TX Marketing II: Negotiation Techniques

Transcription

1 TX Marketing II: Negotiation Techniques

2 MODULE THREE: GENERAL NEGOTIATIONS... 2 MODULE DESCRIPTION... 2 MODULE LEARNING OBJECTIVES... 3 KEY TERMS... 4 LESSON 1: COOPERATION, CONFLICT AND NEGOTIATION LESSON 2: NEGOTIATION FUNDAMENTALS AND DISTRIBUTIVE BARGAINING LESSON 3: INTEGRATIVE NEGOTIATION LESSON 4: HIGH-PRESSURE TACTICS AND ETHICS IN NEGOTIATIONS LESSON 5: COMMON PROBLEMS IN NEGOTIATIONS AND REAL WORLD PRACTICE

3 Module Three: General Negotiations Module Description This module introduces the student to the strategy, structure, and common problems of negotiation. Virtually anyone can profit from improving her or his negotiation skills; since there is so much cooperative exchange in human life, we regularly encounter situations in which we must bargain with someone else to get what we want. Real estate professionals, whose livelihoods depend on negotiating good deals for themselves and their clients, can benefit from studying negotiation even more than most people. 2

4 This negotiation module is made up of five lessons: Cooperation, Conflict, and Negotiation Negotiation Fundamentals and Distributive Bargaining Integrative Negotiation High-Pressure Tactics and Ethics in Negotiation Common Problems in Negotiation and Real Estate Practice These lessons begin with basic ideas about conflict, move through detailed discussion of negotiation strategy, and conclude with a real-world practice lesson in which the student applies this new knowledge to examples and case studies. Module Learning Objectives Upon completion of this module, the student will be able to: Explain why conflict is a common event in human life, and be able to describe common responses to conflict. Apply an understanding of conflict reactions to make judgments about which response is appropriate in a particular conflict. Describe the central role of concessions and commitments in negotiation. Discover and evaluate the best alternative to a negotiated agreement. Rank alternatives in terms of preference, and explain how these preferences determine the scope of negotiation. Name and apply some basic strategies for evaluating the offers made during negotiation. Explore basic considerations to prepare for negotiation. Distinguish between the two common styles of negotiation, and make judgments about which style is appropriate for a particular conflict. Outline the central strategies of these negotiation methods, as well as the demands each approach places on negotiators. 3

5 Spell out the purpose of high-pressure negotiating tactics, and give examples of both the tactics themselves and strategies for managing the high-pressure negotiator. Apply an ethical standard in negotiations, and explain why unethical behavior is a potential problem in negotiation. State the common cognitive errors and psychological tendencies that are the primary pitfalls of the negotiation process, and give details about the problems these issues pose for negotiators. Key Terms Actor-Observer Error: This is a kind of attribution error in which we attribute our own behavior to external causes (like bad luck or circumstance) while attributing others actions to internal causes (like personality traits). This error often leads us to excuse our own conduct while criticizing others who are behaving similarly. Avoiding: This is a response to conflict which aims for non-engagement. Our goal is not to get involved with the conflict at all; avoiding the conflict sometimes includes making an effort to stay away from the other party. BATNA: BATNA is an acronym which stands for best alternative to negotiated agreement. Your BATNA is essentially your best backup plan, in case negotiation fails or cannot provide an outcome above your bottom line. It is important to understand your BATNA because it can help you decide whether negotiation is a good choice for you, and it can help you determine what counts as a good offer in negotiation. Bargaining: Bargaining is the process of making offers, counteroffers, and tradeoffs in the hopes of reaching a mutually acceptable solution. We often think of negotiation and bargaining as the same thing, but bargaining is actually only one part of the negotiation process. 4

6 Bargaining Mix: A negotiation rarely involves just one issue. The bargaining mix is the collection of issues or goals involved in a particular negotiation, some of which are generally more important than others. Bargaining Range: The bargaining range is the area of potential agreement in negotiation. It is determined by the space between negotiators bottom lines. For example, imagine you are selling a car and your asking price is $12,000. If you won t take less than $10,000 for your car (your bottom line) and I won t pay more than $11,000 (my bottom line), then we have a bargaining range of $1,000. The spread between $10,000 and $11,000 consists of prices that we would both find acceptable, at least in principle. Bottom Line: Your bottom line is the least appealing outcome you are willing to accept from negotiation. It represents the greatest sacrifice of your interests that you are willing to make before negotiation becomes a losing strategy for you. The bottom line is sometimes also called the resistance point, since a negotiator will not readily go beyond it. Brainstorming: Brainstorming is a creative process for generating possible solutions to a conflict. Rather than taking the conflict and possible outcomes as given, brainstorming aims to help us rethink our situation. Generally the ultimate goal of brainstorming is to create a solution that helps both parties to get more of the value or benefit they want. Cognitive bias: Cognitive biases are common ways we oversimplify information or fill in the missing parts of incomplete information in order to make that information manageable. However, these patterns of thought can lead us into errors and misunderstandings when we are not thoughtful about the conclusions we draw from them. 5

7 Collaborating: This is a response to conflict in which we try to work together to find a way that we can both achieve our goals. Successful collaboration often requires that we reconsider our situation and think creatively about alternatives we might not have initially been willing to consider. Commitment: A commitment is a tool for defining your position in negotiation. It amounts to stating your position along with an assurance about your future behavior relative to your demands in negotiation. For example, I make a commitment when I say If you do not give me a raise, I will quit or If you agree to give me a raise, I will increase department revenues by 15%. Commitments are effectively promises, and should be honored in the same way. In addition, commitments with a negative overtone (like the threat to quit, above) are often perceived by the other party as threats, which can create further problems and conflicts in negotiation. Competing: This is a response to conflict in which we see ourselves in a struggle with the other party to divide a fixed amount of benefit or value. The competitive response sees conflict as a zero-sum game; whatever one party gains is a loss for the other side. When we react competitively, we choose to pursue our own interests at the expense of the other party s aims. Compromising: This is a response to conflict in which we try to share gains and losses between both parties. Each party agrees to modify his initial demands, so that both parties can get some of what they want. Concession: A concession is an offer made by one party to the other, in which she suggests a decrease in her own benefits. Concessions generally amount to offering some benefit or value to the other party, and are one of the main tools that move negotiations toward a solution. They often take the form of tradeoffs, for example I will give up X if you will give up Y, or if you will give me Z instead. The willingness to make concessions is generally essential to productive negotiation. 6

8 Conflict: A conflict is a disagreement between two or more parties about how some benefit or value should be divided. Conflict is not inherently bad; given that we are interdependent creatures who frequently engage in cooperative projects, we should assume that conflict is a natural part of human life. Constructive Conflict: Conflict is constructive when it moves issues or relationships forward in a respectful, positive way. It resolves conflicts instead of creating them, and it generates solutions both parties can accept. Constructive conflict generally focuses on the real subject of the conflict, and does not deploy strategies like threats or personal criticism. Destructive Conflict: Destructive conflict produces more problems than it solves. It is generally highly divisive, because parties are personally identified with their positions. Communication in such conflicts focuses on criticizing or blaming the other party, and rather than building on common interests the negotiators use threats and deception to achieve their goals. Distributive Bargaining: Distributive bargaining is one of the two main approaches to negotiation. It is a fundamentally competitive strategy for dividing up value or benefit, and its basic goal is to push the other party as close to his or her bottom line as far as possible so that you can capture a maximum amount of the contested value or benefit for yourself. Ethical Considerations: Ethical considerations are criteria that help us decide whether a negotiated solution is a morally good outcome. They tell us about whether a particular outcome conforms to (or violates) ethical standards. We generally believe that ethical considerations tell us about what we should do, and that these considerations often override practical or prudential considerations. For example, if I need money right now, it might be that stealing your money would be both the 7

9 easiest thing to do and the act that best serves my interests. However, we still do not think that stealing your money is the right thing for me to do. The conclusion that it is morally wrong provides me with a reason not to do it a reason which overrides the practical and prudential considerations in favor of the act. Fundamental Attribution Error: When we make this mistake, we attribute behavior to internal causes (like character traits or motives) rather than external ones (like luck or circumstance), even when the cause is visibly external. Halo Effect: The halo effect is the cognitive bias that leads me to draw general conclusions about a person based on her or his specific traits. For example, research has shown that people tend to assign positive personality traits to those they find attractive. Clearly, there is no necessary connection between being handsome and being a good person. Like stereotyping, halo effects are problematic because they keep us from seeing the real facts about the other party. High-pressure or Hardball Negotiation Tactics: High-pressure negotiation tactics try to force the other party to accept an outcome that he or she would normally reject. Strategies like deception and intimidation are often used to push the other party to take offers at or below his or her bottom line. The high-pressure approach can backfire badly when the other party later decides she or he has been treated unfairly and will not honor the negotiated agreement, or seeks revenge. Integrative Negotiation: Integrative negotiation is one of the two main approaches to negotiation. It is a fundamentally collaborative strategy for dividing up value or benefit, and its basic goal is to maximize the value or benefit available to both parties. Interests: A negotiator s interests are the goals or aims she or her wants to see achieved in negotiation. 8

10 Maximal Demand: If you state the outcome you want most (your ideal objective) as your opening position, then it is called your maximal demand because it represents the most you think you can get from negotiation. Negative Bargaining Range: There is no overlap between the outcomes the parties will accept. For example, if we are dividing a pie and you want half of the pie while I want three quarters and neither party is willing to modify his demands then there is no possible outcome that can give both of us what we want. Negotiation: Negotiation is a bargaining process between two or more parties who believe they are in conflict, via which they try to reach a mutually acceptable solution. This conflict can be a real clash between goals, or it can be merely an apparent clash created by the way the various parties perceive their situation. Negotiator: A negotiator is anyone who is working with the other side of a conflict to reach a solution. Sometimes, the negotiators are the people or groups in conflict; in other situations, there may be an individual or team who is appointed specifically to manage a conflict for each side. Another possibility is appointing an impartial negotiator to mediate between the two sides. In this course, the term negotiator generally denotes someone involved in the conflict, not an impartial mediator. Opening Position: Your opening position is your initial statement of what you want from negotiation. Since it is made before interacting with the other party and thus before it is clear whether concessions will be necessary it is often considerably different from the actual outcome. Outcome: An agreement reached via negotiation. This term is used interchangeably with result, solution, and settlement. 9

11 Positive Bargaining Range: When we have a positive bargaining range, this means that there is space between the two parties bottom lines. There is a zone of potential agreement in which we can find solutions that do not require either of us to accept outcomes below our bottom lines. For example, if you are selling something and I am willing to pay at least a bit more than the lowest offer you will accept, then we can bargain with each other in that range between the most I will pay and the least you will accept. Practical Considerations: Practical considerations are a kind of criteria that help us to decide whether a negotiated outcome is a good one. They include questions of cost, time, efficiency, ease and the like. For a practical consideration to tell us anything about what we should do, we must already have an interest in whatever trait it tells us about. For example, if I am unconcerned about the cost of solving a conflict, then the fact that one solution is the cheapest one is not relevant to me it tells me nothing about whether that solution would be a good one to pursue. However, practical considerations alone cannot tell me everything I need to know to assess a solution. I generally need the further information provided by prudential and ethical considerations before I can make a final evaluation. Prudential Considerations: Prudential considerations are a second kind of criteria that help us to decide whether a negotiated outcome is a good one. They tell us about how well (or poorly) an outcome serves our personal interests. For example, prudential considerations are the sort of thing which tell me that jumping off a cliff is probably not the best way to get to the bottom, even though that might be the fastest way to get there. We generally assume that everyone wants to see her or his personal goals achieved and her or his interests protected, and thus prudential criteria are usually understood to give us some important information about what we should or should not do. However, I generally need the further information provided by prudential and ethical considerations before I can make a final evaluation of an outcome. 10

12 Self-Serving Error: This is the third common attribution error, in which we conclude that our successes should be explained by internal causes (i.e., we should get credit for them), but our failures should be explained by external causes which are beyond our control. Stalemate: Negotiators have reached a stalemate when they find that negotiations cannot move forward. Stalemates arise in many ways for example, both parties might stubbornly refuse to modify their positions, or they may feel they have exhausted all possible options without reaching an agreement. Stalemate is used interchangeably here with impasse and deadlock. Stereotyping: When I stereotype someone, I take one piece of information about him the fact that he is member of a certain group and then assign other traits and features to him based on popular generalizations about that group. In essence, I use one general feature about him to draw specific conclusions about his behavior and motives. Stereotyping is problematic in negotiation because it often obscures the actual information before us, thereby leading us to misunderstand the other party and his goals. Target or Ideal Objective: Your target or ideal objective is the outcome you most want from a negotiation. It is your preferred alternative among those possible in negotiation, and generally sets the upper limit on what you think you can achieve by negotiating. Yielding: This is a response to conflict in which one party chooses to postpone or sacrifice her goal, thereby allowing the other party to achieve his goals. This method of handling conflict is also sometimes called accommodating, a term which some people believe has a more positive connotation. 11

13 Lesson 1: Cooperation, Conflict and Negotiation Lesson Topics This lesson focuses on the following topics: Introduction Cooperation and Negotiation Constructive and Destructive Conflict Conflict Responses Responding to Conflict Appropriately Negotiation as Conflict Management 12

