Business Skills Leadership Skills Interpersonal Skills Intrapersonal Skills Learning Focus for Today

Types of Business Skills Decision Making & Problem Solving  Argumentation, critical thinking Negotiation Planning Evaluating Performance

Teaching Method Reading/LectureSelf AssessmentRole Play Thompson & Leonardelli Rowan  Conflict Style Ugli Orange  Salary Negotiation

Factors affecting Negotiations Negotiation Type of Relationship between parties Type of Emotions Perceptions of Parties Ability to Invent Options Best Alternative to Negotiated Agreement BATNA Bargaining Style

Negotiation Ability to Invent Options

Students orally give examples of negotiation with multiple Options –Car Sale Negotiation –Salary Negotiation –Union-Management Negotiation Expanding the pie or using multiple options leads to win-win solutions What is Inventing Multiple Options

Ability to Invent Options Negotiation Outcome Fixed Pie Perceptions Pre-mature judgments Search for a single answer Factors affecting Ability to Invent Options

Erroneous belief that negotiators’ interests are directly opposed – gain for party A => loss for party B E.g., married couple vacation plan (ski lodge or luxury hotel) What is Fixed Pie? Ability to invent options Fixed pie perception Negotiation Outcome

Ability to invent options Fixed pie perception Negotiation Outcome Studies supporting the link: When people believe that the gain made by one party is a loss for the other party, they are less likely to expand the pie E.g., salary / car sales negotiation

Ability to invent options Time pressure Premature judgments=commit to a course of action & find it difficult to change that course even if change could yield mutually beneficial outcomes Time pressure increases premature judgments, prevents use of new information Premature judgments Studies supporting the link:

Ability to invent options Search for single answer Studies supporting the link: When negotiators translate their interests into different constellations of offers where each offer is equivalent to other offers, then they are better able to conceive of different types of outcomes that would be equally acceptable and have improved outcomes Negotiation Outcome

What affects the ability to invent options? Time pressure Leads to commitment to a course of action or not reacting to new information resulting in poor outcomes Search for a single answer Having multiple equivalent offers results in better outcomes Fixed pie perceptions Belief that gain for one is loss for other results in poorer joint outcomes

What’s next: How BATNA affects Negotiation Negotiation Ability to Invent Options Type of Best Alternative to Negotiated Agreement BATNA

BATNA=best alternative to negotiated agreement –The alternative that negotiators can turn to if no agreement is reached in negotiation Students orally give examples of BATNAs in –Car Sale Negotiation –Salary Negotiation –Union-Management Negotiation What are BATNAs

Negotiation Outcome Type of BATNA Anchor point Studies supporting the link: Negotiators agree to outcomes close to the value of their BATNAs bec. BATNAs give an anchor point

Mid lecture point : Three more factors affecting negotiation Negotiation Type of Relationship between parties Type of Emotions Perceptions of Parties

Negotiation Process Type of Relationship b/w parties Studies supporting the link: 1. Friends are less competitive with each other than they are with strangers 2. Friends are more willing to compromise & fail to invent options for mutual gain than are strangers Negotiation Outcome

Negotiation Process Type of emotions Studies supporting the link: 1. Happy negotiations are more cooperative & identify options for greater mutual gain 2. Negotiators are less demanding and concede more with opponents who are angry Negotiation Outcome

Negotiation Process Perceptions of negotiating parties Studies supporting the link: 1. Negotiators perceive concessions made by opponents as benefiting opponents and therefore devalue those concessions Negotiation Outcome

Negotiation Process Perceptions of negotiating parties Studies supporting the link: 2. When negotiators evaluate proposals not knowing that opponents made those proposals, they are more likely to perceive such proposals positively Negotiation Outcome

How the three factors affect negotiation 1.Type of Relationship between parties Friends are more conceding, less competitive, often resulting in less optimal mutually beneficial outcomes 2.Type of Emotions Happy people are more cooperative and identify mutually beneficial outcomes 3.Perceptions of Parties People ‘devalue’ offers proposed by the ‘other party’

And finally…. How bargaining style affects negotiation Negotiation Type of Relationship between parties Type of Emotions Perceptions of Parties Ability to Invent Options Type of BATNA Bargaining Style

Negotiation Process & Outcomes ExtraversionAgreeableness Two Personality Dimensions affecting negotiation

Extraversion –talkativeness –assertiveness –positive affect Agreeableness –cooperative –generous What is extraversion & agreeableness

Negotiation Process Extraversion & Agreeableness Studies supporting the link: Friendly, gregarious styles.. 1.Less likely to claim resources at table 2.Were more susceptible to anchoring effects due to other party’s extreme first offers and therefore, 3.Obtained worse outcomes Negotiation Outcome

Recap Negotiation Type of Relationship between parties Type of Emotions Perceptions of Parties Ability to Invent Options Type of BATNA Bargaining Style

Apply what you learned from reading/lecture 1.Plan for Ugli-Orange Negotiation Exercise Critical thinking and argumentation via role definition Relevance for group decision making exercise 2.Do Ugli-Orange Exercise 3.Complete questionnaire on what happened in the negotiation exercise 4.Group Discussion on learning from Exercise What’s next….