Chapter No 16 Characteristics of a Negotiation Situation

1. Two or more parties involved• It involves two or more individuals, groups or organizations2. Conflict of needs & desires• what one party wants is may not be what the other wants3. Voluntary process• Negotiators negotiate by choice• Believe that they can get a better deal by negotiating than accepting what is voluntarily exchanged4. “Give & take “ process• Parties move away from their opening positions to middle position (compromise) to reach an agreement accepted by both5. Preference for negotiation & search for agreement to fighting openly• Parties prefer to invent their own solution that resolves the conflict• No fixed rules on how to resolve the conflict6. Management of tangibles & resolution of intangibles• Intangible factors (psychological motivations) that may directly or indirectly influence parties in negotiation• Examples: the need to “win”, “look good”, protect one’s reputation• Have enormous influence on negotiation processes & outcomesInterdependence– Parties need each other to achieve their desired objectives / outcomes.– Either they need to coordinate with each other to achieve their own objectives– Or choose to work together because joint efforts can produce better outcomes than individual effortTypes of Interdependence affect Outcomes• Competitive Goals: Goals of both parties are interconnected such that only 1 party achieve his/her goal Zero-sum / distributive situation, -ive correlation between their goal attainments• Collaborative Goals: Goals of both parties are linked such that when 1 party’s goal achievement helps the other party achieve his/her goal as well Non-zero-sum / integrativesituation, +ive correlation between their goal attainments.

Two types of goals:Convergent goals (similar goals) interlockingDivergent goals (non-similar goals)

Lecture 2Negotiation Strategies

Distributive Strategy: Claiming all the profit or the maximum share for oneself winning it all. Integrative Strategy: Creating value (expanding the pie) and finding solutions that best fit the needs of all or most parties -especially over time. Mixed-Motive Strategy: Expanding the pie and meeting the needs of all or most parties as much as possible while claiming an appropriate share.

Negotiation Styles

Competitive Style: To try to do better than all others.Cooperative Style: To try to be sure that the feelings of all are properly dealt with.Independent Style: To try to find the best possible outcome regardless of the achievements and feelings of others.

Alternatives Shape Interdependence• Desirability of alternatives to working together is used to evaluate interdependence• Best Alternative to a Negotiated Agreement (BATNA) • Need to understand one’s & counterpart’s BATNA

What is best alternative to a negotiated agreement (BATNA)?BATNA (best alternative to a Negotiated Agreement) is a better alternative to a negotiation (the alternative that one would take in case of not reaching an agreement). Before any negotiation, we must determine our BATNA and thus know when no agreement is better and retire (when possible agreement less favorable than our BATNA), for example, if we calculate that we can charge a client 1000, that amount will be our BATNA when negotiating with a second client, in this case, our goal is to reach an agreement where we pay 1000 or more and preferably, should offer a lower figure, we know that it is preferable to a non- agreement and seek the first customer.Some peculiarities of BATNA is dynamic, ie constantly changing, and it is psychological, ie based on a personal perspective, which tends to be subjective (eg, a seller might consider that his product is worth much more than actually worth).Mutual Adjustment– One of the key causes of changes occurring during negotiation– One assumption for successful mutual adjustment: the more information one has about the other party, the better– However, too much information may only confuse the parties involved• When one party adjust his position to the another nearer to the counterpart’s position, its concession making• Parties involved will likely make similar concessions until a mutual agreement is reached.

Two dilemmas in Mutual Adjustment

Dilemma of honestyo How much to tell the other party?o Revealing too much info puts one in a vulnerable position, susceptible to being taken advantage ofo Revealing too little info may not help in allowing both parties to look for an agreementDilemma of trusto How much should one believe what the other party says?o Believing in all of the other party’s words may put one in disadvantageo Not believing in the other party’s words may make it difficult to find an agreement

Value Claiming & Value Creation– Two types of negotiation: o Distributiveo Integrative– Distributive is associated with Value Claimingo Only 1 winnero Each party tries to claim as much as possible from the fixed resource– Integrative is associated with Value Creationo Win-win strategies applied to create win-win situationso Finding ways for all parties to meet their goals and objectives by either finding more resources or coordinating and sharing the resources– Most negotiations have a combination of value creation & claiming processeso Negotiators must be able to identify situations that require more of one approach than the othero Negotiators should be versatile and comfortable with the use of both approacheso Negotiators tend to see problems as more distributive/competitive than they really are

Key differences between Negotiators• Differences in interestso Items are seldom regarded equally in negotiations• Differences in judgments about the futureo People hold differing views about the future value of something• Differences in risk toleranceo Different people have different risk appetite• Differences in time preference– Time has different impact on different parties

Chapter 2Conflict– It is defined as “a disagreement in interests, views or positions.”

Levels of Conflict1. Intrapersonal or intra-psychic conflicta. Occurs within a personb. Can include conflicting ideas, emotions etc. 2. Interpersonal conflicta. Occurs between individualsb. Clash of interests, views between e.g. Co-workers, classmates, friends3. Intragroup conflicta. Occurs within groups or organizationsb. Affects groups’ ability to function well4. Intergroup conflicta. Occurs between different groups or organizationsb. Most complex form of negotiationNegotiation Styles/Strategies

5 major strategies for Conflict Management

Competing is a style in which one's own needs are advocated over the needs of others. It relies on an aggressive style of communication, low regard for future relationships, and the exercise of coercive power. Those using a competitive style tend to seek control over a discussion, in both substance and ground rules.Consequence - They fear that loss of such control will result in solutions that fail to meet their needs. Competing tends to result in responses that increase the level of threat.

Accommodating, also known as smoothing, is the opposite of competing. Persons using this style yield their needs to those of others, trying to be diplomatic. Consequence -They tend to allow the needs of the group to overwhelm their own, which may not ever be stated, as preserving the relationship is seen as most important.

Avoiding is a common response to the negative perception of conflict. "Perhaps if we don't bring it up, it will blow over," we say to ourselves. But, generally, all that happens is that feelings get pent up, views go unexpressed, and the conflict festers until it becomes too big to ignore. Consequence - Like a cancer that may well have been cured if treated early, the conflict grows and spreads until it kills the relationship. Because needs and concerns go unexpressed, people are often confused, wondering what went wrong in a relationship.

