1. Negotiations and Distributive Negotiations

2. Negotiation A social process in which conflict is resolved
Results in an allocation of resources or an agreement on how individuals will work together in the future
Five characteristics of negotiation
Two or more parties
You anticipate a better outcome as a result of the negotiation
The parties involved prefer mutual agreement to other outcomes
The parties involved understand that there will be give and take
Tangible and intangible components are involved in the negotiation

3. When negotiating makes sense
When you need the help of others
When others can give you more than what you can get on your own
When you are willing to give up resources valued by others
When working with another party can help you overcome challenges with other parties

4. Distributive negotiation
Competitive
Win-lose
Focus on claiming value
Negotiators’ goals are in direct conflict
Resources are limited
Instrumental concerns only: do not care about the relationship with the other party
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

5. Tools for distributive negotiations
BATNA- Best Alternative To a Negotiated Agreement
What would you pursue if this negotiation doesn’t work?
Reservation value
What your BATNA is valued at in the negotiation
Can be dollars, points, land, flying pigs, etc…
Aspiration value
The value you aspire to in the negotiation
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

6. Zone Of Possible Agreement
The set of all possible deals that would be acceptable to both parties
Seller’s reservation value
Buyer’s reservation value
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party
Bargaining Zone

7. First offers in negotiation
First offers can
Anchor a distributive negotiation
Help to define the ZOPA
Extreme first offers can let you make concessions (thus aggressive offers do not necessarily make you aggressive)….but it also can backfire
Make a first offer only when you have sufficient information about your own and the other party’s aspirations and walk away points
See galinsky’s article.

8. Integrative negotiation
Figure out what motivates the person (ask why)
Then attempt to satisfy these interests
Be surprisingly cooperative
Work with parties that perceive you as an opponent
Find opportunities in others’ demands
Be concerned about their problems too
Make all negotiations a learning opportunity
Don’t get distracted by trying to understand what people want…there are already too many people in the negotiation focusing on this.
Instead allow people to define what they want, then ask why they want it.
By working to satisfy these interests, you will be able to discover multiple issues in the negotiation where you will eventually be able to make tradeoffs
Surprise your partner by being cooperative. Most negotiators come in with the assumption that you will be competitive. By entering the negotiation with a “problem solving” mindset and seeing all other negotiators as you helpers in this effort, you will foster trust and coopration in those you negotiate with.
- To be cooperative, you might join forces with another party who previously perceived you as their opponent, by asking why you can propose creative solutions that give both parties (not just you) new opportunities, and in demonstrating concern for others problems you can change the tone of the negotiation to a problem-solving environment, not a competitive performance.

9. Strategies for integrative solutions in the negotiation
Focus on multiple issues at once
Allows you to be creative
Helps overcome more difficult issues
Provide a trusting and cooperative environment
Give your partner several options
Allows you to ensure that you get an optimal outcome
Promotes your willingness to be cooperative
One of the key concepts to integrative negotiations is to focus on more than one issue. This helps you to see where tradeoffs can be made, helps you to prioritize the issues for yourself and for your partner, helps you see what the underlying interests and themes in the negotiation are, and gives you an opportunity to expand the pie and claim more of it.
The other benefit to multiple issues is that often negotiators believe that they need to focus on the most difficult issue first. When they do that they often get stuck on that issue, bad feelings are created, and the negotiation goes sour. Being aware of multiple issues can help you recognize where tradeoffs can be made so that both the easy and difficult solutions are overcome.
Second, think back to our graph where we had the line representing the creation of value. There may be offers that provide you with the same value, but appear more or less appealing to your partner. By knowing multiple issues you can create several “packages” that give you the same value, but give your partner the choice of what works best for him or her.
Finally, trust is a major component of integrativeness. It suggests that you want what is best for the other person as well as yourself, which puts them at ease and helps them to think in a more problem solving mode than a defensive mode. Starting out with integrative mindset will increase trust in the negotiation, which will then increase cooperation and the potential to reach optimal agreements.

10. Types of issues in new recruit
Distributive
“zero-sum,” “fixed pie”
Different preferences, but same values
Congruent
Integrative
Different preferences but DIFFERENT values
Allows for trades
There are three types of issues that we see in new recruit.
(see slide list)