14 Lesson Learning Objectives By the end of this lesson, you should be able to: Explain why conflict is a common event in human life, and be able to describe common responses to conflict. Apply an understanding of conflict reactions to make judgments about which response is appropriate in a particular conflict. Describe and explain the different modes utilized to respond to conflict. Determine the most appropriate response to respond in a conflict situation. Utilize negotiation as method of managing conflict. Introduction This lesson will introduce you to the basics of conflict and conflict management. Negotiation is a particular method of conflict management, so before we can understand negotiation, we need to know some general facts about conflict and how people respond to it. Because other people s goals often differ from our own, we can come into conflict with them when we are living or working together. These conflicts are not always a bad thing; they can often teach us important things about ourselves and others. Working through a conflict can sometimes help the people involved in a disagreement to understand one another better, and this increased understanding can facilitate problem-solving and improve our future interactions in many other ways. Instead of believing that conflict is wholly negative, we would do better to think of conflict as a fact of human life and to learn how to handle it accordingly. The way we deal with conflict can have far-reaching effects on our relationships with the other parties in the conflict, as well as on our reputations and on other things we value. We can thus help both ourselves and others by developing a more thoughtful stance toward conflict. 13

15 We can also become more skilled at dealing with conflict by cultivating our understanding of how people respond to conflict and why they tend to react in certain ways. Upon completion of this lesson, you will know why conflict is a common feature of cooperative relationships, and you will be able to identify and describe some of the ways people frequently react to conflict situations. In addition, you will begin developing standards for determining the best way to respond to a particular conflict. You will also recognize the role emotional and psychological factors play in our responses to conflict. Lastly, you will begin to develop an understanding of how negotiation can work to resolve conflicts. Later lessons will expand on this understanding and explain the actual process of negotiation more fully. Cooperation and Negotiation Negotiation aims at creating mutually acceptable solutions for individuals (or groups of individuals) who find themselves in conflict. Those whose interests or aims are at odds with our own are those with whom we may choose to negotiate. This sort of situation presents itself in many aspects of our lives, such as work, family, social relationships, and commerce. Any time we encounter a conflict of interest and choose to work toward a solution rather than simply giving in or walking away we are engaged in some sort of negotiation process. The centerpiece of any negotiation process is usually a progressive exchange of provisional offers and counteroffers, in which each party attempts to shape her position into something the other party will accept. Offers and proposals do not determine outcomes until they are deemed mutually agreeable. Because it works in this way, negotiation is not a method for dictating solutions to the other party. It is generally understood to be a more democratic approach, since solutions must be accepted by all parties. 14

16 The negotiation process is carried out by negotiators. A negotiator is anyone who is working with the other side of a conflict to reach a solution. Sometimes, the negotiators are the people or groups in conflict; in other situations, there may be an individual or team who is appointed specifically to manage a conflict for each side. Another possibility is appointing an impartial negotiator to mediate between the two sides. Although relatively few of us are negotiation coaches or consultants, we all have experience negotiating with other people. Experience with negotiation is very common because human beings are interdependent creatures, that is, we generally need other people s help and resources to achieve many of our aims. In addition, when interdependent individuals are working together on a project, one person s objective often conflicts with the goals other parties may have for that same project. We cannot achieve everything we want on our own, but neither can we have everything our own way when we are cooperating with other people, since they have goals and interests of their own just like we do. Even though interdependence and cooperation often lead to conflict, most people feel that the benefits of working collaboratively with others are quite significant. Living and working in isolation would mean doing without cooperative achievements like medicine, public libraries, and the symphony. Since most of us choose to live and work together, it s essential that we find fair and effective ways to manage the conflicts that are sure to arise. Negotiation aims to help us achieve this end. Negotiation is a decision-making process, but it is also social process. It is not a simple formula that will solve our conflicts for us. Instead, effective negotiation requires that we understand our own motives, interests and alternatives, as well as those of the other party. In addition, we need to have some sense of the errors we are likely to make and the problems we are likely to encounter during negotiation. The initial difficulty we face as negotiators is determining how to understand and 15

17 react constructively to our conflict, a challenge that is made more complicated by our tendency to misunderstand the causes of other people s behavior. Constructive and Destructive Conflict We often think of conflict as a negative thing; as it s popularly used, the term tends to suggest wars and loud arguments. But it is really something much more neutral: conflict is simply what happens any time two (or more) parties clash over the division of some value or benefit. Someone working cooperatively cannot reasonably expect to claim all value or benefit for herself, but at the same time we all tend think it is very important that we achieve our goals (i.e., get value or benefit for ourselves). Therefore we should not be at all surprised that conflict occurs regularly. Not all conflict is problematic or harmful. For example, if two friends are discussing where to have dinner and one wants Italian food while the other wants Thai food, then their goals are clearly in conflict. However, this does not mean that they are angry, or that they are fighting. Similarly, even more heated conflict can sometimes be constructive and productive; here we might think of something like lively civic debate that results in shifting public spending from one project to another. Conflict is constructive when it moves issues or relationships forward in a respectful, positive way. A constructive disagreement can, for example, help people to understand one another, or help to allot resources in a way that allows the conflicted parties to get along better. We should note, though, that constructive conflict does not require a particular outcome. In striving to make our conflicts constructive, the critical issue is the way the negotiators react to one another as they try to resolve the conflict. This matters far more than what the conflict is about or which solution we choose. 16

18 Even though some conflicts can be productive and constructive, it remains true that others can be very damaging. In negotiation, the way the negotiators interact often makes the difference between a constructive conflict and a destructive one. Destructive conflict is generally characterized by some combination of the following features: Parties are frustrated and resentful, and these feelings are directed at the other party. Communication is focused on criticizing or blaming the other party. Each party is closely identified with her position, obscuring the real issues at stake and making the conflict highly personalized. Parties see their positions as radically opposed; rather than looking for commonalities and possible avenues of agreement they focus on their differences. Instead of looking for ways to move forward in negotiation, frustrated and antagonistic negotiators resort to threats and deception in an effort to achieve their goals. Destructive conflict often ends unhappily. For example, most of us have been involved in situations where clashing goals led to harsh words and personal attacks. This kind of conflict is destructive because it leaves one party discouraged and upset, and less inclined engage in future cooperative projects with the other person or group. Effective negotiation offers us a way to avoid these negative outcomes, but first we need to know more about our interpretations of others behavior and our reactions to conflict. 17

19 Attribution Errors and Destructive Conflict Whenever we observe other people s behavior, we engage in a complex interpretive process in which we try to make sense of their behavior by finding its cause. These causes are either internal (within the person being observed in personality or motivations, for example) or external (outside the person like luck or the influence of others). Human beings have a strong need to attach meaning to other people s behavior that is, we will generally not be satisfied that we understand someone s actions unless we have an adequate causal explanation. This tendency carries over into conflict situations. The way we understand others behavior is important to negotiation because conflicts generally require us to make sense of other people s actions. When other people s interests conflict with ours, we generally come to know this through their conduct; similarly, we interpret their behavior during the conflict to get an idea of what they want and what they are willing to do to get it. All of this interpretation would not be a worry if we were always adept at determining the causes of others behavior. Unfortunately, we are not. Instead, our thinking leads us to make three common mistakes when deciding why other people act the way they do. This diagram identifies each of these errors. COMMON INTERPRETIVE ERRORS Fundamental Attribution Error Actor-Observer Error Self-Serving Error 18

20 Fundamental Attribution Error: We make this mistake when we attribute behavior to internal causes (like character traits or motives) rather than external ones (like luck or circumstance), even when the cause is visibly external. For example, I commit the Fundamental Attribution Error when I decide that my mother yelled at me because she is an unreasonable, tyrannical person while overlooking the fact that she is clearly overworked lately. Actor-Observer Error: This mistake consists in attributing our own behavior to external causes while we attribute others actions to internal causes. This error often leads us to excuse our own conduct while criticizing others who are behaving similarly. Expanding on the example above, I could commit the Actor-Observer Error by deciding that my mother yells because she is mean, but when I yell at my brother it s because he is provoking me. Here, her behavior is explained in terms of an internal cause (a character defect) for which she is responsible, while mine is attributed to an external cause (my brother s disobedience) and is thus not my fault. Self-Serving Error: I make the Self-Serving Error when I decide that my successes should be explained by internal causes, but my failures should be explained by external causes. Here, I take credit for things that go well, but blame things that go badly on external factors beyond my control. I yelled at my brother because he is disobedient, but when he and I get along well it is because I am fun-loving and kind. We should understand that these errors are not produced by character flaws. It is not just conceited or inattentive people who make these mistakes. We all do this. These inaccurate interpretations arise from the way the human mind generally works. However, if we are willing to do some extra thinking we can often get past these defective views of others behavior. The simplest thing we can do to overcome these errors is make a special effort to be aware of the external causes of others behavior. Rather than assuming we know 19

21 things about other people s character and motivations, we should look at the external factors involved in the situation. We can often ask the other party about these factors, as well. Likewise, we should try to be fair and responsible in evaluating the causes of our own behavior instead of simply explaining it in whatever way we find most flattering to our self-image. Our attributions have an enormous influence on how we perceive and react to others behavior. My belief that you took my book because you are greedy creates a much different reaction from my belief that you took it because you thought it needed to go back to the library. Our attributions have similar broad effects on how we see ourselves and how we think others should react to our conduct. Because attribution errors involve making assumptions about others motives and reasoning, it is not difficult to see how they can lead to destructive conflict or cause a constructive conflict to devolve into a destructive one. Most destructive conflict situations can be averted or improved by making a genuine effort to understand the other person s position; striving for this deeper understanding is useful even in constructive conflicts. We need to understand the real causes of a conflict before we can figure out what counts as an appropriate reaction to it. Likewise, we need this deeper understanding before we can determine how to resolve it. Given that these common attribution errors often lead us away from the true causes, we cannot accept our own analyses of the other party s behavior at face value. We should always consider and try to correct for the possible influence of these errors when we are deciding how to respond to a conflict. 20

22 Conflict Responses Imagine that I have a car you want to buy, but you believe my asking price of $12,000 is too high. You have suggested an alternative price of $10,500. Our goals are thus in conflict: I want a certain amount of money for my car, but you do not want to pay my asking price. There are a variety of ways each of us could respond in this situation. Initial reactions will largely be determined by how each party judges the importance of achieving her or his own goals, in combination with the importance she or he attributes to other person s goals. Five general responses arise out of these basic considerations: 1. Yielding 2. Avoiding 3. Compromising 4. Collaborating 5. Competing We should be thoughtful about how we first react to a conflict, because this initial response will set the stage for any future bargaining or negotiation between us. Yielding If I choose to yield in a conflict situation, this means that I choose to agree to your demands without further discussion. The party who yields believes that it is more important to satisfy the other person s goals than her own, so she sets her own interests aside and focuses on accommodating the other party s interests. Follow the example below to see how yielding works in our conflict over the price of my car. EXAMPLE: In our car example, I could yield by simply accepting the price you have offered for my car, despite the fact that I really did want my full asking price. 21

23 There are many reasons I might yield; for example, I might be in a hurry to sell my car because I am moving, and decide that it is better to take a somewhat disappointing offer than to risk getting no other offers at all. This method of handling conflict is also sometimes called accommodating, a term that some people feel has a more positive connotation. Avoiding If I choose to avoid a conflict, I have chosen to simply walk away or skip the issue entirely. In this situation, I have decided that achieving my goal is not important enough to justify dealing with any kind of conflict. Similarly, I have decided that I do not care enough about seeing your goal achieved that I am willing to clash with you over it. Read the example below to see how avoiding works in our conflict over the price of my car. EXAMPLE: In our conflict over the price of my car, I could avoid the conflict by telling you I will think about your offer, and then just drop the discussion. Again, there are many reasons I might choose to react in this way; for example, I might decide that it s just not that important to me whether I sell the car right now, so I am unwilling to expend time and energy wrangling with you over the price. Notice that yielding and avoiding are similar because both responses indicate that I am not very concerned about achieving my own goal. They differ in the importance I assign to achieving the other party s goal yielding suggests that I see the other party s goal as quite important (possibly because her achieving it helps me in some way, too), whereas avoiding suggests that I am not particularly concerned about whether she achieves her aim. 22

24 Compromising By responding to a conflict by compromising, I show that I have a roughly equal level of concern about both my own goals and the other party s goals. However, I am not necessarily concerned that either of us gets exactly what we initially said we want. That is, compromise is a reaction that says Maybe we can both get something good from this project if we modify our objectives. Compromise is a familiar strategy from our own lives. Read the example below to see how compromising works in our conflict over the price of my car. EXAMPLE: One way I might compromise in our conflict over the price of my car would be to suggest that we meet each other halfway, i.e., to suggest you pay me $11, 250 so that we split the difference between my $12,000 asking price and the $10,500 price you ve proposed. By reacting to this conflict with compromise, I make it clear that while I want to achieve some version of my own aim, I am also willing to modify that aim to (at least somewhat) to help you achieve your objective, too. We should note, though, that someone who is compromising is not (necessarily) yielding. I may only be willing to compromise on the price of the car up to a certain point, for example, and if you insist on a price below that point, I may decide not to deal with you at all. The compromising party is moderately concerned to see both parties goals realized, but she is not so concerned that she is willing to ignore her own interests entirely. Collaborating Collaborating is an effort to maximize the outcomes for both parties. If I choose to collaborate, I judge it to be quite important that both parties achieve their stated aims and I am willing to work with the other party to find an inventive solution that brings us both closer to achieving our stated goals. A collaborative response to conflict requires that both parties be motivated to engage in (sometimes extensive) 23

