Negotiation

Negotiation Quiz

For each of the following situations, try to see if you can determine whether or not it represents a negotiation. You may wish first to answer all those you find easy and then go back to the others.

• Buying a rug in a West African market
• Soliciting a new source of venture capital
• Trying to capture/kill a warlord in a regional war
• Trying to injure or ruin a competitor
• Writing back and forth with someone you do not know on the Internet
• Meeting your potential in-laws for the first time
• Giving or receiving commendation and criticism
• Deciding how the dishes will get done
• Borrowing a wonderful piece of clothing from a family member
• Deciding whether to stay late at work to finish up a project
• Making up, or rebuilding a relationship with someone you love
• Picking a successor for the CEO of a company where you are on the board
• Getting a child to go to bed
• Getting into a class or training program with limited enrollment
• Courting your Life's Companion
• Laying off or firing someone
• Discussing the outsourcing of a business function with the manager of the function
• Deciding with a family member where to invest a small joint inheritance
• Soliciting a major gift from a major donor
• Soliciting bids for the new advertising campaign for your company
• Talking with your parent(s) this weekend
• Saying good-by to someone you will not see for a long time
• Finding an advisor, or a mentor, or a counselor, or a new dentist
• Discussing with a recruiter the salary and benefits you feel you deserve
• Trying to get back to sleep when something is worrying you
• Trying to shake off a stranger on the street who keeps walking with you
• Getting an extension on a paper or a project
• Apologizing to someone whose property you unknowingly damaged
• Seeing someone you dislike and turning away at a party
• Interviewing a potential baby-sitter
• Accepting a bribe
• Turning down a bribe
• Getting another country to lower a trade barrier
• Talking anonymously about an unsafe workplace condition with a Hot Line person
• Meeting a new teammate for the first time
• Struggling to stay on a diet or exercise plan or give up smoking

Source: Mary Rowe, https://ocw.mit.edu/courses/15-667-negotiation-and-conflict-management-spring-2001/pages/study-materials/
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 License.

A Butterfly's View of Negotiations and Conflict Management

Which questions can you answer?

