Chapter 4

Integrative Bargaining
 4-2

Integrative Bargaining
 Defined: “A negotiating process in which
the parties involved strive to integrate
their interests, as effectively as possible in
the final agreement”
 Based on Mary Parker Follett’s tale of the
orange and two sisters AND
 1970s labor relations cooperative
approach to collective bargaining
 4-3

Integrative Bargaining
 Also called:
 “Win-Win” (Getting to Yes by Fisher and Ury)
 “Mutual-gains” approach
 “Expandable pie” approach
 All have in common the integrative
approach:
 Create as much value as possible for both sides
 Claim as much value as possible to meet your
interests
 4-4

Negotiation Skills
 Skill 4.1: Key elements of integrative
bargaining
 Skill 4.2: Apply the categorization method
 Skill 4.3: Recognize the first step – focus on
the interests of the parties involved
 Skill 4.4: Practice active listening
 Skill 4.5: Utilize the packaging tactic
 Skill 4.6: Apply interest-based bargaining
(IBB)
 Differences Between Distributive 4-5

and Integrative Bargaining

Distributive
1. One issue (or one at a
time)
2. “Win-Lose”
3. Maximize share of “fixed
pie”
4. One-time relationship
5. Keep interests hidden
6. One expressed position
for each issue
7. Keep information hidden
Integrative
1. Several issues
2. “Win-Win”
3. “Expand the pie” by
creating and claiming value
4. Continuing long-term
relationship
5. Share interests with other
party
6. Create many options per
issue to maximize mutual
gains
7. Share information, explain
“why” of issue
 Chapter Case: Labor 4-6

Contract Negotiations
 Ohio Metals Co. (management) and Local
56 of the Primary Sheet Metal Workers of
America, AFL-CIO’s current three-year
contract is about to expire
 There is a history of a positive labor-
management climate
 Management shares financial data for the
past three years; union shares survey of
members’ interests
 At the first meeting both share lists of
economic and noneconomic issues
 4-7

Thompson’s Pyramid Model

 Integrative negotiations is both a process – how to
bargain, and an outcome – mutual gain
______________________________________________

Level 3: Pareto Optimal – Maximum value for both parties

Level 2: Superior Agreement – Create additional value for both

parties

Level 1: Agreement – Exceeds both parties’ reservation points or

BATNA
 The Categorization 4-8

Method
Step One: Identify all issues
Step Two: Classify each issue as
a. compatible
b. exchange
c. distributive
Step Three: Agree on all compatible issues
Step Four: Trade or exchange issues of
approximately equal value
Step Five: Use distributive bargaining on all
unresolved issues
 4-9

Tactics for Success:

Practice Active Listening

 Active Listening = focus on what the other

person is saying, understanding both the
content and emotion
 4-10

Practice Tips for Active

Listening
#1 Maintain eye contact
#2 Think only about what they are saying,
don’t formulate a response
#3 Take notes and use them to reflect their
thoughts back
#4 Pay attention to body language
#5 Confirm that you heard and understand
by summarizing – ask reflective and
probing questions
The Five Steps of the Categorization Method
of Integrative Bargaining
 Applying the Categorization 4-12
Method to the Chapter Case
 Step 1: Thirteen issues identified
 Step 2: All issues classified
 Step 3: Agreed on three compatible issues (length of
contract [1]; drug testing [5]; no strike/no lockout [8])
 Step 4: Exchanged
 Union’s job security [11] for management’s subcontracting [10]
 Union’s pension proposal [2] for management’s shift differential [9]
 Union’s clothing allowance [12] for management’s funeral leave [7]
 Management’s profit sharing [4] for union’s overtime [13]
 Step 5: Distributive bargaining used to settle wage
increase [3] and health care insurance [6]
Keys to Successful Integrative 4-13

Bargaining
1. Willing participation: Open
discussions, explore new options and
mutual gains
2. Relationship: Positive long term is
valued
3. Collaborative atmosphere: Avoid “fighter
pilot lock-on” over an issue or position
4. Packaging: Combine two or more issues
into one proposal of equal gains for both
 Labor Contract Negotiations
Through Integrative Bargaining
 Tactics for Success: 4-15
Use Questions to Advance Negotiations
1. Open-ended  “What type of clientele would
this advance course attract?”
2. Open-ended with explanation  “The basic
course targets entry-level employees. What
type of clientele would this advance course
attract?”
3. Moving from debate to dialogue  “What
profit margin do you need for the advanced
course to be successful?”
4. Broad-based, clarification  “You’re clearly
concerned about taking on additional risks, so
what exactly do you see as the risk to you in
offering the advanced course?”
 Tactics for Success (cont.)
4-16

5. Circular  “How do you conduct a marketing

campaign?” “What is the difference between a
basic and advanced course?”
6. Leading  “Can you see that my firm is taking
all the risks in this proposal?”
7. Loaded  “Are you saying these unfair payment
terms are the only ones you will accept?”
8. Underlying concerns  “What type of
payment arrangement would reward you for the
risk and provide your firm an adequate profit?”
9. Seeking creative solutions  “Why is it
essential to offer classes on different days?”
 4-17

Limitations of the
Categorization Method
1. Parties believe they use “win-win,” but in
reality use distributive method on each
issue
2. Imbalance of power causes one party to
use “win-lose”
3. Overconfidence in knowledge of other
party and failure to actively listen
 Traps to Avoid:
4-18
How to Respond to a Loaded
Question
“Are you telling me those unfair terms are the only ones
you will accept?”
Possible responses: (don’t respond in anger, instead
evaluate the emotions)
1. Silence: followed by returning to the prior issue
2. Humor: “I have other demands you will like even
less!”
3. Take a break: “We need to go outside for some
fresh air”
4. Call it what it is: “I consider that a loaded question,
are these the only terms I will accept…?”
 4-19

Interest-Based Bargaining
(IBB)
 Increasing in popularity, but
subject of debate: Is IBB a critical
negotiation improvement or a new label
for “integrative bargaining” (“principled
negotiation” from Getting to Yes)?

 2004 study: IBB effective, but negotiators

also return to distributive bargaining on
tough issues
 4-20

Principles of IBB
 Negotiators view the process as one of
problem solving
 IBB steps (according to FMCS)
1. Sharing of information
2. Willingness to forgo power or leverage
3. Brainstorming to create options
4. Focusing on issues, not personalities
5. Leaving past issues behind
6. Expressing interests, not positions
7. Both parties, committing to IBB
 Advantages and 4-21

Disadvantages of IBB
 Advantages
 Focus is on underlying interests
 Brainstorming leads to more options, better
solutions
 Parties seek out new options rather than defend
portions
 Disadvantages
 May waste time seeking more options
 Proposed options may not be realistic
 Standards agreed to may be vague and subjective
Union and Management Negotiators’ Reports on IBB Activities