Understanding Negotiation: A Vital Communication Skill
"Negotiation is a back-and-forth communication designed to reach an agreement when
parties have shared and opposing interests." - Fisher & Ury, 2011
Why Negotiate? Negotiation serves to:
Create something new collaboratively.
Resolve problems or disputes efficiently.
Achieve mutual benefit, making you better off.
Key Characteristics of Negotiation
Involves two or more interdependent parties.
Inherent conflicts in positions exist.
Potential common interests provide a basis.
Communication is central to the negotiation process.
Aim: To reach a mutually agreeable solution.
Negotiation in Social Life
Negotiation is omnipresent in various aspects of social life.
Reasons include agreeing on new terms, creating something new, and solving problems.
Negotiation occurs in new or unique situations with no set rules.
Opportunities to negotiate are often overlooked, such as in salary negotiations.
Negotiating: Everybody, Everywhere! Negotiation is prevalent in:
Relationships with friends and family.
Business dealings (with suppliers, customers, employees).
Organizational interactions.
Union negotiations.
Diplomacy between nations.
Examples of Negotiation in Daily Life
Negotiation scenarios include:
Renting a car on a touristic trip.
Buying a new car at a reasonable price.
Dealing with a real estate agent interested in selling your house.
Organizing a graduation dinner.
Considering a well-paid job offer.
Resolving vacation destination disagreements.
Navigating a divorce.
Discovering hidden problems after buying a house.
The Impact of Salary Negotiation
In the U.S., negotiating salary can lead to an average annual pay increase of $5,000.
Over time, this can result in a significant difference in lifetime earnings.
Article Reference: Marks, M., & Harold, C. (2011). Who asks and who receives in salary
negotiation. Journal of Organizational Behavior, 32(3), 371-394.
Identifying Your Negotiation Style
Utilize the Thomas-Kilmann Conflict Mode Instrument.
Complete the Negotiating Style Assessment Tool to identify your preferences.
Consider your negotiation style in various situations, recognizing its strengths and limitations.
Negotiation Styles
Competing (Contending or Dominating)
Prioritizes own outcomes.
Limited concern for the other party's outcomes.
Less likely to make concessions.
Embraces a "my way or the highway" approach.
Accommodating (Yielding)
Little concern for personal outcomes.
Prioritizes the other party's outcomes.
Embraces a "Whatever you want is fine with me" attitude.
Avoiding (Inaction)
Little concern for personal and other party's outcomes.
Prefers to avoid conflict with phrases like "I don't want to talk about it" or "Nice weather
we've been having, isn't it?"
Collaborating (Problem Solving)
High concern for own and other party's outcomes.
Seeks creative solutions beneficial to both parties.
Compromising
Moderate concern for own and other party's outcomes.
Strives for fair solutions, though compromises mean neither gets exactly what they want.
Strategic Planning for Successful Negotiation
Understanding the Consequences of Failed Planning
Negotiators often fail due to unclear goals and objectives.
Lack of benchmarks for offers and packages evaluation.
Inadequate understanding of strengths, weaknesses, and alternatives.
Failure to recognize comparable aspects in the other party's arguments.
Insufficient knowledge of when to walk away.
Goals: The Driving Force in Negotiation Strategy
Goals should be specific, measurable, realistic, attainable, and timed.
Three types of goals: Substantive (tangible), Intangible, and Procedural.
Goal-Scoring: A Framework for Analysis
Scoring allows comparison of different packages on various issues.
Enhances analytical thinking, reducing emotional responses.
Provides a framework for discussion and justification of concessions.
Example: Scoring for a Job Interview
Issues: Salary, Vacation time, Working hours, Office location, Travel budget.
Each issue scored based on importance with its own target.
The Dual Concerns Model
Avoidance: Don't negotiate.
Competition: Self-gain, ignoring relationship.
Collaboration: Mutual gain, enhancing the relationship.
Accommodation: Letting the other party win, enhancing the relationship.
Nonengagement Strategy: Avoidance
May serve strategic purposes if needs can be met without negotiation.
Considerations: Time and effort invested vs. available alternatives.
Getting Ready to Implement the Strategy: The Planning Process
Define negotiation goals and related issues.
Assemble issues to form the bargaining mix.
Prioritize issues based on importance and linkage.
Define interests, limits, and alternatives (BATNA).
Set targets and opening bids realistically.
Assess constituents and social context.
