strategy and tactics of integrative negotiation[sav lecture]

TUNGHAI UNIVERSITYDepartment of International Business - Taichung

Strategy and Tactics of Integrative Negotiation

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• Last Session(s):– Win-Loose, Zero-Sum, Distributive.– For some, they were “Loose-Loose”.

• What were your take-away’s:– A-Team Items?– Personal Journal?

• This Session:– Win-Win, Mutual Gains & Their Differences.

Recall…

1. Win: – Trust, throw X’s & Y’s– Reputation, Greed vs. Cooperation

2. Negotiate with your Professor:– Perspective (other sides shoes), hierarchy & power

3. Baker-Andersen:– First Offer, Information, BATNA– Winner’s curse: “leave money on the table.”

Experiential Learning from the three recent Simulations

Interdependence (Ch. 1)

In negotiation, parties need (depend) each other to achieve their preferred outcomes or objectives …

• This mutual dependency is called interdependence

• Interdependent goals are an important aspect of negotiation

• Win-lose: I win, you lose – Baker-Andersen.• Win-win: Opportunities for both parties to gain

Interdependence

Interdependent parties are characterized by interlocking goals– Having interdependent goals does not

mean that everyone wants or needs exactly the same thing

– A mix of convergent and conflicting goals characterizes many interdependent relationships

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Value Claiming and Value Creation

Negotiator’s value differences include:– Differences in interests– Differences in judgments about the future

(perceptions)– Differences in risk tolerance– Differences in time preferences

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Shows that if one side achieves his goal, it does not preclude the other from achieving their goals.

• Most people think win-win negotiation means one or more of the following:

• Compromise -Even split• Building a relationship -Satisfaction

• Win-win really means that all creative opportunities are exploited and no resources are left on the table (“integrative negotiation”, aka hard work.)

WHAT IS WIN-WIN NEGOTIATION?

Win-Win Negotiation

What it is typically not…

• Compromise• Even Split• Satisfaction• Building a relationship

What it typically is…

• Does it involve more than one issue?

• Can other Issues be brought in?

• Can side deals be made?• Do parties have different

preferences across specific issues?

These lower the total value for both sides…

Pyramid Model of Integrative Agreements

• Level 3: Pareto-optimal

• Level 2: Settlement

demonstrably superior to

other feasible settlements

• Level 1: Mutual settlement

(positive bargaining zone)

< 25%

Claiming and Creating Value

“Expanding the Pie” Strategies

Strategies That Do Not Work…

• Commitment to reaching a win-win deal

• Compromise• Focusing on a long-term

relationship• Adopting a “cooperative

orientation”• Taking extra time to

negotiate

Why?

• often parties have an incorrect idea about what win-win is

• pertains to slicing the pie, not expanding the pie

• establishing a long-term relationship does not translate directly into win-win

• keeps parties from focusing on the right information at the right time

“Expanding the Pie” Strategies

Strategies That Do Not Work…

• Commitment to reaching a win-win deal

• Compromise• Focusing on a long-term

relationship• Adopting a “cooperative

orientation”• Taking extra time to

negotiate

Strategies That Work…

• Perspective-taking (other shoes)

• Ask questions about interests and priorities

• Provide information about your interests and priorities

• Unbundle the issues• Make package deals, not

single-issue offers

Overview of the Integrative Negotiation Process

1. Create a free flow of information– Exchange enough information to allow creativity

2. Understand the other negotiator’s real needs and objectives– Our needs are prioritized/valued differently

3. Emphasize the commonalties between the parties and minimize the differences– Keep main goal in mind…prioritize each issue

4. Search for solutions that meet the goals and objectives of both sides– Measure success by total goal’s satisfied, not only yours.

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…

Key Steps in the Integrative Negotiation Process

1. Identify and define the problem

2. Understand the problem fully

3. Generate alternative solutions

4. Evaluate and select among alternatives

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1. Identify and Define the Problem

• Define the problem in a way that is mutually acceptable to both sides

• State the problem with an eye toward practicality and comprehensiveness

• State the problem as a goal and identify the obstacles in attaining this goal

• Depersonalize the problem• Separate the problem definition from the search

for solutions – avoid a rush towards a solution.

2. Understand the Problem Fully Identify Interests and Needs

• Interests: the underlying concerns, needs, desires, or fears that motivate a negotiator – Substantive interests = key issues, financial

– Process interests = the way the dispute is settled

– Relationship interests = value of their relationship

– Interests in principle= doing what is fair, right, acceptable, ethical may be shared by the parties

Interests

•Taxes•Payment Terms•Specifications•Transportation•Delivery Date•Quantity•Process•Risk/Contract

3. Generate Alternative Solutions

• Invent options by redefining the problem set:– Expand the pie; more uses for more resources ($, HR, Land)

– Logroll; add more issues, trade concessions– Cut the costs for compliance of the other party

• Generate options to the problem as a given:– Brainstorming– Electronic brainstorming– Surveys

Re-Forming Questions for Win-Win Options

How can both parties get what they want?

