Management 291 Negotiations, Bargaining and Conflict Resolution The Wharton School Fall 2002 Section 411: Mondays and Wednesdays noon – 1:20 pm G88 Huntsman Hall Anne Cummings, Ph.D. Assistant Professor cummings@wharton.upenn.edu WebCafe for course: http://webcafe.wharton.upenn.edu/eRoom/mgmtb/291c11 Office Hours: M & W 3:00 – 4:00 pm, or by appointment Office: 2029 SH-DH (Management Suite, SH-DH 2000) Office Phone: 215-573-6268 Home Phone: 215-546-4965 8 am – 8 pm only, please COURSE DESCRIPTION This course combines analytical material on the negotiation process with a series of negotiating experiences, to develop your skills at negotiation, bargaining and conflict resolution. The course encourages you to take risks; analytically think about what you read and observe; honestly reflect about your personal behavior and preferences; and apply course concepts to real experiences. Because of this approach, class attendance, preparation and participation is critical, both for your learning and for the learning of your classmates. Indeed, you will not only learn from your own behavior, but also from the behavior of your negotiation opponent, partner(s), and from comparing your outcomes with outcomes from the other pairs/groups in the class. Most of the negotiations will occur during class time, and case materials for the negotiations will be distributed in class. A few of the negotiations will be conducted in time outside of class. Because of the emphasis on risk taking, reflection, and skill development, there will be no examinations. Instead, your learning will be evaluated via reflective and analytical writing in a series of papers. In the term paper, you will demonstrate your learning by using course concepts in a detailed analysis of a real negotiation of your choice. 1 Texts: G. Richard Shell, Bargaining for Advantage, 1999 (Shell). Lewicki, Saunders & Minton, Negotiations, 1999 (LSM). Roger Fisher, William Ury and Bruce Patton, Getting to Yes, 1991 (FUP) Bulk pack from Wharton Reprographics (BP) Class Handouts as assigned. Specific course objectives: 1. Improve your understanding of the nature of negotiation. This objective is paramount because many of the important phenomena in negotiation (e.g., interests, goals, costs, benefits) are dynamic and can be ambiguous. Often, “right” answers do not exist, so we can not teach a set of formulae that will always maximize your profit. We can teach a useful framework through which you can analyze whatever negotiating situations you encounter, and adapt your own style for a “best” outcome. 2. Develop a broad intellectual understanding of the central concepts in negotiation. 3. Improve your ability to analyze the motives and behaviors of individuals, groups, and organizations in settings that have both competitive and cooperative elements. 4. Improve your skills in evaluating the costs and benefits of alternative actions. 5. Practice a variety of negotiating skills and styles. 6. Develop an understanding of your “natural” negotiating style, and improve your skills at using it. 7. Improve your skills at managing the negotiating process. COURSE FORMAT We will typically spend all of Wednesdays’ class time in negotiation exercises. At the end of these exercises, you will turn in a short Negotiation Results Summary. Most of the negotiation exercises are designed to take between 75 and 90 minutes, but nearly all negotiators occasionally need more time. This has three implications: 1. You need to come to class on Wednesdays fully prepared to negotiate in your preassigned role for the session’s negotiation exercise. 2. On occasion, you’ll need to finish a negotiation outside of class, and turn the Negotiation Results Summary into my Management Suite mailbox between Wednesday at 1:20 pm and Thursday at noon. 3. We will typically debrief the exercise during the next class period (on the following Monday), so you need to come to class on Mondays fully prepared to reflect upon, 2 receive feedback about, and evaluate your prior Wednesday experience. Case materials and occasional additional readings will usually be distributed in class on Mondays. Webcafe: http://webcafe.wharton.upenn.edu/eRoom/mgmtb/291c11 It is important that you be able to access this website. I will place copies of all class slides and some course handouts on this site. I will also occasionally place here the aggregated reports (Class Summaries) of the entire class’ negotiation results on various exercises. As noted above, case materials, including your specifically assigned roles