Social Context of Negotiation: Field Analysis
Identify allies, opponents, and coalitions.
Evaluate bystanders' impact on the negotiation.
Consider broader environmental factors.
Analyze relationship history, expectations, and future negotiations.
Account for deadlines and rules of the negotiation game.
Analyzing the Other Party: A Comprehensive Approach
Assess resources, issues, and bargaining mix.
Understand interests, needs, and walkaway points.
Identify targets, opening bids, and constituents.
Evaluate reputation, negotiation style, and likely strategy.
Plan the issue presentation and defense.
Planning P's: Keys to Effective Negotiation
Purpose: Clearly define your objectives.
Plan: Strategically outline your approach.
Pace: Control the tempo of the negotiation.
Personalities: Understand and adapt to the other party's personalities.
Place (Location): Choose a suitable negotiation environment.
Physical Layout (Room): Consider the setup for effective communication.
Power: Be aware of power dynamics and leverage them effectively.
Navigating Ethical Dimensions in Negotiation
Understanding Ethics
Ethics are broadly applied social standards for determining right or wrong.
Distinguishable from personal morals, which are individual beliefs about morality.
Ethics in Negotiation
Ethical dilemmas arise when economic benefits conflict with social or moral obligations.
Four ethical approaches:
End-result ethics
Rule-based ethics
Social contract ethics
Personalistic ethics
Approaches to Ethical Reasoning
End-Result Ethics:
Rightness determined by evaluating consequences.
"The end justifies the means."
Consideration: Defining and measuring happiness, trade-offs, and conflicting ends.
Rule-Based Ethics:
Rightness determined by adherence to consistent principles, laws, and moral rules.
Emphasis on obeying rules and laws.
Social Contract Ethics:
Rightness based on customs and social norms of a society.
Relies on societal expectations and norms.
Personalistic Ethics:
Rightness based on personal conscience and moral standards.
Influenced by culture and upbringing.
Handling Ethical Dilemmas: A Hostage Situation
Different ethical approaches in negotiation:
End-result (means-end): Whatever it takes to save lives is acceptable.
Rule-based: Truthfulness is paramount; no false promises.
Social contract: Reciprocity in the face of expected deceit.
Personalistic: Based on individual convictions about lying or killing.
Guiding Questions for Ethical Decision-Making
Reciprocity:
Would I want others to treat me or my close ones this way?
Publicity:
Would I be comfortable if my actions were fully described in the public domain?
Trusted Friend:
Would I be comfortable telling my best friend, spouse, or children about my actions?
Universality:
Would I advise anyone else in my situation to act this way?
Legacy:
Does this action reflect how I want to be known and remembered?
Dilemmas of Trust and Honesty in Negotiation
Negotiation success depends on sharing accurate information, creating trust.
Dilemmas:
Trust Dilemma: Believing everything may lead to manipulation.
Honesty Dilemma: Full disclosure may compromise negotiation positions.
Balance between openness and deception crucial for constructive negotiation relationships.
Categories of Marginally Ethical Negotiation Tactics
Recognizing and navigating tactics that lie on the edge of ethical boundaries.
A Simple Model of Deception in Negotiation
Motives:
Power Motive: Increase negotiator's power.
Other Motives: Dependent on anticipated competitiveness.
Effectiveness:
Assessing the effectiveness of ethically ambiguous tactics.
Reactions of Others:
Anticipating responses from other parties.
Reactions of Self:
Understanding personal reactions to deceptive tactics.
Explanations and Justifications:
Providing rationale for the use of marginally ethical tactics
Consequences of Unethical Conduct in Negotiation
Effectiveness:
Deception can be effective when misrepresenting interests distorts the other side's beliefs
and actions.
Success may lead to a higher likelihood of using unethical tactics in the future.
Reactions of Others:
Reactions could range from anger and feeling deceived to seeking revenge and retaliation.
Discovery of deception may result in generalized distrust in future negotiations.
Exceptions exist when the deceptive party has little power, making the lie more forgivable.
Reactions of Self:
Negotiators may feel discomfort, guilt, or stress if the other side truly suffers.
Those high on moral attributes may compensate with larger concessions.
Not everyone feels guilt; some may seek ways to make the tactic more effective in the future.
Explanations and Justifications:
Negotiators must defend unethical tactics to themselves and others.
Rationalizations may include unavoidable actions or harmless lies.
Rationalizations for Unethical Conduct:
Unavoidable:
"I had no choice" (claiming lack of control over actions/options).
