Strategy and Tactics of Integrative Negotiation[Sav Lecture]
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The document discusses the concepts and strategies of integrative negotiation, emphasizing the importance of mutual gains, trust, and interdependence between negotiating parties. It contrasts win-win approaches with zero-sum or distributive situations and outlines key steps in the integrative negotiation process, including problem identification, understanding needs, generating alternatives, and evaluating solutions. The document also highlights successful negotiation factors and challenges faced in achieving effective integrative outcomes.
Strategy and Tactics of Integrative Negotiation[Sav Lecture]
- 1. 3-1Strategy and Tactics of Integrative Negotiation
- 2. Last Session(s):Win-Loose, Zero-Sum, Distributive.For some, they were “Loose-Loose”.What were your take-away’s:A-Team Items?Personal Journal?This Session:Win-Win, Mutual Gains & Their Differences.Recall…
- 3. Experiential Learning from the three recent SimulationsWin: Trust, throw X’s & Y’sReputation, Greed vs. CooperationNegotiate with your Professor:Perspective (other sides shoes), hierarchy & power Baker-Andersen:First Offer, Information, BATNAWinner’s curse: “leave money on the table.”
- 4. Interdependence (Ch. 1)In negotiation, parties need (depend) each other to achieve their preferred outcomes or objectives…This mutual dependency is called interdependenceInterdependent goals are an important aspect of negotiationWin-lose: I win, you lose – Baker-Andersen.Win-win: Opportunities for both parties to gain
- 5. InterdependenceInterdependent parties are characterized by interlocking goalsHaving interdependent goals does not mean that everyone wants or needs exactly the same thingA mix of convergent and conflicting goals characterizes many interdependent relationships1-5
- 6. 1-6Types of InterdependenceAffect OutcomesInterdependence and the situation shape processes and outcomesZero-sum or distributive – one winnerNon-zero-sum or integrative – mutual gains situation
- 7. The Dual Concerns Model1-7
- 8. Value Claiming and Value CreationOpportunities 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 wellMost actual negotiations are a combination of claiming and creating value processesMore of one approach than the otherNegotiator perceptions of situations tend to be biased toward seeing problems as more distributive/ competitive than they really are
- 9. 1-9Value Claiming and Value CreationNegotiator’s value differences include:Differences in interestsDifferences in judgments about the future (perceptions)Differences in risk toleranceDifferences in time preferencesShows that if one side achieves his goal, it does not preclude the other from achieving their goals.
- 10. 3-10Strategy and Tactics of Integrative Negotiation
- 11. Most people think win-win negotiation means one or more of the following:Compromise -Even splitBuilding a relationship -SatisfactionWin-win really means that all creative opportunities are exploited and no resources are left on the table (“integrative negotiation”, aka hard work.)what is win-win negotiation?
- 12. What Makes IntegrativeNegotiation Different?3-12Focus on commonalties rather than differencesAddress needs and interests, not positionsCommit to meeting the needs of all involved partiesExchange information and ideasInvent options for mutual gainUse objective criteria to set standards
- 13. Win-Win NegotiationWhat it is typically not…CompromiseEven SplitSatisfactionBuilding a relationshipWhat it typically is…Does it involve more than one issue?Can other Issues be brought in?Can side deals be made?Do parties have different preferences across specific issues?These lower the total value for both sides…
- 14. Pyramid Model of Integrative AgreementsLevel 3: Pareto-optimalLevel 2: Settlement demonstrably superior to other feasible settlementsLevel 1: Mutual settlement (positive bargaining zone)< 25%
- 15. Claiming and Creating Value
- 16. “Expanding the Pie” StrategiesStrategies That Do Not Work…Commitment to reaching a win-win dealCompromiseFocusing on a long-term relationshipAdopting a “cooperative orientation”Taking extra time to negotiateWhy?often parties have an incorrect idea about what win-win is pertains to slicing the pie, not expanding the pie establishing a long-term relationship does not translate directly into win-winkeeps parties from focusing on the right information at the right time
- 17. “Expanding the Pie” StrategiesStrategies That Do Not Work…Commitment to reaching a win-win dealCompromiseFocusing on a long-term relationshipAdopting a “cooperative orientation”Taking extra time to negotiateStrategies That Work…Perspective-taking (other shoes)Ask questions about interests and prioritiesProvide information about your interests and prioritiesUnbundle the issuesMake package deals, not single-issue offers
- 19. Trust
- 21. Give to get
- 22. Maturity
- 23. Stand up for your Issues
- 25. We are just a part of a larger goal
- 26. Listening Skills3-19Overview of the Integrative Negotiation ProcessCreate a free flow of informationExchange enough information to allow creativityUnderstand the other negotiator’s real needs and objectivesOur needs are prioritized/valued differentlyEmphasize the commonalties between the parties and minimize the differencesKeep main goal in mind…prioritize each issueSearch for solutions that meet the goals and objectives of both sidesMeasure success by total goal’s satisfied, not only yours.