for exercises, will be distributed in class, but the website is the best place to check for other course materials. COURSE REQUIREMENTS AND GRADES I. Participation (25% of course grade) Much of the learning in this course will occur in class. Your attendance, prepared participation, and thoughtful contributions to class discussion are therefore critical for your learning, as well as for the learning of your classmates. Attendance For nearly every negotiation, I will assign you a role and (a) negotiating partner(s) before class. Your partner(s) are therefore dependent upon your attendance at that class to complete the negotiation exercise. Failure to attend, or to complete the Negotiation Results Summary in a timely manner, will affect your participation grade negatively. Poor attendance may reduce grade by 25% or more. Preparation Every week will include a negotiation exercise, so preparing for class involves not only completing the assigned reading, but also preparing for the specific case or exercise. You should always complete a “Negotiation Preparation Sheet” to use in the negotiation. Early in the term, and on occasion thereafter, I’ll give you a form to assist in this endeavor. Writing down your thoughtful preparation will always help you so it’s a good idea to create this “Prep Sheet” even when I don’t give you a form. I will collect these Prep Sheets before negotiation exercises at various unannounced, times during the term. Negotiation Results Summaries As noted above, at the end of most negotiation exercises, you will turn in a short summary of the results of the negotiation. You will not receive a grade based on the negotiation outcomes reflected in these summaries. But consistently punctual and high quality (thoughtful and thorough) summaries will certainly help your participation grade. And failure to turn in every summary will negatively affect your participation grade. 3 Quality of Comments During Discussion I will evaluate the quality of your contributions and insights (rather than the quantity of comments you make) in class discussions. High quality comments possess one or more of the following: • Thoughtful application of course readings or prior course concepts to the current negotiation experience • Extension of (building upon) other students’ comments (demonstrates listening to others and understanding in addition to presenting own idea) • Analysis of a relevant personal experience that moves the discussion forward (not simply a description of that experience) • Integration of prior comments and ideas, resulting in a new, relevant perspective. 4 II. Three Short Analysis Papers (15% each; 45% of course grade) Purpose: develop your skills at analyzing the players, outcomes and processes of three specific negotiations. 1) Short analysis of in-class negotiation exercise (15% of course grade) Due: in my Management Suite mailbox on Friday, October 4, by 5 pm. Assignment: Choose one of the negotiation exercises we have completed in class thus far, and write a short analysis of the negotiation. To analyze, you need to identify the causes and the effects evident in the negotiation, and explain how they are related. The focus of your paper should answer the general question “Why did the negotiation go the way it did?” You should make inferences, based on class principles, about causality -- what interest(s), what behaviors (your own and the behaviors of others), and what process(es) caused the outcome? In addition, your analysis should address the following questions: • • • • • • • How did my outcomes differ from those of other class members? Why? What theory applies? How did the process and the outcomes of this negotiation compare to what would have been predicted by the writings on negotiation we have seen in class thus far? What surprised me about my behavior, and the behavior of others in this negotiation? What did I learn about myself, and about others, from this negotiation? What did I learn about negotiations from this case? What would I do differently if I had the chance to do this negotiation over again? Maximum length: 4 double-spaced pages. The best papers typically do not simply list the above questions and answer them, but rather organize an analysis in some format that fits the negotiation you have selected and your own writing style. 