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Organizational Communication

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Presentation on theme: "Organizational Communication"— Presentation transcript:

1 Organizational Communication
Negotiation Organizational Communication

2 Main take-aways Principles of negotiation can be used in any situation of interpersonal conflict Principles Negotiate over issues, not positions Separate people from the problem Expand the pie (integrative negotiation) before dividing it (distributive negotiation); Search for opportunities for log-rolling, where negotiators differ on importance & payoff for settlements Use the right strategies Ask for what you want (esp. for women) Ask questions & reveal information to find log rolling opportunities, Consider multiple issues simultaneously Build trust, don’t use threats Prepare. Know your own priorities, your partner’s priorities , your alternatives & your least acceptable deal

3 How is negotiation related to organizational communication?
Negotiation is the process of communication btw two or more people with divergent interests to reach a joint decision Can be used in most cases of conflict between interests E.g., Setting terms of an employment contract Interest in getting best worker Interest in getting best salary Interest in getting an interesting assignment E.g., Deciding approaches to HCII website redesign Interest to have an improvement in the short term Interest to have best site in the long term E.g., Disciplining a teammate Interests of Sharon to have flexibility for family Interest of rest of team to increase Sharon’s reliability

4 Negotiation Skills Are a Core Competency
Key communication & influence tool for interdependent relationships (in & outside the workplace) Way to solve conflicts Most people not very good at negotiation E.g., over 80% of corporate executives and CEOs leave money on the table in negotiations People don’t realize this & can’t self-classify Goal of negotiation is to improve your ability to: Create value Claim value Build trust Research basis in economics and psychology

5 Principles People Separate people from the problem Interests
Focus on interest, not positions Options Generate a variety of possibilities before deciding what to do Criteria Judge the result against some objective standard

6 Discuss issues, not positions
Jack Nicholson: Five Easy Pieces (1970)

7 What Does it Mean to Be an “Effective Negotiator”?
Individual level Getting valued resources (money, people, projects) Maintaining & building relationships Enhancing your reputation Building/maintaining trust Enjoying peace of mind Company level Profitable deal making (effective sales force) Getting positive (rather than negative) press Enhancing reputation of company Building the brand

8 Major Traps of Negotiation
Leaving money on the table (lose-lose negotiation) Settling for too little (winner’s curse) Walking away from the table (hubris) Settling for terms that are worse than your current situation (agreement bias)

9 Negotiation myths Negotiations are fixed-sum
You need to be either tough or soft Good negotiators are born Good negotiators need to be risk-takers Good negotiators rely on intuition Experience is a great teacher

10 Women don’t ask In US, men are more likely than women to negotiate salary E.g., Among new MBAs, 52% of men vs 12.5% of women negotiated starting salary  male starting salaries 8.5% higher Babcock, L., Gelfand, M., Small, D., & Stayn, H. (2006). Gender differences in the propensity to initiate negotiations. In D. D. Cremer, M. Zeelenberg & J. K. Murnighan (Eds.), Social psychology and economics (pp. 239–262). Mahwah, NJ: Erlbaum.

11 Experimental Analog Men & women were told that they would receive cash payment ($3–$10) for playing Boggle by themselves. Their goal was to create as many words as possible. At end, all participants were offered the minimum ($3) payment. Participants were not informed of how the payment was determined nor given any performance feedback. If they initiated a negotiation, they could receive more money (up to $10), and if not, they received just $3. Study 1: No cues to negotiate “You have now completed four rounds of Boggle and will be compensated between $3 and $10. Please indicate to the experimenter that you are finished, so that he or she can score your rounds. Then you will be paid.” Study 2: Added cue to negotiate: “The exact payment is negotiable.”

12 Study 3  Women need encouragement to ask Study 3: Framing
No negotiation cue Negotiation cue: “You will be compensated between $3 and $10. The exact payment is not fixed, and you can negotiate for more if you want. Many participants negotiate for a higher payment.” Ask cue: “ You will be compensated between $3 and $10. The exact payment is not fixed, and you can ask for more if you want.. Many participants ask for a higher payment.”  Women need encouragement to ask Small, D. A., Gelfand, M., Babcock, L., & Gettman, H. (2007). Who goes to the bargaining table? The influence of gender and framing on the initiation of negotiation. Journal of Personality and Social Psychology, 93(4), 600.

13 Two fundamental processes in successful negotiation
Distributive negotiation Divvying up some fixed resource (e.g., price) Normally entails a single issue Goal is to gain as much of the resource as possible Integrative negotiation Finding solutions that maximize the resource before divvying it up Possible with multi-issue negotiations, where the parties care about the issues differently Most negotiations involve both. Rule: first grow the pie & then divide it It is possible to convert a distributed negotiation into an integrative one, by adding issues

14 Negotiators’ Mental Models
Orientation Win/lose Win/win Strategy Positional, distributive; Principle-based; oriented; power-based interest-based Goal Slice the pie Expand the pie, then slice the pie Approach Single issue; Multiple issues; sequential bargaining simultaneous discussion of issues Offers Single offers; take-it-or-leave-it Multiple offers Outlook Short-term; no future relationship Long-term; build long term relationship Claiming Value Mental Model Creating Value Mental Model Naïve Expert