25 discussion of the conflict, and that they be willing to consider creative and unusual solutions to their problem. Even though collaborative solutions can be complex and difficult to forge, collaborating is still an appealing response to conflict because it allows both parties to achieve much sometimes all of what they want from a conflict. Read the example below to see how collaborating works in our conflict over the price of my car. EXAMPLE: Our car example is a bit oversimplified to illustrate collaboration well, but we can still imagine a collaborative solution here. I want $12,000 for my car, and you want a car for $10,500. It s clear that we cannot get what we want from one another. However, it might be the case that I can find someone who has a suitable car he would sell you for the price you desire, and you know someone who would buy my car for my asking price. Working together in this way, we can devise an outcome that provides both of us with our desired aim. It is admittedly a bit unlikely that we could solve our car conflict this simply. Still, this example captures the fact that collaboration requires work and creativity from both parties. It also illustrates the way successful collaboration requires that negotiators approach problem-solving as a joint project. Competing When I react to a conflict by competing, I feel achieving my own aim is very important, but I assign considerably less importance to achieving your goal. In effect, my reaction here is an effort to make you yield, or to persuade you to come as close to yielding you will. If I react to the conflict in this way, I am not (genuinely) interested in your counteroffers or the reasons you have for making those counteroffers. I am 24

26 primarily interested in achieving my own goals I win this competition by getting you to give up at least a significant part of your aim. Read the example below to see how competing works in our conflict over the price of my car. EXAMPLE: Reacting competitively means that I would respond to the conflict over the price of my car by trying to get you to pay my asking price, or at least getting you to pay as much of it as I can. I might try to woo you with friendly talk about what a great deal I am offering you, or I might try to browbeat you with claims that you clearly have no idea what my car is worth in both cases, I would be trying to encourage you to give up your goal of a cheaper car in favor of my goal of getting a higher price. Note The five responses to conflict discussed here are adapted from The Managerial Grid, R.R. Blake and J.S. Moulton (Houston, TX: Gulf Publishing, 1964) and from K.W. Thomas and R.H. Kilman s Conflict Mode Instrument (Tuxedo, NY: XICOM, 1974). These are the five basic ways people react to conflict. The response we choose influences how the other party reacts to us. However, our response can also determine whether negotiation can perform any meaningful function in this particular conflict. If one party chooses to yield in a conflict or to avoid it entirely, then there is no scope for further bargaining or discussion that is, there is no place for negotiation. In these cases, the only purpose of negotiating would be to try to convince the person who yields or avoids that she should respond differently. Compromising, collaborating, and competing, however, leave ample room for negotiation and discussion. 25

27 Responding to Conflict Appropriately It is not the case that one of these ways of reacting to conflict is right while the others are wrong. Depending on the parties involved and the issues at stake in the conflict, any one of them may be an appropriate response. In addition, it may be that one kind of response is a good choice at a certain stage of a conflict, while a different response becomes appropriate at a later point in the same conflict because the issues have shifted or evolved. Responding appropriately is a matter of sensitively considering the context and character of the disagreement, as well as the relationships between the parties involved. Read the corresponding information for the circles below to learn more about the general contexts in which a particular response is a good or bad choice. Yield Compromise Selecting your response to conflict Avoid Collaborate Compete Yielding: If the central issue in our conflict matters a great deal to the other party but is not important to me, I might reasonably choose to yield. This approach provides the other party with his desired outcome and saves me the time and effort of negotiating. 26

28 In addition, yielding now might buy me future goodwill that is, if I am accommodating in this conflict, he might be more inclined to yield to me in some future conflict. However, if the issue matters a great deal to me, then it would probably be a mistake to yield, since I will feel that I have given up something very important and gotten nothing in return an outcome which is likely to have negative effects on my future interactions with the other party. Avoiding: If the conflict is over something trivial, or I am concerned that confronting the other party will have broad negative results for me, then avoiding a conflict may well be a prudent course of action. But if leaving the conflict unresolved will cause it to grow worse, or if I am the only person who can address the conflict, then avoiding the conflict would be a mistake. Compete: If the conflict must be resolved quickly, or if one party s goal is simply unacceptable (for example, if her aim is to do something unethical), then a competitive response may be the best one. But if both parties are equally able to pressure each other, or the issue is complicated, then responding competitively is unlikely to be effective. Collaborate: If a conflict is very complicated and I cannot solve it alone, collaborating is often a good option. But if we need a quick solution, or I feel that the other party doesn t care about my goals, then collaborating is probably not a wise choice. Compromise: If both parties simply cannot attain their stated ends simultaneously for example, if I want half of a pie and you want three-quarters of that same pie the situation is one in which compromise would be an appropriate response. 27

29 Some conflicts are too complex for the parties to simply split the difference between their desired ends; compromise is probably not a good approach in these cases. The situations described in the diagram do not cover every context in which a particular response is appropriate or inappropriate. Instead, they aim to give you a sense of how what counts as an appropriate response is determined by the character of the conflicted parties and the character of the conflict itself. Emotional and Psychological Influences Affecting Response to Conflict The previous discussion has focused on the ways that the facts of a conflict can help us to determine how we should respond to it. However, there are also subtle emotional and psychological influences that affect how people react to conflict. Whatever we think of them, these influences play a role in nearly every conflict and negotiation process; eliminating these factors is not an option. We saw earlier that response to conflict is largely determined by how each party judges the importance of achieving her own goals, in combination with the importance she attributes to other person s goals. Emotional and psychological influences play a significant role in my decisions about what goals are important and why, regardless of whether those goals belong to me or to someone else. This does not mean that these influences are the real subject matter of conflict and negotiation they are not, since the central issue of our disagreement is dividing the value or benefit that brought us into conflict in the first place. Instead, the point is that these influences often motivate us to respond to our conflict in certain ways. Because this is so, we should be aware of how these influences can affect both ourselves and others. Such awareness can help us to understand both our own position and the other party s stance more clearly. 28

30 In addition, these influences can lead both parties to react in a way that is at odds with what they know about the facts of a conflict; being sensitive to them helps us to keep our reactions in line with our rational understanding of the problem. If we are ignorant of these influences, or make no effort to correct for them, then they can push both parties to react in ways they would rather avoid. So while it is extremely important to understand the rational facts of a conflict, we must also think about other issues: What is each party s level of comfort with conflict in general, and how comfortable is each party with this particular conflict? What kind of affection or animosity exists between the two parties? How much does each party trust the other? What preconceptions or prejudices might affect the parties understanding of each other and their respective positions? Are there background factors that might be behind each party s desire to win in this conflict that is, is there more at stake for one or both parties than is immediately apparent from the facts of the conflict? For example, would one party lose the respect of her coworkers if she failed to achieve her goal? These concerns are complex, and these factors play a different role in each negotiation. When someone reacts in an unexpected way, this is one place we might look for information about his response; we can also often ask the other party about these issues, as long as we do so in a thoughtful and diplomatic fashion. For example, rather than saying Why don t you trust me? we could instead say I m getting the feeling that you re somewhat uncomfortable sharing information with me. I feel the same way. Do you think we might discuss this before we start negotiating? We must recognize the influence of emotional and psychological factors because they are at work in nearly all conflicts from the very beginning. They affect our initial 29

31 response, and they shape the way we negotiate about our problems amongst ourselves as well as the way we respond to external negotiation efforts. Negotiation as Conflict Management All of the responses to conflict discussed earlier have the potential to go wrong. Reacting inappropriately can intensify a conflict because it can irritate and provoke the other parties rather than pacifying them; inappropriate responses also have the potential to create new conflicts, compounding the one we were originally trying to address. This is easy to see if we imagine one party who responds by avoiding the conflict while the other party reacts competitively. The person who avoids the conflict walks away from it, suggesting that the issue is unimportant; this makes the competitive person feel angry and disrespected since the issue is very important to her. This does not mean, though, that the proper way to handle a conflict is simply for both parties to match their responses to one another. The problem in the previous example lies in the way the competitive party interprets the avoiding party s response. The person who wants to avoid the conflict can still do so, but she needs to do this in a way that does not make the other party feel slighted otherwise all she has done is create an additional conflict while leaving the original problem unresolved. Instead, she should help the other party understand her response accurately. She might, for example, try to explain clearly why she wants to avoid the conflict, including an explicit statement saying that her response is not meant to trivialize the other party s concerns. When you leave it wholly up to the other party to make sense of your position in a conflict, you essentially invite him to misunderstand your stance. 30

32 You want to make it easy for the other party to agree with what you are saying and simple for him to agree to your offers. The belief that the other party s view of your position is his problem or not your concern does not help with these goals at all. Instead it is likely to lead to further misapprehensions and additional conflicts, especially in cases where the two parties have an ongoing relationship. Reacting in an inappropriate way is one way of mishandling a conflict, but refusing to do the work that is needed to make your position as clear as possible is certainly another. Mishandling a conflict in either or both of these ways is the first step toward making it a destructive conflict. Destructive conflict is what negotiation tries to avoid; it is considered a method of conflict management because it seeks to stop destructive conflicts in their tracks, and to keep constructive conflicts from escalating into destructive conflicts. Negotiation works to clarify a conflict, to determine possible solutions to that conflict, and to find a course of action that allows all parties to feel their goals have been acknowledged and they have been treated fairly. This does not mean that good or successful negotiation aims at making sure everyone gets exactly what they would most like to have. Negotiation seeks to find a solution that everyone can accept, and which will thus allow them to continue enjoying the benefits of working cooperatively. Click here to view and print an activity in which you can identify different elements of a conflict. Lesson Summary Conflict is a central feature of human life because many of our goals require us to work and live cooperatively. Because we are interdependent creatures, we often find ourselves interacting with people or groups who have aims that are different from our own. This tension between our interests gives rise to conflict. 31

33 We should remember that not all conflict is negative or problematic, and even strong clashes between goals can be productive if we respond to them appropriately. Reacting to conflict in the proper way requires that we understand our basic options for responding (yielding, avoiding, compromising, collaborating, and competing), and that we think carefully about the character of the dispute and the individuals involved to determine which kind of response is best suited to a particular disagreement. When we are making decisions about how to react, we should be sure that we actually understand the issues to which we are reacting. We need to grasp what it is that s causing our conflict, that is, what the contested benefit or value actually is and why it s contested. We also need to understand the other party s response, since this helps us to determine our own reactions both before and during negotiation. In particular, we need to be aware of making attribution errors; understanding our situation accurately requires that we avoid falling into these common but mistaken ways of interpreting the causes of others behavior. In addition to knowing what specific features of a conflict make a response appropriate, we must also be sensitive to the psychological and emotional factors operating in the background that motivate people to react to conflict in certain ways. There are many subtle influences that guide the way we handle conflicts, and an awareness of them can help us to make sense of behaviors that might otherwise seem puzzling or purposely antagonistic. If a conflict is to have a productive outcome for both parties, it should be managed thoughtfully and carefully from the very beginning. Our initial responses to a conflict set the stage for later negotiation and bargaining, whether we negotiate the issue ourselves or get outside help resolving the issue. 32

34 Lesson 2: Negotiation Fundamentals and Distributive Bargaining Lesson Topics This lesson focuses on the following topics: Introduction Basic Perspectives for Negotiation Preferences: Evaluating and Ranking Outcomes Concessions and Commitments Planning and Preparing for Negotiation Introduction to Distributive Bargaining Tactics and Strategy in Distributive Bargaining... ERROR! BOOKMARK NOT DEFINED. 33

35 Lesson Learning Objectives By the end of this lesson, you should be able to: Describe the central role of concessions and commitments in negotiation. Discover and evaluate the best alternative to a negotiated agreement. Compare alternatives in terms of preference, and explain how these preferences determine the scope of negotiation. Effectively utilize the tactics of distributive bargaining in controlling information and influencing the opponent. Describe the strategies used in distributive bargaining. Introduction This lesson will introduce you to distributive bargaining, which is one of the two basic approaches to the negotiation process. Before we can really understand distributive bargaining, though, we need to explore some concepts that are fundamental to negotiation in general. For this reason, this lesson begins by discussing preferences and outcomes. No matter how we approach negotiation, it remains true that each party attaches certain values to the various possible solutions that is, each party ranks and evaluates her outcomes. To understand both our own position and that of the other party, it helps to have some sense of how our various preferences interrelate. We should attach particular importance to one particular outcome: our best alternative to a negotiated agreement (BATNA). This outcome, and where it fits in our spectrum of preferences, matters a great deal because it is the standard by which we judge whether we should engage in negotiation, and how we should judge its possible outcomes. Similarly, we need some preliminary understanding of concessions and commitments because these are the basic tools we use to get from one position to another in negotiation. 34

36 Concessions are the changes we make to our initial position in a conflict they are the benefits we relinquish in an effort to get something else we want. Commitments are statements about alternatives that we cannot or will not accept; they are generally declarations about how far we are willing to go in making concessions. A very strong commitment, for example, might take the form If you won t offer me a higher salary, I will quit. After discussing these more basic issues, the lesson moves on to an in-depth examination of distributive bargaining. This is a fundamentally competitive approach to negotiation. A distributive bargainer aims to capture for herself as much as possible of the contested value or benefit in a conflict; she does this primarily through controlling information within the conflict and trying to influence her opponent s perception of what it is feasible or desirable for him to achieve as a result of the conflict. The ultimate object of distributive bargaining is to push one s opponent as close to yielding as possible to get a maximum amount of benefit or value for yourself while giving your opponent the minimum outcome you can get him to accept. Distributive bargaining can produce quick solutions, especially if one party can exert strong pressure on the other. However, this approach sometimes lends itself to an aggressive, bullying tone, which makes many people uncomfortable and incline people to accept solutions to which they do not genuinely wish to agree Upon completion of this lesson, you will know the basic structure and operation of preferences in a negotiation process. You will also be able to identify and evaluate your BATNA, and know how to use it to decide when to stay in a negotiation and when to leave. In addition, you will be able to describe the role of concessions and commitments in the negotiation process. Beyond this background material, you will be able to determine when a negotiator is using distributive bargaining. 35