5 2.) Short analysis of an actual negotiation (outside of class) (15% of course grade) Due: in my Management Suite mailbox no later than Friday, November 8, 5:00 pm. Assignment: Outside of class, actually negotiate for an object or service. This object or service should be something you had planned to obtain anyway. The objective is to spend time integrating what you’ve learned in the course thus far, choose an object or situation of personal significance to you, and then plan and conduct a negotiation as best you can. Possible places to start include flea markets, garage sales, roommate situations, new leases, business partnerships, newsgroups like upenn.forsale, electronics shops, department stores, hair styling salons. You will not be evaluated based on how successful the outcome is, but rather, how well you planned the negotiation (using course material and some serious thoughtfulness), and how well you analyze what happened (How did your planning affect the outcome? How did the negotiation itself affect the outcome? How did your style and the style of the other party(ies) affect the outcome? What contextual factors played a role?) Your analysis should use a format appropriate for your negotiation experience and your writing style. I recommend using no more than 1 page worth of space for a brief description of the facts and events of this negotiation. The bulk of your paper should analyze what happened -- why did the negotiation go the way it did? Again, use course principles to make inferences about causality here. You should also address the following questions: • What surprised me about my behavior, and the behavior of others in this negotiation? • What did I learn about myself, and about others, from this negotiation? • What did I learn about negotiations from this event? • What theory applies? • How did the process and the outcomes of this negotiation compare to what would have been predicted by the writings on negotiation we’ve seen in class thus far? • What would I do differently if I had the chance to do this negotiation over again? Maximum length: 5 double-spaced pages 3.) Short analysis of an in-class negotiation exercise (15% of course grade) Due: at the beginning of class on Monday December 9. Assignment: Choose one of the negotiation exercises we have completed in class between (and including) October 7 and December 4, and write a short debriefing analysis of the negotiation. As with the first Short Analysis paper, you should make inferences about causality, based on class principles, to explain why the negotiation proceeded as it did. What interest(s), what behaviors (your own and the behaviors of others), and what process(es) caused the outcome? In addition, your analysis should address the same questions, and follow the same other suggestions, as outlined on page 5 of this syllabus for the first Short Analysis (of the other inclass negotiation). Maximum length: 4 double-spaced pages. 6 Evaluation of Short Analysis Papers: The best papers typically do not simply list questions and answer them, but rather organize an analysis in some format that fits the negotiation you have selected and your own writing style. Regardless of format, your short papers will be judged on how well you display the following three facets, as you explain why the negotiation proceeded and resulted as it did, and address the specific questions noted above. Good papers have the following three facets: a) Understanding: demonstrate that you understand the course material by using it to answer the questions and make causal inferences (not simply reciting course material). b) Insight: demonstrate that you have reflected on what happened, and analyzed it. Insight offers something beyond a report of what; it offers an explanation of why something happened. It often includes an analysis of the process and its relation to the outcomes. c) Generalizability: demonstrate what you can take from your learning here and apply to future negotiation situations. Points for short analysis papers will be awarded as follows: 14-15: Exceptional paper. Clearly, thoroughly covers all three facets and develops them well. Paper reflects honest assessment of own behavior, and is well written. No more than 20% of the paper is devoted to describing facts and events; the bulk of the paper is a thoughtful analysis (supported by course material) of why events happened as they did, and how you will behave in future situations. 11-13: Good paper. Addresses all three facets, but does not thoroughly develop them. Or, develops one or two facets well, but misses most or all of the third facet. 6-10: Average paper. Contains one or two good points. 