Compromising is an approach to conflict in which people gain and give in a series of trade-offs. While satisfactory, compromise is generally not satisfying. We each remain shaped by our individual perceptions of our needs and don't necessarily understand the other side very well. Consequence -We often retain a lack of trust and avoid risk-taking involved in more collaborative behaviours.

Collaborating is the pooling of individual needs and goals toward a common goal. Often called "win-win problem-solving," collaboration requires assertive communication and cooperation in order to achieve a better solution than either individual could have achieved alone.

Consequence - It offers the chance for consensus, the integration of needs, and the potential to exceed the "budget of possibilities" that previously limited our views of the conflict. It brings new time, energy, and ideas to resolve the dispute meaningfully

Chapter 4

Strategy and Tactics of Distributive Bargaining

Distributive bargaining situation:Win-lose: Distributive bargaining (Claiming value)

Integrative bargaining situation:Win-win: integrated bargaining (Value creating)

Distributive Bargaining situation

1. Claiming Value2. Resources are limited3. Maximize your own gain

If you are in relationship than bargaining is not easy with that party and if no than bargaining is easy.

A Negotiated Agreement: establish a bargaining zone (Basics)

1. The Role of Alternatives to a Negotiated Agreement 2. Settlement Point 3. Bargaining Mix 4. Fundamental Strategies

Resistant Point

• The objective of both parties is to reach an agreement as close to the other party’s resistant point as possible.

• Both parties must believe that the settlement is the best they can get.

• Another factor will affect the satisfaction with the agreement is whether the parties will see each other again.

The buyer’s view of the house negotiation: (A) vs (B)

The Buyer’s view of the house negotiation (Extended)

The Role of Alternatives to a Negotiated Agreement

The buyer’s view of the house negotiation (Extended with alternatives)

Positive bargain Range= Buyer resistance point > seller resistance point

Negative bargain Range= Buyer resistance point< seller resistance point

Bargaining Mix

The package of issues for negotiation is bargaining mix. Each item in the mix has its own starting, target, and resistance point.

Negotiators need to understand what is important to them and to the other party, and they need to take these priorities into account during the planning process

Fundamental Strategies

In the previous example, the buy has four fundamental strategies available: (1) To push for a settlement close to the seller’s resistance point. (2) To convince the seller to change her resistance point. (3) If a negative settlement range exists, to convince the seller to reduce her resistance point. (4) To convince the seller to believe that this settlement is the best that is possible.

Discovering the Other Party’s Resistance Point

. The more you can learn about the other party’s target, resistance point, motives, feelings of confidence, and so on, the more able you will be to strike a favorable agreement.

. To influence the other party’s perception, however, they must establish some points effectively and convincingly.

Influencing the Other Party’s Resistance Point

(1) The value the other attaches to a particular outcome; (2) The cost the other attaches to delay or difficulty in negotiations; (3) The cost the other attaches to having the negotiation aborted.

To explain how these factors can affect the process

1. The higher the other party’s estimate of your cost of delay or impasse, the stronger the other party’s resistance point will be.2. The higher the other party’s estimate of his or her own cost of delay or impasse, the weaker the other party’s resistance point will be.3. The less the other values an issue, the lower their resistance point will be.4. The more the other believes that you value an issue, the lower their resistance point may be

Tactical Tasks

(1) Assess the other party’s target, resistance point, and cost of terminating negotiation.

(2) Manage the other party’s impressions of a negotiator’s target, resistance point, and cost of terminating negotiation.

(3) Modify the other party’s perceptions of his own target, resistance point, and cost of terminating negotiation.

(4) Manipulate the other party’s actual cost of delaying or terminating negotiation.

Pattern of Concession Making

Chapter 5

Positions Taken during Negotiation

Effective distributive bargainers need to understand the process of making positions during bargaining, including the importance of opening offer, opening stance, and the role of making concessions throughout the negotiation process.

Changes in position are usually accompanied by new information concerning the other’s intentions, the value of outcomes, and likely zones for settlement.

Opening Offers

The fundamental question is whether the opening offer should be exaggerated or modest.

There are at least two reasons that an exaggerated opening offer is advantageous.

Two disadvantages of exaggerated opening offer are: (1) it may be summarily rejected by the other party; (2) it communicates an attitude of toughness that may be harmful to long-term relationships.

Opening Stance

Will you be competitive or moderate?

It is important for negotiators to think carefully about the messages that they wish to signal with their opening stance and subsequent concessions.

To communicate effectively, a negotiator should try to send a consistent messages through both opening offer and stance.

Initial Concessions

First concession conveys a message, frequently a symbolic one to the other party that how you will proceed.

Firmness may actually shorten negotiations, there is also the very real possibility, and however, it will be reciprocated by the other.

There are good reasons for adopting a flexible position.

Role of Concessions

Concessions are central to negotiation.

Negotiators also generally resent a take-it-or-leave-it approach.

Parties feel better about a settlement when the negotiation involved a progression of concession.

A reciprocal concession cannot be haphazard.

To encourage further concession from the other party, negotiators sometimes link their concessions to a prior concession made by the other party. (“Since you have reduced your demand on X, I am willing to concede on Y.”)

Final Offers

1. Eventually a negotiator wants to convey the message that there is no further room for movement---that the present offer is the final one. (e.g. “This is all I can do.” OR, “This is as far as I can go”. …. A negotiator might simply let the absence of any further concessions in spite of urging the other party.)

2. one way negotiators may convey the message that an offer is the last one is to make the last concession more substantial. (OR, “I went to my boss and got a special deal just for you.”)

Closing the Deal

Several tactics are available to negotiators for closing a deal:

Provide alternative

Assume the close

Split the differences

Exploding the offers

Sweeteners：I’ll give you X if you agree to the deal.”

