Strategy and Tactics of Integrative Negotiation[Sav Lecture]

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Notes to accompany Ch. 3 Integrative Negotiation Lecture.

East-West Negotiation, Culture and Challenges.

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  • Only about 4% of managers reach “Win-Win” outcomesAbout 20% reach “loose-Loose” (Leaving money on the table.)Win-Win: only 50% actually realize the shared benefits.
  • Find out Who is Who? Ask them to offer their opinion.
  • Few businessnegotiations are purely distributive…(Baker-Andersen was a Closed Simulation)We both do better (create value) if we cooperate.Negotiation is worth the effort. (Don’t just compromise, split the difference, this does not really create value, just divide it.) MH Ch1.
  • When two parties goals are linked so that one persons goal achievement helps the other to achieve their goals, this is Mutual-Gains or Integrative.
  • Best Outcome: Commitment to other sides interests and your own.1 Contending - Worried about YOUActors pursue own outcomes strongly, show little concern for other party obtaining their desired outcomes2 Yielding - ThemActors show little interest in whether they attain own outcomes, are quite interested in whether the other party attains their outcomes3 Inaction Actors show little interest in whether they attain own outcomes, little concern about whether the other party obtains their outcomes4 Problem solving – creates GAINS, larger pieActors show high concern in obtaining own outcomes, as well as high concern for the other party obtaining their outcomes5 Compromising – too easy, both leave money on the table.Actors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes
  • Opportunities to “win” or share resources”Claiming 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 object is to have both parties do well
  • Shows that if one side achieves his goal, does not preclude the other from Achieving their goals.Priorities are different, priorities show value differences.
  • a pyramid model (Exhibit 4-1)Three levels of integrative, or win-win, agreementsLevel 1: agreements that exceed parties’ no-agreement possibilities or reservation pointsLevel 2: agreements that are better for both parties than other feasible negotiated agreements (situation is not purely fixed-sum)Level 3: agreements that are impossible to improve on from the perspective of both parties (along pareto-optimal frontier of agreement)Less than 25% of executives in negotiation simulations reach level 3 agreements, and of those, 50% reach them by chance
  • strategies that do not really workCommitment to reaching a win-win deal (often parties have an incorrect idea about what win-win is)Compromise (pertains to slicing the pie, not expanding the pie)Focusing on a long-term relationship (establishing a long-term relationship does not translate directly into win-win)Adopting a “cooperative orientation” (often keeps parties from focusing on the right information at the right time)Dual-concern model of effective negotiation: high concern for the other party coupled with high concern for one’s own interestsTaking extra time to negotiate (the quality of the negotiation does not improve with additional time) strategies that workPerspective-takingAsk questions about interests and prioritiesProvide information about your interests and priorities (Exhibit 4-2 and 4-3)Illusion of transparency—negotiators believe they are revealing more than they actually areUnbundle the issuesMake package deals, not single-issue offersMake multiple offers of equivalent value simultaneously (Exhibit 4-4)Threefold strategyDevise multiple-issue offersDevise offers that are all of equal value to yourselfMake the offers all at the same timeAdvantages for the negotiatorCan be aggressive in anchoringGain better information about the other party (inductive reasoning)Be more persistent and persuasive regarding the value of an offerSignal priorities more effectivelyOvercome concession aversionStructure contingency contracts by capitalizing on differencesIn valuation (logrolling)In expectationsIn risk attitudesIn time preferencesIn capabilitiesCautionary note on effective contingency contractsShould not create a conflict of interestShould be enforceable and may require a written componentShould be clear, measurable, and readily evaluatedRequire continued interaction among partiesPresettlement settlements (PreSS; Exhibit 4-5)Search for postsettlement settlements
  • strategies that do not really workCommitment to reaching a win-win deal (often parties have an incorrect idea about what win-win is)Compromise (pertains to slicing the pie, not expanding the pie)Focusing on a long-term relationship (establishing a long-term relationship does not translate directly into win-win)Adopting a “cooperative orientation” (often keeps parties from focusing on the right information at the right time)Dual-concern model of effective negotiation: high concern for the other party coupled with high concern for one’s own interestsTaking extra time to negotiate (the quality of the negotiation does not improve with additional time) strategies that workPerspective-takingAsk questions about interests and prioritiesProvide information about your interests and priorities (Exhibit 4-2 and 4-3)Illusion of transparency—negotiators believe they are revealing more than they actually areUnbundle the issuesMake package deals, not single-issue offersMake multiple offers of equivalent value simultaneously (Exhibit 4-4)Threefold strategyDevise multiple-issue offersDevise offers that are all of equal value to yourselfMake the offers all at the same timeAdvantages for the negotiatorCan be aggressive in anchoringGain better information about the other party (inductive reasoning)Be more persistent and persuasive regarding the value of an offerSignal priorities more effectivelyOvercome concession aversionStructure contingency contracts by capitalizing on differencesIn valuation (logrolling)In expectationsIn risk attitudesIn time preferencesIn capabilitiesCautionary note on effective contingency contractsShould not create a conflict of interestShould be enforceable and may require a written componentShould be clear, measurable, and readily evaluatedRequire continued interaction among partiesPresettlement settlements (PreSS; Exhibit 4-5)Search for postsettlement settlements
  • Mutually Acceptable: May have to look Up, big picturePractical, efficient, common senseGoal: Limiting factors (people, processes, resources)Takes Open and Honest Communication, not protection.Takes time, not a rush to solution.