37 You will also be able to describe the basic tactics and strategy of distributive bargaining, as well as some of its prominent drawbacks. Basic Perspectives for Negotiation In Lesson 1, we noted that only certain approaches to conflict actually leave room for negotiation. Yielding and avoiding effectively close the discussion, but if we respond competitively or collaboratively, then we can still discuss options for how each of us might reach our goals. In addition, relatively few instances of non-trivial conflict prompt people to react by yielding or avoiding. Most individuals want to see their goals achieved, and this means that the parties to a conflict between goals will not generally be inclined to yield or avoid. Much more likely responses are pressing to see one s own goal achieved (competing) or making an effort to see if there is a way both goals can be achieved (collaborating). Because collaborating and competing are the most likely responses, and because they are the approaches most likely to produce results from a conflict, these are the perspectives that define the two basic theoretical models of negotiation. The distributive bargaining model operates from a competitive perspective; the integrative negotiation model which will be treated in detail in the next lesson focuses on collaboration. Compromise does not define a particular model because it is not generally a place where people begin negotiation; instead it is seen as a response or strategy that may emerge during either a competitive or a collaborative negotiation process. In their discussions of distributive bargaining and integrative negotiation, some writers on negotiation favor one approach in all cases; others believe that a negotiator should choose between the approaches on a case-by-case basis, depending on the features of a particular negotiation. 36

38 These strategies are not mutually exclusive, and some negotiations might involve both methods at different points in the process. Over the next two lessons, we will look at the particulars of these approaches; we will also compare their advantages and drawbacks, and explore some ideas about how one perspective might be better suited to a particular situation. Before we can really understand the details of either of these two positions, however, we need to understand the background material that is common to both methods. Specifically, we need to clarify some general ideas about how people understand and evaluate their preferences, and we need to appreciate the role of concessions and commitments in negotiation. Preferences: Evaluating and Ranking Outcomes We need to begin our discussion of negotiation by talking about preferences because no matter how we respond to conflict and regardless of what negotiation model we choose, it remains true that each party to a negotiated conflict has preferences i.e., she attaches certain values to the various possible outcomes. We can think of each party as having a spectrum of preferences that ranges from her target or ideal objective (the outcome she would most like to achieve) to her bottom line (the outcome she wants the least). The bottom line is also sometimes called the resistance point, since it indicates a point at which that party no longer sees negotiation as a winning strategy she will resist any outcome that does not satisfy her bottom line. There may be any number of potentially acceptable outcomes between any party s ideal objective and his bottom line. If only my ideal objective is acceptable to me, then my target and my bottom line are the same; if this is true, I am likely to be rather inflexible in our negotiations. However, it might instead be that there are many options I would accept, as long as they were presented to me in the proper way. 37

39 The negotiation process itself will do much to reveal information about parties ideals and bottom lines, as well as about how much space lies between those points on their spectrum of preferences. Identifying and Evaluating Your Best Alternative to Negotiation In addition to his ideal and his bottom line, each party should consider his best alternative to a negotiated agreement a concept sometimes abbreviated as BATNA. NOTE: The term BATNA was coined by Roger Fisher and William Ury in their book Getting to Yes: Negotiating Without Giving In. For example, if I am job hunting and I enter into negotiations with Company B about my salary, it s important for me to know what my options are if we cannot or do not reach an acceptable agreement. Is there another employer with whom I might negotiate instead? Would I choose simply to stay at my present job? In short, if for some reason these negotiations don t work out, what it my best alternative? I need to think about these before I enter into negotiation because a good understanding of my BATNA helps me to see clearly when and whether I should decide to abandon a negotiation process. You can determine your BATNA via the following steps: 1. First, think creatively about your options: if the negotiation does not turn out as you would like, what are your alternative courses of action? List as many as you can come up with, making an effort to think creatively and to consider possibilities you might have previously rejected. 2. Second, critically evaluate this list of options: Which of them are real possibilities and which are just wishes or vague hopes? Prune your list so that it includes only those options you believe are real possibilities. 38

40 3. Third, determine what steps are needed to make these more practical options into realities. Look at those steps and see if they are themselves feasible and realistic. For example, if one of your options requires you to further your education, think about whether that is something you can afford to do. Prune your list again so that it includes only practical alternatives which you can bring about with the time and resources you currently have. 4. Fourth, from this refined list select the alternative that you find most appealing. Keep in mind that there are many different factors that could make one alternative the best. For example you might prefer the one that can be brought about most quickly, the one that can be done most cheaply, or the one that can be done most easily. The criteria you use to make your choice are up to you. Remember that your BATNA must be a real alternative: it must be something you can actually do. If it is not, or if you have not taken the time to determine whether it is, then you will often be risking a great deal by depending on it in negotiation. In addition, it is often prudent to spend some time working to improve one s BATNA before entering negotiation, since it is difficult to foresee exactly how any negotiation process will turn out. Each party s BATNA is important because it can have an enormous influence on what is viewed as an acceptable negotiation outcome. Returning to the salary negotiation example, let s imagine that I am interested in Company B primarily because they are located close to my home. However, I also have a job offer from Company A; this company is farther away, but the job includes a salary higher than that offered by Company B. I have decided that I will only take the job with Company B if I can persuade them to offer me a similar salary. In this situation, my BATNA is accepting a job with Company A. 39

41 Since I have this other offer already, it would be nice for me if negotiations with Company B produced a salary matching that offered by Company A but it is by no means necessary that they do so. I have an attractive alternative no matter what happens in my negotiations with Company B. This may mean that I am less likely to offer any kind of compromise in my negotiations with Company B. If, on the other hand, I currently have no job and I have no other offers, then I cannot afford to be so choosy about which outcomes I will accept from Company B. If my BATNA here is no job or income at all, then I will probably be much more flexible about the results I will accept from this process. As you can see, having a good BATNA increases the strength of my bargaining position. If I can reject unfavorable outcomes because I have a better alternative waiting somewhere else, then I am unlikely to feel pressured to accept offers that do not come close to my ideal objective. If I am to get the best result I can from any negotiation process, then I must be able to decide accurately whether a negotiated agreement that is unappealing in some ways is better than no agreement at all. Thoughtful consideration of my own preferences and BATNA will give me a better understanding of what I hope to get from negotiation. However, it is usually more difficult to obtain knowledge about other parties preferences and BATNA. Unless they choose to give this information to me directly, my understanding of their position will largely be indirect, based on my inferences about their actions and statements. Nonetheless, knowledge about their alternatives and how they see them can be very useful to me because it can help me to identify which options they will actually see as potential solutions. If I know what their aims are and what options are unacceptable to them, I can better tailor my own contributions to the negotiation process. There are two main methods by which we achieve this tailoring: concessions and commitments. 40

42 Concessions and Commitments Concessions Like preferences, concessions are another topic that is largely shared by distributive bargaining and integrative negotiation. A concession is a change we make to our initial position in a conflict it is an offer made by one party to the other, in which she suggests a decrease in her own benefits. They often take the form of an exchange: I m willing to stop asking for A, if you will give me B instead. or I will quit asking for A from you if you will quit asking for B from me. When we noted earlier that neither yielding nor avoiding left room for negotiation, what we were really pointing out was the fact that neither the yielder nor the avoider is interested in making concessions. If neither party is willing to make any concessions (for whatever reason), then there can be no negotiation negotiation is, instead, the interplay between concessionary offers. In most conflicts, one party makes an opening offer expressing how he would like to see the conflict handled, and the other party responds with a counteroffer or a critique of the opening offer i.e., her own vision of how the conflict should be handled. Negotiation is the process of reaching the solution that lies between these two views, and the concession is one of the primary methods we use to get there. Concessions are a complex issue. We need to figure out what (if any) concessions are acceptable to us, and whether the other party will be interested in revising their position in response to the concessions we are willing to make. We also need to determine how to present our concessions in the best light. It is important that we be willing to make some concessions, because that willingness is one significant way that we show the other party that we take his position and his concerns seriously. It is also a way we show him that we are meeting him as an equal, since we are willing to change our position to accommodate him, just as we hope he will do for us. 41

43 Presenting our concessions in a defiant and rigid way This is all I m giving you, and that s my final offer! can undermine whatever good things we might have been able to achieve by making them in the first place. Instead, it is generally best to aim for adaptability in our concessions. Discussing various options i.e., various combinations of concessions with the other party helps us to get a better sense of how he understands his position and role in this conflict. When we have this information, negotiation is often more productive. Conferring about concessions in an open and accommodating way also allows both parties to feel that they have been part of the decision-making process. It might be the case that I have a good idea of my final offer in a conflict, and I would rather just start there instead of wasting time dickering over concessions. However, if I come to you and say that my opening offer is also my final offer, you are likely to feel that I am dictating a solution to you and react negatively. I can make our discussions more productive if I go through the steps that determined my final offer with you if I begin with something that strikes me as a reasonable offer, but which also leaves us with some room to negotiate, and use concessions to work from that toward a solution that you are willing to accept, too. It might even be the case that we can eventually agree on the very same solution which you would have rejected if I had started by stating it as my final offer. In addition, in most cases it is much more likely that whatever I state as my final offer will be taken more seriously if the other party can see some of the work and concessions that have gone into creating my final position. Once again, we can see that there is a great deal going on underneath the simple facts of any negotiation, and that we need to be sensitive to people s typical emotional and psychological responses. 42

44 Even though we want to aim for flexibility and a tempered approach, we still do not want the concession process to devolve into yielding or avoiding. We want to deliver our concessions firmly enough that they are taken seriously as options, and we want to be sure they are clearly perceived as a voluntary decrease in our own benefits. We also want some assurance that the other party is willing to make concessions, too, before we give up anything that really matters to us. Commitments Commitments are central to the negotiation process in both integrative negotiation and distributive bargaining. If we want to make progress in our negotiations, then we cannot just mull over various options indefinitely. At some point, we need to make statements about the positions we will and will not accept, and the concessions we can and cannot make. In negotiation, we call these statements commitments. Stating a commitment in this context amounts to making a binding agreement to do, or to refrain from doing, something. While concessions give us flexibility and potential, commitments give us certainty. If we return to our salary negotiation example, I can make a commitment by telling Company B s negotiator I am not interested in negotiating further about this job unless you offer me at least $50,000. This is a much stronger statement than merely telling the negotiator that my basic salary requirement is $50,000. In the latter case, an employer who really wanted to hire me might try to offer me other benefits, or some similar enticement to accept a lower salary. If I explicitly tie my minimum salary to my interest in further negotiations, however, I am effectively saying Unless you can meet my bottom line, I feel that we have nothing else to discuss. 43

45 This example illustrates several important features of commitments: They make specific claims. They describe particular consequences. They make it clear that the claims are not open to further discussion. If, instead, I had responded to Company B s offer with the more imprecise and openended statement I would really like a larger salary than that, then I would not have made a commitment. Whereas concessions often work to increase the array of available options, commitments instead tend to narrow them. Commitments reduce my options because when I commit to a certain course of action, I should expect that the other party takes me seriously. I cannot simply walk away from a stated commitment if I expect this person (or anyone else) to take my other commitments at face value. Commitments also reduce the other party s options because now he must either accommodate my commitment or abandon (or significantly restructure) our negotiations. For example, once I make the salary commitment, whatever else Company B s negotiator might have had planned that did not involve offering me $50,000 is no longer a possibility. Commitments vary in their strength, and they can be worded in quite a few different ways. For example, I might make my salary commitment by saying If you will give me $50,000, I can assure you that I will meet your demands on whatever other concessions you might want from me. This commitment is framed in terms of satisfying my prospective employers needs, rather than terminating our negotiations. Nonetheless, this way of putting the matter implicitly suggests that if I do not get the salary I desire, I will not be making any other concessions. So the message is still fundamentally the same. 44

46 No matter how it is framed, a commitment is often interpreted by the other party as a threat or a high-pressure tactic, since it has the effect of limiting his options. In addition, a simple statement of fact like If you cannot offer me $50,000, then I don t think we should bother negotiating further can seem like a threat to the person receiving it, because he will be the one left to face whatever negative consequences might arise from ending negotiations. Further, if the other party had for whatever reason focused much of his effort on options that did not involve meeting my bottom line, the my commitment can leave him feeling angry and frustrated that he has wasted his time. Even though they are often interpreted as threats, we should not assume too much about how the other party will respond to a commitment from us. In particular, we should not make a commitment especially one that we don t want to honor based on a belief that we can predict how he will react. We do not want to be stuck with an unattractive alternative if he does not behave the way we expected. We also want to be careful about putting the other party in a position where he feels he must make a commitment. Whatever advantages I can gain by making a commitment, the other party can similarly gain over me by making a commitment of his own. For all of these reasons, we should handle commitments like the volatile tactical maneuvers they are. While a commitment may sometimes get us what we want, in other situations it may lock us into a position we do not want to occupy. Planning and Preparing for Negotiation Face-to-face confrontation is stressful and intimidating for many people, and we have looked at some of the complicated considerations that are at work in negotiation. Because negotiation can be daunting and complex, we should not expect that we can simply walk into a negotiation process unprepared and rely on quick thinking to get what we want. 45