8 Hardball Tactics

1. Good Cop / Bad Cop

a. “Bad cop” plays the role of the bad guy who takes tough measures (threats, intimidation)

against the targeted party

b. “Bad cop” leaves the negotiation table for the “Good cop” to come and offer the targeted party

“an easy way out” of the situation

c. The “easy way out” option is meant for the targeted party to yield to the team’s demands

Advantages

• Often results in negotiated agreements

Disadvantages

• easily seen through by targeted party

• Can be countered easily by clearly exposing the negotiators’ plot

• Distracts the negotiators from the negotiation goals

Dealing with Good Cop / Bad Cop

• openly exposing the negotiators’ plot

2. Lowball / Highball

a. Starts the negotiation with a unreasonable low (high) opening offer

Advantages

• Aims to get the other party to re-evaluate his opening offer & move closer to his resistance

point

Disadvantages

• other party may not want to negotiate at all

• requires a skilled negotiator to explain his extreme opening offer if the other party continues to

negotiate

Dealing with Lowball / Highball

• Best tactic: ask for a more reasonable opening offer instead of a counter offer

• Insisting on a reasonable opening offer before negotiating further

• Show that you are familiar with the bargaining mix and therefore you will not be fooled

• Show your displeasure of such tactic used against you by threatening to leave the negotiating

table

• Come up with an extreme counter offer

3. Bogey

a. Negotiator pretends that an unimportant issue is quite important to him

b. Use this tactic to trade and make concessions for issues that are really important

Advantages

• Difficult to defend against

Disadvantages

• Difficult to enact

• May backfire if the other party takes you seriously and therefore giving you what you want to

bogey away

Dealing with Bogey

• Question why the negotiator wants a particular outcome or makes a sudden reversal in positions

• Not conceding to what the negotiator wants after his sudden reversal in position

4. The Nibble

a. Negotiator adds a small item (the nibble) to the agreement when the both parties had spent

significant time & effort in negotiation and the agreement is near

Advantages

• None

Disadvantages

• although the nibble is small in size, it’s enough to upset the other party

• the other party may be motivated to seek revenge in future negotiations

Dealing with The Nibble

• Ask the negotiator “What else do you want?” every time he asks for a nibble, until all issues are

raised and identified

• Come up with one’s own nibbles in exchange for the negotiator’s nibbles

5. Chicken

a. The negotiator uses a big bluff with a threatened action, in order to force the other party to

“chicken out” and yield to their demands

Advantages

• Non

Disadvantages

• Turns the negotiation into a high-stakes gamble for both sides

• Makes it hard to distinguish whether either party will follow through on his/her stated course of

action

Dealing with Chicken

• Preparation before negotiation helps to understand both parties’ situations

• Using external sources to verify what’s exchanged in the negotiation

6. Intimidation

a. Many tactics take the form of intimidation

b. Common point of these tactics: the use of emotional ploys to force the other party to yield

c. Other forms of intimidation: increasing the appearance of legitimacy & guilt

d. All these tactics make intimidator feel more powerful

e. leads the targeted party to give in due to emotional rather than objective reasons

Dealing with Intimidation

• Discuss the negotiation process with the intimidator, stating that you expect a fair negotiation

process

• Ignore the intimidation

• Using a team to negotiate with the intimidator

o Not everyone in the team is intimidated by the same things

o Team members provide mutual support to one another through the process

7. Aggressive Behavior

a. Similar to intimidation tactics

b. being aggressive in establishing your position and attacking the other party’s position eg.

i. Asking for best offer early in the negotiation

ii. Getting the other party to explain his position by justifying item by item

c. Getting the other party to make many concessions

Dealing with Aggressive Behavior

• Stop the negotiation to discuss the process itself

• Using a team of negotiators to negotiate with the aggressive party

8. Snow Job

a. To overwhelm the other party with large amount of information, such that the other party have

a problem determining which information are real or important

b. To use technical or expert language such that a non-expert party cannot understand and would

simply acknowledge it just to avoid embarrassment

Dealing with Snow Job

• Not to be afraid to ask questions until a clearly understood answer is obtained

• Use of technical experts to discuss and verify technical issues

• Looking out for inconsistency in the negotiator’s answer or response & ask if in doubt

Dealing with typical hardball tactics – there are several choices about how to respond.

Discuss them. Ignore them. Respond in kind. Co-opt the other party

Lecture 6

Integrative   Negotiation

Strategy and Tactics of Integrative Negotiation

What Makes Integrative Negotiation Different?

• Focus on commonalties rather than differences

• Address needs and interests, not positions

• Commit to meeting the needs of all involved parties

• Exchange information and ideas

• Invent options for mutual gain

• Use objective criteria to set standards

Claiming and Creating Value

Key Steps in the Integrative Negotiation Process

1. Identify and define the problem2. Understand the problem fully

--- Identify interests and needs on both sides3. Generate alternative solutions4. Evaluate and select among alternatives

Identify and Define the Problem

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

2. State the problem with an eye toward practicality and comprehensiveness

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

4. Depersonalize the problem

5. Separate the problem definition from the search for solutions

Understand the Problem Fully – Identify Interests and Needs

• Interests: the underlying concerns, needs, desires, or fears that motivate a negotiator

– Substantive interests relate to key issues in the negotiation

– Process interests are related to the way the dispute is settled

– Relationship interests indicate that one or both parties value their relationship

– Interests in principle: doing what is fair, right, acceptable, ethical may be

shared by the parties

• 6 Key Strategies for Reaching Integrative Negotiation

1. Expand the Pie

• Effective for negotiations that experience shortages in resources that fails to meet both

parties objectives and interest

• Assumes that the enlargement of resources will solve the problem

Solution:

• Add resources (expand the pie) so that both parties can achieve their objectives

How?

• Ask diagnostic questions, such as, “Is there a resource shortage, How can resources be

expanded to meet both parties needs/interest?”

• Make package deals

• Unbundle issues

Advantages:

• requires no information from the other parties except of their interest

• Simple and easy method to solve problems relating to resource shortages

Disadvantages:

• Not applicable to problems that are outside the scope of shortages in resources

• 2. Logrolling

• Effective for negotiation that have more than one conflicting issues that are of different

priorities

Solution

• Involves the trading off of issues between parties so that both achieve their preferred

outcome

How?