  • keeps parties from focusing on the right information at the right time
  • Be alert to the influence of intangibles in selecting optionsUse subgroups to evaluate complex options
  • Minimize negative issues….Logroll: Enlarge the area of negotiation to find similar goals but different needs to trade
  • Best Outcome: Commitment to other sides interests and your own.1 Contending - Worried about YOUActors pursue own outcomes strongly, show little concern for other party obtaining their desired outcomes2 Yielding - ThemActors show little interest in whether they attain own outcomes, are quite interested in whether the other party attains their outcomes3 Inaction Actors show little interest in whether they attain own outcomes, little concern about whether the other party obtains their outcomes4 Problem solving – creates GAINS, larger pieActors show high concern in obtaining own outcomes, as well as high concern for the other party obtaining their outcomes5 Compromising – too easy, both leave money on the table.Actors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes
  • Strategy and Tactics of Integrative Negotiation[Sav Lecture]

    1. 1. 3-1<br />Strategy and Tactics of Integrative Negotiation<br />
    2. 2. Last Session(s):<br />Win-Loose, Zero-Sum, Distributive.<br />For some, they were “Loose-Loose”.<br />What were your take-away’s:<br />A-Team Items?<br />Personal Journal?<br />This Session:<br />Win-Win, Mutual Gains & Their Differences.<br />Recall…<br />
    3. 3. Experiential Learning from the three recent Simulations<br />Win: <br />Trust, throw X’s & Y’s<br />Reputation, Greed vs. Cooperation<br />Negotiate with your Professor:<br />Perspective (other sides shoes), hierarchy & power <br />Baker-Andersen:<br />First Offer, Information, BATNA<br />Winner’s curse: “leave money on the table.”<br />
    4. 4. Interdependence (Ch. 1)<br />In negotiation, parties need (depend) each other to achieve their preferred outcomes or objectives…<br />This mutual dependency is called interdependence<br />Interdependent goals are an important aspect of negotiation<br />Win-lose: I win, you lose – Baker-Andersen.<br />Win-win: Opportunities for both parties to gain<br />
    5. 5. Interdependence<br />Interdependent parties are characterized by interlocking goals<br />Having interdependent goals does not mean that everyone wants or needs exactly the same thing<br />A mix of convergent and conflicting goals characterizes many interdependent relationships<br />1-5<br />
    6. 6. 1-6<br />Types of InterdependenceAffect Outcomes<br />Interdependence and the situation shape processes and outcomes<br />Zero-sum or distributive – one winner<br />Non-zero-sum or integrative – mutual gains situation<br />
    7. 7. The Dual Concerns Model<br />1-7<br />
    8. 8. Value Claiming and Value Creation<br />Opportunities to “win” or share resources”<br />Claiming value: result of zero-sum or distributive situations where the object is to gain largest piece of resource<br />Creating value: result of non-zero-sum or integrative situation where object is to have both parties do well<br />Most actual negotiations are a combination of claiming and creating value processes<br />More of one approach than the other<br />Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive/ competitive than they really are<br />
    9. 9. 1-9<br />Value Claiming and Value Creation<br />Negotiator’s value differences include:<br />Differences in interests<br />Differences in judgments about the future (perceptions)<br />Differences in risk tolerance<br />Differences in time preferences<br />Shows that if one side achieves his goal, it does not preclude the other from achieving their goals.<br />
    10. 10. 3-10<br />Strategy and Tactics of Integrative Negotiation<br />
    11. 11. Most people think win-win negotiation means one or more of the following:<br />Compromise -Even split<br />Building a relationship -Satisfaction<br />Win-win really means that all creative opportunities are exploited and no resources are left on the table (“integrative negotiation”, aka hard work.)<br />what is win-win negotiation?<br />
    12. 12. What Makes IntegrativeNegotiation Different?<br />3-12<br />Focus on commonalties rather than differences<br />Address needs and interests, not positions<br />Commit to meeting the needs of all involved parties<br />Exchange information and ideas<br />Invent options for mutual gain<br />Use objective criteria to set standards<br />