11. Compromise
Compromise: making an agreement in which parties both get some of what they want by giving up some of what they want
Meeting in the middle
Splitting the difference
Something accepted rather than wanted
Agreement by concession
Lessen the value of something
Compromises occur when engaging in a distributive negotiation. Rather than compromising, use distributive negotiation tactics to get more of what you want!
So the important thing to remember with value creation is that you are pushing the boundaries, not just creating something that everyone is willing to settle on.
A lot of us think about a compromise as a good thing, and thus associate it with being a value creator, but do you think compromising has more to do with integrative negotiations or distributive negotiations?
You are essentially settling for less than what you expected to get
A lot of times we become satisfied with this because we assume that we could not have gotten what we did any other way, but really we just settled for the size of pie we had initially, rather than trying to push the boundaries
Compromise is very positional focused, rather than interest focused (lets each give in on our initial positions so that we can get part of what we want)
We have these definitions, but then these are also definitions of compromise
This may be what a reasonable person sees as appropriate, but it is not what a skilled negotiator accepts!
If your partner wants to give in, that is fine, but you should never be ok with a compromise unless you feel that it is necessary for the relationship and you care about the relationship.
Remember, you are in a distributive negotiation when you are considering a compromise, so compromises are not optimal for you.
By focusing on your aspiration price at all times, you can overcome the attractiveness of a compromise and get more of what you want (just as in a distributive negotiation)
Value creation is not soft on the problems inherit in the negotiation.

12. NOT INTEGRATIVE!! Compromise Candidate Recruiter Joint Salary 86K
-3000
-6000
Start date
10/15
1200
2400
Location
Chicago
600
Job Assignmt C
-1200
-2400
Bonus 6%
2000
800
2800
Vacation
20 days
Moving %
80%
1600
400
Insurance
Kaiser
Total
4800
NOT INTEGRATIVE!!
Need to change these 2 slides.
So we discussed the importance of recognizing the difference between and integrative solution and a compromise and new recruit is able to show us quantitatively the differences. So here is a cmpromise.
Essentially you are splitting down the middle of each issue.
In what issues does it make sense to actually do this?

13. Creating value
Value can be created by identifying what each party cares about most
The goal of the negotiation should be to create the most value for yourself overall, not the most value on each issue

14. Compromise (total: 4800 points)

15. Improvements (total: 7800 points)

16. Improvements (total: 10800 points)

17. Pareto Optimal (total: 13200 points)

18. Soft vs. Hard Negotiation
Soft negotiation:
Emphasize goal of reaching agreement!
Friendly, concessions made for relationship
Change position easily, make offers, disclose your bottom line
One-sided losses, aimed at reaching agreement
Single Answer
Hard Negotiation:
Adversarial
Goal is victory
Hard on problem and on people: demand concessions, distrust others, threaten, mislead,
Insist on your position

19. Choice between Hard and Soft

20. Choice between Hard and Soft

21. Choice between Hard and Soft
There is another alternative:
Change the Game

22. Principled Negotiation
Separate people from the problem
Focus on interests not positions
Generate a variety of options before deciding on one
Insist that the results be based on some objective standards

23. Separate the People from the Probelm
Hard on Problems, soft on People
Clear the air first: deal with people problems upfront so that they don’t cloud issue
Walk a mile in the shoes of the other
Don’t assume the worst because its “safe”
Don’t play the blame game (even when deserved).
Give people a stake in the outcome

24. Positions vs Interests

25. Positions versus Interests
Identifies what you want
Acts as an anchor
Commits you to your initial goal
Harms relationships
Interests
Motivation behind positions
Identifies which issues conflict and which simply differ
Allows for flexibility in initial goal
Maintains relationship
On issues that conflict versus differ
Conflict means that people’s preferences are opposed
Differ means that people’s issues oppose
See getting to yes pg. 47

26. Pitfalls of Position-Based Negotiation
Creates unwise agreements that do not meet underlying needs
Inefficiency: extreme positions and holding on to them increase length, number of concessions and probability of not reaching a settlement
Endangers relationships

27. The importance of asking “why”
Reveals interests in the negotiation
Helps you understand the other party’s reason for participating in the negotiation
Allows you to identify the motivations of the other party
Gives both parties the opportunity to generate creative solutions
Pulled from 4th edition, pg 27
On instrumental concerns, note that they don’t care about the relationship with the other party

28. Focusing on Interests
In an integrative negotiation, we can push beyond substantial interests
Relationship interests
Process interests: Fairness
Principle interests: Values
We have discussed the idea that in integrative negotiations, we primarily focus on interests, which allows us to generate creative and mutually appealing agreements. But not only is there a greater focus on interests in integrative outcomes, we also focus on a broader selection of interests than in a distributive negotiation.
When we have talked about distributive negotiations in previous classes, I have tried to emphasize that in a distributive negotiation, you don’t really care about the relationship. In an integrative negotiaion, you often do care about the relationship, which is why you want mutually beneficial outcomes. These are focused on the quality of your relationship with the other person.
Process interests are about the procedures that lead to the decision. Usually these have to do with how fair the procedures were during the negotiation. Rsearch on procedural fairness and how that makes people percieve the outcome as more fair
Principle interests have to do with an individuals values and beliefs. You want to be aware of the other party’s principle interests since these are a main source of contention is violated. And they are difficult to repair.