• Done by trial and error, experimenting with numerous package deals that satisfies

everyone’s interest

• Ask diagnostic questions, “Can I unbundle issues, make one issue into smaller ones that

can then be logrolled?”

• Unbundling issues and unlinking them

• Making package deals

Advantages:

• Result in a win-win options

• Simple and easy way to solve negotiations with multiple conflicting issues

• Enable the establishment of long-term working relationships

Disadvantages:

• Time-consuming

• Only applicable to negotiation that have more than one conflicting issue at stake

• Not suitable for successive negotiations-where parties takes turn to get what they want

• Not suitable for parties that do not wish to establish long-term working relationships

• 3. Non Specific Compensation

• Involves the paying off of a nonspecific compensation to the party that accommodates

to the other party’s interest and objectives

• the payoff is unrelated to substantive negotiation but adequate for the party in agreeing

to the other party’s preferences.

How?

• Parties should know how much compensation is sufficient in making the

accommodative party satisfied

• Need to experiment with different types of compensation offers to identify the one that

satisfies the other party the most

• Ask diagnostic questions, “What are the things that will be inexpensive to me but

valuable to the other party?”

Advantages:

Disadvantages:

• Time-consuming

• Fear of turning into distributive situation when , the other party may request for high

demands as in return for accommodating while the other tries to play down the

compensation that he/she will pay.

• 4. Cut the Cost for Compliance

• Involves the achieving of one’s objective by minimizing the cost incurred by the

agreeing party

• How?

• Parties are required to have personal knowledge of the agreeing party’s needs, wants,

desire and preferences.

Advantages:

• More sophisticated as compared to logrolling and nonspecific compensation as it

requires a more detailed personal knowledge of the agreeing party

Disadvantages:

• Time-consuming

• 5. Bridging

• Involves the inventing of a new options that meet the needs of both parties

How?

• Through the revealing of sufficient information which discloses interests and needs that

facilitate the invention of new options

Advantages:

• highly satisfying when negotiators commit themselves to win-win negotiations

Disadvantages:

• Do not always remedy all concerns

• Not applicable when parties commit themselves to win-lose negotiations

• 6. Post Settlement –Settlement

• Involves the using of current settlement as a benchmark or (BATNA) to explore other

possible/satisfying options and agreement

How?

• Find a more satisfying option or agreement over the present negotiated outcome

• Advantages:

• Enable both parties another chance to reach an even more satisfying outcome

Disadvantages:•

Generate Alternative SolutionsTwo techniques

Inventing Options: Generating Alternative Solutions by Redefining the Problem or

Problem Set

Generate Alternative Solutions to the Problem as Given

Invent options by redefining the problem set:

Expand the pie

How can both parties get what they are demanding?

Is there a resource shortage?

How can resources be expanded to meet the demands of both sides?

Logroll

What issues are of higher and lower priority to me?

What issues are of higher and lower priority to the other?

Are issues of high priority to me low for the other, and vice versa?

Can I “unbundled” an issue---i.e. make one larger issue into two or more smaller ones---

that can then be logrolled?

What are things that would be inexpensive for me to give and valuable for the other to get

that might be used in logrolling?

Use nonspecific compensation

What are the other party’s goals and values?

What could I do for the other side that would make them happy and have them allow me

to get my way on the key issue?

What are things that would be inexpensive for me to give and valuable for the other to get

that might be used as nonspecific compensation?

Cut the costs for compliance

What risks and costs does my proposal create for the other?

What can I do to minimize the other’s risks and costs so that they would be more willing

to go along?

Find a bridge solution

What are the other’s real underlying interests and needs?

What are my own real underlying interests and needs?

What are the higher and lower priorities for each of us in our underlying interests and

needs?

Can we invent a solution that meets both sides’ relative priorities and their underlying

interests and needs?

Generate options to the problem as a given:

Brainstorming

Electronic brainstorming

Surveys

Evaluation and Selection of Alternatives

• Take time to “cool off”

• 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

• Narrow the Range of Solution Options

• Evaluate Solutions on the Basis of Quality, Standards, and Acceptability.

• Agree to the Criteria in Advance of Evaluating Options

• Be Willing to Justify Personal Preferences.

• Be Alert to the Influence of Intangibles in Selecting Options.

Evaluate and Select Alternatives-2

• Use Subgroup to Evaluate Complex Options

• Take Time Out to Cool Off

• Explore Different Ways to Logroll

• Keep Decisions Tentative and Conditional until All Aspects of the Final Process

• Minimize Formality and Record Keeping until Agreement are Closed

7 Key Factors in Achieving Successful Integrative Negotiation

1. Common Objective or Goal

• It is important for individuals to focus on the commonalities within a group to achieve

successful integrative outcome. Parties have to believe that collaborative efforts will be

beneficial to all of them. Therefore, it is important for them to establish common, shared or joint

goals among them.

Common goal

• A goal that is being shared equally among one another.

• One that would not be accomplished without each other’s collaboration.

Shared goal

• A goal that both parties hopes to achieve but are beneficial to each other in a different way.

Joint goal

• A goal that comprises of a collective effort to combine differing individual goals together.

2. Faith in One’s Problem-Solving Ability

• Parties must have a collaborative attitude when working together.

• The absence of such mentality will result in a lower devotion to collaborative relationship

3. A Belief in the Validity of One’s Own Position and the other’s Perspectives

• Parties should respect and accepts the view, interest and desires of other parties and incorporate

them into the negotiation problem instead of challenging their viewpoint.

• Hence, search for mutually beneficial alternatives that lead to satisfying negotiation outcomes.

4. Motivation and Commitment to Work Together

• Parties must be highly motivated to collaborate rather than to compete

• They should be committed to achieve a mutually beneficial objective or goal

• One should present interpersonal style that are more:

1) Friendly than Competitive

2) Flexible(but firm) than Obstinate (but yielding)

3) Accepting and Trusting than Defensive and Evasive

• Parties should state their needs clearly, be willing to focus on the similarities and accepts

differences among each other

• Be comfortable with inconsistencies and uncertainties

5. Trust

• Parties must be able to elicit a certain level of trust towards the other party, vice versa.