    13. 13. Win-Win Negotiation<br />What it is typically not…<br />Compromise<br />Even Split<br />Satisfaction<br />Building a relationship<br />What it typically is…<br />Does it involve more than one issue?<br />Can other Issues be brought in?<br />Can side deals be made?<br />Do parties have different preferences across specific issues?<br />These lower the total value for both sides…<br />
    14. 14. Pyramid Model of Integrative Agreements<br />Level 3: Pareto-optimal<br />Level 2: Settlement demonstrably superior to other feasible settlements<br />Level 1: Mutual settlement (positive bargaining zone)<br />< 25%<br />
    15. 15. Claiming and Creating Value<br />
    16. 16. “Expanding the Pie” Strategies<br />Strategies That Do Not Work…<br />Commitment to reaching a win-win deal<br />Compromise<br />Focusing on a long-term relationship<br />Adopting a “cooperative orientation”<br />Taking extra time to negotiate<br />Why?<br />often parties have an incorrect idea about what win-win is <br />pertains to slicing the pie, not expanding the pie <br />establishing a long-term relationship does not translate directly into win-win<br />keeps parties from focusing on the right information at the right time<br />
    17. 17. “Expanding the Pie” Strategies<br />Strategies That Do Not Work…<br />Commitment to reaching a win-win deal<br />Compromise<br />Focusing on a long-term relationship<br />Adopting a “cooperative orientation”<br />Taking extra time to negotiate<br />Strategies That Work…<br />Perspective-taking (other shoes)<br />Ask questions about interests and priorities<br />Provide information about your interests and priorities<br />Unbundle the issues<br />Make package deals, not single-issue offers<br />
    18. 18. Characteristics<br /><ul><li>Honesty & Integrity
    19. 19. Trust
    20. 20. Abundance Mentality
    21. 21. Give to get
    22. 22. Maturity
    23. 23. Stand up for your Issues
    24. 24. Systems Orientation
    25. 25. We are just a part of a larger goal
    26. 26. Listening Skills</li></li></ul><li>3-19<br />Overview of the Integrative Negotiation Process<br />Create a free flow of information<br />Exchange enough information to allow creativity<br />Understand the other negotiator’s real needs and objectives<br />Our needs are prioritized/valued differently<br />Emphasize the commonalties between the parties and minimize the differences<br />Keep main goal in mind…prioritize each issue<br />Search for solutions that meet the goals and objectives of both sides<br />Measure success by total goal’s satisfied, not only yours.<br />
    27. 27. …<br />
    28. 28. 3-21<br />Key Steps in the Integrative Negotiation Process<br />Identify and define the problem<br />Understand the problem fully<br />Generate alternative solutions<br />Evaluate and select among alternatives<br />
    29. 29. 1. Identify and Define the Problem<br />Define the problem in a way that is mutually acceptable to both sides<br />State the problem with an eye toward practicalityand comprehensiveness<br />State the problem as a goal and identify the obstacles in attaining this goal<br />Depersonalize the problem<br />Separate the problem definition from the search for solutions – avoid a rush towards a solution.<br />
    30. 30. 2. Understand the Problem Fully Identify Interests and Needs<br />Interests: the underlying concerns, needs, desires, or fears that motivate a negotiator <br />Substantive interests = key issues, financial<br />Process interests = the way the dispute is settled<br />Relationship interests = value of their relationship<br />Interests in principle= doing what is fair, right, acceptable, ethical may be shared by the parties<br />
    31. 31. Interests<br /><ul><li>Taxes
    32. 32. Payment Terms
    33. 33. Specifications
    34. 34. Transportation
    35. 35. Delivery Date
    36. 36. Quantity
    37. 37. Process
    38. 38. Risk/Contract</li></li></ul><li>3. Generate Alternative Solutions<br />Invent options by redefining the problem set:<br />Expand the pie; more uses for more resources ($, HR, Land)<br />Logroll; add more issues, trade concessions<br />Cut the costs for compliance of the other party<br />Generate options to the problem as a given:<br />Brainstorming<br />Electronic brainstorming<br />Surveys<br />
    39. 39. Re-Forming Questions for Win-Win Options<br />How can both parties get what they want?<br />What issues are higher and lower priority for me? Them? <br />What is inexpensive for me to give and valuable for them as non-specific compensation (benefits)<br />What can I do to minimize the other’s risks/costs?<br />What are the other negotiators real interests and needs? Mine?<br />Match your Higher Priorities against their lower priorities: find win-win.<br />
    40. 40.