1-5: “Missed the point” paper. Completed assignment, but not consistent with the spirit of the course. These papers are usually “play by play” accounts of the negotiation, that include a description but little or no analysis. 7 III. Term Paper (30% of course grade) Due: at the beginning of class on Monday, November 25. Purpose: to illustrate your ability to apply and expand upon course concepts in a detailed and indepth fashion. Assignment: Analyze in a thoughtful and thorough fashion a negotiation or conflict that illustrates (or perhaps calls into question) the principles discussed in this course. You will need to do some outside reading for this paper. You need not reference additional materials about negotiation per se. Instead, you need to read and cite at least 2 different reports of the negotiation, deal or conflict you choose. These sources might be books, articles, news reports, or even personal interviews with involved parties. The best papers typically draw from sources that offer different perspectives of the same negotiation, deal or conflict. The range of possible topics is broad; you might choose a personal experience (outside of class exercises), someone else’s experience with which you are familiar, a merger or acquisition (successful or unsuccessful) in the recent news, or an important historical international negotiation. Fictional cases (e.g. from fictional movies or books) do not work well. Think broadly about real events involving at least two parties with different interests, and choose one that truly fascinates you; I think you’ll then find plentiful bargaining and conflict resolution issues to address. I am delighted to work with you to develop a particular topic; please don’t hesitate to come by office hours or email me with your ideas. The best papers typically do the following: Display the author’s keen interest in the conflict or deal (attempted or completed) Clearly and relatively narrowly bound the topic in time and scope. Be clear about the period of time (probably choosing a relatively short period), and about roles (who are the negotiating parties, who is the “audience,” who are the influencing parties, agents, mediators, etc….?). “Triangulate” multiple and very divergent sources. That is, authors of the best papers in the past have found 3 or more diverse reports, views, opinions, or “sides” regarding the conflict or deal. That diversity gives you, the author, the raw material with which to create your own theory of what “really” happened, using course principles to analyze the negotiation aspects of what you’ve read. Your goal is to write your own analysis of the clearly bounded negotiation (not to report someone else’s analysis of the situation). The more diverse the sources you read, the more richness you have available to use in generating your own explanation of what happened. Use your insight into this case and what you’ve learned about negotiations in general to make a recommendation or two. What could one or more parties have done differently, to increase the likelihood of an improved outcome? Your paper should be about 15 pages, double-spaced, and please, no longer than 20 doublespaced pages. Outlining the basic facts typically takes about 5 pages worth of space (note: this doesn’t need to be the first 5 pages); the remaining pages should be devoted to dissecting, 8 critiquing, integrating, extending and commenting (in short, your analysis). Whereas simple presentation or listing of course concepts is a waste of your space, I am interested in how you apply and use them in the context of your analysis. This is not a term paper that requires pages of references, but rather some hard thinking and careful explanation of what happened and why. Evaluation of term paper: Your term paper will be judged on: (1) Intellectual understanding – how well you seem to understand the negotiation concepts you employ; (2) Creativity – how much you clearly extend, modify or elaborate the concepts you use, and integrate the perspectives of your sources. How much new insight is your analysis offering?; (3) Validity – how well your descriptions of the data illustrate your points; and (4) Organization and style – how easy and interesting the paper is to read. I will choose a few representative papers from the class, and ask their authors to informally present those analyses in our final class periods on December 4 and 9. Excellent (informative, well organized, and entertaining) presentations will contribute positively towards your participation grade. Summary of Course Grading 25% 15% 15% 15% 30% Participation Short Analysis Paper 1 (on class exercise) Short