• The eliciting of trust will facilitate the sharing of information and greater accuracy in

communicating individuals’ needs, wants, positions and desires in the given situation.

6. Clear and Accurate Communication

• Parties must be willing to share relevant information and state what they want clearly to

prevent any misunderstanding as a result of generalities or vagueness

• Parties must be willing to speak up and clarify any ambiguities

• Parties must make sure that the messages that were communicated through numerous

communication channels are consistent.

• Parties should always give everyone a chance to speak, no one should dominate the negotiation

process

7. An understanding of the Dynamics of Integrative Negotiation

• to achieve a successful outcome in Integrative Negotiation, one should truly understand the

dynamics, key elements, structure and principles that make up integrative negotiation.

• It is only through thorough understanding and training that one will be able to successfully

pursue the process.

Factors that affect integrated negotiation

Common objective Self-efficacy related to problem solving Motivations commitments Free flow of information Your trust on other party Process control (how to integrated negotiation) Effective communication History of relationship

Chapter 5: Perception, Cognition and Emotion

Perception is the process by which individuals connect to their environment. In layman’s terms,

it is a sense-making process where people interpret their environment so to respond

appropriately. As perception depends on the perceiver’s current state of mind, role and

comprehension, here could always be errors in the interpretation and subsequent communication.

Some forms of such distortions are as follows;

I. Types of Perceptual Distortions

–          Stereotyping

Assign attributes to one solely on the basis of the membership to a particular large group or category (social, racial, religious or sexual orientations )

Eg: He is an Italian so he must know so much about Rome. Very common, highly resistant to change once formed

–          Halo effect

Generalize many attributes based on the knowledge of one attribute of the individuals without any consistent relationship between them

Positive effect à good attribute, negative effect à bad attribute Reasons for occurrenceo Very little experience with the other partyo When the person is well knowno When the qualities have strong moral implicationso E.g.: He is smiling so he must be telling the truth!

–    Selective perception

Singles out certain information that supports a prior belief and filters out information that does confirm the belief.

–    Projection

Assign to others the characteristics or feelings that they possess themselves. E.g.: I feel upset to postpone things, so he also will probably get frustrated if I tell him to

delay our meeting.

Framing

Frame is the subjective mechanism through which people evaluate and make sense out of

situations based on their own experiences, leading them to pursue or avoid subsequent actions.

Type of Frames Used in Disputes

Substantive

Disposition about key issue and concern in the conflict Neglects how parties will resolve the dispute

Outcome

Predisposition to achieving a specific result or outcome from the negotiation Primarily used by distributive negotiators

Aspiration

Predisposition to a broader set of interests, needs and concern other than a specific outcome. Primarily used by integrative negotiators

Process

Procedure on how parties will resolve their dispute. Does not care much about specific key issues and concern in the conflict

Identity

Definition of oneself, based on membership of a number of different social groups such as gender, religion, ethnic origin, etc.

Used to differentiate themselves from others and tend to be positive

Characterization

One’s definition of the other parties, shaped by prior or early experience and knowledge about others.

Tend to be negative in conflicts

Loss/ Gain

Definition of risk and reward associated with different outcomes Can frame the outcome as loss or reward based on risk preference of other parties For instance, a car buyer can view the transaction as a monetary cost of the purchase (loss)

or the value (gain) of the item.

How frames work in Negotiation Negotiators can use more than one frame Mismatches in frames between parties are sources of conflict Different types of frames or content from the two parties can cause misunderstanding and

conflict escalation Can reframe the conflict into the frame that is more compatible for both parties3. Particular

types of frames may lead to particular types of agreements1. Aspiration frames lead to integrative agreement2. Outcome or negative frames can lead to distributive agreement

Specific frames may be likely to be used with certain types of issues1. People discussing salary may be likely to use outcome frame.2. People discussing relationship may be likely to use characterization frame

Parties are likely to assume a particular frame because of various factors1. Differences in personality2. Value differences3. Power differences4. Differences in background5. Social context

Different approach on how frames work in negotiation1. Interests

1. Frame the conflicts based on interest, not on their positions and demands2. Rights

1. Use some standards and rules to decide who has legitimacy, who is correct and fair in resolving the problem

3. Power1. Create win-lose situation2. Resolve the conflict based on power – ability  to coerce the other by

imposing other types of forces – economic pressures, expertise, legitimate authority, etc.

II. Cognitive Biases in Negotiation Irrational Escalation of Commitment – stick with a failing course of actiono E.g.: a country continues to pour resources into an unwinnable war because the conflict

has already happened. Mythical Fixed-Pie Beliefs – assume that all negotiations are win-lose Anchoring and Adjustment – effect of standard against which subsequent adjustments are

made during negotiation Issue Framing and Risk – more risk averse when a decision problem is framed as gain,

and risk seeking when framed as a loss Availability of Information- depends on how easily information can be recalled and used The Winner’s curse – tendency to settle quickly and subsequently feel discomfort about a

win that comes easilyo Eg: the other party gives in too easily, so there might be something wrong with the

outcome or I could have done better. Overconfidence – tendency to believe their ability to be correct or accurate is greater than

for real. The Law of Small Numbers- tendency to draw conclusions from small sizeso Eg: assuming all negotiations as distributive based on a number of past negotiations or

prior experiences Self-Serving Biases- explain behaviors by making attributions to the person or situationo Eg: If I mess up, it’s bad luck. If you mess up, it’s your fault!

