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