Because learning changes everything. ® Essentials of Negotiation 2024 Release Chapter 01: The Nature of Negotiation © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Style and Approach Bargaining and negotiation are not the same. • Bargaining describes competitive win–lose situations. • Negotiation refers to win–win situations. Give-and-take is important. • But factors shaping the negotiation occur before the negotiation or shape the context around the negotiation. The author’s insights are drawn from three sources. • Personal experience, media, and research. © McGraw Hill LLC 2 Characteristics of a Negotiation Situation • There are two or more parties. • There is a conflict of needs and desires between parties. • The parties negotiate by choice. • A give-and-take is expected. • Parties prefer to negotiate. • Negotiators must manage tangibles and resolve intangibles (underlying motivations). © McGraw Hill LLC 3 Interdependence Working interdependently allows parties to achieve an outcome better than they could achieve by working on alone. • Independent parties are able to meet their own needs without the assistance of others. • Dependent parties must rely on others for what they need. • When parties depend on each other to achieve their own outcome they are interdependent; with interlocking goals. © McGraw Hill LLC 4 Types of Interdependence Affect Outcomes Goal interdependence, and the structure of the situation, strongly shapes negotiation processes and outcomes. Zero-sum, or distributive. • Competitive—there is only one winner. • A negative correlation between the goal attainments. Mutual-gains, a non-zero-sum or integrative situation. • A positive correlation between the goal attainments. • If one person achieves their goal, the other’s goals are not necessarily blocked and may in fact be enhanced. © McGraw Hill LLC 5 Alternatives Shape Interdependence B͏A͏T͏NA ͏ : Best Alternative To a Negotiated Agreement. • Your agreement on anything in a negotiation depends upon the attractiveness of your best available alternatives. • Understand your own B͏A͏T͏N͏A, and the other’s B͏A͏T͏N͏A. • A B͏A͏T͏NA ͏ may offer independence from, dependence on, or interdependence with someone else. • Every possible interdependency has an alternative because negotiators can always walk away. © McGraw Hill LLC 6 Mutual Adjustment and Concession Making A negotiation transforms over time, and mutual adjustment is one of the key causes of the changes that occur. • Negotiations often begin with each party stating their most preferred settlement proposal. • If the proposal isn’t readily accepted, negotiators defend their own proposals and critique the others’ proposals. • When one party agrees to make a change, a concession has been made. • When a concession is made, the bargaining range is further constrained. © McGraw Hill LLC 7 Two Dilemmas in Mutual Adjustment The dilemma of honesty. The dilemma of trust. • This concerns how much truth to tell the other. • Concerns how much to believe what the other party tells you. • Telling the other party everything may allow them to take advantage. • Not telling the other party anything may lead to a stalemate. © McGraw Hill LLC • If you believe everything, they could take advantage. • If you believe nothing, you will have difficulty in reaching an agreement. 8 Outcomes and Processes Concessions are greatly aided by trust and a belief you are being treated fairly. • Shape outcome perceptions by managing how the receiver views the proposed result. • Enhance perceptions of the process credibility by signaling fairness and reciprocity in proposals and concessions. © McGraw Hill LLC 9 Value Claiming and Value Creation The structure of the interdependence shapes the strategies and tactics negotiators employ. Win–lose strategies in distributive situations. Win–win strategies in integrative situations. • In distributive bargaining, both parties pursue the “one winner” position. • Integrative negotiation seeks to achieve both parties’ goals. • The purpose is to claim value. • The purpose is to create value. © McGraw Hill LLC 10 Implications of Claiming and Creating Value Most negotiations are a combination of claiming and creating value, and there are significant implications to this. Know when to use one approach over the other. Be versatile and use both approaches. People tend to overuse distributive strategies. Successful coordination of interdependence has the potential to lead to synergy. • Often leaving value on the table. © McGraw Hill LLC 11 Value Creation and Negotiator Differences The heart of the value creation process lies in exploiting the differences between the negotiators. Differences in interests. • Finding compatibility is often the key to value creation. Differences in judgments about the future. • People differ in their perception of future value of an item. Differences in risk tolerance. • A company with a cash flow problem can assume less risk. Differences in time preferences. • One negotiator may want the gains now; the other can wait. © McGraw Hill LLC 12 Conflict Conflict arises for the following reasons. • From the strongly divergent needs of the two parties. • From misperceptions and misunderstandings. • When the two parties are working toward the same goal and generally want the same outcome. • When both parties want very different outcomes. Conflict is a disagreement or opposition and includes the belief that the parties’ current needs cannot be achieved simultaneously. © McGraw Hill LLC 13 Levels of Conflict Intrapersonal or intrapsychic conflict. • Conflict occurs within an individual. Interpersonal conflict. • This is conflict between individuals. Intragroup conflict. • This is conflict within a group. Intergroup conflict. • Conflict between organizations, ethnic groups, warring nations, feuding families, or splintered communities. • Negotiations at this level are the most complex. © McGraw Hill LLC 14 Functions and Dysfunctions of Conflict • • • • • • • Productive aspects. Discussion helps with coping. Leads to change. Strengthens relationships. Promotes awareness of self and others. Enhances personal development. Encourages psychological development. Can be stimulating and fun. © McGraw Hill LLC Destructive aspects. • Competitive, win–lose goals. • Misperception and bias. • Decreased communication. • Magnified differences. • Emotionality. • Blurred issues. • Rigid commitments. • Conflict escalation. 15 Figure 1.3: The Dual Concerns Model Access the text alternative for slide images. © McGraw Hill LLC Source: Pruitt, Dean G., Jeffrey Z. Rubin, Sung H. Kim, Social Conflict: Escalation, Stalemate, and Settlement, (New York: The McGraw Hill Companies, 1994). 16 Because learning changes everything. ® www.mheducation.com © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