Endowment Effect – tendency to overvalue something you posess Eg: One is likely to pay $3 for a mug if he is to buy from others, but values $7 on the same

mug he owns. Ignoring Others’ Cognitions – ignoring the other party’s perceptions and thoughts hence

working with incomplete information Reactive Devaluation- devaluing the other party’s concessions simply because the other

party made them

Managing Misperceptions and Cognitive Biases in Negotiation Be aware that misperceptions and cognitive biases can occur as negotiators gather and

process information and discuss them in a structured manner within their team and with their counterparts

Careful discussion of the issues and preference can reduce the effects of perceptual biases

III. Mood, Emotion and Negotiation Mood and emotion are different in specificity (emotion is directed at more specific targets),

intensity (mood is less intense) and duration (mood is more enduring)

Negotiations create both positive (happiness)and negative (dejection-related, agitation-related) emotions

Positive emotions generally have positive consequences for negotiations (lead parties to integrative process)

Negative emotions generally have negative consequences for negotiations (lead parties to competitive or distributive process or escalate conflicts)

Emotions can be used strategically as negotiation gambits The effect of positive and negative emotion in negotiation

1)      Positive feelings may have negative consequences

More susceptible to a competitive opponent’s deceptive tactics Less focus on arguments of other party, leading to less-than-optimal outcomes Create strong positive expectations, experiencing the defeat more strongly and treating other

more harshly if an satisfying integrative agreement is not found

2)      Negative feelings may create positive outcomes

Negative emotion has information value Motivate people to either leave the situation or resolve the problem Alerting other party of a problem in relationship, leading both to work on fixing the

problem

Chapter 6: Communication during Negotiation

Offers, Counteroffers, and Motives

-The communicative framework for negotiation

1). the communication of offers is a dynamic process

2). the offer process is interactive

3). various internal and external factors drive the interaction and “motivate” a bargainer to

change his or her offer.

Ÿ   Information about Alternatives

Negotiators with an attractive BATNA should tell the other party about it if they expect to

receive its full benefits.

-The style and tone used to convey information about an attractive BATNA

1).Politely making the other party aware of one’s good alternative can provide leverage without

alienating the other party.

2).Waving a good BATNA in the other party’s face in an imposing or condescending manner

may be construed as aggressive and threatening.

Ÿ   Information about Outcomes

Negotiators should be cautious about sharing their outcomes or even their positive reactions to

outcomes with the other party, especially if they are going to negotiate with that party again in

the future.

Ÿ   Social Accounts

Three explanation types:

1).Explanations of mitigating circumstances

2).Explanations of exonerating circumstances

3).Reframing explanation

Ÿ   Communication about Process

How well it is going or what procedures might be adopted to improve the situation.

Consider: Is More Information Always Better?

“Information-is-weakness Effect”: Negotiators who know the complete preferences of both

parties may have more difficulty determining fair outcomes that negotiators who do not have this

information.

l How People Communicate in Negotiation

Ÿ   Use of Language

-Two levels of language operation: Logical level & Pragmatic level: The meaning conveyed by a

statement or proposition is combined with a logical surface message and several pragmatic

levels.

Parties whose statements communicated interests in both the substance of the negotiation and the

relationship with the other party achieved better, more integrative solutions.

Ÿ   Use of Nonverbal Communication

1).Make Eye Contact

–When listening: show others you are paying attention and listening that you consider them

important

–When delivering: emphasize the importance of the message that is being sent

2).Adjust Body Position

One’s body position indicates whether one is paying attention to the other party.

–To show you are attentive: hold your body erect, lean slightly forward, and face the other

person directly

–To show strong rejection or disapproval: crossing arms, bowing the head, furrowing the brow,

and squeezing eyebrows together.

3).Nonverbally Encourage or Discourage What the Other Says

Indicate encouragement: brief eye contact, a smile, or a nod of the head.

Indicate discouragement: a frown, a scowl, a shake of the head, or a grab of one’s chest in mock

pain

Ÿ   Selection of a Communication Channel

–Face-to-face negotiators are more easily to develop personal rapport, more inclined to disclose

information truthfully, increasing their ability to attain mutual gain.

–What e-mail negotiations lack is schmoozing—off-task or relationship-focused conversations?

 How to Improve Communication in Negotiation

Ÿ   The Use of Questions

Questions in Negotiation:

1).Manageable: cause attention or prepare the other person’s thinking for further questions, get

information, generate thoughts

2).Unmanageable: cause difficulty, give information, bring the discussion to a false conclusion

–collect and diagnose information, assist the other party in addressing and expressing needs and

interests

–pry or lever a negotiation out of a breakdown or an apparent dead end

Ÿ   Listening

1). Passive listening

Receive the message while providing no feedback to the sender about the accuracy or

completeness of reception. (Can be used as the best strategy when the counterpart is talkative)

2).Acknowledgment:

Receivers occasionally nod their heads, maintain eye contact, or interject responses like “I see,”

“mm-hmm.” “Interesting,” “really,” and the like.

3).Active listening

Restate or paraphrase the sender’s message in their own language

Ÿ   Role Reversal

Gain an understanding of the other party’s perspective or frame of reference: allow negotiators to

understand more completely the other party’s position by actively arguing these positions until

the other party is convinced that he or she is understood.

 Special Communication Considerations at the Close of Negotiations

Ÿ   Avoiding Fatal Mistakes

Ÿ   Achieving Closure

–avoid surrendering important information needlessly, and to refrain from making “dumb

remarks” that push a wavering counterpart away from the agreement

–recognize the other party’s faux pas and dumb remarks for what they are and refuse to respond

or be distracted by them

Chapter 7: Sources of Power and Dealing with Others Who Have More  Power

Power – capabilities negotiators can assemble to give themselves an advantage or increase the

probability of achieving their objectives

Sources of Power – How People Acquire Power

Traditional Sources of Power

–          Expert power

from having unique, in-depth information about a subject

–          Reward power

from ability to reward other for doing what needs to be done

–          Coercive power

from ability to punish other for not doing what needs to be done

–          Legitimate power

from hierarchical status within organization

–          Referent power

from respect or admiration one commands due to attributes like personality, integrity, interpersonal style and the like

Major Source of Power in Negotiation

–          Informational sources of power

–          Personal sources of power

–          Power based on position in an organization

–          Relationship-based sources of power

–          Contextual sources of power

1) Informational Sources of Power

–          Most common source of power – derived from ability to assemble and organize facts and

data to support one’s position, arguments or desired outcomes

–          Challenge other’s position or desired outcomes

–          undermine the effectiveness of the other’s negotiating argument

–          Power based on expertise is a special form of information power – only for those who

have achievement some level of command and mastery of a body of information

–          Experts’ arguments are more credible than no experts’ ones

–          To use expert power, demonstrate that this expertise actually exists and is relevant to the

issues under discussion

2) Personal Sources of Power

–          have different psychological orientations to social situations

–          Cognitive orientation individual differences in ideological frames of reference shape one’s expectations, the way individual process social information about power and

people’s willingness to share power 3 types of ideological frameso The unitary

o

Beliefs that society is an integrated whole and that the interests of individuals and society are one, such that power can be largely ignored or, when needed, be used by benevolent authorities to benefit the good of all. (communal)

o The radical Beliefs that society is in a continual clash of social, political, and class interests,

and that power is inherently and structurally imbalanced (Marxist)o The pluralist