- 27. …
- 28. 3-21Key Steps in the Integrative Negotiation ProcessIdentify and define the problemUnderstand the problem fullyGenerate alternative solutionsEvaluate and select among alternatives
- 29. 1. Identify and Define the ProblemDefine the problem in a way that is mutually acceptable to both sidesState the problem with an eye toward practicalityand comprehensivenessState the problem as a goal and identify the obstacles in attaining this goalDepersonalize the problemSeparate the problem definition from the search for solutions – avoid a rush towards a solution.
- 30. 2. Understand the Problem Fully Identify Interests and NeedsInterests: the underlying concerns, needs, desires, or fears that motivate a negotiator Substantive interests = key issues, financialProcess interests = the way the dispute is settledRelationship interests = value of their relationshipInterests in principle= doing what is fair, right, acceptable, ethical may be shared by the parties
- 31. InterestsTaxes
- 32. Payment Terms
- 33. Specifications
- 34. Transportation
- 35. Delivery Date
- 36. Quantity
- 37. Process
- 38. Risk/Contract3. Generate Alternative SolutionsInvent options by redefining the problem set:Expand the pie; more uses for more resources ($, HR, Land)Logroll; add more issues, trade concessionsCut the costs for compliance of the other partyGenerate options to the problem as a given:BrainstormingElectronic brainstormingSurveys
- 39. Re-Forming Questions for Win-Win OptionsHow can both parties get what they want?What issues are higher and lower priority for me? Them? What is inexpensive for me to give and valuable for them as non-specific compensation (benefits)What can I do to minimize the other’s risks/costs?What are the other negotiators real interests and needs? Mine?Match your Higher Priorities against their lower priorities: find win-win.
- 41. 3-284. Evaluation and Selection of AlternativesNarrow the range of solution optionsFocus on the positive options…Evaluate solutions on: Quality …how good they are.Objective standards…Acceptability…How acceptable.Agree to evaluation criteria in advance Be willing to justify personal preferences
- 42. 3-29Evaluation and Selection of AlternativesTake time to “cool off”Use patience and focus on positive optionsExplore different ways to logrollExploit differences in expectations and risk/ time preferencesKeep decisions tentative and conditional until a final proposal is completeMinimize formality, record keeping until final agreements are closed
- 43. Summary: Successful Integrative Negotiation FactorsSome common objective or goalFaith in one’s own problem-solving abilityA belief in the validity of one’s own position and the other’s perspectiveThe motivation and commitment to work togetherTrustClear and accurate communicationAn understanding of the dynamics of integrative negotiation
- 44. Why Integrative Negotiation Is Difficult to AchieveThe history of the relationship between the partiesIf contentious in past, it is difficult not to look at negotiations as win-loseThe belief that an issue can only be resolved distributivelyNegotiators are biased to avoid behaviors necessary for integrative negotiationThe mixed-motive nature of most negotiating situationsPurely integrative or purely distributive situations are rareThe conflict over the distributive issues tends to drive out cooperation, trust needed for finding integrative solutions
- 46. Adapted from “Negotiation” Text (Lewicki 5e) and, Heart and Mind of the Negotiator (Thompson 4e)
- 48. Competing Style: Q1, 7, 13, 17, 22: ____Avoiding Style: Q2, 10, 5, 18, 25: ____Collaborating Style: Q4, 8, 12, 19, 21: ____Accommodating: Q3, 9, 15, 20, 24: ____Compromising Style: Q6, 11, 14, 16, 23 :____Assertiveness: (COMP+COLL)-(AVOD+ACCOM): ___Cooperativeness: (COLL+ACCOM)-(COMP+AVOID): ____Self-Assessment Calculations
- 49. The Dual Concerns Model1-36
- 51. contingency contracts Agreements wherein negotiators make bets based on their differences in beliefs, forecasts, risk profiles, and interests. empathy Ability to emotionally connect with another person. false conflict or illusory conflict A situation in which conflict does not exist between people, yet they erroneously perceive the presence of conflict. fixed-pie perception The belief that the counterparty’s interests are directly and completely opposed to one’s own. 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. 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. integrative negotiation A process by which negotiators seek to expand the amount of available resources. issue mix The union of both parties’ issue sets. logrolling The strategy of trading off in a negotiation so as to capitalize on different strengths of preference.p1
- 52. lose-lose effect The tendency for negotiators to settle for outcomes that both prefer less than some other readily available outcome. multiple offers of equivalent value simultaneously A strategy that involves simultaneously presenting the counterparty with two or more proposals of equal value to oneself. 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. perspective taking A cognitive ability to consider the world from another’s viewpoint. 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. premature concessions Making concessions on issues before they are even requested. 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.p2
Editor's Notes
- #3: 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.
- #4: Find out Who is Who? Ask them to offer their opinion.
- #5: 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.
- #6: 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.
- #8: 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
- #9: 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
- #10: Shows that if one side achieves his goal, does not preclude the other from Achieving their goals.Priorities are different, priorities show value differences.
- #15: 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
- #17: 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
- #18: 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
- #23: 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.
- #26: keeps parties from focusing on the right information at the right time
- #29: Be alert to the influence of intangibles in selecting optionsUse subgroups to evaluate complex options
- #30: Minimize negative issues….Logroll: Enlarge the area of negotiation to find similar goals but different needs to trade
- #37: 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