1. Is there one especially "rational way" to divide $2 with a stranger? (If you think there is not, what determines the family of " rational choices "?)
2. Do you think that most business decisions are made rationally? Is there usually one optimum decision?
3. You are facing a specified conflict or negotiation with someone about whom you know only demographics, style and job description. You have only an hour. What might you do to prepare?
4. In real life, in a super important case, how and when should you choose which strategies and tactics you will use in a negotiation? On what factors ought this choice to depend?
5. How can one try to prevent a "bad attitude death spiral" in a negotiation with someone you do or do not know well? Where does a desire for revenge come from?
6. Which of the ways of building trust appeal to you the most?
7. What is the difference between manipulating people and inspiring them (as a leader)?
8. If you or someone else has gotten painted into a corner, through a commitment that should never have been made, what could be done?
9. Can you tell when someone is lying to you?
10. How might you figure out the strategy and depth of strategy the Other is using in a negotiation?
11. Within a close team or a couple, if you have no time in each negotiation to pursue the best win-win solutions, where both sides gain simultaneously, how can A and B behave so that both are actually gaining, in the aggregate, over time?
12. How would you define effectiveness in a negotiation'? Are you effective? Who do you know that is effective?
13. Is it the choice of negotiating strategy that determines effectiveness? If so-which strategy is most effective?
14. If not-which tasks and skills most fundamentally determine the effectiveness of a negotiator?
15. What proportions of all your negotiations and conflicts are " mixed motive " ? What proportion is purely collaborative? and what proportion is purely competitive? After you take the Thomas Kilmann Questionnaire, assess the strengths, in the five basic strategies, that you bring to your negotiations. Are your skills in balance with the requirements of the negotiations you are engaged in? (Which of the tactics on the Tactics sheets in Negotiation 101 do you want to practice?)
16. Imagine you are assembling a team to start a project or a company. What would you look for, in the people you would choose for your team, with respect to the five sets of strategic strengths in negotiation?
17. Given that most people think they are ethical, and that people are not at all the same with respect to ethical standards, would you want to give your future employees or partners an Ethics test? See if what they actually do is what they say they should do, when ethical questions arise? Just see if they do what they agree to do, in negotiations with you? Suppose they think different standards should apply to them than to " most people " '?
18. What is the likely effect of having an observer when you negotiate?
19. In complex negotiations what are some of the reasons for sidebar discussions with someone on the Other's team? Are there any reasons not to have sidebar discussions?
20. If you wanted to win over a ten-person decision-making group about a certain proposal, what are some of the ways you might do this successfully?
21. Please think of one or two negotiations that are truly vital to you-these could either be negotiations with yourself or negotiations with Others. What is it that is being negotiated? Think for example, about money, time, status and prestige, trust, space, family status, future growth possibilities, etc. Is money the most important subject? Name some ways you could find out how effective you are in this real-life negotiation that really matters to you.
22. The Last Task in a negotiation is: that all parties must come to see the outcome as the best possible under the circumstances. When is the last time you have seen the failure of the Last Task in a negotiation? Why did this happen?
23. Under what circumstances would you make the first offer in a competitive negotiation?
24. Under what circumstances would you lay out all your relevant real interests in a negotiation?
25. Name some elements of process you would want to think about, if you were going to negotiate for your side on a two-person team.
26. In a setting with coalitions, would you prefer to be a " pivot'' person, o r the person with the most tangible resources, if those are not the same?
27. Some of the options for dealing with complaints are: listening, referring people to other resources, just giving or receiving needed information, helping people help themselves through developing choices and coaching, shuttle diplomacy, formal mediation, fact - finding, arbitration or adjudication (and managerial decision-making), systems change,generic approaches, agency complaints, lawsuits, going to the newspapers. Which of these are more likely to be collaborative? Which are more likely to be competitive? Which will likely be " mixed motive"?
28. Some sources of power in negotiations include: legitimate authority, rewards, sanctions, force, information, expertise, elegant solutions, commitment, moral authority, BATNA, relationships. Which of these sources of power do you need for each of the options above, for dealing with complaints?
29. Who should decide which complaint option or conflict management option is chosen? The manager? The complainant?
30. Which is the most cost - effective complaint handling option'?
31. What does a person in a n organization think about first when he or she wants to raise a concern or make a complaint?
32. Is it possible to go outside the organization with a complaint and still have a normal work life thereafter within the organization? What does your answer mean for conflict management system design?
33. What is the first question to ask yourself when you face a dispute or a complaint as a manager?
34. Which sources of power do people turn to when they feel powerless? What is the effect?
35. Is there such a thing as a "frivolous" complaint? What would you want to try, if someone kept blaming problems on other people?
36. Under what circumstances is a Difficult Person not "difficult"?
37. Which sources of power are likely help the most, in dealing with a very Difficult Person?
38. How do you manage your own emotions in conflict situations? (Do you consciously manage your emotions at all, or do you simply react?) What do you do if you start to feel yourself getting upset?
39. Do you try to affect the emotions of others in a conflict situation? How? For what purpose?

Negotiation Styles/Strategies

Conflict Styles

When to use which style?

Competing

Often appropriate when:

• an emergency looms
• you're sure you're right, and being right matters more than preserving relationships
• the issue is trivial and others don't really care what happens

Often inappropriate when:

• collaboration has not yet been attempted
• cooperation from others is important
• used routinely for most issues
• self-respect of others is diminished needlessly

Collaborating

Compromising

Interests vs. Positions

Negotiation Strategies: Definitions

Team Building

Interests

• interests rather than positions
• collaborative, cooperative learning styles
• integrative and mixed motive strategies
• informal problem solving rather than "justice"

Rights & Power

• positions rather than interests
• competitive (or avoiding) style
• distributive strategy
• justice orientation rather than problem-solving

• Tangibles
• Intangibles

Bargaining Range

More Terms in Negotiation

Reservation Point: the point at which the Best Alternative to a Negotiated Agreement (the BATNA) becomes preferable to starting or continuing a negotiation. In a sale - or in any negotiation - this is the point beyond which a party will not go. 

Bargaining Range: The distance between the reservation points of the parties. This range can be positive or negative. If it is negative there will be no settlement unless one or both parties changes reservation points.