47 Outcomes are not generally predictable and if we walk into a conflict hoping to simply play it by ear, we can easily end up unhappy with the result. There is a great deal we can do to make conflicts and the process of negotiating easier for ourselves. We are much more likely to achieve our goals if we lay out a solid foundation of information and understanding from which we can negotiate. Exactly what we need to know depends on the particular negotiation. However, we can say some general things about the issues a negotiator should consider before beginning negotiation. Read the corresponding information for each box in the diagram to learn more. Preparing for Negotiation Determine your goals Determine your fundamental interests Determine your strengths and Learn about the other party Identify your limits Prepare your presentation Determine your goals: Formulate a clear, concise statement of your objectives in negotiation, and a realistic picture of your BATNA. Identify the basic components of your bargaining mix, simultaneously thinking about how the components relate to one another and how important each one is for achieving your main objective(s). In addition, if other people are significantly affected by the outcome of negotiation, be certain to consult them about their goals as well. 46

48 Determine your fundamental objectives: In addition to having a clear statement of your position, you should also work out why you want that outcome. This can help you to recognize whether another outcome might serve your basic interests equally well. Having this deeper understanding can also help you to identify when a superficially attractive outcome actually fails to satisfy your more basic aims. Know your strengths and weaknesses: This is a critical part of understanding your position. You must understand these dimensions of your situation if you are to anticipate the other side s arguments and objections. In addition, this knowledge can help you better predict what you can achieve in negotiation and how difficult it may be to get it. Learn about the other party: Even though negotiators often have incomplete or ambiguous information about the other side s position and attitudes, we should still make an effort to develop a picture of what the other party wants and how he is likely to go about getting it. We should try to anticipate ways he might formulate his position, and ways he might try to get us to accept his position. We should then use what we know or can infer about his view to work out our own response to his position and his strategy for pursuing it. Identify your limits: Think about which concessions you are willing to make and why. Consider what kind of exchanges might make a concession worthwhile to you, and where you will draw the line and make no more concessions. Plan how you will state your commitments if the negotiation reaches that point. Again, if other people are likely to be affected by this process, you should determine what outcomes and concessions are unacceptable to them. 47

49 Prepare your presentation: Develop a clear sense of how you will present your position to the other party. Know which points you will discuss, and what you want to say about each of them. Think about how your position will sound to the other party, and about ways you might make it sound more attractive. Anticipate objections the other party might have, and plan a way to respond to them. We now have a better understanding of the basic material of negotiation. We also have a clearer picture of the main tools used to move the process forward, and of how we can effectively prepare for the process. With this background understanding in hand, we can begin discussing one of the primary models of negotiation: distributive bargaining. Introduction to Distributive Bargaining In distributive bargaining, negotiating parties are seen and see one another as competitors. Whatever is at stake in the conflict is seen as a fixed resource, something that cannot be broken up in such a way that all parties can have what they would most like; it is called distributive bargaining because the issue is seen as a matter of distributing a limited value or benefit. The simplest way to envision this is by thinking of dividing a pie: if I want half of a pie while you want three-quarters of the same pie and this is the only pie we have then our negotiating process can be framed in terms of distributive bargaining. We are in competition with each other to get as much of the pie (benefit) for ourselves as possible, because there is no way to divide the pie so that each of us gets exactly what we want. If I get half of the pie, you have lost a quarter of what you wanted; similarly, if you get three-quarters of the pie, then I have lost a quarter of what I wanted. From the perspective of distributive bargaining, one party s gain is necessarily a loss for the other party. For this reason, distributive bargaining is sometimes also called zero sum or win-lose bargaining. 48

50 In distributive bargaining, each party uses the negotiating process to achieve an outcome that is as close as possible to her ideal objective, a result that is generally understood to come at the other party s expense. The relationship between our respective bottom lines is a defining feature of distributive negotiation. If, for example, the smallest part of the pie I am willing to accept (my bottom line) is one half, and the smallest part of the pie you are willing to accept (your bottom line) is three-quarters, then we are at an impasse. In such cases we have what is called a negative bargaining range, because there is no overlap in our preferences, and so there is no possible solution that satisfies each of our goals even at their minimal, bottom line level. There is thus nothing for us to bargain about unless we are willing to revise our preferences and begin anew. In most conflicts, however, there is a positive bargaining range that is, there are outcomes that each party would prefer over a stale mate, or no outcome at all. Let s return to the salary negotiation example, and imagine that my bottom line (the least I am willing to accept from them) is $50,000. If negotiations with Company B reveal that the most they are willing to pay me (i.e., their bottom line) is $52,000, then there is a positive bargaining range between these figures that gives us room to negotiate. The $2,000 space between our respective bottom lines each represents a zone of outcomes or settlements that are at least potentially acceptable because they satisfy both parties preferences to a degree they judge to be adequate. This is the area where bargaining can occur. We should keep in mind that most negotiations revolve around more than one issue. For example, in choosing a new job, I am likely to be concerned about more than just the salary perhaps my starting date is another possible point of conflict, though there may be many more. Each of these other issues has its own ideal outcome, its own bottom line and its own range of alternatives that lie between those two points. 49

51 My prospective employers, too, are likely to have additional concerns of their own. In any negotiation, there is thus an array of issues actually under discussion; the various issues that must be settled before we can consider the conflict settled is known as the bargaining mix. The competition in distributive bargaining is a struggle over whatever amount of benefit or value lies in the positive bargaining range of a particular issue. Both parties know that they cannot achieve their ideal objective (otherwise there would be no conflict), but each still wants to capture as much of the bargaining range as she can. My goal is to push the other party toward her bottom line that s how a distributive bargainer wins a competitive negotiation. In the example, I would win our negotiation by convincing Company B to offer me the highest salary they are willing to give or the closest approximation of that I can achieve. The other party is likewise trying to push me toward my bottom line. Company B would win by persuading me to agree to a salary at or near the lowest figure I would accept. The closer I can push them to their bottom line, the more I get of the $2,000 that makes up our positive bargaining range; the closer they can push me to accepting $50,000 as my salary, the more of that $2,000 they get to keep for themselves. Our negotiation can be seen as a kind of tug-of-war over the money that makes up our positive bargaining range. All distributive bargaining is fundamentally this kind of competitive struggle over allotting value or benefit. Tactics and Strategy in Distributive Bargaining Managing Information about One s Preferences The control of information is crucial to the success of distributive bargaining. Each of the parties in a negotiation process has a spectrum of preferences, but in distributive bargaining each party s preferences are largely kept private especially those preferences that are less attractive than their ideal outcome. Keeping these preferences private is thought to create greater leverage in the negotiation process. 50

52 For example, let s say I know in advance that Company B s bottom line salary offer will be well above my ideal objective. That is, what they see as the most they can pay me is actually a lot more than I thought I could possibly get from them under any circumstances. If I know this about Company B s preferences while they remain in the dark about my preferences, then I can shift my both my ideal objective and my bottom line upwards and refuse to accept any offer far from their bottom line. If they were aware of how low my bottom line salary really was, they would surely not start with an offer they knew to be well above it. Thus my knowledge about Company B s preferences (when they know nothing about mine) gives me an advantage in bargaining with them, because it allows me to capture more benefit for myself. In essence, distributive bargainers guard information about their bottom lines because it is always possible that your opponent s bottom line is better (for you) than you think it is: it might be the case that she will take less money for her car, wants less of the pie you re dividing, or is willing to pay a higher minimum salary. However, if you openly state your bottom line and your opponent sees that she can do better than she had planned that is, if she sees you will pay more for her car, take less of the pie, or work for less money than she had thought you would then she is unlikely to be willing to revert to her original position, since she has now seen that she can do better. Precisely the same thing can happen to your opponent if she openly states her bottom line to you. For reasons like these, it is generally thought that one should keep one s bottom line to oneself in distributive bargaining. It is not just the bottom line that must be carefully guarded in distributive bargaining. One must also be thoughtful about what is called one s opening position your initial statement about the outcome you would prefer. This is sometimes called your maximal demand, in which case it is taken to indicate your target, or ideal objective. In the competitive context of distributive bargaining, opening positions and ideal objectives can play complicated and unpredictable roles. 51

53 For example, in some situations the opening position has little to do with the objective a party actually hopes or expects to achieve. In distributive bargaining, it may be to one s advantage not to open with one s actual ideal outcome. For example, I might begin negotiations by vastly overstating my desired salary to Company B, starting very high so that even if we negotiate down to a lower salary I will still get something well above my bottom line. Though this strategy might backfire if I choose a salary outside of Company B s bargaining range, there are also reasons this strategy might work; perhaps Company B will hear my figure and begin to think I am in fact a more valuable employee than they had previously believed. In addition and much as was the case with my bottom line I would do well to keep my ideal objective to myself to the extent that I can, since I might be able to do better than I expect. For example, if I begin by stating my opening position honestly, I could end up getting a much lower salary than Company B would actually have been willing to pay if I had approached the issue differently. Similarly, if my opponent knows my real goal from the outset, she can work to make me believe that goal is less attainable than it actually is; if she can push me below my original bottom line, she can achieve an improved version of her ideal objective. While openly revealing one s range of preferences is a bad idea in distributive bargaining, especially near the beginning of the process, it is still the case that all parties need to be able to make some reasonably accurate inferences about the other parties position(s), particularly their bottom lines. If they cannot or do not do this, they stand to waste a lot of time discussing courses of action that are not actually viable alternatives. 52

54 Sometimes people will give explicit information about their preferences during negotiation, but more often explicit information does not emerge until late in the process and the negotiator must rely largely upon her own people-reading and information-gathering skills to develop a picture of the other party s preferences. The Three Central Tactics of Distributive Bargaining As we noted earlier, distributive bargaining can be understood as a struggle between the bottom line of each party each party wants the other to give up as much as possible. Yet each party wants to keep most of the facts about his preferences, including his bottom line, to himself. We can see, then, that distributive bargaining will be, in part, a struggle over information: over access to various kinds of information, and over how that information is understood. Much of the work of distributive bargaining has to do with getting information about your opponent, controlling the information she can get about you, and influencing the way she understands what she knows about both her own position and yours. Given this basic project, there are several general tactics I should use as a negotiator in distributive bargaining: I should try to learn as much as I can about how the other party views his alternatives, and how he views the negotiation. In particular, I want to learn what I can about his bottom line, and I should determine whether he sees abandoning the negotiation as a strongly negative outcome (since I can use his need for a negotiated agreement to push him closer to his bottom line). However, in the process of gathering information about him, I want to give only minimal information about my own preferences to my opponent. Once I have determined the other party s perspective as best I can, I should make an effort to control his view of my alternatives and my investment in the negotiation process. 53

55 In effect, I want to determine as much accurate information about him as I can, but I do not want him to have or think he has any information that might make him believe my bottom line can be manipulated. I want to find out what he knows about my position, and I want to influence his understanding of that information in a way that increases my bargaining power as much as possible. Having established some level of control over his ideas about me and my position, I should work to change his view of his own position in the conflict so that my desired outcome appears more positive to him. First Tactic: Get the Information You Need Now that we have a clear idea of the basic tactical tasks in distributive bargaining, we can see how information about each party s position plays a central role. It is essential that I be able to locate the other party s bottom line as accurately as possible. I would also like to know as much as I can about how she perceives this conflict, as well as her motives for engaging in it and how confident she feels about achieving her goal(s). One way of getting this information is simply to ask the other party for it. In general, however, she is unlikely to give me open and accurate information, for the same reasons that I am reluctant to give her similar information about my own position. Because each party in distributive bargaining perceives the other as an opponent, this kind of negotiation is often a complex and subtle process that discourages the free exchange of information. In situations where there is little leeway for bargaining or in which both parties feel the need for a rapid solution, however, people may be more forthright about how they perceive the conflict and their alternatives. If Company B tells me that they absolutely cannot pay me more than $52,000 and explains the reasons behind this stance to me, I may very then well tell them truthfully that the less-convenientlylocated Company A has offered me $54,000 for a similar job. 54

56 In this situation, both parties have their articulated their genuine positions because there is nothing to be gained by obscuring the issue. It is worth noting that to get to this point, one party must generally go first that is, one party must lay out his position in a way the other party can clearly see is truthful. Otherwise each party might reasonably continue thinking that the position being described is simply a further attempt to manipulate the bottom line. Few negotiations begin with one or both parties pushed to the absolute limit in this way, though, and so directly asking for information about bottom lines and ideal objectives is not generally the most productive strategy. Instead, the negotiator must take a more indirect route to get at what she wants to know. In our salary example, Company B might make plausible estimates about my bottom line by researching how much people with my skills and educational background are currently paid in this industry. They might also look at factors such as how long I ve been seeking a job to help them determine how committed I am to my bottom line. There are myriad sources from which a person might get information that helps them negotiate successfully: books, newspapers, web sites, and experts in the field are just some of the options here. Knowing where to find the facts that enable you to understand your opponent better is part of being a skilled negotiator. When we get our information in these indirect ways, we need to remember that our conclusions can differ wildly from what our opponent actually feels or believes. This kind of information can be a helpful guide to formulating your position and it can help you to understand your opponent s views better, but it is not any kind of guarantee about the way your opponent will respond in negotiation. Second Tactic: Control your Opponent s Information and How It is Interpreted In distributive bargaining, each party is trying to guide the opposing side toward a particular interpretation of her position. 55

