Negotiation

"Let us never negotiate out of fear.

But let us never fear to negotiate."
President John F. Kennedy

Bargaining and negotiation have been defined as forms of conflict management that
involve two or more parties, who have a conflict of needs and desires that choose to
negotiate through a give and take process involving proposals and counterproposals
to search for a mutually acceptable agreement. While some theorists and
researchers distinguish between bargaining and negotiation, saying that the former
is a competitive activity between parties and the latter is a cooperative process, the
two terms will be used interchangeably.

Bargaining and negotiation differ from mediation and arbitration. Both mediation and
arbitration emphasize the importance of an impartial third-party to help manage the
conflict. Mediation utilizes a third party neutral, called a mediator, who facilitates the
two parties to talk and generate a mutually acceptable agreement, but who has no
decision power. Arbitration is similar to a legal hearing where both parties present
information regarding their position to a third-party neutral, an arbitrator, who then
makes a decision regarding the best way to manage the conflict. Bargaining and
negotiation do not rely on third parties to facilitate the process and make decisions;
rather, the process and agreements are generated by the parties in conflict.

When to Choose Negotiation

Negotiation is a conflict strategy that allows you to meet your needs. There are
certain moments and times when negotiation may actually hurt your ability to meet
your needs and should be avoided. These times include:
• When you are in a situation that could cause you severe financial or personal risk.
• When your counterpart asks for something you cannot support because it’s illegal
or morally and ethically inappropriate.
• When there is high time pressure. The need to move quickly may hurt your ability
to think clearly and cause you to underestimate the impact of your concession.
• When your counterpart acts in bad faith. If you can’t trust their agreement, it makes
little sense to follow through and negotiate.
• When you’re not prepared. A failure to think through your positions, questions, and
strategies will hinder your ability to achieve a good outcome.
Types of Negotiation & Types of Negotiators
All negotiations are similar in that they involve people taking initial positions, offering
proposals to help resolve the conflict, making counter-proposals, offering
concessions, and coming to agreement. However, negotiations can be distinguished
according to the strategy and tactics that are used to conduct the negotiation.
There are two general strategies and clusters of negotiation tactics: (1) distributive,
and (2) integrative.
Distributive bargaining. This type of bargaining emphasizes the importance of
maximizing individual gains and minimizing losses. It adopts a “fixed” pie approach
where resources are viewed as being limited and it becomes important to claim
one’s rightful share of the pie. Distributive bargaining is competitive with each
bargainer taking positions to achieve victory over the other side. Distributive
bargainers tend to use the following kinds of strategies and tactics:
• Distributive bargainers try to keep the opposing side from gaining information about
their position or “bottom-line” while trying to collect information about the resistance
point of the other party.
• Distributive bargainers misrepresent and withhold information as well as make
exaggerated statements about their positions in order to mislead people about their
true objectives.
• Distributive bargainers may use bluffs, threats, and manipulation to reduce the
options of the other party.
• Distributive bargainers use threats, putdowns, demands, and blame statements.
• Distributive bargainers develop their position by using more and more facts to build
the case for the validity of their proposals.

Integrative bargaining. This type of bargaining emphasizes the importance of

maximizing joint gains.
Rather than viewing bargaining from a win-lose perspective, integrative bargaining
adopts a win-win orientation where parties try to create agreements where both can
prosper. Integrative bargaining assumes that both parties share multiple overlapping
issues and that the best way to deal with these multiple issues is to be flexible in
one’s position and to engage in cooperative problem solving. By engaging in
cooperative problem solving the pie becomes expandable, as the focus becomes on
developing creative solutions that expand the pie in ways that ensure both parties
can get what they need.
Integrative bargainers tend to use the following kinds of strategies and tactics:
• Integrative bargainers share their information openly and divulge their needs and
objectives. Information disclosure is viewed as facilitating the problem-solving
process as it allows bargainers to define problems, identify causes, develop
solutions, and evaluate the merits of proposed solutions.
• Integrative bargainers tend to use soft rather than hard tactics. They tend to make
statements that support the other party and use exploratory problem-solving
messages.
• Integrative bargainers drop particular agenda items, separate issues, and
recombine issues in creative ways as they move through the negotiation. This opens
up the room for developing novel solutions to the problem.

While we may aspire to use an integrative bargaining approach, there are times
when a distributive approach may be more useful to achieve our desired outcomes.
Use a distributive approach:
• When your interests and the other party’s clearly conflict.
• When the other party insists on taking a win-lose approach.
• When you do not need a long-term harmonious relationship.
• When you are powerful enough to prevail.
• When short-term goals are more important.

