal term and negotiating with a more formal process in which
parties attempt to find a mutually agreeable solution to a conflict situation.
Why Do We Negotiate?

 We negotiate when what one party wants is not necessarily what the other party wants.
The conflict of interests may be clear and simple.
 Complex negotiation is a fact of life for anyone in business. Managers ensure work gets
done on time and within a budget.
 Another factor driving the need for negotiation skills in business is the increased use of
teams in the workplace.
 Global diversity is another factor motivating the need for acquiring skills in negotiation.
Benefits of Honing Negotiation Skills

 Increase your salary, profits, and marketability.

 Save time, money, and grief, while ensuring needs are met.
 Improve relationships.
 Reduce the number and severity of conflicts, thereby reducing stress.
 Integrative and Distributive Bargaining
Strategies

 Once we decide to negotiate, our approach to negotiation or bargaining will generally fall
into one of two categories or strategies: integrative (“win–win”) or distributive (“win–
lose”).
 Negotiators use an integrative bargaining strategy when they believe that a win–win
situation exists and can be reached.
 Integrative bargaining only works when both parties are committed to preserving the
relationship that exists between them. Integrative bargaining requires a great deal of
creativity, problem-solving ability, and time, as well as a set of ultimate goals on which
both parties can agree.
 Integrative and Distributive Bargaining
Strategies

 A distributive bargaining strategy is based on an attempt to divide up a fixed “pie” or

amount of resources, resulting in a win–lose situation.
 Negotiators taking a distributive approach typically take an adversarial or competitive
posture to dividing a fixed amount of resources. One improves its lot at the expense of
the other.
 Generally, one or two fixed solutions are presented and a decision or choice is expected
almost immediately, with possibly some consequence if a choice is not made soon.
 Five Stages of Negotiating

 (1) preparation and planning,

 (2) defining ground rules,
 (3) clarifying and justifying your case,
 (4) bargaining and problem solving,
 (5) closure and implementation
Five Stages of Negotiating
 Strategies for Negotiating Effectively

 Scripting
 Agenda Setting
 Anchoring
 Questioning
 Summarizing
 Managing
 Additional Tips for Effective Negotiating

 Look forward, not backward

 Separate people from problems.
 Adopt a win–win attitude.
 Respond, don’t react
 Use a third party
 Emotions and Defensiveness
in Negotiation

 Emotions are at the core of conflict interactions; they might hinder negotiators from
behaving rationally.
 Research demonstrates that negative emotions increase competitiveness, while positive
emotions increase cooperation in negotiation.
 Defensiveness is an emotion that is particularly associated with conflict situations and
leads us to use protective strategies when negotiating.
 When we are anxious, fearful, or feel threatened, in the same way as in situations of
danger, defensive behavior is automatically triggered
 Integrity and Ethics in Negotiation

 Why do people intentionally lie or deceive in negotiations? Two reasons seem especially
important:
 ■ Expected norms.
 Pressure from management or others.
 despite your best efforts in preparing, you might face another party’s use of unethical
tactics. These suggestions can help you deal with such behavior:
 ■ Ask direct questions to reveal the truth or missing information
 Inform the other party about the tactic being used.
 Request a different party with whom to continue negotiations
 End the negotiations immediately
 Special Situations in Negotiations

 Third-party Negotiations
 A mediator: neutral third party who has no stake in the outcome of the agreement
 An arbitrator: neutral third party who has the legal power to bind both parties to an
agreement determined by the arbitrator.
 A conciliator: is a trusted third party whose role is to ensure that a steady flow of
accurate information exists between the negotiating parties.
 A consultant: is a neutral third party who teaches and advises the negotiating parties on
skills and techniques of negotiation.
 Multiparty and Team based
Negotiations

 One type of multiparty negotiation involves three or more “sides” represented by one or
more individuals.
 Another type of multiparty negotiation is the team-based negotiation, where each side is
represented by at least two individuals who work together as a team to achieve the goals
and interests within a negotiation
 Virtual Negotiations

 1. Try to meet face to face at least once before or early in the negotiation.
 2. Be explicit about the process or procedure to be followed in the negotiation.
 3. Ensure that everyone is introduced and his or her roles are clarified.
 4. Pick the communication channel most appropriate for the goals of both sides.
 5. Don’t use computer jargon, acronyms, or emoticons that may not be universally understood.
 6. Ensure that everyone has a turn and speak up if someone is being left out.
 7. Check assumptions and ask questions about what is and isn’t said.
 8. In an email or chat negotiation, what’s discussed is retained in written form. Remember not to make
promises you don’t intend to or can’t keep.
 9. Where nonverbal communication is limited, the temptation to engage in unethical behavior may
increase. Be wary of this.
 10. As with any new tool, your comfort and ability using communications technology may be limited at
first. Realize this, and allow yourself more time (and patience) with the process and your role in it.