57 I want the other party to believe my goals are desirable, perhaps even necessary, and he wants me to believe the same thing about his goals. This interpretation may not be accurate it may even be false but it is still an understanding that gives each party greater bargaining power, which is what they both want at this stage. Controlling your opponent s interpretation of whatever facts she has about your position (and her own) is essential to maintaining your power in distributive bargaining. You can greatly increase the strength and stability of your position by persuading your opponent to accept the facts as you present them (regardless of whether they are genuinely the facts of the situation), particularly if the way you present them simultaneously gets her to question her own position. Controlling Your Opponent s Information One simple way to control the information your opponent receives is to keep your mouth shut. Many people will talk simply to fill up empty space in a conversation and this habit carries over to negotiation, where it often results in giving away more information than the speaker intended. For example, instead of providing lengthy and detailed answers to questions, give the minimum response that will do the job. Focus your energy on asking questions and getting information for yourself, rather than divulging it to your opponent. Similarly, bring your best poker face to a distributive negotiation. Even if you keep your mouth shut, a look of disappointment or delight can speak volumes, giving your opponent information you do not want her to have. Another way to control the information your opponent receives is to control the people with whom she interacts. For example, if you and your spouse are considering buying my car, it might be wise to choose only one person to deal with me. Otherwise, you will need to engage in complex pre-negotiation efforts to determine who will be allowed to say what, and when. 56

58 The point here is to minimize the number of people who can weaken your position by inadvertently giving me new information about your position. Further, by keeping some of the individuals involved out of the direct negotiation process, you can give yourself an out if I begin pressuring you to make a decision. In that situation, you can say that you are not able to make the decision without consulting the other people who are affected by the outcome. This approach is useful, because then it is much more difficult for me to push you into revealing information about your target and your bottom line. The methods discussed focus on limiting the information available to your opponent. As an alternative, one might try overwhelming the opponent with information. The goal here is to present so much information that your real concerns and objectives are obscured. One way you might do this is by increasing the issues in your bargaining mix that is, by introducing so many side concerns and preferences (some of which may not actually matter to you at all) that it is no longer clear which issues are genuinely important to you. This way, even if your real bottom line and your real target are laid out openly someplace in the bargaining mix, it is unlikely that your opponent will be able to pick them out readily. Influencing How Your Opponent Interprets Information The way you present the facts of your position is the key to influencing how your opponent sees that position. The basic strategy here is to enhance your own position as much as possible while appearing to remain neutral. This is often done by presenting information selectively, in such a way that I only present the information that supports my position. This may involve concealing some kinds of information. However, a successful negotiation requires that I do this in a way that isn t nakedly self-serving. 57

59 If I am clearly only out for myself in a negotiation, my opponent will likely either abandon the issue entirely (if that s an option for her) or respond to my efforts to manipulate her by fighting all the harder for her desired outcome. Fortunately for the distributive negotiator, there are many subtle ways of selectively presenting information. For example, I can frame my discussion of your preferred outcome in terms of its potential costs and risks for you. Anything a negotiator can do to make your ideal result seem less attractive to you is a gain for him, and there are many ways of doing this. His goal is to convince you that you don t actually want what you thought you wanted instead, he aims to convince you that you want what he wants to give you. Company B s salary negotiator might try to push me closer to my bottom line by reminding me of the difficult job market in my field, or pointing out that what I see as my bottom line salary is well above the average income for someone in my field. This information may not accurately describe my own situation but if I don t know the facts, I may be swayed by what he says. When it is offered in a helpful and concerned fashion, this kind of information can often make people reconsider their bottom lines in part because many people have not done enough research to know the real strengths and weaknesses of their positions. Similarly, he might focus on the current restrictive budget situation at Company B while emphasizing its other benefits, in an effort to make me feel as though he is doing the very best he can for me something that he hopes will incline me to modify my own position in return. Beyond presenting information selectively, there are ways to use conversational conventions to your advantage. 58

60 Usually, the time we spend discussing a topic and the detail in which we discuss it are both reliable indicators of how much we care about that topic. Both of these methods can be used to mislead one s opponent about how much an issue actually matters to you. Similarly, you can manipulate the other party s understanding of your position by using body language and facial expressions which don t accurately reflect your real feelings. Generally, this more complex psychological approach is used in combination with selective presentation. Third Tactic: Influence Your Opponent s Bottom Line If I have obtained the information I need either directly or indirectly and I have effectively managed my opponent s perception of the conflict and my position, then my negotiating task now focuses on influencing the other party s bottom line. The other party s bottom line is defined primarily by how much he cares about the goal at issue in combination with the quality of his BATNA i.e., in combination with what he stands to lose if the negotiation gets hopelessly tangled or is abandoned. We can see this if we return to our salary negotiation example. In the case where I have no current employment alternatives to the position I am presently negotiating, I stand to lose a great deal if this negotiation gets complicated or if the other party walks away. This means that I am unlikely to be as stubborn about my bottom line as I might be if I had other employment alternatives. Also, I care a greatly about finding a job, but because I have no job at all right now, I care less about finding a job that fits well with all of my ideal outcomes. My bottom line for what counts as an acceptable job is thus lower than it would be in other circumstances. This means that I might take a job that offered a less-than-ideal salary, since my alternative is no salary at all. 59

61 How much your opponent cares about his goal and the quality of his BATNA also affect his willingness to lower his bottom line. Since these are the key elements determining his bottom line, they are where you should focus your attempts to influence him. If you are the negotiator for Company B you can use these facts about my situation to manipulate my bottom line. For example, if you know (or can infer) that I feel that I will lose a great deal by walking away from our negotiations, then you also know that you can push me and my bottom line harder than you could if my alternatives were more attractive. Similarly, if you know that I want a quick solution which I do, since I currently have no job you could threaten to lengthen or abort our negotiation process in an effort to get me to back off from my stated bottom line. If you can successfully employ these kinds of strategies, you can create more space between our bottom lines, and thus increase the positive bargaining range in a way that favors your position since your bottom line stays stable while mine drops. Specifically, you increase the alternatives that are close to your ideal, the outcomes that require the other party to accept results that are at (or below) his bottom line. We mentioned earlier that a person s bottom line is determined by several factors. The first is the importance he attaches to realizing a particular goal. The methods described are focused on influencing how determined a person is to achieve a particular outcome. However, the other party s bottom line is also determined by the extent to which he perceives ending or complicating the negotiations as a loss to himself. Another way to influence someone s bottom line, then, is to influence his beliefs about what he stands to lose if the negotiation gets complicated or ends without a resolution. Deadlines and how you react to them are one way to achieve this goal. 60

62 Generally, the deadline of any negotiation is more pressing to one party than the other. The party who is not under pressure from a deadline has a certain amount of power she can use to her advantage: the other party needs a solution in a particular amount of time, and by refusing (or appearing to refuse) to give in as that deadline approaches, she can motivate the other party to accommodate some version of her demands. Similarly, one party generally has more to lose if negotiations are aborted. For example, if Company B ends or delays our salary negotiations when I have no other job offers lined up, then I am the one who suffers most. Since stalled or prematurely abandoned negotiations are usually undesirable to at least one party in a conflict, distributive bargaining strategies can also focus on altering the costs of not completing negotiations (or similarly, on altering the perceived costs of incomplete negotiations). If you are committed to completing negotiations, I can pressure you to lower your bottom line by finding ways to make you believe that your current position will make it difficult for us to complete an agreement. There are a number of ways one might go about manipulating the (perceived) outcome here. For example, striking workers who picket their workplace are using a strategy that increases their employer s costs for not settling a strike. The picketing often produces negative publicity for the business, and if those who sympathize with the highly-visible strikers choose to boycott the company this means lost revenue as well. These results make it increasingly difficult for the employer to ignore the strikers; the sooner the company reaches an agreement with them, the sooner the problems created by the picketing will cease. Thus the employer feels increasingly pressured to reach an agreement with the strikers, which is exactly what the strikers want. 61

63 As the examples in this section suggest, there are widely varying strategic approaches one might use to influence the other party s bottom line in ways that favor one s own position. Virtually all of these revolve around the basic tactical methods discussed earlier: they require an alert negotiator who can carefully manage information and control how that information is understood. Drawbacks of Distributive Bargaining Some conflict management scholars completely reject distributive bargaining. They see it as unnecessarily adversarial, and unlikely to produce results that actually satisfy all parties. There is certainly some truth to these claims. It is not hard to see how an encounter with a distributive bargainer who is well-informed about your position and willing to deploy high-pressure tactics could leave you feeling manipulated and hostile. Because of this, it is easy for the careless or overly forceful use of distributive bargaining methods to make a conflict worse. Particularly in situations where the two parties must continue interacting with one another coworkers, for example, or a married couple the distributive approach, with its model of winners pitted against losers, may not be the best choice. Similarly, distributive bargaining s strong focus on winning may encourage those people who place a high general value on winning to approach negotiation in a highly competitive and inflexible way. From this perspective, it is difficult to justify or tolerate making concessions; this unwillingness to accommodate the other party can stall negotiations or intensify a conflict. In a similar way, distributive bargaining may prompt those who are especially concerned about a particular goal to adopt ethically questionable negotiating tactics. It is a very short step from selective presentation or the withholding of information to outright lying. In Lesson 5, there will be further discussion of the ethical issues raised by the negotiating process. 62

64 But even without knowing more about negotiation ethics, we can see that the distributive bargaining approach can easily create a context in which we must be more ethically sensitive than we might need to be otherwise. If I view the other party in a negotiation as an opponent whose beliefs and values are of interest to me primarily as something I can manipulate to my own advantage, I run a serious risk of treating him merely as a tool for achieving my own goals rather than as a person with important goals of his own. Further, many people react negatively to the distributive approach unless it is applied quite gently. Most people are uncomfortable with a negotiation process in which it seems that the other party is only concerned about achieving his own ends; in this context they are wary and resentful, which can actually make it more difficult to reach an agreement. In addition, individuals generally dislike feeling pressured to make a choice, particularly when they are pushed to make a choice that they do not feel serves their interests. Distributive bargaining definitely has some significant drawbacks. However, there are situations in which a more cooperative approach is unattractive to one or both parties, for various reasons. If, for example, you genuinely want to maximize the benefit you get from this particular exchange and have no continuing relationship with the other party (or do not care about how this conflict affects that relationship), then distributive bargaining may be the right method. Also, some conflicts really are win-lose conflicts they are like our case of dividing the pie between parties who are not satisfied with a split. In those cases, distributive bargaining is probably necessary. We should look closely at a conflict, though, before deciding that it is definitely of this kind. We shouldn t assume that a conflict is necessarily a win-lose situation simply because we are strongly attached to our ideal outcome. 63

65 Lastly, even if we desire or choose another negotiating method, it might be the case that the other party wants to use the distributive bargaining approach. In these situations, unfamiliarity with what he is doing can work against us. It might also be the case that in a particular negotiation, it is not up to us to choose what method we will use. So we should educate ourselves about distributive bargaining even if we have no plans to use this method ourselves. Lesson Summary This lesson introduced the student to the basic ideas and terminology used to evaluate and rank their preferences in a negotiation. It also described how to discover and evaluate one s best alternative to a negotiated agreement (BATNA), an option that deserves special attention when we are analyzing our preferences since it helps us to decide whether to enter negotiation at all and has a large influence on the terms we will accept in a negotiation. This lesson addressed the fundamental tools we use to move a negotiation process forward: concessions and commitments. Concessions are the things we are willing to relinquish in a disagreement; we can exchange them with the other party in an effort to secure other things that matter more to us. Commitments are specific, clear statements about alternatives we can or cannot accept, and actions we will or will not take, as well as the consequences that will follow. Commitments are volatile tactical maneuvers, and should be used with care. While they can help make a negotiation more productive, it is also true that the other party may interpret a commitment as a threat and react much differently than we had anticipated. These topics are common to all negotiations; we need to understand them no matter what negotiating method we choose. Distributive bargaining is one negotiating style we might choose; it a competitive approach to negotiation and was discussed in detail in this lesson. 64

66 A distributive bargainer aims to capture as much benefit or value as she can for herself; her primary strategies for achieving this aim are controlling information and influencing her opponent s perception of what he can or should get from a conflict. The distributive bargainer ultimately wants to push her opponent as close to yielding as possible she wants to maximize her own benefit while giving her opponent the minimum outcome she can get him to accept. Distributive bargaining can produce quick solutions, especially if one party can exert strong pressure on the other. However, this approach sometimes lends itself to an aggressive, bullying tone, which makes many people uncomfortable and which can incline people to accept solutions to which they do not genuinely wish to agree. In addition, distributive bargainers have strong motivation to distort and conceal information; this inclination must be watched carefully to keep it from devolving into lying and fraud. 65

67 Lesson 3: Integrative Negotiation Lesson Topics This lesson focuses on the following topics: Introduction The Fundamental Perspective of Integrative Negotiation Strategy and Tactics of Integrative Negotiation Resolving the Conflict Obstacles to Successful Integrative Negotiation... ERROR! BOOKMARK NOT DEFINED. 66

68 Lesson Learning Objectives By the end of this lesson, you should be able to: Name and apply some basic strategies for evaluating the offers made during negotiation. Recognize the basic considerations to explore to prepare for negotiation. Distinguish between the two common styles of negotiation, and make judgments about which style is appropriate for a particular conflict. Outline the central strategies of these negotiation methods, as well as the demands each approach places on negotiators. Identify solutions to bring the parties to an agreement with a positive outcome for all parties. Introduction Distributive bargaining is a fundamentally competitive approach to negotiation. Integrative negotiation, on the other hand, approaches negotiation from a collaborative perspective. Instead of taking the problem as given and struggling to capture maximal benefit or value for herself, the integrative negotiator focuses on working together with the other party to find creative alternatives to a win-lose outcome. Integrative negotiators aim to get as close as they can to a solution that lets both parties have everything they want; for this reason, integrative negotiation is sometimes called win-win negotiation. The first step in this process is openly sharing information. Integrative negotiators closely examine and thoroughly discuss their conflict and their goals; they also make an effort to articulate the more basic interests and concerns that underwrite those goals. Using this approach, negotiators work to understand the conflict and the other party s view of it, and to develop a thorough understanding of why the other party has the goals he does. 67