BUYING A HOUSE

Expanding the pie: The process of adding elements to a negotiation which help one or both sides to gain more - a basic task in making negotiations more integrative. These are usually elements which are valued differently by each party and often they have the characteristic that one side will gain a little, give up nothing or suffer only a small loss in return for great gain to the other. These elements can usually be added to almost any negotiation no matter how distributive the negotiation at first appears to be. As examples: the seller of a house may not care about taking the curtains or the lawn furniture. The buyer may greatly value these amenities because they will save a lot of time in moving in. The buyer might agree to a postponed moving date which does not affect him or her very much - in order to accommodate the seller's staying until the end of a school year. In return, the seller may not mind if the buyer sends loads of books that will be stored in the garage months before transfer takes place. Both buyer and seller may enjoy introducing the buyer to the neighbors. Both may greatly value respectful and honorable treatment from the other - which usually costs nothing.

Positions vs. Interests: A position is what you say you want or must have. Positional bargaining is usually distributive - and may be inefficient in the sense that value may be left on the table at the time of settlement because each party did not know what the other really wanted - but it may help one party gain more short-term profit. An interest is why you want what you want. Interest-based bargaining adds integrative potential.

Strategy and Style

Ineffective Competitives

• Obnoxious, complaining, rude
• Unsure of the values at hand
• Not realistic, perceptive, astute

Ineffective Cooperatives

• Unsure of self and interests
• Not creative or perceptive
• Not realistic or astute

Effective Negotiators

(both strategies)

• Ethical, trustworthy
• Appropriately courteous
• Prepared
• Creative, realistic
• Perceptive, self-controlled

Bargaining Tactics for Distributive, Integrative and Mixed Motive Strategies

Tactics Common to All Strategies

Help both sides to come to feel that whatever settlement is reached, that it is the best possible one under the circumstances.

Mixed Motive Strategies

In almost all negotiating situations you will have "mixed motives," where you wish both to create value with your Other, and then to claim your share. In these situations you may use tactics common to both strategies, or switch at least a little from one strategy to the other. For example one would show respect at all times, be cautiously forthcoming about one's interests, share information as trust grows, be truthful and consistent, seek common ground and agreement on principle, generate as many options as possible, and in general pursue the integrative path as long as possible, while explicitly safeguarding your own interests. In many situations you will be able to expand the pie before having to divide it.

Basic Negotiation and Mediation Tasks

Basic Tasks for a Pure Distributive Strategy

1. Figure out your own interests and reservation point as well as you can. Keep reviewing these points while you negotiate.
2. Figure out the interests and reservation point of the Other (the other party or parties). Be alert to new data while you negotiate.
3. Seek to move the reservation point of the Other to widen the bargaining range especially if there is a negative range. (This process is often begun by "sowing doubt"). However, if necessary for a settlement that you must achieve, move your own reservation point.
4. 4. Seek a settlement as close as possible to the reservation point of the Other so that you win the maximum profit.
5. Do what you can to see that both you and the Other come to see this settlement as the best possible one under the circumstances.

1. Figure out your own interests and reservation point as well as you can. Keep reviewing these points while you negotiate.
2. Figure out the interests and reservation point of the Other. Be alert to new data while you negotiate.
3. Through judiciously shared information and brainstorming, seek to expand the pie so that each side may get as much as possible of what it would like. Explore moving the reservation points of each side.
4. Decide on fair principles to determine how to divide the pie.
5. Do what you can to see that both you and the Other come to see this settlement as the best possible one under the circumstances.

1. Figure out the real interests - not the "positions" - and reservation point for each side as well as you can. Privately review your understanding of these points with each side. If appropriate, keep reviewing these points during the mediation. Stay alert for new data.
2. Through acquiring information and brainstorming, seek to expand the pie so that each side might get as much as possible of what it would like. Explore moving the reservation points of each side.
3. Help the parties decide on fair principles to determine how to decide the issues at hand.
4. Do you what you can to see that all parties come to see the settlement - if any - as the best possible one under the circumstances

Sources of Power in Negotiations

• Positional Power or the Power of
  Legitimate Authority
  
  • "You do what I say because I'm the boss - that's why!"
  • "Like it or not - that's the law".
• Rewards
  
  • "He bought his way in"...
  • "Do whatever he says - you'll be glad you did".
• Sanctions
  
  • "She said she would just sue me"...
  • "If you continue to make these mistakes - at very least it means a demotion".
• Force
  
