CHAPTER 1CHAPTER 1

The Nature of Negotiation

IntroductionIntroduction

Negotiation is something that everyone does,

almost daily

STUDING NEGOTIATIONSTUDING NEGOTIATION

Within organizations, at one time the study was limited to collective bargaining & to purchasing.

By the late 1970s and early 1980s, there was an explosion of research.

MethodsMethodsWilliams: cooperative & competitiveMenkel-Meadow: problem-solving &

adversarialLax & Sebenius: value-creating &

value-claimingFisher: hard bargainer, soft

bargainer, principled bargainerGifford: competitive, cooperative,

integrative

The Sandtraps of NegotiationThe Sandtraps of Negotiation

Leaving money on the table (“lose-lose” negotiation)

Settling for too little (the “winner’s curse”) Walking away from the table Settling for terms worse than your alternative (the

“agreement bias”)

WHY ARE PEOPLE WHY ARE PEOPLE INEFFECTIVE NEGOTIATORS?INEFFECTIVE NEGOTIATORS?Faulty feedback– Confirmation bias– Egocentrism

SatisficingSelf-reinforced Incompetence

Debunking Negotiation MythsDebunking Negotiation Myths

Myth 1: Negotiations are fixed-sum Myth 2: You need to be either tough or soft Myth 3: Good negotiators are born Myth 4: Experience is a great teacher Myth 5: Good negotiators take risks Myth 6: Good negotiators rely on intuition

NegotiationsNegotiations

Negotiations occur for several reasons: – To agree on how to share or divide a

limited resource– To create something new that neither

party could attain on his or her own– To resolve a problem or dispute

between the parties

NEGOTIATION METHODSNEGOTIATION METHODS

Distributive Zero-Sum Positional Competitive Claiming value

Integrated Win/Win “Interest Based” Cooperative Creating value

InterdependenceInterdependence

In negotiation, parties need each other to achieve their preferred outcomes or objectives

This mutual dependency is called interdependence

Interdependent goals are an important aspect of negotiation

• Win-lose: I win, you lose

• Win-win: Opportunities for both parties to gain

InterdependenceInterdependence

Interdependent parties are characterized by interlocking goals

Having interdependent goals does not mean that everyone wants or needs exactly the same thing

A mix of convergent and conflicting goals characterizes many interdependent relationships

Types of InterdependenceTypes of InterdependenceAffect OutcomesAffect Outcomes

Interdependence and the structure of the situation shape processes and outcomes– Zero-sum or distributive – one winner

– Non-zero-sum or integrative – mutual gains situation

Alternatives Shape InterdependenceAlternatives Shape Interdependence

Evaluating interdependence depends heavily on the alternatives to working together

The desirability to work together is better for outcomes

Best available alternative: BATNA (acronym for Best Alternative to a Negotiated Agreement)

Value Claiming and Value Value Claiming and Value CreationCreationOpportunities to “win” or share

resources– Claiming value: result of zero-sum or

distributive situations where the object is to gain largest piece of resource

– Creating value: result of non-zero-sum or integrative situation where object is to have both parties do well

Value Claiming and Value Value Claiming and Value CreationCreation

Most actual negotiations are a combination of claiming and creating value processes– Negotiators must be able to recognize situations

that require more of one approach than the other– Negotiators must be versatile in their comfort

and use of both major strategic approaches– Negotiator perceptions of situations tend to be

biased toward seeing problems as more distributive/ competitive than they really are

Value Claiming and Value Value Claiming and Value CreationCreationValue differences that exist between

negotiators include:Differences in interestDifferences in judgments about the

futureDifferences in risk toleranceDifferences in time preferences