Use an integrative approach:

• When you and the other party have common interests.
• When the other party is willing to consider a win-win approach.
• When a continuing, harmonious relationship is important.
• When you are weaker or power is approximately equal.
• When long-term goals are more important.

Principled Negotiation
The dominant model of integrative bargaining is principled negotiation. The idea of
principled negotiation was developed in Roger Fisher and William Ury’s classic
book, Getting to Yes. In this book they distinguish between what they call positional
bargaining and principled negotiation. Positional bargaining occurs when people
negotiate according to their positions or statements of what they want to get out of
the situation.

Positional bargaining is a form of distributive bargaining where both parties view the
conflict as a win-lose situation. Positional bargaining can take one of two forms: (1)
soft, and (2) hard.
Soft positional bargaining emphasizes the importance of building relationships,
which may mean that the parties take a soft line toward the negotiation. This may
create a win-lose outcome as they lose by giving up too much in an effort to maintain
a friendly environment and good relationship.
Soft positional bargaining is characterized by the following:
• Participants are friends.
• The goal is agreement.
• Make concessions to cultivate the relationship.
• Be soft on the people and the problem.
• Trust others.
• Make offers.
• Disclose your bottom line.
• Accept one-sided losses to reach agreement.
• Search for the single answer: the one they will accept.
• Insist on agreement.
• Try to avoid a contest of will.
• Yield to pressure.
Hard positional bargaining emphasizes the importance of getting what you want by
playing hard-ball and being tough on the other person during a negotiation. Hard
positional bargaining is characterized by the following characteristics:
• Participants are adversaries.
• The goal is victory.
• Demand concessions as a condition of the relationship.
• Be hard on the problem and the people.
• Distrust others.
• Dig in to your position.
• Make threats.
• Mislead as to your bottom line.
• Demand one-sided gains as the price of agreement.
• Search for the single answer: the one you will accept.
• Insist on your position.
• Try to win a contest of will.
• Apply pressure.

Principled negotiation is based on the notion that we need to negotiate on the merits
of the case. We need to find ways to work together in order to ensure that wise
choices are made that benefit everyone.
Principled negotiation operates from four simple rules:
1. Separate the person from the problem. It is possible to be soft on the people you
are working with and hard on the problem. One can simultaneously act in ways that
are respectful of the other and treat the other person well but work hard at
addressing the substantive issues that are informing the conflict.
2. Focus on interests, not positions. Creative resolutions can be achieved by
focusing on the party’s mutually shared interests. Positions are the statements of
what someone wants or needs from a situation while the interest is the underlying
reason or motivation for the position. For example, an individual in a social service
organization may take a position of wanting to stamp out corruption because their
interest is in making sure the resources the organization has are totally used to
benefit the client.
3. Invent options for mutual gain. It is important to generate multiple options that may
meet both parties’ interests. Techniques such as brainstorming can be used to
generate multiple options from which a resolution can be created later.
4. Insist on using objective criteria. Principled negotiation emphasizes the
importance of selecting objective criteria for selecting among competing alternatives.
Rather than make negotiations a contest of the will, by creating objective criteria
people can be open to reason and yield to principle, not pressure.

The Four Points of Principled Negotiation

PRINCIPLE #1
Separate the people from the problem.
Learn to separate people difficulties from substantive issues. Be soft on the people
and hard on the problem. Use psychological tools to handle psychological
difficulties, analytical tools to address substantive issues.
PRINCIPLE #2
Focus on interests, not positions.
Positional bargaining causes people to “dig in their heels” and maintain their position
to avoid losing face. Learn to look behind positions for interests, some of which you
may share.
PRINCIPLE #3
Invent options for mutual gain.
Work with your partner to create additional options to explore. Use brainstorming
techniques to create a larger number of quality ideas to serve your common
interests.
PRINCIPLE #4
Insist on objective criteria.
Appeal to objective standards and outside sources to judge the quality of your
agreements. This not only helps "separate the people from the problem”, but also
allows negotiators to work together to identify possible measures of fairness.

“BATNA” - Best Alternative To a Negotiated Agreement

Goals of a “wise” negotiation: Protect yourself from making an agreement you
should reject. Make the most of your assets so that any agreement that you reach
will satisfy your interests as well as possible.

The Bottom Line vs. BATNA

The Bottom Line limits your ability to benefit from what you learn during negotiation.
It inhibits imagination and is likely to be set too high.