  • "I will get you…and your children, if you continue…"
  • "This assignment isn't safe for a woman - we can't send you there".
• Information
  
  • "He was able to get us the information we needed about what our competition is planning for the next year".
  • "You think you're being paid fairly? Let me tell you what others are making".
• Expertise
  
  • "She is the most important employee here - she is the only person who really knows how the data system works".
  • "I don't care if there's a hiring freeze. Get me someone who knows about interoperability".
• An Elegant Solution
  "We were completely stymied. He walked in here with a magic wand - he fit together all the pieces of the puzzle and found us a workable answer that helps everyone at least a little and saves face for everyone".
• Charisma - referent authority - moral authority
  
  • "People would just stop what they were doing and watch him and listen to him and do their best to support whatever he wanted done".
  • "It was scary. But I got to my feet and said, 'You must stop this.' And he did".
• Commitment
  
  • "She just never gave up. She camped outside his office night and day until finally he had to listen".
  • "We will go to the mat on this one - let there be no mistake. It's this or a strike".
• Relationship - power gained or power lost
  
  • "Friends come and go - enemies accumulate forever".
  • "I know her and she is the only person I will deal with on this matter".
• BATNA - the best alternative to a negotiated agreement
  • "They had all the time in the world and lots of other customers - they did not need us".
  • "The worst that can happen is that I will just go back where I came from. I might even like that".

Preparing for a Negotiation

Questions to address before and during negotiation

1. Whose interests are at stake?
2. What are their interests?
3. What are the sources of power for each person whose interests are at stake?
4. What are all the possible options?
5. What strategy do I wish to adopt?

1. Play the aggressive strategy right back.
2. Ignore the aggressive strategy. Lead a change in the game by proposing objective criteria and principles that should be considered.
3. Ignore the aggressive strategy. Lead a change in the game by concentrating first on the interests of the Other and then on your interests.
4. "Name" the aggressive strategy of the Other and try to negotiate a change in the game by generating options, and concentrating on objective criteria and interest of all parties.
5. Propose a change in negotiators.
6. Go to your fallback position (your BATNA).
7.  Go to your "micro-BATNA".

I. Problem-solving options, oriented toward the interests of all parties:

• A could choose to learn how to write a civil, factual, private note or letter to B, laying out the facts as A sees them, A's feelings about these facts, and the remedies proposed by A.
• A could choose to learn how to go talk directly with B, with or without presentation of the note or letter.

Changing Behavior

1. Reinforce and reward good behavior which, as it takes place, is inconsistent with, and blocks, the (bad) behavior that you hope will disappear....
2. Reinforce good behavior (role-modeling from senior people, performance reviews, etc.)
3. Punish bad behavior
4. "Name" what is good behavior and bad behavior
5. Ignore bad behavior (and good behavior)
6. Reward bad behavior
7. Alternately reward and punish bad behavior --- this will cast it in concrete forever

How would you know if you are an effective Negotiator?

Who should decide? Should you decide, or should your supervisor? Your Significant Other?

What about the Other? And what about other stakeholders?

Is it all about outcome? Or process? Or both?

Can you tell right away if you have been effective? Or is it the long run that counts?

Do you have " ethical" and " legal " on your list of required characteristics?

When would collaborative and when would competitive or mixed motive strategies be most effective?

How " wide " an effect do you want to have as a negotiator? Do well on one negotiation? Or improve a whole system?

Notes on Negotiations 101

"Negotiations 101" begins with a quiz

I give people two minutes to decide which of the items on the list is (or is not) a "negotiation". After two minutes I ask them to look especially at the last item and I ask aloud: "Is there anyone in the room who has negotiated with him or herself?" Heads nod yes. I ask, "Is it possible to negotiate with yourself?" Again most heads will nod affirmatively.

The answer, of course, is that all the items on the quiz are negotiations. I will usually say, "As I see it, ALL interactions between two or more points of view are negotiations". I go on to point out that the "theory of negotiations covers all interactions - personal and professional - where there are two or more points of view".

Often people will raise a hand, "But …war?" And then they will think. And realize that war is a use of force - in a negotiation.