69 These are the pillars that support successful integrative negotiation: a clear definition of just what the problem is one that both parties accept and a solid appreciation of the other party s needs and concerns. The negotiators then use this information to think creatively about possible solutions to their conflict. There are many things they might do here, but in general this step of the negotiating process revolves around one of two basic strategies. First, negotiators might focus on rethinking their problem: for example, is there a way to get more resources so that each party can have what she wants? Is there a tradeoff they might make within the conflict itself, such that one party can achieve one of her important goals in exchange for the other party achieving an aim he cares about? Other tactics for rethinking the problem will be discussed later in this lesson, but they are all alike in that they aim to help us see the problem in a new way, as something other than a head-to-head clash in which one party s gain is the other s loss. Second, integrative negotiators might take the character of the problem as given and instead focus their energies on coming up with an innovative solution. Brainstorming is one example of a tactic they could use here; this is a process in which they work to get past the obvious or traditional solutions, in the hopes of finding a creative insight that will allow them to craft a solution that is good for both parties. The solutiongenerating phase of integrative negotiation often takes time, and both sides must be willing and motivated to work together in an atmosphere of trust. Done well, though, integrative negotiation can generate surprising, innovative outcomes that both parties accept readily. Upon completion of this lesson, you will be able to describe the basic tactics of integrative negotiation, as well as some of the important ways it differs from distributive bargaining. You will be able to name some strategies for clarifying a conflict, and know why this clarity is important. 68

70 In addition, you will be able to identify the various general kinds of concerns and motivations that frequently underwrite people s positions in negotiation. You will know the basic methods that integrative negotiators use to find a solution, and be able to explain integrative approaches to rethinking a conflict. You will also be able to identify the basic rules for successful brainstorming. Lastly, you will recognize some of the major obstacles to successful integrative negotiation. The Fundamental Perspective of Integrative Negotiation Integrative negotiation seeks a solution that gets all parties close to their ideal outcomes that is, its goal is to maximize outcomes for both parties. Instead of a tug-of-war between two bottom lines, integrative negotiation is a collaborative problem-solving process aimed at finding solutions in which both sides feel they have won. So rather than seeing one another as competitors pursuing incompatible goals, integrative negotiators should understand themselves as working cooperatively to achieve a good outcome for everyone involved. This is not just a matter of semantics. It is true that a distributive bargainer might say she wants to work cooperatively toward a shared good when what she really wants is to convince us to accept her aims. However, we can determine what she is actually doing by looking at the methods she uses. If she hoards information about her own position, tries to manipulate our view of what goals we can attain, and proposes solutions that consistently favor her own aims, then she is using distributive bargaining. Integrative negotiation uses different methods to achieve its ends, and these methods show that it operates from a fundamentally different perspective. 69

71 The Basic Concerns of Integrative Negotiation We can begin to understand integrative negotiation and its methods by examining its perspectives on the basic subject matter of negotiation, and looking at these in contrast with the distributive bargainer s stance. One important thing to keep in mind when examining real estate negotiations is the number of parties involved. Usually, there are two sellers and two buyers. The sellers agent and the buyers agent are essential parties of the negotiation process when they are representing their clients, respectively. The Exchange of Information The distributive bargainer seeks to control and conceal information, while the integrative negotiator openly shares the particulars of his position. The integrative negotiator s first task, and one that persists throughout the negotiations process, is facilitating the free exchange of information. Both parties must be able to talk openly about what they hope to achieve and what they are willing to do to reach that goal. They must also feel reasonably sure that this information will not be used against them by the other side. Rather than spending time blustering and bluffing about our ends while trying to manipulate the other party s vision of her goals, integrative negotiation begins with a forthright discussion about the facts of our conflict and our respective positions. The last lesson showed us how the distributive bargainer can use information about our position against us. It may now seem like the free exchange of information is a bad idea, and that we should worry about the price we will pay for trusting the other party with the truth about our position. We should remember, though, that there are also significant costs attached to lying, being suspicious of him, hiding information, and otherwise treating him like an adversary. These things take time and energy, and can be damaging to our relationship with the other party. 70

72 In addition, fact-finding work, inspections and the like which are often necessary in negotiations when the parties do not trust each other may create substantial business expenses. So it is not at all the case that integrative negotiators are naive about the potential dangers of sharing information. They are aware of these hazards, but they have decided that the costs of making negotiation into a win-lose battle outweigh the disadvantages of openly sharing their goals and interests. The Other Party s Interests and Concerns The distributive bargainer wants to manipulate the other party, hoping to persuade an alteration in position that favors the desired outcome. The integrative negotiator, conversely, aims to understand the facts and motivations of the other perspective so that solutions can be found that will work for everyone. The integrative negotiator genuinely wants to understand what the other party seeks in the negotiating process. He or she does not see the other s ideal objective simply as an obstacle on the path to his or her own goal, something that would be brushed aside if possible. Instead, he or she truly wants to know what the other party needs and why it s needed; he or she wants to identify the underlying influences that shape the position. The integrative negotiator does not use this information to undermine or manipulate the other party s position. Instead he or she uses it as building material for constructing a mutually agreeable solution. Outcomes The distributive bargainer focuses on pressuring the other party s bottom line; the desire is to push the other party to the worst deal that they are willing to accept. The integrative negotiator focuses instead on the parties shared interests, and on whether they can work together to develop a solution that provides both sides with at least some important part of their ideal objective. 71

73 Integrative negotiation focuses on what the parties have in common, and the ways in which they can collaborate productively. Distributive bargaining sets two bottom lines in opposition, and paints the parties as opponents. By focusing on the parties basic similarities, integrative negotiation works to remind the two sides of a conflict that this disagreement is not the whole story about their relationship a fact that often gets forgotten in the heat of distributive bargaining. Integrative negotiators approach the subject matter of negotiation from a different perspective than the one assumed in distributive bargaining. They use different tactics and methods from the very beginning of the process. Because this is the case, early in any negotiation we can generally establish a reasonably good idea of whether a negotiator is pursuing a distributive or an integrative approach. Strategy and Tactics of Integrative Negotiation The key to successful integrative negotiation is clear and open communication that goes beyond the surface of a conflict, combined with the ability to be both certain and adaptable about one s ideal outcome. If both parties are to maximize their outcomes, they must know what they want to achieve (be certain) but they must also be willing to think about various ways their goal can be achieved (be adaptable) that is, they should be clear about what their basic aims and needs are, while remaining open to different ways of satisfying those aims and needs. However, before negotiators start talking about adapting their goals to fit different solutions, they need to understand what their problem is in the first place. Clarifying the Conflict If our goal is to solve a conflict in a way that satisfies both parties, then the first step in integrative negotiation is determining exactly what the conflict is and whether both parties understand it in the same way. There is no real point in working on solutions until we understand the problem and we know that the other side understands it in roughly the same way. 72

74 If we plow ahead with solutions before we have a shared description of our problem, then we run the risk of wasting our time crafting solutions for a problem other than the one we really need to address. This point seems obvious, but it can surprisingly difficult to identify and describe a conflict in a way that all parties accept as accurate, and this difficulty increases as the number of parties involved in a disagreement increases. We can think of this in terms of the familiar claim There are two sides to every story similarly, there are as many sides to a conflict as there are parties involved, and it can be difficult to find one description of the problem that all parties think is satisfactory. There are, however, some steps that we can take to help formulate a clear, mutually acceptable vision of our conflict. First, we should be clear about the questions to which we need answers what do we need to know to understand our problem? In most cases, we need answers to the questions represented on the following diagram. Read the corresponding information for each box to learn more: Clarifying the Conflict Who are the parties to the conflict? Is anyone else affected by the outcome of the conflict? What kind of relationship, if any, exists between the conflicted parties? What are the basic points of disagreement? 73

75 Who are the parties to the conflict? Who are the people truly involved in the conflict? We should be wary of thinking the conflict consists just of those who see themselves as being in disagreement. For example, it might be the case that the only person who can resolve the conflict doesn t even know about it yet. In addition, we should think about how many people are genuinely involved in the conflict. We want to make sure everyone who is really involved gets to take part in negotiation, but at the same time we want to limit the conflict and the negotiation process to people whose input is actually necessary for a solution. Is anyone else affected by the outcome of the conflict? Sometimes the way we solve a conflict has effects that reach far beyond the parties directly who are directly involved. For example, if we are local government officials negotiating about where to build a new landfill, the residents and property owners in the locations we are considering could be greatly affected by our decision to put a landfill in their area. In cases like these, we need to get input from the other affected parties about their goals and interests. Otherwise, what looks like a good agreement to us may turn out to be totally unacceptable when we try to put it into action. What kind of relationship, if any, exists between the conflicted parties? Do they like each other? Do they have a history of hostility? Past interactions can have a strong influence on what kind of negotiation and outcomes are possible. In addition, we want to know if there is an existing relationship that should influence the way we should understand and approach a conflict. For example, the right approach to a disagreement between two corporations is probably not the right approach for a conflict between a parent and his child. What are the basic points of disagreement? What is the contested benefit or value at issue in the conflict? How does it relate to the parties more fundamental interests? Seeing the answers here often requires us to put aside personal judgments about the people involved in the conflict. 74

76 However, we need to get clear on this to understand why the parties are in conflict in the first place, and to see what kind of solutions will actually resolve the issue. As we work on answers to these questions, we want to avoid creating further disagreement and tension. There are a number of basic strategies that can help us achieve this goal. State the Problem Neutrally: All parties should make an effort to describe the problem in neutral terms language that does not favor their own position or disparage the other party s stance. This can be difficult in volatile conflict situations, but it goes a long way toward finding a description of the problem we are trying to solve that is acceptable to everyone. Focus on the Problem, not the People: We want to address the conflict itself, not the character of the people involved. Personal attacks and judgments about the personalities of the other parties just distract us from the real problem. Constructive negotiation requires us to focus on the actual facts of the problem. Depersonalizing a conflict can go a long way toward making it more manageable and toward helping parties see one another as collaborators rather than competitors or enemies. Make Defining the Problem a Joint Effort: Parties to the conflict should try to define the problem together. If we make this a joint endeavor we are much more likely to come up with an understanding of the conflict that accurately reflects both parties interests and aims. Keep the Definition Focused and Simple: Our description of the problem should focus on parties primary concerns. At this stage, we are not trying to put the whole bargaining mix on the table. All we want to do is sort out the most important issues and make sure they are represented in our definition of our problem. There will be time to talk about secondary issues later, if they still seem important. 75

77 Disconnect the Statement of the Problem from Solutions: Like the previous point, this step asks us not to make things too complicated too early in the process. We want to define the problem in terms of an objective and the obstacles standing in the way of that objective. In defining the problem, all we are interested in is what we are trying to accomplish. We can worry about how to accomplish it at a later stage in our negotiations, after we are sure about what our goal really is. Be Specific: Defining the problem in terms of an objective is good, but we can help ourselves further by making sure we define it in terms of a specific objective. The more concretely we can describe the particulars of the conflict, the more clearly we can assess each party s role in it and the more clearly we can see what would need to be done to resolve it. How we define and understand our conflict can have a substantial effect on whether the integrative approach can address it successfully. If we want integrative negotiation to work for us, we should strive to frame our problem in a way that makes it clear that there is a common good here that both parties will gain from working to resolve the problem together. If either party believes she can do better working alone, or by competing against the other party, then an integrative agreement is likely to be an uphill battle. Integrative negotiators should keep in mind that there are different ways of understanding the parties common good. It might be that each party shares in a good outcome equally, each getting some benefit or value she could not attain on her own. 76

78 On the other hand, each party might get a different kind or amount of benefit, but again the benefit (regardless of the type or quantity) is one that would not exist unless they worked together. We want to stay flexible about how we understand what it means for both parties to do well. This does not mean that we should try to deceive the other party into believing that a loss is actually a gain. However, if we get too attached to one particular idea of what it would mean for us both to maximize our outcomes, we can end up right back in the tug-of-war that typifies distributive bargaining. If integrative negotiation is to achieve its goals, both parties must be motivated to work together to maximize benefit overall. They must be committed to attaining the benefits that collaboration makes available to them when they work together. Only from this perspective are they likely to be open, honest, and adaptable about their goals and their interests, rather than being suspicious and inflexible. Clarifying the Other Party s Wants and Needs An important part of getting clear on a conflict is recognizing and appreciating what is going on in the background of the other party s position. When someone states their ideal objective, we know what she wants from the conflict, but we do not know anything about why she wants that outcome. Virtually every negotiator s position is motivated by a complex interplay of worries, requirements, and hopes. We should also think hard about our own deeper concerns and motivations, because sometimes these are not as clear to us as we imagine them to be. Successful integrative negotiation requires that we have at least some sense of this motivational network behind each party s stance. We need this knowledge because it helps use to see the fundamental wants and needs that drive each party to take the position she has chosen. 77