Harmless:
"No harm done" (justifying white lies or seemingly minor deceptions).
Rationalizations for Unethical Conduct (Cont.): 3. Avoid Negative Consequences:
Deception is justified if it helps avoid negative consequences or produces positive outcomes.
Fairness:
Claiming fairness as a justification for deceptive behavior.
Anticipated Dishonesty:
Rationalizations when dishonesty is sensed or anticipated.
Conditions Ripe for Deception:
Great asymmetry of information (inequality).
Limited knowledge about the other party, expecting competitiveness.
Infrequent interaction and low interdependence.
Conditions Ripe for Deception (Cont.):
Easier deception in non-face-to-face communication.
Differences between negotiating personal cases and representing others.
Testing the other party and "calling" the tactic as preventive measures.
Ways of Dealing With Deception:
Discussion and Offer Help:
Discuss observed deception and offer assistance for a shift to honest behaviors (for minor
issues).
Reciprocal Response:
Respond in kind if the other party uses deceptive tactics.
Chapter 7: Communication in Negotiation (NEG3000)
Basic Models of Communication
Communication involves a sender and a receiver.
The sender encodes a message, either verbal or non-verbal, and transmits it through a
channel.
The receiver decodes and interprets the message.
Negotiation involves interactive, two-way communication.
Encoding and Decoding:
Message can be encoded verbally or non-verbally.
Various channels or mediums are used for transmission (face-to-face, telephone, email, etc.).
The receiver decodes and interprets the message.
Interactive Communication in Negotiation:
Negotiation requires bidirectional communication.
Both parties act as senders and receivers, encoding and decoding messages throughout the
process.
How to Improve Communication in Negotiation (Continued):
Listening:
Three major forms of listening: passive, acknowledgment, and active listening.
Passive Listening:
Receivers receive the message without providing feedback to the sender.
Acknowledgment:
Slightly more active.
Receivers nod, maintain eye contact, or interject responses (e.g., "I see," "hmmm,"
"interesting").
May risk misinterpretation that the listener agrees with what is said.
Active Listening:
Receivers restate or paraphrase the sender's message in their own language.
Role Reversal:
Negotiators understand the other party's positions by actively arguing their positions until
mutual understanding is achieved.
Helps negotiators accept the validity of the other party's position and find ways to make
positions more compatible.
RetailMAX Recap:
Internal salary negotiation exercise with roles of Cam Archer (MBA graduate) and Regan
Kessel (Recruiting manager).
Cam Archer's previous salary: $143K (including bonuses), prefers the new position.
Regan Kessel has a possibility to hire an external candidate for $132K but is willing to pay a
15% premium for Cam ($151K).
Why Ask the Same Questions Over and Over:
Mistakes in data, carelessness, omission, forgetfulness, etc.
Example: Salaries registered by Cam Archer and Kessler differed.
Cam Archer: $163,865
Kessler: $162,147
Consistency in data is crucial to avoid discrepancies.
Different Practices:
Cam Archer or Kessler sometimes made the first offer.
About 90% focused only on salary, while 10% negotiated extra terms (bonus, car, holiday,
etc.).
Examining the distribution of negotiation practices and outcomes.
Comparisons of Results Over Years:
Average salaries and satisfaction levels compared over the years (2020, 2019, 2018).
Emphasis on the importance of preparation and consistency in negotiation outcomes.
Preparation is Important:
Positive correlation between satisfaction and factors like considering BATNA, counterpart's
alternatives, writing down points, etc.
Attention and Effort are Important:
Positive correlation between attentiveness, effort, and satisfaction with negotiation
agreements, oneself, relationship, and in general.
Language Problems:
Communication problems negatively impact salary agreements.
Cam Archer ended up with a lower salary when language problems were present.
Gender Differences:
Salary differences for Cam Archer: Males ($157K) vs. Females ($170K).
No significant difference in satisfaction; both genders were equally satisfied with their salary
agreements.
Anchoring Effect:
The first offer significantly predicted the salary outcome (r = 0.56).
Emphasis on the importance of the initial offer in framing the negotiation discussion.
RetailMAX Wrap-ups:
Check and double-check final agreements to avoid discrepancies.
Preparation, study of facts, and writing down points pay off.
The first offer influences the negotiation outcome.
Language/communication problems reduce satisfaction.
Gender differences did not significantly affect satisfaction.