Beliefs that power is distributed relatively equally across various groups, which compete and bargain for a share of the continually evolving balance of power (liberal democracies)

–          Motivational orientation differences rooted more in need and energizing elements of the personality rather than in

ideology power motive – a need to influence and control others and to seek positions of power and

authority

–          Dispositions and skills Competitive dispositions and skill emphasize on “power over” approach along with skills

such as sustaining energy and stamina, maintaining focus and having high expertise, strong self-confidence and high tolerance for conflict.

Cooperative dispositions and skill emphasize on “power with” approach along with skills such as sensitivity to others, flexibility and ability to consider and incorporate other’s views into an agreement

–          Moral orientation different moral view about power and its use

3) Power Based on Position in an organization

–          Legitimate power

exist at the foundation of our social structure from occupying a particular job, office or position in an organizational hierarchy make people feel proper (legitimate) to receive directions from others and proper

(obligatory) to follow it ways of acquiring legitimate powero by birthrighto by election (from peers)o by appointment (from superior)o by cultural value (the young respects the old)

legitimate power cannot function without  obedience or the consent of the governed types of social legitimate powerso legitimate power of reciprocity

if a person something positive for other, the gesture or favor is expected to be returned

o legitimate power of equity someone has a right to request compensation from other if he/she goes out of his

way or endures suffering for the othero legitimate power of responsibility or dependence

we have an obligation to help others who cannot help themselves and are dependent on us

–          Resource control

resource can be anything valued by participants in the negotiation ability to create or control and dispense resources is a major power source in organizations develop and maintain control over some desirable reward that other party wants or  control

over some punishment the other wants to avoid

4) Relationship-Based Sources of Power

–          Good interdependence

has strong impact on how likely parties will be to constructively use power shape “power with” orientation between parties, inducing higher expectations of assistance,

more persuasion and less coercion and more trusting and friendly attitude

–          Referent power

Derived from the respect or admiration one commands due to attributes such as personality, interpersonal style, integrity and the like.

Based on an appeal to commonalities Has negative forms to create distance between themselves and others or to label others

5) Contextual Sources of Power

–          BATNAs

Alternative deal that a negotiator might pursue in case of negotiation failure Offers negotiator significant power

–          Culture

Often contains many implicit rules about use of power and more or less processes Company culture shapes what kind of power are seen as legitimate and illegitimate or how

people use influence and react to influence National cultures also differ in the degree to which these “power over” or “power with”

orientations are supported or encouraged

–          Agents, constituencies and external audiences

Negotiation process is more complex when acting as agents, or other parties such as public media, critics, etc. are present to observe.

These other parties might or might not share your interests, putting pressure on either party.

Dealing with Others Who Have More Power1. Never do an all-or-nothing deal – deal with several other partners to lower risks2. Make the other party smaller- diversify into multiple negotiations by establishing

relationships with several departments or individuals in an organization3. Make yourself bigger- build coalitions4. Build momentum through doing deals in sequence5. Use the power of competition to leverage power-create competition among partners by

using BATNA

6. Constrain yourself- limit the ways you can do business7. Good information is always a source of power – seek information that is most

compelling and persuasive to the counterpart8. Do what you can to manage the process – steer the deal in an advantageous direction.

Do not let the high-power party control the process (agenda, cadence, timing, location)

Chapter 9: Relationships in Negotiation

Negotiation within Relationships

When negotiating in the context of an important relationship, relationship issues could

dramatically change the approach to negotiation strategy and tactics

1. Negotiation within relationships takes place over time.2. Negotiation is often not a way to discuss an issue, but a way to learn more about the

other party and increase interdependence.3. Resolution of simple distributive issues has implications for the future.4. Distributive issues within relationship negotiations can be emotionally hot.5. Negotiating within relationships may never end.

–Parties may defer negotiations over tough issues in order to start on the right foot.

–Attempting to anticipate the future and negotiate everything up front is often impossible.

–Issues on which parties truly disagree may never go away.

1. In many negotiations, the other person’s behavior is the focal problem.2. In some negotiations, relationship preservation is the overarching negotiation goal, and

parties may make concessions on substantive issues to preserve or enhance the relationship.

 Key Elements in Managing Negotiations within Relationships

Ÿ   Reputation

–Reputations are perceptual and highly subjective in nature.

–An individual can have a number of different, even conflicting, reputations.

–Reputation is influenced by an individual’s personal characteristics and accomplishments.

–Reputations develop over time; once developed, they are hard to change.

–Negative reputation is difficult to “repair”.

Ÿ   Trust

–Many people show remarkably high levels of trust when approaching a new relationship.

–Trust tends to cue cooperative behavior.

–Individual motives shape both trust and expectations of the other’s behavior.

–Trusties, and those trusted, may focus on different things as trust is being guilt.

–The nature of the negotiation task can shape how parties judge the trust.

–Greater expectations of trust between negotiators lead to greater information sharing, therefore

tend to enhance effectiveness in achieving a good outcome.

–Distributive processes may tend to reduce trust while integrative processes tend to increase

trust.

–Trust increases the likelihood that negotiation will proceed on a favorable course over the life

of a negotiation.

–Face-to-face negotiation encourages greater trust development.

–Negotiators who are representing others’ interest tend to behave in a less trusting way.

Trust Repair

�   the more severe the breach of trust, the more difficult it is to repair trust and reconcile the

relationship.

�   If the parties had a good past relationship, it was easier to repair trust.

�   The party who breach the trust must apologize as soon as better.

�   the apology must be sincere enough.

�   the one who makes the apology must take personal responsibility for having created the breach.

