Negotiation Skills Information Technology Institute Soft Skills Unit Ministry of Communications and Information Technology Information Technology Institute
Distributive Versus Integrative Bargaining Bargaining Characteristic Distributive Bargaining Integrative Bargaining Information sharing Low (sharing information will only allow other party to take advantage) High (sharing information will allow each party to find ways to satisfy interests of each party) Duration Short term Long term
Distributive Versus Integrative Bargaining Cont’d Bargaining Characteristic Distributive Bargaining Integrative Bargaining Goal Get as much of the pie Expand the pie so that both parties are satisfied Motivation Win-Lose Win-Win Focus Positions “ I can’t go beyond this point on this issue.” Interests “ Can you explain why this issue is so important to you?” interests Opposed Congruent
Negotiation—Non-Verbal Cues Hand-to-face gesture Legs tightly crossed Arm Crossing the body I don’t like what you’re saying! I disagree! I’m holding back Negative Feelings! Direct Eye-Contact Hand on Chin Making a Decision!
The five stages are basically the same across all cultures.
This stage involves laying the foundations through advance planning and analysis prior to any face-to-face interactions. At this stage, individuals or teams conduct background research, gather relevant information and plan their strategies and tactics. In addition, preliminary decisions are made about what the objectives will be and what can and can not be conceded during the negotiation. Research should not be based only on the Internet, Rather seek to get information from your Contacts & from magazines Don’t ASSUME: You shouldn’t assume anything about your opponent: ASSUME is then read as ASS/U/ME
This stage is commonly referred to as “non-task time” , in which each side attempts to establish comfortable working relationships with the other side. Americans are inclined to make this stage briefer and believe that such activities are relatively unimportant. On the other hand, negotiators from some other cultures such as Latin America, the Middle east and Asia believe exactly the opposite. Research suggests three types of behaviors during this stage: developing trust, developing personal rapport, and establishing long-term association
In this stage, each party attempts to learn about the needs and demands of its counterparts. Managers from the united states often attempt to hurry through these activities with an attitude of “ you tell me what you want and I’ll tell you what I want”. In contrast, managers from Asian cultures take a much more indirect, more drawn out, and more thorough approach to acquiring and exchanging information. Arabic and Latin America managers appear to follow similar approach except that the latter are even more leisurely in their use of time at this stage.
American managers treat this stage as the most important This stage focuses on attempts to modify the position of other party and to influence that side to accept the negotiator’s desired set of exchanges (for example, an exchange of a certain price for a certain quantity or quality of goods or services). American managers usually treat this as the most important stage, with assertive and straightforward efforts to obtain a desired conclusion. Such persuasion can sometimes involve the use of warnings or threats to try to force the other party to agree. Managers from Arabic countries tend to show tactics similar to those of Americans at the persuasion stage, but they are less inclined to hurry. Negotiators from Asian cultures take a slow, careful approach but do not tend to use direct assertiveness in persuasion until later in the negotiations. As reported in one research study, “ when not sure of the offer, they frequently resort to the tactics of “ pretending of lack authority” or “ deliberately delaying counter offer”. Managers from Latin American cultures tend to use a mixture of approaches during this stage by showing a moderate degree of assertiveness but also a willingness to use the tactic of “ calculated delay” when this seems advisable.
At this final point, if reasonable progress has been made, compromises and concessions are made that permit each party to take away something of value. Since American managers tend to begin the negotiation process with positions fairly close to what they will finally accept, they do not have much leeway for concessions. Managers from Arabic and Latin American countries seem to open negotiations from more extreme positions, which permit them to offer concessions late in the process. Managers from Asian countries often employ “ normative appeals” to try to get the other party to offer concessions.
Negotiation “interests” a party’s or parties concerns and desires-in other words, what they want. Negotiation “positions” a party’s or parties stance regarding their interests. It is easier to get agreement on interests rather than positions because: (a) for a given interest there are probably several possible positions that could satisfy it; and (b) behind two opposed positions, there are likely to be at least some interests of the two parties that are shared rather than in direct conflict. The key point is that a negotiator should endeavor to concentrate on the substance of disagreement rather than on who is doing the disagreement or what they are like as people. “ be hard on the problem, soft on the people” Try to lessen the competition between the two parties ( an ” I win, you lose” situation) by establishing an atmosphere of collaboration ( a “ we all win “ situation ). Collaboration is an attempt to get both parties to attack a problem as solve it together, rather than attacking each others. Both parties should be encouraged to develop creative solutions that increase the total amount of resources available to be shared or divided by the two parties. Finally if the negotiations are extremely complex and the parties seem emotionally invested in the outcome, they can often request intervention by a neutral party. The third- parity negotiator can serve the role of judge (make decisions), mediation (just control the process), or devil’s advocate ( asks questions that may oppose the positions of both parties. The attempt here is for all parties to think about positions that may not originally have considered).
