Because learning changes everything Negotiation Section 01 Negotiation
Because learning changes everything. ® Negotiation Section 01: Negotiation Fundamentals Chapter 01: The Nature of Negotiation © 2019 Mc. Graw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of Mc. Graw-Hill Education.
Overview Everyone negotiates, almost daily. Negotiations occur for several reasons. • To agree on how to share or divide a limited resource. • To create something new that neither party could do on their own. • To resolve a problem or dispute between the parties. People fail to negotiate because they do not recognize they are in a negotiation situation. • Options other than negotiation fail to achieve goals or needs. • Or, people misunderstand the negotiation process and do poorly. © Mc. Graw-Hill Education 2
Style and Approach First a brief definition of negotiation. • Negotiation is a form of decision making in which two or more parties talk with one another in an effort to resolve their opposing interests. • Bargaining describes the competitive win-lose situation – haggling. • Negotiation refers to win-win situations – mutually acceptable solutions. Many assume the “heart of negotiation” is the give-and-take. • Negotiation is complex, factors may shape the negotiation before it begins, or shape the context around the negotiation. Author’s insights are drawn from three sources. • Personal experience, the media, and research. © Mc. Graw-Hill Education 3
Characteristics of a Negotiation Situation Characteristics common to all negotiation situations. • Two or more parties, individuals, groups, or organizations. • There is a conflict of needs and parties search for a resolution. • Parties think they can get a better deal by negotiating. • In negotiation, a give-and-take is expected. • The parties prefer to negotiate and search for an agreement. • Successful negotiation manages tangibles and resolves intangibles. • Tangibles include the price or the terms of agreement. • Intangibles are the underlying psychological motivations that directly or indirectly influence the parties during negotiation – the need to “win. ” • Often rooted in personal values and emotions and impossible to ignore. © Mc. Graw-Hill Education 4
Interdependence Relationships are characterized in one of three ways. • When parties have interlocking goals, they are interdependent. • Independent parties can meet their own needs without others’ help. • Dependent parties must rely on others for what they need. Interdependence and the structure of the situation shapes negotiation processes and outcomes. • A zero-sum, or a distributive situation is competitive with one winner. • A non-zero-sum, or integrative situation is a mutual-gains situation. Interdependence depends on the desirability of alternatives. • A BATNA is a negotiator’s Best Alternative to a Negotiated Agreement. • Understand your own BATNA as well as the opponent’s BATNA. © Mc. Graw-Hill Education 5
Mutual Adjustment As parties influence each other, they engage in a mutual adjustment – causing changes to occur during negotiation. • Effective negotiators understand how people will adjust and re-adjust, how negotiations might twist and turn. • The best strategy is grounded in the assumption that the more information available about the other party, the better. When one party alters their position based on the other party’s suggestion, a concession has been made. • Concessions constrain the bargaining range. • The range of possible agreements between the two parties’ minimally acceptable settlements. © Mc. Graw-Hill Education 6
Two Dilemmas in Mutual Adjustment Dilemma of honesty Dilemma of trust Concerns how much of the truth to tell the other party. Concerns how much to believe what the other party tells you. Telling the other party everything may allow them to take advantage of you. If you believe everything, you may be taken advantage of. Not telling the other party about your needs may lead to a stalemate. © Mc. Graw-Hill Education If you believe nothing, you may not reach an agreement. Current trust depends on: • Their reputation. • Their past treatment of you. • Their current pressures. 7
Perceptions and Patterns Two efforts in negotiation create trust and the belief of fairness. • One is based on perceptions of outcomes. • Shaped by managing how the receiver views the proposed results. • The other is based on perceptions of the process. • Enhance credibility of the process with images that signal fairness. • When people make a concession, they trust the other party and the process far more if a concession is returned. The pattern of give-and-take is essential to joint problem solving. • Satisfaction is determined as much by the process through which an agreement is reached as with the actual outcome obtained. © Mc. Graw-Hill Education 8
Value Claiming and Value Creation The purpose of distributive bargaining is to claim value. • Using whatever necessary to claim the reward or gain the largest part. The purpose of integrative negotiation is to create value. • Or find a way for all parties to meet their goals and share the reward. Most negotiations combine claiming and creating value. • Negotiators must recognize when to use one approach or the other. • Negotiators must be versatile and comfortable using either approach. • Negotiators see problems as more competitive than they really are. Coordination of interdependence has the potential for synergy. © Mc. Graw-Hill Education 9
Creating Value Through Differences There are some key differences among negotiators. • Differences in interests. • Finding compatibility is often the key to value creation. • Differences in judgments about the future. • How parties see what is possible creates opportunities to get together. • Differences in risk tolerance. • A company with a cash flow problem can assume less risk. • Differences in time preference. • The seller wants to close the deal but the buyer may not be ready. Value is often created by exploiting common interests, but differences can also serve as the basis for creating value. © Mc. Graw-Hill Education 10
Conflict Interdependent relationships have the potential for conflict. • Negotiation can play a role in resolving conflict effectively. Conflict is a sharp disagreement of interests, ideas, etc. • Includes the perceived divergence of interest or a belief that current aspirations cannot be achieved simultaneously. There are four levels of commonly identified conflict. • Intrapersonal conflict occurs within an individual. • Interpersonal conflict occurs between individuals. • Intragroup conflict happens within a group. • Intergroup conflict is between groups – the most complex. © Mc. Graw-Hill Education 11
Functions and Dysfunctions of Conflict Discussion raises awareness. Brings change and adaptation. Strengthens relationships and boosts morale. Promotes self-awareness. Enhances personal development. Win-lose goals lead to competitive processes. Misperception and bias increase. Emotionality may increase. Productive communication decreases. Blurred central issues. Encourages psychological development. Rigid commitments – locked in. Can be stimulating and fun. Escalation of the conflict. © Mc. Graw-Hill Education Magnified differences. 12
Factors When Managing Conflict Difficult to Resolve Easy to Resolve Issue is a matter of principle. Divisible issues. Large stakes, big consequences. Small stakes, little consequences. A zero-sum situation. A positive-sum situation. A single interaction. A long-term relationship. No neutral third party available. Trusted, powerful third parties available. Unbalanced conflict progress. Balanced conflict progress. © Mc. Graw-Hill Education 13
Figure 1. 3: The Dual Concerns Model Jump to slide containing descriptive text. © Mc. Graw-Hill Education 14
Effective Conflict Management Individuals in conflict have two independent levels of concern. • Concern about your own outcomes. • Concern about the other’s outcomes. Five major conflict management strategies are identified in the dual concerns model. • The contending strategy is used for trivial issues, not complex issues. • Yielding is helpful if you were in the wrong, not with important issues. • Inaction is appropriate for a cooling off period, not when you are responsible for a decision. • Problem-solving is needed with complex situations needing commitment from others for success, not for simple, or timely, issues. • The compromising strategy is appropriate when power is equal, not when power is not equal, or when the problem is very complex. © Mc. Graw-Hill Education 15
End of Chapter 01. Because learning changes everything. ® www. mheducation. com © 2019 Mc. Graw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of Mc. Graw-Hill Education.
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