�   Apologies were more effective when the trust breach appeared to be an isolated event rather

than habitual and repetitive for the other party.

Ÿ   Justice

Forms of justice:

1)         Distributive Justice: about the distribution of outcomes

2)         Procedural Justice: about the process of determining outcomes

3)         Interactional Justice: about how parties treat each other in one-to-one relationship

4)         Systemic Justice: about how organizations appear to treat groups of individuals and the

norms that develop for how they should be treated.

Relationships among Reputation, Trust, and Justice

They are all central to relationship negotiations and feed each other.

 Relationship Repair

Find out:

Ÿ   what might be causing any present misunderstanding, and what can I do to understand it

better?

Ÿ   what might be causing a lack of trust, and what can I do to begin to repair trust that might

have been broken?

Ÿ   what might be causing one or both of us to feel coerced, and what can I do to put the focus on

persuasion rather than coercion?

Ÿ   What might be causing one or both of us to feel disrespected, and what can I do to

demonstrate acceptance and respect?

Ÿ   What might be causing one or both of us to get upset, and what can I do to balance emotion

and reason?

Nonverbal Negotiation Skills

Researchers in nonverbal communication claim:

As much as 90 percent of the meaning transmitted between two people in face-to-face

communication is nonverbal. This means that as little as 10 percent of your verbal

communication will have an impact on the outcome of your negotiations! If these figures are

even close to reality, the importance of nonverbal negotiation skills cannot be overestimated.

Learning the language of nonverbal communications is almost as difficult as acquiring fluency in

a foreign language. In addition to studying your own gestures and the meaning you are

conveying, you must also become aware of what your counterpart is conveying.

Gesture Clusters

Many skeptics argue that it is difficult to tell what someone is thinking by singling out one

gesture—and they are right. A single gesture is like a single word; its true meaning is difficult to

understand out of context. However, when gestures come in clusters, their meaning becomes

clearer. For example, while a person’s fidgeting may not mean much by itself, if that person is

avoiding eye contact, holding his hands around his mouth, touching his face and fidgeting,

there’s a good chance he is not being totally honest.

As you study nonverbal behavior, you will begin to understand the clustering process. When

scanning a counterpart for clusters of gestures, a good formula to follow is to divide the body

into five categories:

1. Face and head. The face and head truly provide a window into your counterpart’s soul. Look

for the following signs.

*Someone who is trying to hide something will avoid eye contact.

*Someone who is bored may gaze past you or glance around the room.

*Someone who is angry or feels superior to you may maintain piercing eye contact.

*Someone who is evaluating what you are saying may turn his head slightly to one side, almost

as though trying to hear you better.

*Someone who is in agreement may nod his head as you are speaking.

2. Body. The body also plays an important role in nonverbal communication. Here are some

signs to watch for:

*someone who is interested and in agreement with you will usually lean toward you or position

her body closer to you.

*Someone who is in disagreement with, uncertain about, or bored with what you are saying will

generally turn her body away from you and lean back farther in her chair.

*Someone who feels insecure, nervous or in doubt may move from side to side, shifting her

weight.

For your part, to create a win/win outcome, you should always position your body toward the

other party.

3. Arms. In general, an open arm position suggests that someone is receptive to the negotiation

process. Watch especially for changes in arm position. If your counterpart’s arms are lying open

on the table where you are both sitting as you start the negotiation., and he takes his arms off the

table and crosses them over his chest when you mention that your company has a standard

deposit of 50 percent on all first-time orders, that’s a good indication that this information was

not received well. You may want to clarify your words or, better yet, ask your counterpart

whether he has a concern about the deposit.

4. Hands. People’s true feelings are commonly revealed through hand movements. For example,

open palms generally convey a positive message. This goes back to medieval days, when people

showed their open palms to prove they were not carrying any weapons.

Involuntary hand movements can be particularly telling. People often touch their nose, chin, ear,

arm or clothing when they are nervous or lack confidence in what they are saying.

5. Legs. When asked why they cross their legs, most people say they do so for comfort.

Although they are being truthful, they are only partially correct. If you have ever crossed your

legs for a long period of time, you know that this position can become painfully uncomfortable.

Crossing your legs can have a devastating effect on a negotiation. In a study described in How to

Read a Person like a Book, Gerard I. Nierenberg and Henry H. Calero found after videotaping

2,000 transactions that no sales were made by people who had their legs crossed.

If you want your counterpart to perceive you as cooperative and trustworthy, sit with your legs

uncrossed, feet flat on the floor and body tilted slightly toward the other party. This posture will

give you a better chance of sending a positive signal.

Interpreting Body Language

Studying what you and your counterpart in the negotiation process are not saying is critical to

achieving a win/win outcome. The following chart is a “dictionary” that will help you translate

your counterpart’s body language, and use your own to say what you really mean to say.

Dominance, Power

*Feet on desk                              *Piercing eye contact                 *Hands behind head or on

hips *Palm-down handshake         *Steepling” of the fingers          *Standing while other is

seated

Submission, Nervousness

*Fidgeting                                    *Minimum eye contact

*Hands to face, hair, etc.

*Palm-up handshake

* Throat clearing

Disagreement, Anger, Skepticism

*Red skin                                 *Finger pointing                    *Squinting eyes                     

*Frowning                               *Turning away                        *Crossing arms or legs

Boredom, Lack of Interest

*Avoiding eye contact

*Playing with objects on desk

*Staring blankly

*Drumming on table

*Picking at clothes

*Looking at watch, door, etc.

Uncertainty, Indecision *Cleaning glasses                    *Looking puzzled                      *Putting

fingers to mouth            *Biting lip                                *Pacing back and forth               *Tilting

head

Suspicion, Dishonesty

*Touching nose while speaking

*Covering mouth

*Avoiding eye contact

*Moving away

*Crossing arms or legs

Evaluation

*Nodding                                 *Squinting                               *Putting index finger to lips       

*Tilting head slightly               *Stroking chin

Confidence, Cooperation, Honesty

*Leaning forward

*Opening arms and palms

*Maintaining great eye contact

*Keeping feet flat on floor

*Smiling

*Moving with counterpart’s rhythm