Your BATNA determines what will you do if you do not reach an agreement. It
invents a list of actions you might conceivably take if no agreement is reached and it
explores some of the more promising ideas to convert them into practical
alternatives. Selection should be made tentatively by brainstorming and narrowing
the choices to the one alternative that seems to be the best BATNA for the situation.

Remember: BATNA in action gives you the confidence to reach a “wise” agreement.
Judge every offer against your BATNA. The better your BATNA, the greater your
ability to improve the terms of any negotiated agreement.

Practice:
Instructions: The goal of this exercise is to analyze and improve an actual
negotiation using the method of principled negotiation. When you were on a team
before you may have experienced conflict. Explain this incident to the team. Tell
the team how effective you were at negotiating the conflict.
1. Take 5 minutes and as a team choose one team member's case for development
to discuss.
2. Focus on the following aspects of the method of principled negotiation in
analyzing the negotiation strategy used in this case. If warranted, suggest specific
ways the strategy could be improved.
a) The Four Principles
-Separating the People from the Problem
-Focusing on Interests and Not Positions
-Creating Options for Mutual Gain
-Insisting on Objective Criteria
b) BATNA (Best Alternative To a Negotiated Agreement)

Practice:
The case study classroom layout
Meeting (10 minutes) - Groups (Group A and Group B) meet to discuss their part of
the case study.
Presentation (15 minutes per group) - Group A present their findings to the other
group and vice versa.
Discussion (10 minutes) - all students come together to discuss the findings and
make recommendations.

You are a member of the management negotiating team at Behrco Industries, a

major producer of auto parts for various retail outlets (e.g. Auto Zone, Pep Boys)
across the country. You are bargaining with your production/maintenance
employees’ union. Your company has been successful in its chosen market, turning
a good profit each year and compensating the employees within the top 15% of the
relevant labor market. In your current contract negotiations you have settled the
majority of the outstanding wage and benefit issues. You feel it is an equitable
agreement so far with each side compromising where necessary to reach an
agreement. You were even able to settle a long-standing contracting out issue to the
satisfaction of both sides. Now, however, you have four remaining issues that must
be settled. All of these issues are important and have generated strong feelings on
both sides. You want to get this agreement signed and ratified before your present
contract expires next week. With so many of your competitors anxious to supply your
customers if your employees strike, it is essential that you conclude this contract
without a work stoppage.

Management Issues:
 Dress Code: The current dress code is not being followed – employees often show
up for work wearing ripped and dirty jeans and t-shirts, dirty sneakers and baseball
caps. After struggling with enforcement of the dress code for years, you have
decided that the best solution is for all employees to be required to wear coveralls at
work. You feel that these should be purchased by the employees at their own
expense - $45/pair. However, you may be willing to purchase each employee one
set of coveralls each year.

Union Issues:
Parking: There has been a 25% increase in the number of employees in the plant
over the past year. As a result, there is no longer adequate space in the employee
parking lot (employees get spaces on a first come first served basis). Many
employees now have to park on the street (if they can find spaces) or they must pay
$6.00/day to park in the commercial lot across the street. The employees want the
company to build a new parking garage where the current parking lot is to
accommodate the increase in cars. While management is opposed to this capital
investment, it may be willing to subsidize the cost of employee parking at the
commercial lot up to $3.00/day.
Take about 30 minutes to discuss your options and your strategy with the members
of your bargaining team. Delineate your demands clearly and then discuss what
compromises you may be willing to accept. You will then begin negotiating with the
union team. In collective bargaining, the union typically takes the lead in making
initial proposals; the company reacts.
And remember, as an effective negotiator you have an obligation to bargain in good
faith which means:
You must make counterproposals when you reject the opposing party’s proposal.
You must not constantly change your position with regard to your contract terms.
You must not engage in evasive behavior. You must make a serious attempt to
adjust differences to reach an acceptable common ground.

After the initial negotiation session you will meet with your own team again. Take
about 30 minutes to discuss the proposals made by the other team and to decide
where you might be willing to compromise to achieve an agreement and where you
are determined to remain firm. Finally, you will bargain with the management team
one more time in an attempt to settle the outstanding issues and come to an
agreement.

At the conclusion of this session we will discuss the terms and conditions negotiated
by each team, the settlement each attained, and where you felt the greatest
problems arose and why. How did you resolve them? At the conclusion of the
exercise each labor-management team should present its collective bargaining
agreement. This will generate discussion among the other teams which can be
facilitated by the instructor.