Nature of negotiation


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Siena Heights University graduate class on Negotiation as Process based on text (2011) from Lewicki, Saunders and Barry (McGraw-Hill).

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  • Welcome to LDR 655 Negotiation as Process using Essentials of Negotiation by Roy Lewicki, David Saunders and Bruce Barry from McGraw Hill published in 2011.
  • We all negotiate to varying degrees throughout the day, or maybe more importantly, not be aware that we’re in a negotiation, we just acquiesce to requests from leaders, followers, family and others without actually entering into a negotiation. The importance of this class comes in part from understanding the terms, certainly in understanding the negotiation process, but most importantly from recognizing situations and opportunities for negotiation and your ability then to understand your opponent’s, pardon the term, viewpoint.
  • Most people think bargaining and negotiation mean the same thing; however, we will be distinctive about the way we use these two words because they are not the same thing:Bargaining: 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, and given the need for value creation in our organizations today, the win-win-win situations where not only do both parties gain something of value, but the other stakeholders not directly involved in the negotiations do as well.
  • The definition of negotiation and the basic characteristics of negotiation situations. In negotiations both parties need each other, which is the definition of:Interdependence, the relationship between people and groups that most often leads them to negotiate, and:Understanding the dynamics of conflict and conflict management processes which serve as a backdrop for different ways that people approach and manage negotiations. This area in particular is highly important, as some research shows that managers spend up to 40% of their time handling conflict in the organization.
  • The basic characteristics of negotiation are:That there are two or more parties. We’ll discuss in later chapters multiple party negotiations.There is a conflict of needs and desires between two or more entitiesParties negotiate because they think they can get a better deal than by simply accepting what the other side offers themParties expect, or should expect a “give-and-take” process. That depends somewhat on the psychological motivations and beliefs of those coming to the table as it were.
  • Parties search for agreement rather than:Fight openlyCapitulate or give upBreak off contact permanentlyTake their dispute to a third party where they may lose some control over the outcomeSuccessful 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
  • In negotiation, parties need each other to achieve their preferred outcomes or objectivesThis mutual dependency is called interdependenceInterdependent goals are an important aspect of negotiationWin-lose: I win, you loseWin-win: Opportunities for both parties to gainAnd as we must stress beyond the textbook, that win-win-win scenario where other stakeholders, customers, vendors, etc also gain from the value creation of the negotiation.
  • Interdependent parties are characterized by interlocking goalsHaving interdependent goals does not mean that everyone wants or needs exactly the same thingConvergence is a movement unto itself these days with many descriptions, but a simple definition is the coming together of different viewpoints or entities that leads to direction towards each other and the same place, point or results. A mix of convergent and conflicting goals characterizes many interdependent relationships
  • Mutual adjustment throughout negotiations occurs through both interdependence levels, the structure used that impact the processes and the eventual outcomes. When you hear the term Zero-Sum which originated in the 1950’s and comes from both game and economic theory, and like the term bargaining leads to one winner, or distributive outcomes where resources meet one side’s needs, but not the other. Non-zero-sum or integrative outcomes derive from economics as well: Many economic situations are not zero-sum, since valuable goods and services can be created, destroyed, or badly allocated in a number of ways, and any of these will create a net gain or loss of utility to numerous stakeholders. Specifically, all trade is by definition positive sum, because when two parties agree to an exchange each party must consider the goods it is receiving to be more valuable than the goods it is delivering. In fact, all economic exchanges must benefit both parties to the point that each party can overcome its transaction costs, (or the transaction would simply not take place).