Analysis Paper 2 (on actual negotiation outside of class) Short Analysis Paper 3 (on class exercise) Term Paper 9 Management 291 Negotiations, Bargaining and Conflict Resolution Class Outline Class 1: Introduction Monday, 9/9/02 Read: Shell Introduction Bulkpack (BP) “1: Some Organizing Questions.” From Howard Raiffa, The Art and Science of Negotiation. Class 2: Distributive Negotiations I – Planning, Goals and BATNA Wednesday, 9/11/02 Read: Shell Ch. 2: Goals and Expectations Fisher, Ury & Patton (FUP), Ch. 6: What if they are More Powerful? Prepare Role for Negotiation: Buy a House Class 3: Distributive Negotiations II – Tactics Monday, 9/16/02 Read: Shell Ch. 9: Opening and Making Concessions Lewicki, Saunders & Minton (LSM) Ch 3: pp 70 – 91. BP 2: “3: Elmtree House.” From Howard Raiffa, The Art and Science of Negotiation. Prepare Role for Negotiation: Used Cars Role Class 4: Distributive Negotiations III – Harder Tactics Wednesday 9/18/02 Read: Rest of LSM Ch 3: pp. 91-106 Shell Ch. 3: Standards and Norms Shell Ch 10: Closing and Gaining Commitment BP 3: “Ch 8: Bargaining.” From Kennedy, Benson & McMillan, Managing Negotiations. BP 4: “Winning at the Sport of Negotiation.” Kathy Aaronson. Prepare Role for Negotiation: Patriot National Insurance Co (PNI), or Byrnes, Byrnes and Townsend (BBT), as assigned in class. Complete last page of case, to turn in at the beginning of class. 10 Class 5: Distributive Negotiations IV - Planning, Decision and Framing Tactics Monday 9/23/02 Read: BP 5: “Three: Judgment under Uncertainty.” From Max H. Bazerman, Judgment in Managerial Decision Making. Good Background Reading: LSM Ch. 2 Complete and turn in Thomas-Kilmann Conflict Mode Instrument. This will be distributed in a prior class period. Class 6: Summary of Distributive Bargaining Wednesday 9/25/02 Read: BP 6: “1:A Preview of the Basic Skills.” From James C. Freund, Smart Negotiating. Prepare Role for Negotiation: Pheasant Egg Class 7: Introduction to Integrative Negotiations Monday 9/30/02 Read: Shell Ch. 5: The Other Party’s Interests FUP Introduction and Ch. 1: Don’t Bargain Over Positions FUP Ch. 2: Separate the People from the Problem FUP Ch. 3: Focus on Interests, Not Positions Class 8: Integrative Negotiations: Power, Influence and Leverage Wednesday 10/2/02 Read: Shell Ch. 4: Relationships Shell Ch. 6: Leverage Shell Ch. 8: Exchanging Information BP 7: “Influence without Authority: The Use of Alliances, Reciprocity, and Exchange to Accomplish Work.” Allan Cohen & David Bradford. Prepare Role for Negotiation: Performance Interview Friday, October 4. Short Analysis Paper 1 is due. No later than 5 pm, my mailbox. 11 Class 9: Integrative Negotiations: Truth and Trust Monday 10/7/02 Read: BP 8: “To some at Harvard, telling lies becomes a matter of course.” Wall Street Journal. BP 9: “When is it Legal to Lie in Negotiations?” Richard Shell, Sloan Management Review. BP 10: “6: Establishing Trust and Building a Relationship.” From Leigh Thompson, The Mind and Heart of the Negotiator. Good Background Reading: LSM Ch. 7 (This will be assigned later but getting a start on it now will be helpful to you.) Class 10: Integrative Negotiations: Threats, Promises and Conflict Resolution Wednesday, 10/9/02 Read: BP 11: “2: An Essay on Bargaining.” From Tomas C. Schelling, The Strategy of Conflict. BP 12: “3: Bargaining, Communication, and Limited War.” From Tomas C. Schelling, The Strategy of Conflict. LSM Ch. 4: Strategy and Tactics of Integrative Negotiation Class 11: Integrative Negotiations: Threats, Promises and Conflict Resolution Monday 10/14/02 Read: LSW first part of Ch. 8: “The Social Context of Negotiation” (pp. 267 – 289.) FUP Ch. 4: Invent Options for Mutual Gain FUP Ch. 5: Insist on Using Objective Criteria Class 12: Choosing and Executing Your Strategy Wednesday 10/16/02 Read: Shell Ch. 7: Preparing Your Strategy LSM Ch. 12: Difficult Negotiations – Individual Approaches BP 13 : “Taking the Bull out of Bully.” Len Leritz BP 14: “1: Don’t React: Go to the Balcony.” From William Ury, Getting Past No. Prepare Role for Negotiation: El-tek 12 Class 13: Complex Negotiations: Mixed Motives Inside the Firm Monday 10/21/02 Read: FUP Ch. 7: What if they won’t play? FUP Ch. 8: What if they use dirty tricks? FUP Conclusion and 10 Questions (pp. 147-187). Do the answers they provide address White’s critique? BP 15: “Essay Review: The Pros and Cons of ‘Getting to Yes’.” James J. White Prepare to discuss Luna Pen A: Design a negotiation strategy; turn in at beginning of class the Assignment as