    41. 41. 3-28<br />4. Evaluation and Selection of Alternatives<br />Narrow the range of solution options<br />Focus on the positive options…<br />Evaluate solutions on: <br />Quality …how good they are.<br />Objective standards…<br />Acceptability…How acceptable.<br />Agree to evaluation criteria in advance <br />Be willing to justify personal preferences<br />
    42. 42. 3-29<br />Evaluation and Selection of Alternatives<br />Take time to “cool off”<br />Use patience and focus on positive options<br />Explore different ways to logroll<br />Exploit differences in expectations and risk/ time preferences<br />Keep decisions tentative and conditional until a final proposal is complete<br />Minimize formality, record keeping until final agreements are closed<br />
    43. 43. Summary: Successful Integrative Negotiation Factors<br />Some common objective or goal<br />Faith in one’s own problem-solving ability<br />A belief in the validity of one’s own position and the other’s perspective<br />The motivation and commitment to work together<br />Trust<br />Clear and accurate communication<br />An understanding of the dynamics of integrative negotiation<br />
    44. 44. Why Integrative Negotiation Is Difficult to Achieve<br />The history of the relationship between the parties<br />If contentious in past, it is difficult not to look at negotiations as win-lose<br />The belief that an issue can only be resolved distributively<br />Negotiators are biased to avoid behaviors necessary for integrative negotiation<br />The mixed-motive nature of most negotiating situations<br />Purely integrative or purely distributive situations are rare<br />The conflict over the distributive issues tends to drive out cooperation, trust needed for finding integrative solutions<br />
    45. 45. Comments/Feedback?<br />
    46. 46. Adapted from “Negotiation” Text (Lewicki 5e) and, Heart and Mind of the Negotiator (Thompson 4e)<br />
    47. 47. Negotiation Style Self-Assessment<br />APPENDIX A<br />
    48. 48. Competing Style: Q1, 7, 13, 17, 22: ____<br />Avoiding Style: Q2, 10, 5, 18, 25: ____<br />Collaborating Style: Q4, 8, 12, 19, 21: ____<br />Accommodating: Q3, 9, 15, 20, 24: ____<br />Compromising Style: Q6, 11, 14, 16, 23 :____<br />Assertiveness: (COMP+COLL)-(AVOD+ACCOM): ___<br />Cooperativeness: (COLL+ACCOM)-(COMP+AVOID): ____<br />Self-Assessment Calculations<br />
    49. 49. The Dual Concerns Model<br />1-36<br />
    50. 50. Key Terms<br />APPENDIX B<br />
    51. 51. contingency contracts Agreements wherein negotiators make bets based on their differences in beliefs, forecasts, risk profiles, and interests.<br /> <br />empathy Ability to emotionally connect with another person.<br /> <br />false conflict or illusory conflict A situation in which conflict does not exist between people, yet they erroneously perceive the presence of conflict.<br /> <br />fixed-pie perception The belief that the counterparty’s interests are directly and completely opposed to one’s own.<br /> <br />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.<br /> <br />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.<br /> <br />integrative negotiation A process by which negotiators seek to expand the amount of available resources.<br /> <br />issue mix The union of both parties’ issue sets.<br /> <br />logrolling The strategy of trading off in a negotiation so as to capitalize on different strengths of preference.<br />p1<br />
    52. 52. lose-lose effect The tendency for negotiators to settle for outcomes that both prefer less than some other readily available outcome.<br /> <br />multiple offers of equivalent value simultaneously A strategy that involves simultaneously presenting the counterparty with two or more proposals of equal value to oneself.<br /> <br />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.<br /> <br />perspective taking A cognitive ability to consider the world from another’s viewpoint.<br /> <br />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.<br /> <br />premature concessions Making concessions on issues before they are even requested.<br /> <br />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.<br />p2<br />

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