carrell labor relations 9e ppt 06 (1)

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CHAPTER 6

Negotiation Models, Strategies, and Tactics

PART III: Cost of Labor Contracts

BMGT616: Seminar in Labor Relations

Prof. Paul Shie, Ph.D.

University of Kansas

University of Northern Virginia

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Chapter OutlineChapter Outline

Negotiation Sessions: “At the Table” Critical Elements in Negotiations Bargaining Strategies Distributive Bargaining Interest-Based Bargaining Reaching Agreement

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Tips from the ExpertsTips from the Experts

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Critical Elements in NegotiationsCritical Elements in Negotiations

Information BANTA: Best Alternative To a Negotiated Agreement

“Walk-away value”

WATNA: Worst Alternative To a Negotiated Agreement Realistic assessment of not reaching agreement

♦ Time (Pareto’s Law) “80/20 rule”

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Critical Elements in Negotiations (cont.)Critical Elements in Negotiations (cont.)

♦ Time (cont.)

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Bargaining StrategiesBargaining Strategies

Distributive Bargaining Target Point Resistance Point Initial Offer Settlement Range Settlement Point

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Opening Offers: Anchors Anchor - An opening offer, often a number, and not

necessarily a realistic number, that can influence the parties’ assessment of the zone of potential agreement in the negotiation.

Three types of anchors1. Facts: Statement of what is presented to be a fact: Example: “Our offer is based on this list of other industry contracts settled in this

region; the lowest wage increase in the past year was 3.5 percent.”

2. Extreme offer: Example: “We believe our officers are special public servants who put their lives on the line every day and thus deserve a 10 percent wage increase this year.”

3. Precedent: Example: “In the past 30 years, management has always, every time, agreed to retroactivity as a ground rule; we expect you to honor this practice.”

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Negotiation Norms Views or attitudes that regulate behavior and act as an informal

control in a negotiation, such as a relational norm that recognizes the relationship between the parties, a fairness norm that seeks consistency or equality, a reciprocity norm that reacts in kind to an action, and a good-faith norm that values integrity, honesty, and willingness to compromise.

Types of Negotiation Norms Relational Fairness Reciprocity Good-faith bargaining

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Framing Positions Presenting an issue to the other side in a negotiation

in a way that is convincing and causes the other side to “see” the proposal in a different light.

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Reframe Offers Negotiators should, whenever possible, not simply

reject an opponent’s offer, but instead reframe it or literally “change the frame around the picture” so it satisfies the interests of both parties.

Ask Why Ask Why Not Ask What If Ask for Advice

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

FIGURE 6-8 Questions to Advance NegotiationsSOURCE: Adapted from: Linda Putnam, “Are You Asking the Right Questions?” Negotiation 2, Vol. no. 3 (2005), pp. 7–9. Used by permission

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Reframe Personal Attacks Recognize a personal attack for what it usually is Reframe their attack on you as an attack on the

problem or issues at hand Respond with silence or a question

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Interest-Based Bargaining A negotiation method described as a “win-win”

situation, in which resources are viewed as expandable and the parties attempt to both create as much value as possible for both sides and claim as much value as possible for their own interests.

Interest-based bargaining strives to achieve 2 goals To create as much value as possible for both sides To claim as much value as possible for their own interests

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Interest-Based Versus Distributive Bargaining

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Position versus Interests The specific demand a party makes at the bargaining

table (position) as compared with the party’s underlying needs or concerns (interest).

Separate People from Issues Avoid emotional outbursts or anger Don’t discuss an issue on a personal basis Try to see the situation from the other side’s

perspective and recognize their goals

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Positions Versus Interests

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Mutual Gains Options Interest-Based Bargaining Principles

Sharing of information Willingness to forego power or leverage Brainstorming to create options Focus on issues, not personalities Past issues are forgotten Interests, not positions Both parties commit to IBB

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

IBB Steps

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Categorization Method STEP 1: Exchange information and identify all of the issues to

be negotiated. Each side explains their interests and concerns on the issues.

STEP 2: Develop a common list of all issues that were discussed by either side during the first step and seek to classify each issue as (1) compatible—similar interests; (2) exchange—approximately equal value that may be traded; (3) distributive—those issues that are not compatible, cannot be traded, and therefore whose value must be distributed.

STEP 3: Reaching final agreement on each of the compatible issues and removing them from further negotiation.

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Categorization Method (cont.) STEP 4: Trading, or exchanging issues of

approximately equal value; in some cases, several issues may be included in a single exchange.

STEP 5: Resolution of any remaining issue(s), which often is accomplished through the distributive bargaining on each separate issue.

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)29

Economic Matrix

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Reaching Agreement Point of Crisis (if agreement cannot be reached)

Neutral third party using mediation or arbitration Job actions such as strikes or lockouts “The crunch” - a deadline that will cause no decision to

become final decision

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Bargaining Strategies (cont.)Bargaining Strategies (cont.)

Closing Stage Silence The Walkaway Reciprocate

Tentative Agreement Communication Commitment Contract

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