  • Evaluating interdependence depends heavily on the alternatives to working togetherThe desirability to work together is better for outcomes and you will certainly need to know and understand the term BATNA.Best Alternative to a Negotiated Agreement)
  • Mutual adjustment should continue throughout the negotiation as both parties act to influence the other, thus the cycle of share – observe – listen – understand and adjust. That’s also why you have an assignment this week of researching body language, to increase your power of observation and understanding by what you observe in all parties.One of the key causes of the changes that occur during a negotiation is mutual influence, the primary change force.The effective negotiator needs to understand how people will adjust and readjust and how the negotiations might twist and turn, based on one’s own moves and the other’s responses.The term locus of control was first introduced in the 1950s by psychologist Julian Rotter. People with an internal locus of control believe that they are primarily responsible for the outcomes in their lives. Those with an external locus of control believe that forces outside of themselves affect their ability to succeed. Very few of us live entirely internally or externally, but if our mindset is external, we are more aware of what’s occurring around us, and thus are able to make better continual adjustments.
  • When one party agrees to make a change in his/her position, a concession has been made within the range of bargains that is acceptable to that party, and there is always a range which we’ll discuss later on.Concessions restrict the range of optionsWhen a concession is made, the bargaining range is further constrained
  • Whether we’re talking about negotiations among family, co-workers, or multiple organizations, the difficulties of honesty and trust are paramount. Within your graduate studies of leadership you should be well aware of this on many levels.Dilemma of honesty: Concern about how much of the truth to tell the other partyDilemma of trust: Concern about how much should negotiators believe what the other party tells them
  • Opportunities to “win” or share resources are continual.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 the object is to have both parties do well
  • Most 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 and understanding your own biases is paramount to your being a successful negotiation.As the oracle at Delphi temple proclaims “Self Knowledge is the beginning of wisdom.”
  • Value differences that exist between negotiators include:Differences in interestDifferences in judgments or visions of the futureDifferences in risk tolerance, which varies greatlyDifferences in time preferences whether those constraints are individual or passed on from higher up in the organization
  • Conflict 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"
  • Intrapersonal or intrapsychic conflict: Conflict that occurs within an individual - We want an ice cream cone badly, but we know that ice cream is very fattening and our heart and hips don’t need it.Interpersonal conflict: Conflict is between individuals.Conflict between bosses and subordinates, spouses, siblings, roommates, etc.
  • Intragroup Conflict is within a group: Among team and committee members, within families, classes etc.Intergroup Conflict can occur between organizations, warring nations, feuding families, or within splintered, fragmented communities. These negotiations are the most complex to work through.
  • Understanding the dual concerns model is of great importance to effective conflict management. It suggests that independent parties have two different concerns; self, and others. Vertically would be our level of cooperation, and horizontally is the assertive dimension. In the middle is where compromise leads to win-win-win outcomes.
  • Understanding the dual concerns model is of great importance to effective conflict management. It suggests that independent parties have two different concerns; self, and others. Vertically would be our level of cooperation, and horizontally is the assertive dimension. In the middle is where compromise leads to win-win-win outcomes.
  • Contending : Actors pursue own outcomes strongly, show little concern for other party obtaining their desired outcomesYielding: Actors show little interest in whether they attain own outcomes, but are quite interested in whether the other party attains their outcomesInaction: Actors show little interest in whether they attain own outcomes, and little concern about whether the other party obtains their outcomesProblem solving: Actors show high concern in obtaining own outcomes, as well as high concern for the other party obtaining their outcomesCompromising: Actors show moderate concern in obtaining own outcomes, as well as moderate concern for the other party obtaining their outcomes
  • So take a few moments or more to consider what your patterns and biases are and how that impacts your ability to negotiate in any circumstance, let alone in areas of high importance and conflict.