Strategy: the overall plan to achieve one’s goal in a negotiation Tactics: Short-term, adaptive moves designed to enact or pursue broad strategies. (tactics are subordinate to strategy, and are driven by strategy) Techniques: A bundle of Tactics The “Walk-Away” Scenarios where you decide at one point (Price, offer, deal…etc) where continuing in the negotiation process would mean a loss. Auction: If you decide to sell by auction there will be no role for negotiations. Sticker Price: Like auction the sticker price leaves no room for negotiation. Sticker price plus or minus a bit: the deal-making strategy. It is often used when terms & conditions do not vary greatly within an industry. It is a common deal-making strategy when both sides have an established long-term relationship Haggling: Negotiation is used when you don’t care about long-term relationship with your opponent Bargaining: Negotiation is used in this Strategy when you do care about a long-term relationship with your opponent.
KISS: Keep it Short & Simple or Keep it Simple Stupid Haggling is a game: Haggling is a battle of wills, & the best way to be very competitive, but remain unemotional, is to treat it as a game. You don’t have to be reasonable: contrary to bargaining, in haggling you don’t have to be reasonable as both you & your opponent care for nothing but getting the best gain, YOU don’t care for a long relation, just the best you can get out of it. Still you can always play rationally whenever it suits, REMEMBER HAGGLING IS A GAME!!
In bluffing you should make sure: Your opponent can’t disprove your bluff Bluffs should be credible Do not bluff too much If you got caught, don’t look embarrassed A bit of overreacting never hurts: for instance you can work on your look of complete astonishment when hearing an opening offer. Leverage: refers to the balance of power between negotiations, Using your leverage is by pressuring that you’d go to the competitor if you don’t get a good offer. Or pressuring by mentioning all the defects of the good, or that you have your network that you can use to publicize in favor of or against their product Never Reveal your budget: If your opponent get know your budget, they won’t stop until they extract your full budget
Make Smaller & Smaller concessions: Don’t reach your ground price or ground offer too early go bit by bit till you reach your Zero point. Your opponent would be probably using the same previous rule going by small concessions, Knowing this just work on breaking them through, reaching with them the furthest you can. Silence: Makes your opponent uncomfortable that they will unconsciously pour out some valuable information, or at least a revised offer Work on maintaining an on-going auction: try to get different prices, to maintain the competition between your opponents & others Timing is crucial: timing to get the best deal, getting an inside info on the production process, or the right timing to approach a certain oponent
You can always renegotiate after you close the deal: if things done as were agreed on, you can always come back to renegotiate but make sure you make your demands & concerns quite clear. Don’t get emotionally attached to the object of haggling, so as to be able to walk away from the deal flexibly Never get angry: again it’s a game, so avoid losing your temper Be ready to ‘flash the cash’: it is always effective to show the banknote not the opponent, once a deal is about to be reached Nibbling is OK: In bargaining; Nibbling is questioned, but in haggling it’s ok. Nibbling is where you appear to have agreed & then come back demanding additional sweetners
Never give something for Nothing: If I give you X then will you give me Y In Win/Win offers: some items could be used to enlarge the pie i.e. the gains for each party (Customer reference, Payment terms, guarantees. Large orders & multi-year deals You cannot guarantee that you and your opponent have the same memory. Some it’s either you keep a legal document or you have written minutes
Perceptions are the only reality: if your opponent get something incorrectly, make sure you always make it right. You should be alert about the body language & tone used by the opponent. Be flexible: sometimes when you are well prepared to a bargaining process, you prefer that things would stay within the confines you have set, You must be ready to think sometimes outside the box.