Bakery-Florist-Grocery Exercise:
Illustration of possible outcomes using different negotiation strategies: compromise,
distributive, coalition formation, no agreement, and integrative.
Emphasis on the importance of considering integrative strategies for maximizing joint
outcomes (win-win).
Effective Negotiation Strategies: Moving Beyond Positions
Understanding Integrative Negotiation
From Position to Interests: Unlocking Solutions by Asking "Why"
Information Dynamics: The Power of Providing and Seeking Information
Trust and Reciprocity: Building the Foundation for Successful Negotiations
Distributive vs. Integrative Negotiation
Characteristics Overview
DISTRIBUTIVE: Fixed-pie (zero-sum)
INTEGRATIVE: Expandable (multiple-sum)
Number of Issues
DISTRIBUTIVE: Single
INTEGRATIVE: Multiple
Outcomes
DISTRIBUTIVE: Win-lose/lose-lose
INTEGRATIVE: Win-win/win-lose/lose-lose
Underlying Interests
DISTRIBUTIVE: Conflicting
INTEGRATIVE: Potentially Compatible
Strategies
DISTRIBUTIVE: Better BATNA, Anchoring, etc.
INTEGRATIVE: Collaboration, Problem-solving, Creativity, Information Exchange
Team Negotiation: Navigating Complexity
Occurrence
Complex negotiations requiring diverse knowledge and skills
Critical negotiations, such as M&A deals
Need to signal power, expertise, etc., to the other party
Diverse interests must be represented (e.g., union negotiations)
Negotiating in Teams
At the table (inter-team negotiation with the other party)
Behind the table (intra-team negotiation within one's team)
Interrelated and may happen simultaneously, requiring careful separation
Team vs. Individual Negotiation
Benefits of Negotiation Teams
More expertise and problem-solving capabilities
Higher motivation and aspirational targets
Introduction of new strategies
Team members feel more powerful and less pressured
Possible Problems in Negotiation Teams
Unfamiliarity, conflicting interests, asymmetry of information
Differences in negotiation approaches, need for a leadership structure
Decision-making processes within the team
Managing Negotiation Teams: Key Steps
Preparation
Interest Alignment
Conflict Plotting
Internal Communication Facilitation
Role Assignment
Diverse Roles in Negotiation Teams
General Management
Technical Expert
Financial Expert
Legal Consultant
Interpreter
Recorder
Other Considerations
How to manage decision-making?
Unlocking Creativity in Negotiation
Key Importance in Integrative Negotiation
Fluency, Flexibility, Originality: The Three Pillars of Creativity
Previous Research Insights
Group vs. Individual Creativity: Balancing Pros and Cons
Rules vs. No Rules: Striking the Right Balance
Quality vs. Quantity: A Delicate Interplay
Individual First vs. Group First: Finding the Optimal Approach
Effective Brainstorming: Enhancing Creative Performance
Before: Purpose definition, participant selection, environment change
During: Idea generation, open recording, encouraging participation
Never: Judging
After: Identifying promising ideas, inventing improvements, evaluation scheduling
Consider: Brainstorming with the other side, if possible, for enhanced effectiveness
Team Negotiation in a Nutshell
Higher Joint Gains: The Impact of Teams at the Bargaining Table
Stimulating Discussion: Teams vs. Individuals
Balancing Act: The Power and Risk of Teams in Negotiation
Conformity and Groupthink: Cautionary Considerations
Mastering International Negotiation: Understanding the Complex Dynamics
Agenda Highlights:
International Negotiation Complexity Unveiled: A Deeper Dive
Overview
International negotiations surpass domestic ones in complexity.
Influencing Contexts
Environmental Context: External forces impacting negotiations beyond control.
Immediate Context: Factors negotiators can influence to some extent.
Cultural Considerations in International Negotiation
Negotiators and Cultural Differences
Recognizing the significance of cultural nuances.
Culture Defined
"The collective mental programming that distinguishes one group from another" (Hofstede,
1990).
Importance of Culture
Integral in inter-cultural negotiations today.
"Cultural Intelligence (CQ)": Understanding and adapting to local culture (Michele Gelfand).
Culture's Role in Negotiation: Unveiling the Impact
Real-life Insight
American-Italian Negotiation: Watch Here
Research Findings
Culture's effect on negotiation outcomes may not be direct or unidimensional.
Cross-cultural negotiations may yield poorer outcomes.