  • Nature of negotiation

    1. 1. Ch 1 - The Nature of NegotiationLRD 655 - Wallace(Lewicki, Saunders & Barry. 2011)
    2. 2. 1-2 Daily Occurrences Negotiation is something that everyone does to varying degrees.(Lewicki, Saunders & Barry. 2011)
    3. 3. Negotiations• Sharing or dividing limited resources• Creation of something new• Collaboration• Mergers & acquisitions• Dispute resolution• Customer service(Lewicki, Saunders & Barry. 2011)
    4. 4. 1-4 Not Bargaining • Bargaining is a competitive win-lose tactic (old school). • Negotiation requires win-win objectives for complex situations that are mutually acceptable to all stakeholders.(Lewicki, Saunders & Barry. 2011)
    5. 5. Negotiation Key Themes1. Definitions and characteristics2. Interdependence3. Conflict dynamics and management processes.(Lewicki, Saunders & Barry. 2011)
    6. 6. Characteristics • Two or more parties • Conflict between needs and desires • We believe we can do better by negotiating • We should expect a “give-and-take” process(Lewicki, Saunders & Barry. 2011)
    7. 7. Characteristics• We seek agreement over: – Openly arguing – Surrendering – Discontinuing contact permanently – Hiring third party mediation• Successful negotiation involves: – Managing the tangibles – Resolving intangibles • Psychological motivations(Lewicki, Saunders & Barry. 2011)
    8. 8. Interdependence Mutual need • Interdependent goals are a highly important aspect of negotiation • Win-lose: I win, you lose won’t work. • Win-win: Both sides gain. • Win-win-win: Other stakeholders gain.(Lewicki, Saunders & Barry. 2011)
    9. 9. Interdependence Conflicting B’s A’s GoalsGoals Convergent Interdependent(Lewicki, Saunders & Barry. 2011) Goals
    10. 10. Outcomes• Interdependence levels and situation structure guide both processes and outcomes – Zero-sum or distributive – one winner – Non-zero-sum or integrative: mutual benefits(Lewicki, Saunders & Barry. 2011)
    11. 11. Alternatives (BATNA) Desire Alternatives(Lewicki, Saunders & Barry. 2011)
    12. 12. Mutual Adjustment • Mutual influence is ongoing • Primary change force • External locus of control • Continual adjustment(Lewicki, Saunders & Barry. 2011)
    13. 13. Concession Making(Lewicki, Saunders & Barry. 2011)
    14. 14. 1-14 Two Dilemmas HONESTY TRUST(Lewicki, Saunders & Barry. 2011)
    15. 15. Value Claiming & Creation Selfish Sharing or(Lewicki, Saunders & Barry. 2011)
    16. 16. Value Claiming & Creation Claiming Creating(Lewicki, Saunders & Barry. 2011)
    17. 17. Value Differences • Interests • Visions • Risk • Time(Lewicki, Saunders & Barry. 2011)
    18. 18. Conflict(Lewicki, Saunders & Barry. 2011)
    19. 19. Levels of Conflict Intrapersonal- Interpersonal Intrapsychic(Lewicki, Saunders & Barry. 2011)
    20. 20. Group Levels of Conflict Intragroup Intergroup(Lewicki, Saunders & Barry. 2011)
    21. 21. Dysfunctions1. Competitive, win-lose goals2. Misperception and bias3. Emotionality4. Decreased communication5. Blurred issues6. Rigid commitments7. Magnified differences - minimized similarities8. Escalation of conflict(Lewicki, Saunders & Barry. 2011)
    22. 22. Functions and Benefits1. Organizational members more engaged with increased coping skills via discussion.2. Promises organizational adaptation and change.3. Improves relationships and heightens morale.4. Promotes self awareness and empathy.5. Enhances personal development.6. Builds psychological development & improving self analysis.7. Can be stimulating and fun. (Lewicki, Saunders & Barry. 2011)
    23. 23. Dual Concerns Model(Lewicki, Saunders & Barry. 2011)
    24. 24. Dual Concerns Model(Lewicki, Saunders & Barry. 2011) Graphic Source: Emerald Insight
    25. 25. 1-25 Conflict Management Yielding Problem Solving Compromising Inaction Contending(Lewicki, Saunders & Barry. 2011)
    26. 26. Your Patterns?(Lewicki, Saunders & Barry. 2011)
    27. 27. Assignments • Watch the Video • Read Chapter 1 • Research Body Language and post in the Discussion Thread • Journal • Take the Chapter 1 Quiz(Lewicki, Saunders & Barry. 2011)
    28. 28. Time to Grow(Lewicki, Saunders & Barry. 2011)