McGraw-Hill/IrwinCopyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

CHAPTER ONEThe Nature of Negotiation

IntroductionNegotiation is something that everyone does, almost daily1-*

NegotiationsNegotiations occur for several reasons: To agree on how to share or divide a limited resourceTo create something new that neither party could attain on his or her ownTo resolve a problem or dispute between the parties

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Bargaining vs. NegotiationBargaining: describes the competitive, win-lose situationNegotiation: refers to win-win situations such as those that occur when parties try to find a mutually acceptable solution to a complex conflict

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Three Important Themes The definition of negotiation and the basic characteristics of negotiation situationsInterdependence, the relationship between people and groups that most often leads them to negotiateUnderstanding the dynamics of conflict and conflict management processes which serve as a backdrop for different ways that people approach and manage negotiations1-*

Characteristics of aNegotiation SituationThere are two or more partiesThere is a conflict of needs and desires between two or more partiesParties negotiate because they think they can get a better deal than by simply accepting what the other side offers themParties expect a give-and-take process

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Characteristics of aNegotiation SituationParties search for agreement rather than:Fight openlyCapitulate Break off contact permanentlyTake their dispute to a third partySuccessful negotiation involves:Management of tangibles (e.g., the price or the terms of agreement)Resolution of intangibles (the underlying psychological motivations) such as winning, losing, saving face

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InterdependenceIn negotiation, parties need each other to achieve their preferred outcomes or objectives This mutual dependency is called interdependenceInterdependent goals are an important aspect of negotiationWin-lose: I win, you loseWin-win: Opportunities for both parties to gain

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InterdependenceInterdependent parties are characterized by interlocking goalsHaving interdependent goals does not mean that everyone wants or needs exactly the same thingA mix of convergent and conflicting goals characterizes many interdependent relationships

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Types of InterdependenceAffect OutcomesInterdependence and the structure of the situation shape processes and outcomesZero-sum or distributive one winnerNon-zero-sum or integrative mutual gains situation

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Alternatives Shape InterdependenceEvaluating interdependence depends heavily on the alternatives to working togetherThe desirability to work together is better for outcomesBest available alternative: BATNA (acronym for Best Alternative to a Negotiated Agreement)

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Mutual AdjustmentContinues throughout the negotiation as both parties act to influence the otherOne of the key causes of the changes that occur during a negotiationThe effective negotiator needs to understand how people will adjust and readjust and how the negotiations might twist and turn, based on ones own moves and the others responses

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Mutual Adjustment and Concession MakingWhen one party agrees to make a change in his/her position, a concession has been madeConcessions restrict the range of optionsWhen a concession is made, the bargaining range is further constrained

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Two Dilemmas in Mutual AdjustmentDilemma of honestyConcern about how much of the truth to tell the other party

Dilemma of trustConcern about how much should negotiators believe what the other party tells them

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Value Claiming and Value CreationOpportunities to win or share resourcesClaiming value: result of zero-sum or distributive situations where the object is to gain largest piece of resourceCreating value: result of non-zero-sum or integrative situation where the object is to have both parties do well

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Value Claiming and Value CreationMost actual negotiations are a combination of claiming and creating value processesNegotiators must be able to recognize situations that require more of one approach than the otherNegotiators must be versatile in their comfort and use of both major strategic approachesNegotiator perceptions of situations tend to be biased toward seeing problems as more distributive/competitive than they really are

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Value Claiming and Value CreationValue differences that exist between negotiators include:Differences in interestDifferences in judgments about the futureDifferences in risk toleranceDifferences in time preferences

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ConflictConflict may be defined as a: "sharp disagreement or opposition" and includes "the perceived divergence of interest, or a belief that the parties' current aspirations cannot be achieved simultaneously"1-*

Levels of ConflictIntrapersonal or intrapsychic conflictConflict that occurs within an individualWe want an ice cream cone badly, but we know that ice cream is very fatteningInterpersonal conflictConflict is between individualsConflict between bosses and subordinates, spouses, siblings, roommates, etc.

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Levels of ConflictIntragroup ConflictConflict is within a groupAmong team and committee members, within families, classes etc.Intergroup ConflictConflict can occur between organizations, warring nations, feuding families, or within splintered, fragmented communitiesThese negotiations are the most complex

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Dysfunctions of ConflictCompetitive, win-lose goalsMisperception and biasEmotionalityDecreased communicationBlurred issuesRigid commitmentsMagnified differences, minimized similaritiesEscalation of conflict

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Functions of ConflictMakes organizational members more aware and able to cope with problems through discussion.Promises organizational change and adaptation.Strengthens relationships and heightens morale.Promotes awareness of self and others.Enhances personal development.Encourages psychological developmentit helps people become more accurate and realistic in their self-appraisals.Can be stimulating and fun.

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The Dual Concerns Model1-*

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Styles of Conflict Management1.Contending Actors pursue own outcomes strongly, show little concern for other party obtaining their desired outcomes

2.YieldingActors show little interest in whether they attain own outcomes, but are quite interested in whether the other party attains their outcomes

3.Inaction Actors show little interest in whether they attain own outcomes, and little concern about whether the other party obtains their outcomes

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Styles of Conflict Management4.Problem solvingActors show high concern in obtaining own outcomes, as well as high concern for the other party obtaining their outcomes

5.CompromisingActors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes

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