15 Negotiating a coffee contract
15 minutes to negotiate Return to class Post your results on the board

16 Ground Rules Do not show your confidential role instructions to the other side in the negotiation, but you are free to tell them whatever you would like about your confidential role information. You may use any strategy, short of physical violence, to reach agreement, including ingratiation, bribery, side-deals or misrepresentation. However, in selecting a strategy, it is wise to consider that using it may have ramifications that go beyond that particular negotiation. Be creative in what you offer or ask for

17 Coffee results What produced this diversity in outcomes?
100.0% maximum 9.15 99.5% 9.15 97.5% 9.15 90.0% 75.0% quartile 7.35 50.0% median 7 25.0% quartile 6.95 10.0% 2.5% 5.95 0.5% 5.95 0.0% minimum 5.95 What produced this diversity in outcomes?

18 Essence of Negotiation Analysis
Target (aspiration) BATNA (Best Alternative To Negotiated Agreement) Reservation Point (RP) Bargaining zone (Zone of Possible Agreements) Bargaining surplus

19 Target or Aspiration level
What you aiming for—your ideal Since aspiration level influences the offers you make and accept, set it aggressively The best, reasonable deal you think you can get  You need to do preparation to know what is reasonable (e.g., Zillow for house prices; Career center for salaries) Setting it too low  winner’s curse I had two offers on my house at the asking price before it went on the market  set the price too low Setting it too high with no concessions may lead to partner walking away & not getting any deal

20 What are targets in coffee negotiation?
How did you arrive at them?

21 B.A.T.N.A Best Alternative To Negotiated Agreement (BATNA)
What will you do if you don’t make a deal with this partner? Determined by your available alternatives Defines the most you will pay (buyer) or least you will accept (seller) Key source of power: Ability to walk away

22 Strategic advice BATNAs are not static.
May change naturally with time (e.g. new houses on the market; sequential job offers) You can often improve yours E.g., Investing in new paint for house E.g., Finding another job offer when negotiating for salary E.g., Looking at multiple brands when car shopping Don’t fall in love with any alternative No longer have a viable BATNA

23 Reservation price The offer below which you will walk away
When the deal no longer makes sense for you Based on BATNA To develop a reservation point: Brainstorm alternatives Evaluate each alternative Attempt to improve BATNA Calculate reservation price as precisely as possible  Probability of alternative X value

24 BATNAs and RPs in Coffee Negotiation
Buyer BATNA: ? RP: ? Seller Buyer BATNA $4.70 for LaRoche Coffee Target: $5.95 for Colonial Williamsburg’s price RP: $7.40 Seller BATNA: $5.93 (williamsburg) (transportation) (advertising) = 6.53 Target: $8.10 for regular restaurants RP: $6.50

25 Coffee Contract Bargaining Zone
Price to Colonial Williamsburg CEO sets min price ($6.50) based on bean cost ($5.93) + transport ($.80) – publicity investment ( $.20) Value of Anderson quality (2.70) over current brand ($4.70) Price to typical restaurant Zone of Possible Agreement >=$5.95 $6.50 $7.40 <=$8.10 Buyer’s Target Seller’s RP Buyer’s RP Seller’s Target Why is this information useful to you in a negotiation? How should you get this information?

26 Strategic Advice abt Reservation Price
Remember your Target is not your Reservation Price Your RP is determined by your BATNA BATNAs = Reality + Subjective probabilities + Idiosyncratic preferences Constantly try to improve your BATNA Try to understand your partner’s BATNA, since that determines his RP Do research about your partner & the situation E.g., In negotiating for coffee with vendor, know what other customers pay E.g, in negotiating for a house, find information about comparables ( E.g, in negotiating for car, get the dealer’s cost from consumer reports E.g., in salary/job offer negotiations check salary services, what others are getting & cost of living

27 Strategy Who went first? How many offers & counter offers?
What strategies did you use? Quality of the arguments Split the difference External standard E.g., Price to best customer = $5.93, E.g., Standard restaurant price = $ 8.10 Increasing the value E.g., > $.20/pound advertising

28 Opening the negotiation
Should you go first or wait? Where should you open the negotiation? When you should make concessions? In what order? Should you use threats or false verbal commitments (e.g., “That’s the best I can do”)

29 Anchoring effects People make estimates by starting from an initial anchor value and adjusting to yield a final answers They generally insufficiently adjust Anchors are usually based on whatever information is available, regardless of relevance First offers act as anchor  advantage Use your target as your anchor Not your RP Not the initial offer Set aggressive, but realistic targets Get data to know what is realistic

30 Power in distributed negotiation: Slicing the Pie
Know your BATNA & try to improve it Research partner’s BATNA Don’t reveal your BATNA/RP Set high, but realistic target Make the first offer Immediately re-anchor on others BATNA or your target if other makes a first offer Make small, graduated concessions Make bilateral, not unilateral concessions

31 Getting the best deal in a distributed negotiation
Appeal to norms of fairness Support your offers with facts Don’t fall for a ‘split the difference’ trap


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