Example: Brett and Okumura (1998) study on U.S. and Japanese negotiators.
Insights from Research: Navigating Cultural Dynamics
Simulation Results (Brett, 2014)
Joint gains lower in intercultural negotiations.
Less understanding of priorities and utility in intercultural vs. intracultural negotiations.
Culture's Indirect Impact on Negotiation: Breaking it Down
Negotiators' Perceptions
Giving excessive weight to national culture.
Cautionary Note
Avoid Stereotypes: An imperative for successful international negotiations.
Resources for Deeper Understanding
International Negotiation Video 1
International Negotiation Video 2
Cultivating Negotiation Mastery: Beyond Boundaries
Final Thoughts
Culture is integral but should not be over- or under-estimated.
Acknowledging and navigating cultural differences is a crucial aspect of international
negotiation success.
Navigating Cultural Challenges in Negotiation: Risks and Strategies
Risks of Stereotyping in Negotiation: A Cautionary Overview
Offending Your Partner
We vs. You Distinction: Harmful for Negotiation and Relationship Building
Lost Opportunities
National vs. Regional Culture
Corporate Culture
Uniqueness of Every Individual
Cultural Awareness: A Balancing Act
Managing Negotiations
According to expectations
With flexibility and openness
Benefiting from diversity
Boosting creativity
Reducing the Risk of Conformity and Groupthink
Exploring Cultural Icebergs: What Lies Beneath the Surface
Above the Iceberg
Greetings, Body Language, Verbal Language, Emotional Expressiveness
Institutional Arrangements, Special Days, Punctuality
Examples
Clothing, Meeting Schedules, Cultural Variances
Navigating Below the Iceberg: Unveiling Cultural Dimensions
Underlying Values
Individualistic vs. Collectivism
Hierarchical vs. Egalitarianism
Linear vs. Holistic View
Fundamental Assumptions: Fairness, Risk, Time, Human Nature, Conflict
Hofstede's Cultural Dimensions
Explore Here
Cultural Sensitivity: Emotional Expressiveness and Confrontation
Watch Video: Getting to Yes Across Cultures
Tight vs. Loose Cultures
Tight: High Homogeneity & Strong Shared Values
Loose: Low Homogeneity & High Diversity
Learn More
Defining "Fair" Agreements: A Cultural Perspective
Subjectivity of Fairness
Trust & Culture: Percentage of People Who Agree with "Most People Can Be Trusted"
Cultural Evolution: Cultures Change Over Time
Explore World Values Survey (WVS)
Adapting Negotiation Strategies Across Cultures: Tailoring to Familiarity Levels
Low Familiarity
Seek Help: Use Agents, Advisors, Mediators, Interpreters
Moderate Familiarity
Adapt and Coordinate with the Other Culture
High Familiarity
Embrace the Other's Culture
Improvise and Create a New Joint Approach
Mastering Negotiation: Essential Practices for Success
Understanding Negotiation: A Fundamental Definition
Negotiation is...
Communication designed to reach an agreement when shared and opposing interests exist
(William & Ury, 2011).
Fundamental Aspect
About human interaction.
Ultimate Aim
To improve negotiation skills for various life situations.
Key Takeaways for Better Negotiation
Prepare, Prepare, Prepare
Especially crucial for those from disadvantaged groups.
Study Alternatives (BATNA) and Target
Evaluate the Value You Bring to the Table
Initiate with the First Offer
Emphasize Process over Substance
Build Trust
Exercise Caution with Anger
Effective Negotiation Strategies: Wrapping Up & Highlights
Incompatible Positions, Rarely Incompatible Interests
Ask Questions (Ask Why)
Study Responses
Present Multi-Issue (Package) Offers
Recognize Priorities: List and Prioritize Issues
Show Flexibility and Respect Constraints
Facilitate the Other Side's Last Offer
Team Negotiation: Invest Time, Preparation, Avoid Groupthink
Cultural Awareness is Key
Understand Perspectives and Seek Help if Needed
Avoid Stereotypes: Acknowledge Cultural Biases
Credibility Matters: Do Not Lie
Closing Remarks: Thank You!
Questions?
Upcoming Exam Details
Exam Period: 11 Dec 2023 - 14 Dec 2023
Individual or Group Submission (Max. 4 Members)
Group Formation: Actively look for group members; introductions available upon request
Exam Question Clarifications: Limited to the exam text content; no answers to specific
questions
Best of Luck in Your Negotiation Journey!