Reciprocity: IF I agree to that THEN then it would reasonable for you to give me an equivalent concession The strategic Apology Good Cop/ Bad Cop: this involves two negotiators: one plays good guy who makes the offers & the other plays bad guy who issues the threats. This tactic is however not very much recommended as it involves the need for two negotiators who are capable of role playing the two different roles well, without being caught. Third Party Mandate: Similar to the above tactic, yet with the bad guy being a third not present party i.e. your boss, lawyer, family, simply it’s “My hands are tied” tactic or you show limited authority
Bluffing: same as in haggling, yet in bargaining you should be more careful so as not to be caught, remember you care for a long-term relationship with your opponent Ultimata, threats & Walk-outs: Us this tactic at the end, if you reached a deadlock & not at the beginning with an opening offer. Ultimata are set along a continuum. There are most extreme such as “This is my final offer, take it or leave”, A less extreme “I must insist that you get me that information before we meet tom” Threats can be explicit “ this issue is a deal breaker for me”, or can be implicit “I’m not comfortable parking this issue because it is very important to me” Time-out you can benefit from calling for a Time-Out To give yourself or the other side a rest To discuss an issue amongst your negotiating team in private To contact your bosses, lawyers or financial experts to seek guidance To do research to find out relevant information To disrupt the flow of your opponents. If they are getting the upper hand then a time out may well be a chance for you to regroup & for them to lose their concentration Use breaks & informal Sessions: Most deals are reached during breaks, during coffee breaks, lunch…where you &/or your opponent can come up with possibilities that you could not think in a formal context
Throw out lots of options: Now is the time to be creative & think out of the books Ask a lot of (open) questions: this buys you time & gets you potentially useful intelligence Issue an Ultimatum (BAFO): This is my Best & Final Offer take it or leave it. An Ultimatum is effective when your opponent wants the offer more than you do. Invite your Opponent to give their BAFO: Not the best tactic, but sometimes work well Capitulate: You would rather agree on their terms than walk away Walk Away: They may run after you with a better offer or come back at a later date. Agree to Sleep on it: this works well when both parties are exhausted & they just part amicably, agreeing to think about it
Example: you read a used car advertised for sale in the newspaper. It appears to be just what you’ve been looking for. You go out to see the car. It’s great and you want it. The owner tells you the asking price. You don’t want to pay that much. The two of you then negotiate over the price. Zero-sum condition means that any gain I make is at your expense and vice versa. In the figure, Parties A and B represent two negotiators. Each has a target point that defines what he or she would like to achieve. Also each has a resistance point, which marks the lowest acceptable outcome (where it is better to break off negotiations rather than accept a less-favorable settlement). The area between these two points makes up each one’s aspiration ranges. As long as there is some over-lap between A’s and B’s aspiration ranges, there exists a settlement range in which each one’s aspirations can be met. One’s tactics focus on trying to get one’s opponent to agree to a specific target point or to get as close to it as possible. Examples: persuading your opponent of the impossibility of getting to his/her target point and the advisability of accepting a settlement near yours; arguing that your target is fair, while your opponent’s isn’t. and attempting to get your opponent to feel emotionally generous toward you and thus accept an outcome close to your target point. Another tactic is reveling deadline.
In terms of intraorganizational behavior, all things being equal, integrative bargaining is perfect to distribute bargaining because the former build long-term relationships. It bonds negotiators and allows them to leave the bargaining table feeling they have a achieved a victory. Distributive bargaining leaves one party a loser. Why don’t we see more integrative bargaining in organizations? The answer lies in the conditions necessary for this type of negotiation to succeed. These include parties who are open with information and candid about their concerns, sensitivity by both parties to maintain flexibility. Because these conditions often don’t exist in organizations, it isn’t surprising that negotiations often take a win-at-any-cost dynamic. To achieve more integrative outcomes Individuals who bargain in teams reach more integrative agreements than those who bargain individually. This happens because more ideas are generated when more people are at the bargaining table. The more negotiable issues that are introduced issues that are introduced into a negotiation, the more opportunity there is for logrolling where issues are traded because of differences in preferences. Compromise may be your worst enemy in negotiating a win-win agreement. This is because compromising reduces the pressure to bargain integratively. After all if you or your opponent caves in easily, it doesn’t require anyone to be creative to reach settlement. Thus people end up settling for less than they could have obtained if they had been forced to consider the other party’s interests, trade off issues, and be creative.
Negotiators who are in positive moods negotiate better outcomes than those who are in average moods. Why? Negotiators who are upbeat or happy tend to trust the other party more and therefore reach more joint-gain settlements. Assessments of the personality-negotiation relationship have been that personality traits have no significant direct effect on either bargaining process or the negotiation outcomes. However recently research stated that the Big Five traits are related to negotiation outcomes. For example: agreeable or extraverted are not very successful in distributive bargaining while they are more helpful in integrative negotiations. So the best distributed bargainer appears to be a disagreeable introvert. People who are overly competitive in negotiating negotiate to look good personally rather than to attain the best agreement for all concerned. So those who are able to check their egos at the door are able to negotiate better agreements for themselves and for others, whether the bargaining situation is distributive or integrative.
The answer of the first question is no. The answer to the second is yes. A popular stereotype held by many is that women are more cooperative and pleasant in negotiations than are men. The evidence doesn’t support that belief. However, men have been found to negotiate better outcomes than women, although the difference is relatively small. Managerial women demonstrate less confidence in anticipation of negotiating and are less satisfied with their performance after the process is complete, even when their performance and the outcomes they achieve are similar to those for men. This latter conclusion suggests that women may unduly penalize themselves by failing to engage in negotiations when such action would be in their best interests.