described on page 9 of Luna Pen A. The case (Luna Pen A) will be distributed in a prior class period. Tuesday, 10/22/02 by 5 pm. Turn in Luna Pen B choices. Luna Pen B will be distributed in Monday’s (10/21/02) class. Class 14: Complex Negotiations: Individual Differences in Negotiating Styles – I Wednesday 10/23/02 Complete and turn in Luna Pen B BEFORE you do this reading. Read (after turning in Luna Pen B): LSW Ch. 11: Global Negotiation BP 16: “Culture, Negotiation, and the Eye of the Beholder.” Jeffrey Rubin & Frank Sander. BP 17: “The Hidden Challenge of Cross-Border Negotiations.” James Sebenuis. BP 18: “Global Negotiating: Vive les Differences!” Sergey Frank. BP 19: “Our Game, Your Rules: Developing Negotiating Approaches.” Leonard Greenhalgh & Roderick Gilkey. NOTE: This article is about sex-based differences in negotiation styles. Think through what you believe about sex differences before you read this article. Class 15: Complex Negotiations: Individual Differences in Negotiating Styles - II Monday, 10/28/02 Read: Shell Ch. 1 BP 20: “Bargaining under the influence: The role of alcohol in negotiations” Maurice Schweitzer & Jeffrey Kerr. Good background: LSM: Ch 10: Individual Differences Prepare Role for Negotiation: Mexico Venture 13 Class 16: Your Skills -- Feedback Wednesday 10/30/02 Read: BP 21: “2: Don’t Argue: Step to Their Side.” William Ury, Getting Past No. Prepare to give feedback to your Mexico Venture partner. Class 17: Complex Negotiations – Third Party - Mediation Monday, 11/04/02 Read: LSM Ch. 13: Managing Difficult Negotiations: Third Party Approaches BP 22: “Six: Designing a Detailed Plan for Mediation.” From Christopher Moore, The Mediation Process. Prepare Role for Negotiation: Short mediation case given in prior class. Class 18: Complex Negotiations - Third Party Mediation Inside the Firm Wednesday 11/06/02 Read: BP 23: “Do Managers Mediate, or Even Arbitrate?” Deborah Kolb & Blair Sheppard. BP 24: “Three Approaches to Resolving Disputes.” From William Ury, Jeanne Brett, & Stephen Goldberg, Getting Disputes Resolved. Prepare Role for Negotiation: Amanda Project Friday, November 8. Short Analysis Paper 2 (of Actual Negotiation) is due. No later than 5 pm, my mailbox. Class 19: Complex Negotiations - Third Party – Mediation and Agency Monday, 11/11/02 Read: BP 25: “Post-Settlement Settlements in Two-Party Negotiations.” Max Bazerman, Lee Russ, & Elaine Yakura. BP 26 : “Scrolling Around the New Organization: The Potential for Conflict in the On-Line Environment.” Elaine Landry. BP 27: “Mediation as Parallel Seminars: Lessons from the Student Takeover of Columbia University’s Hamilton Hall.” Carol Liebman. 14 Class 20: Complex Negotiations – Agency Wednesday 11/13/02 Read: BP 28: “When Should we Use Agents? Direct vs. Representative Negotiation.” Jeffrey Rubin & Frank Sander. Prepare Role for Negotiation: Bullard Houses Class 21: Complex Negotiations – Agency Monday 11/18/02 Read: Shell Ch. 11 LSM Ch. 7 (this was optional earlier; read it now if you didn’t before). LSM rest of Ch. 8 (pp. 289-314). Class 22: Complex Negotiations – Coalitions Wednesday, 11/20/02 Read: BP 29: “1: Introduction.” Theodore Caplow, Two Against One: Coalitions in Triads. Prepare Role for Negotiation: Federated Science Foundation Role Class 23: Complex Negotiations – Coalitions and Collective Bargaining Monday 11/25/02 Term paper due at the beginning of this class Read: LSM first part of Ch. 9 (pp. 315-334). BP 30: “Background Note: GM-UAW Negotiations, 1984.” Class 24: Complex Negotiations -- Collective Bargaining Wednesday 11/27/02 Read: Rest of LSM Ch. 9 (pp 334-352). 15 Class 25: Multi-Party, Multi-Interest Negotiation Monday 12/02/02 Read: BP 31: “Ch 14: Negotiating in Groups and Organizations.” From Max Bazerman & Margaret Neale, Negotiating Rationally. Prepare Role for Negotiation: Harbor Co This is a 6-party, multi-issue negotiation. You’ll have a pre-assigned role and project group. I guarantee that you’ll need at least 80 minutes to negotiate, so please plan to be on time and ready to start negotiating immediately. Your tardiness or absence directly frustrates 5 other class members. Class 26: Debrief HarborCo & Select Paper presentations Wednesday 12/04/02 Read: BP 32: “18: The Law of the Sea.” From Howard Raiffa, The Art and Science of Negotiation. BP 33: “American Strengths and Weaknesses” Tommy T. B. Koh. Class 27: Select Paper presentations & Course Summary Monday 12/9/02 Short Analysis Paper 3 (of in-class negotiation) is due at the beginning of this last class. 16