"There are many possible strategies in negotiation"

I start with the "story of the orange". There are by the way many stories of the orange, and a delightful role-play called the Ugli Orange - sometimes I tell a fanciful story about a fight over a single orange. In all versions, persons (or teams) A and B are fighting over an orange. Each wants the whole orange. I ask, "You are a third party to this dispute. What will you do to manage the dispute?"

Usually someone will say, "Eat the orange". And some will say, "Divide it in half". I produce Graph #1 and point to Avoidance. I will smile at a person who suggests eating the orange, and say that there is a technical definition for the strategy of eating the orange - called Avoidance.

I then point to Compromise and suggest that all over the world this is an essential strategy and widely practiced. Then I will point to Competition (as A will see it) and Accommodation (also as A will see it) and then ask if it is obvious that these two points are reversed for Person B. People will nod.

Then I will point to the dot inside the triangle and ask the significance of the dot.

Sometimes someone will understand that the dot represents a damaged orange…. a point where A and B will each get only a bit of the orange. I ask, "Has anyone ever seen a negotiation where that which is at stake gets damaged? The goods or the services or somebody's reputation?" Usually many people nod. If I have time I will ask for examples. I look for examples that show INTANGIBLE loss as well as TANGIBLE damage.

I point out that all the points within the triangle represent INEFFICIENT solutions - value is left on the table. Not only are these simply win-lose solutions but they also are not cost-effective.

Then we think about the nature of "win-lose". Is it sometimes a good thing? Is it the best we can do? I ask the class, "How many in the class believe in ‘justice'?" Of course most of us raise our hands, including me. I point out that the diagonal (competition to accommodation) IS the line of justice, as one would find it in court. That is, the winnings of the one represent loss to the other. And I ask rhetorically, "But is this always the best we can do? Can we do better than win-lose, in some cases? "

"Why Does Each Party want what they say they want?"

Often someone in the class will point out that there is another way to help in the dispute about the Orange. The third party might ask each person WHY he or she wants the orange. (If no one in the class notices this possibility I will raise it).

In our delightful example, the third party asks the interests of each. A says he wants the orange for the peel - to flavor the frosting on a cake with the "zest". B says she wants the juice - she has a cold and wants to get better. A thus gets all the peel, B all the juice. Each gets all of what he or she wanted. We find a wonderful point on the graph called Collaboration.

I ask how common such a solution is, in real life. People shake their heads, "This is not common, because of scarce resources, scarce time, scarce space". I ask, "Nevertheless can you give me a common example, where both A and B will tell you that they GET more than they GIVE, in the relationship with each other?" Some people will look puzzled. I ask again, slowly, so that people digest the oddity of the concept - it is possible every day in a relationship to get more than one gives, and two people might both feel this way in the same relationship.

One answer, of course, is the example of a very happy marriage - or a very happy work team - where both parties will say that they get more than they give - every day. How is this possible? Are they deluding themselves? Or is it just the addition of intangibles - happiness in being with the Other?

I will note, at this point in the lecture, that as a young person growing up, I was taught to be collaborative, (whenever I could reasonably behave this way). I thought that I was taught to be collaborative, because collaboration was morally better. It was not until I took math that I realized that collaborative solutions - at least those inscribed in the square box outlined inside the north east triangle - are (also) mathematically better, in the sense that both A and B are better off than in a win-lose settlement.

Thus, in circumstances where a collaborative solution is appropriate - which is of course not always the case - then a solution in the northeast square is absolutely "better". And any solution in the northeast triangle adds value to the two-people-taken-together. Our two happy people are not "deluding themselves".

So how do very happy marriages happen? One answer lies in the lines of the northeast square that define the "box" inside the northeast triangle. Whenever something matters more to A, then B gives in….. whenever something matters more to B, then A gives in. The effect, for both of them, is to feel as if they live on the northeast corner that is marked Collaboration.

Of course, in addition, intangibles do matter. That is respect, affection, trust, friendship, and graciousness add to the tangible value received, and help to push the negotiations to the northeast. In fact one can almost always add real value to any negotiation, by adding intangibles, especially by "delivering respect".

Finally I usually ask, "If I love to cook and my partner loves to clean, and we want to divide the housework 50/50, how should we divide the work? Should we each do half the cooking and half the cleaning?" Usually a class immediately understands that collaboration depends on people valuing things differently, one from the other. So effective collaboration depends on finding out what the Other's real interests actually are.