What issues are higher and lower priority for me? Them?

What is inexpensive for me to give and valuable for them as non-specific compensation (benefits)

What can I do to minimize the other’s risks/costs?

What are the other negotiators real interests and needs? Mine?

Match your Higher Priorities against their lower priorities: find win-win.

4. Evaluation and Selection of Alternatives

• Narrow the range of solution options– Focus on the positive options…

• Evaluate solutions on: – Quality …how good they are.– Objective standards…– Acceptability…How acceptable.

• Agree to evaluation criteria in advance

• Be willing to justify personal preferences

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Evaluation and Selection of Alternatives

• Take time to “cool off”– Use patience and focus on positive options

• Explore different ways to logroll– Exploit differences in expectations and risk/ time

preferences– Keep decisions tentative and conditional until a

final proposal is complete– Minimize formality, record keeping until final

agreements are closed

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Summary: Successful Integrative Negotiation Factors

1. Some common objective or goal

2. Faith in one’s own problem-solving ability

3. A belief in the validity of one’s own position and the other’s perspective

4. The motivation and commitment to work together

5. Trust

6. Clear and accurate communication

7. An understanding of the dynamics of integrative negotiation

Why Integrative Negotiation Is Difficult to Achieve

• The history of the relationship between the parties– If contentious in past, it is

difficult not to look at negotiations as win-lose

• The belief that an issue can only be resolved distributively– Negotiators are biased to

avoid behaviors necessary for integrative negotiation

• The mixed-motive nature of most negotiating situations– Purely integrative or purely

distributive situations are rare

– The conflict over the distributive issues tends to drive out cooperation, trust needed for finding integrative solutions

Comments/Feedback?

Adapted from “Negotiation” Text (Lewicki 5e) and, Heart and Mind of the Negotiator (Thompson 4e)

NEGOTIATION STYLE SELF-ASSESSMENT

APPENDIX A

• Competing Style: Q1, 7, 13, 17, 22: ____

• Avoiding Style: Q2, 10, 5, 18, 25: ____• Collaborating Style: Q4, 8, 12, 19, 21:

____• Accommodating: Q3, 9, 15, 20, 24:

____• Compromising Style: Q6, 11, 14, 16, 23 :____

Assertiveness: (COMP+COLL)-(AVOD+ACCOM): ___

Cooperativeness: (COLL+ACCOM)-(COMP+AVOID): ____

Self-Assessment Calculations

The Dual Concerns Model1-36

KEY TERMSAPPENDIX B

• contingency contracts Agreements wherein negotiators make bets based on their differences in beliefs, forecasts, risk profiles, and interests.

•  • empathy Ability to emotionally connect with another person.•  • false conflict or illusory conflict A situation in which conflict does not exist between people, yet they

erroneously perceive the presence of conflict.•  • fixed-pie perception The belief that the counterparty’s interests are directly and completely opposed to

one’s own.•  • illusion of transparency The tendency of negotiators to believe that they are revealing more information

than they actually are; i.e., they believe that others have access to information about them when they in fact do not.

•  • inductive reasoning The process by which a negotiator unilaterally deduces what the counterparty’s true

interests are and where the joint gains are by listening to their responses in negotiation.•  • integrative negotiation A process by which negotiators seek to expand the amount of available

resources.•  • issue mix The union of both parties’ issue sets.•  • logrolling The strategy of trading off in a negotiation so as to capitalize on different strengths of

preference.

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• lose-lose effect The tendency for negotiators to settle for outcomes that both prefer less than some other readily available outcome.

•  • multiple offers of equivalent value simultaneously A strategy that involves

simultaneously presenting the counterparty with two or more proposals of equal value to oneself.

•  • pareto-optimal frontier A situation in which no other feasible agreement exists that would

improve one party’s outcome while simultaneously not hurting the counterparty’s outcome.•  • perspective taking A cognitive ability to consider the world from another’s viewpoint.•  • postsettlement settlements Strategies in which negotiators reach a binding settlement,

but agree to explore other options with the goal of finding another that both prefer more than the current one; if one is not found, the current settlement is imposed.

•  • premature concessions Making concessions on issues before they are even requested.•  • presettlement settlements (PreSS) Formal, partial settlements that occur in advance of

the parties’ undertaking full-scale negotiations, designed to be replaced by a long-term, formal agreement.

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