The French like conflict. They frequently gain recognition and develop their reputations by thinking and acting against others. Chinese and Japanese negotiate to develop a relationship and a commitment to work together rather than to tie up every loose end. The Chinese draw out negotiations because they believe negotiations never end. Just when you think you’ve pinned down every details and reached a final solution with a Chinese executive, that executive might smile and start the process all over again. Chinese and Japanese negotiate to develop a relationship and a commitment to work together rather than to tie up every loose end.
We’ve discussed bargaining in terms of direct negotiation. Occasionally individual or groups representatives reach a stalemate and are unable to resolve their differences through direct negotiations. In such cases, they may turn to a third party to help them to find a solution.
Perceptions of the mediator are important to be effective, the mediator must be perceived as neutral and non-coercive.
Voluntary requested Compulsory forced on the parties by law or contract. The big plus of arbitration over mediation is that it always results in a settlement. Whether or not there is a negative side depends on how “heavy-handed” the arbitrator appear. If one party is left feeling overwhelmingly defeated, that party is certain to be dissatisfied and unlikely to graciously accept the arbitrator’s decision. Therefore, the conflict may resurface at a later time.
This role was made famous by Robert Duval in the first Godfather film. Duval acted as an intermediary between the Corleone family and the other Mafioso families.
The higher the position of the Hand, the more the frustration felt. You should then invite the frustrated side to unclench their hands by offering them a drink or making them use their hands
The Mouth Cover: It is as if you re trying to stop the deceitful c=words coming of your mouth, some people do it by coughing. The nosed touch: “Pinocchio Effect” research proved that lying causes an increase in blood pressure that causes the nose to expand The Eye Rub: See no evil: It is the adults attempt at not looking to the face of those being lied to The ear grub: Hear no Evil: you don’t want to hear your lies
The Neck Scratch: this is a signal of doubt or uncertainty, It is very noticeable when the verbal language contradict it The collar pull: as previously mentioned lying causes an increase in blood pressure that causes sweating, Pulling the collar is a reaction to the increase sweat. Finger in the Mouth: It shows an inner feeling to reassurance, knowing that you re lying you feel in secure, so you resort to the childish gesture of sucking your finger.
Communication: A review of the research suggests that differing word connotations, jargon, insufficient exchange of information, and noise in the communication channel are all barriers to communication and potential antecedent conditions to conflict. The potential for conflict increases when either too little or too much communication takes place. Furthermore, the channel chosen for communication can have an influence on stimulating opposition. The filtering process that occurs as information is passed between members and the divergence of communications from formal or previously established channels offer potential opportunities for conflict to arise. Structure: the larger the group and the more specialized its activities, the greater the likelihood of conflict. The potential for conflict tends to be greatest when group members are younger and when turnover is high. Personal variables: did you ever meet someone to whom you took an immediate disliking? Most of the opinions they expressed, you disagreed with. Even insignificant characteristics– the sound of their voice, the smirk when they smiled, their personality– annoyed you. We’ve all met people like that. When you have to work with such individuals, there is often the potential for conflict.
If the conditions cited in Stage I negatively affect something that one party cares about, then the potential for opposition or incompatibility becomes actualized in the second stage. Perception is required. Therefore, one or more of the parties must be aware of the existence of the antecedent conditions. However, because a conflict is perceived doesn’t mean that it is personalized. In other words, “ A may be aware that B and A are in serious disagreement…but it may not make A tense or anxious, and it may have no effort whatsoever on A’s affection toward B.” It is at the felt level, when individuals become emotionally involved, that parties experience anxiety, tension, frustration, or hostility. Perceived conflict: Awareness by one or more parties of the existence of conditions that create opportunities for conflict to arise. Felt conflict: emotional involvement in a conflict creating anxiety, tenseness, frustration, or hostility.
A person have to infer the other’s intent to know how to respond to that other’s behavior. There is typically a great deal of slippage between intentions and behavior, so behavior doesn’t always accurately reflect a person’s intentions. The figure represents one author’s effort to identify the primary conflict-handling intentions. Using two dimensions –cooperativeness (the degree to which one party attempts to satisfy the other party’s concerns) and assertiveness (the degree to which one party attempts to satisfy his or her own concerns) Competing: A desire to satisfy one’s interests regardless of the impact on the other party to the conflict. Collaborating: A situation in which the parties to a conflict each desire to satisfy fully the concerns of all parties. Avoiding: The desire to withdraw from or suppress a conflict. Accommodating: The willingness of one party in a conflict to place the opponent’s interest above his or her own. Compromising: A situation in which each party to a conflict is willing to give up something.
It is where conflicts become visible. It includes the statements, actions, and reactions made by the conflicting parties. These conflict behaviors are usually overt attempts to implement each party’s intentions. As a result of miscalculations or unskilled enactments, overt behaviors sometimes deviate from original intentions.
Functional in that the conflict results in an improvement in the group’s performance, or dysfunctional in that it hinder group performance