79 Returning to our salary negotiation example, let s say I have asked Company B for $53,000 a figure that exceeds the $52,000 their budget permits. At this point, if we do not look behind my position to see what is motivating it, then we have no options: Company B cannot meet my demand, and I am not willing to accept a lower salary. Neither of us will get what we want from this negotiation. But if Company B s negotiator knows why I want a certain salary from his company, he may be able to help me reach my goals in other ways while still keeping his salary offer in line with what his budget allows. If, for example, I tell him that I need at least $53,000 because in addition to my regular budget I must pay a certain amount for child care, he might be able to help me achieve my goals by informing me about Company B s highly respected and very inexpensive daycare program. If that program offers what I want while still costing less than I had anticipated spending for childcare, I may be willing to accept a lower salary from Company B. In this way, we both get what we want: he gets me as an employee at a salary within his budget, and I while I don t get the salary I was seeking, I do get a job benefit that does the same work of a higher salary. This example illustrates a number of important points about integrative bargaining. It shows us how important it is for integrative negotiators to communicate openly and honestly with one another: if Company B s negotiator does not know about the factors driving me to ask for a higher salary, he cannot do anything to address them. Similarly, unless there is forthright communication between us neither he nor I can see intersections between our wants and needs that might give rise to solutions we can both accept. This example also demonstrates that reaching a mutually satisfactory solution often requires integrative negotiators to be open to diverse and perhaps unexpected options for satisfying their interests. 78

80 Making the effort to see and understand the elements operating in the background of each party s position is often what will bring the conflicted parties together as collaborators. Asking probing questions and openly exchanging information can help us to see why the other side s position is actually reasonable, given what they care about, believe, and desire. Once we see that both sides have legitimate issues addressing their wants and needs, and a reasonable stance, we are well on our way to working together toward a shared goal. In addition, when we have this additional information about the other party it is easier for us to see him as a complete, complex person rather than just an obstacle heedlessly blocking us from our goals. Likewise, when the other side expresses genuine interest in your position, and in helping you achieve your goals, it tends to help you feel that negotiation is a conversation between real human beings, instead of a struggle between caricatured enemies. It is fairly easy to understand that each party has this background network of wants and needs that motivates her position. However, it is not so easy to see specifically what her true wants and needs are, or how we might ask her the right questions to find out about them. While this process will depend in part on the particulars of a given negotiation, there are some general things we can say about the sort of concerns and interests people often have regarding their perceived wants and needs. If we know what these are, we can remind ourselves to look for them in a negotiation. Concerns about the Details of the Conflict In most negotiations, both parties have interests connected to the specific issues at the core of the conflict that is, they have an interest in the contested benefit or value being used a particular way, or divided in a certain way. These interests can be discovered by asking questions about the substance of the negotiation, for example Why does this salary seem like too little to you? 79

81 What made you decide you wanted $53,000? It is important to remember for this point and those that follow that if we want real information and a collaborative response from the other party, we must ask these questions in a way that shows that we are genuinely interested in her input. Similarly, we must use what she tells us in the negotiation: our responses and the options we offer her must reflect that we hear and understand what she has told us. Otherwise, the other party will likely and reasonably conclude that we are not listening to her, or not truly interested in what she has to say. Concerns about How the Conflict is Resolved People often have interests pertaining to how the conflict is resolved. For example, sometimes people care less about the subject matter of the conflict and more about the fact that they feel like no one ever consults them about how things should be done. This can be true even if that person starts the negotiation by taking a hard line on a specific point about the subject matter of the conflict; her desire to be heard can lead her to act as though another issue is very important to her, even though it actually is not. In such a case, finding out about this underlying concern makes it clear that the real issue is making sure we solve the conflict in way that assures this person that her input is important in our decision-making process. In other cases, someone may be pushing for a high-pressure distributive bargaining approach because she sees a given conflict as part of a bitter interpersonal dispute between herself and the other party. We can learn a great deal about these interests by asking each party about her ideal objectives, and about what methods she thinks would lead to the best solutions. She might not tell us outright that she prefers distributive bargaining because it will give her a chance to make the other party look bad, but if we listen carefully here we can find important clues about what people see as the real problem, and how they perceive that problem. 80

82 In essence, we must remember that particular ways of solving a problem carry different meanings for various individuals. These meanings are not inherently a part of the solution or the process. For example, someone who has frequently been left out of decision-making might not have been overlooked at all. Perhaps we tried to make decisions without her because we thought she was too busy to get involved in our problems; we didn t leave her out because we thought she was too trivial, rather we tried to avoid bothering her because we thought she was too important. Even though the ways we solve problems are themselves generally neutral, a good negotiator will recall that people do interpret the meanings of various methods and take this into account when he is choosing a solution. Concerns about How the Conflict Will Affect a Relationship Parties to a conflict often have concerns about how that conflict will affect a relationship. When one party places a high value on his relationship with the other party in the conflict, these concerns can strongly influence what he is willing to do in negotiation because he wants to avoid damaging the relationship. In other cases, one party might see the conflict as a chance to establish dominance or control in a relationship; here, the person values the outcome she believes will make her look strongest, but she values it primarily as a tool for shaping her relationship with the other party i.e., she would be equally attracted to any other outcome that achieved the same result. In addition, an individual might be concerned about how a conflict will affect his relationship with someone outside the conflict entirely; for example, a child might be concerned about what his parents will think about his position in a conflict. We can find out about these interests by asking people about what they hope or worry will happen after a conflict is resolved. Relationship issues are often very sensitive points in the negotiation process, and we would do well to ask such questions in a diplomatic and thoughtful way. 81

83 A further consideration related to relationships is the fact that people commonly conclude that there is no need to bother with integrative negotiation when there is no ongoing relationship between the negotiators. This view arises from the belief that, in essence, there is no need to make a special effort to understand or work collaboratively with someone you will never see again instead you should use distributive bargaining to get as much benefit as you can from him. There is some merit to this view; integrative negotiation can take a great deal of work and time, which may make it a less appealing approach when dealing with people who are and will remain strangers. However, we should also bear in mind that one never really knows what the future holds: for example, the person who crumpled under your high-pressure distributive bargaining when you bought her car may turn out to be your next supervisor. Because life is unpredictable in this way, the choice to forego integrative bargaining can have unforeseen repercussions. Concerns about How the Conflict Relates to Other Abstract Values Parties also often have concerns about how their position and their alternatives are evaluated in terms of a standard outside the conflict. For example, someone s bargaining position might be motivated by a concern for doing the morally right thing, or by a concern for how this kind of conflict has traditionally been handled. These kinds of basic values can strongly influence what a person views as an acceptable outcome, and sometimes in surprising ways; for example, one party may be unwilling to accept a solution she believes is unfair, even if it is unfair in a way that favors her. It is not always easy to get people to articulate the abstract values and beliefs that guide their positions; sometimes they cannot even explain these well to themselves. However, it is still worth looking for their influence in negotiation. At best, speaking clearly about our more abstract values will help us to see important things we have in common. 82

84 If, for example, we can both agree that we are committed to arriving at an ethical solution, we can use our concern for a morally right outcome as a touchstone in our discussions, a point we can return to when we find ourselves starting to disagree. At the very least, having a clearer sense of each party s abstract values will help us to see the basic framework our solution must satisfy. Some General Points about Wants and Needs Now that we know more about what kind of concerns arise when realizing the negotiators wants and needs that they bring to the process, we should remember some important points about them. First, wants and needs can shift or change during a negotiation. People may reconsider an issue and come to see their concerns in a different light, or they may decide that something they initially thought was important is actually trivial. In addition, even if we think we have a clear sense of the other party s wants and needs, we should realize that new concerns may arise at any time. And, we should be aware that some concerns over different wants and needs may be rooted between each of the two buyers or each of the two sellers: not necessarily between just buyers and sellers i.e.: between husbands and wives; elderly parents and children; siblings, etc. Second, people can value their wants and needs in different ways. If I am concerned to see a particular outcome realized, it could be because I value that outcome in itself (i.e., getting it will please or satisfy me, and I want nothing further from it). However, I might instead value that outcome as a tool for achieving further outcomes. It is important that we know how people value their concerns; when people value an outcome as a tool it is often the case that they will accept other tools that can do the same job, and if other tools are acceptable, this opens up the range of satisfactory solutions. 83

85 Third, our concerns over our wants and needs are not necessarily anything like the other party s concerns over their wants and needs the other party may have different concerns of the same type, or she may have an entirely different sort of concern. This seems like a simple point, but people often assume that the things that matter to them are the same things that matter to the other party. This belief that both parties are struggling over the same issues is part of what leads many people to see conflicts as competitions. If a discussion about our underlying concerns reveals that we are not actually in conflict about the same specific points, it can be considerably easier to find a solution that will satisfy us both. Lastly, a single position can be motivated by various kinds of wants and needs. For example, it might be the case that I care strongly about certain details of the actual conflict itself, but I also care intensely about how that conflict is resolved and how that resolution fits with my more abstract values. Distributive bargaining focuses on undermining and discrediting the other party s position; this mindset has no place in integrative negotiation. Exploring the wants and needs that underwrite people s positions in a conflict is critical to the success of the integrative approach. If the parties to a conflict are to work together cooperatively (rather than thinking they can do better alone, or by competing), it is essential that each see the other s position as valid and reasonable. I do not need to share your position or even agree with it to see it as valid and reasonable. However, I do need to understand why someone might sensibly hold that position, that is, I need to understand the facts and background influences that make it a plausible position. Each party needs to feel that the other party s position is legitimate at least in large part, if not completely. 84

86 This perspective is central to the respectful, open communication required throughout the integrative negotiation process. Additionally, honest and considerate discussion of each party s wants and needs can do much to build a general atmosphere of trust in the negotiating process. When parties do not trust one another, collaboration is extremely difficult; people who mistrust one another tend to spend their time acting defensively, trying to protect their resources and ideas from attack instead of working together. Some significant level of trust is thus necessary for successful integrative negotiation. Clearly, people who do not trust each other will not reveal their deeper wants and needs to each other, either; so it is not as though this stage of integrative negotiation (exploring the other party s wants and needs) will create trust if there isn t at least some already. This is why one s attitude and demeanor are so important in integrative negotiation. From the very beginning of the process, one should strive to present oneself as compassionate and reflective. Resolving the Conflict The early stages of integrative negotiation focus on developing a clear and shared idea of the problem negotiators are trying to solve, as well as a sketch of the background influences that affect what each party defines as an acceptable solution to that problem. With this information in hand, they are in a good position to begin thinking about what kind of solutions are possible, and how they might bring those solutions about. Conflicts arise because people believe their goals are at odds each of them believes he wants something he cannot have if the other party gets what he wants, too. Initially, most conflicts are cast in terms of either I get to have my way or you get to have your way. Distributive bargaining focuses on trying to change what your opponent thinks he wants, deserves, or can get, so that you can capture more of the contested benefit for yourself. 85

87 Integrative negotiation, on the other hand, emphasizes creatively exploring alternative ways to resolve the problem. On this view, negotiation is not a battle between my position and your position; integrative negotiators approach the conflict in much less absolute terms. They focus on changing both parties understanding of the problem, or of their available options, so that everyone can leave the bargaining table knowing that they have achieved at least some of their important goals. At this stage of integrative negotiation, we are largely finished gathering information. Now our goal is to reach a solution by thinking creatively about the problem. There are two general strategies used at this stage. One approach focuses on changing the way we see the problem, since rethinking the problem can help us to find mutual gain in a situation that previously seemed to be win-lose. The other approach accepts the problem as we presently see it, and focuses instead on creating an array of alternative solutions. Rethinking the Problem If we choose to seek a solution by rethinking the problem, we should be sure that we have done the work of exploring our background concerns and desires. We need to be clear about the basic needs and interests we want to see satisfied, because these are the fundamentals of our conflict. We should not be focused on seeing them satisfied in a particular way that is, we are not wedded to a specific course of action; any course of action that satisfies these fundamental concerns in a suitable way can be considered a good solution. Let s say we are planning an evening out, and we disagree about both where to have dinner and which movie to see. I want to have Vietnamese food and see a horror movie, whereas you would like to have Mexican food and see a romantic comedy. On the face of it, this is a win-lose conflict: we each want different things, and if one of us achieves an ideal outcome then the other party loses. 86

88 As integrative negotiators, however, there are a number of tactics we might use to recast our conflict: Increasing the available resources Finding a solutions that brings parties goals together Seek a tradeoff inside the conflict Look for a tradeoff outside the conflict Make your ideal outcome less costly for the other party These techniques are discussed in detail in the sections that follow. Increasing the Available Resources One tactic we can use is looking for a way to increase the available resources. The object here is to increase the amount of value or benefit available to both parties. This technique is sometimes called expanding the pie, a metaphor that recalls our earlier example about dividing a pie: if we could somehow have had an additional quarter of a pie in that example, then there would not have been a conflict at all. Many conflicts spring from the belief that the value or benefit is limited in such a way that we cannot both have what we want. This is not always true, and a very simple solution to this kind of conflict is to add resources. It is not always easy to see where these additional resources might come from, but it is similarly true that creative thinking about how to expand our pie can often do so successfully. Toward this goal, we should keep in mind that resources can be many different things: time, money, and objects are just a few possibilities. Similarly, we should also note that we need not always add more of the same resource that is already under discussion; instead we might be able to offer another resource that the other party finds equally, or more, attractive. Read the example below to see one way we might increase resources in planning our night out. 87

89 EXAMPLE: In planning our evening out, it is true that we cannot have dinner at two restaurants simultaneously, nor can we see two movies at once. However, maybe we could plan a longer day together, in which we had Vietnamese food for lunch and then went to see a romantic comedy, after which we had Mexican food for dinner and then finished our evening with a horror movie. By adding more time to the equation increasing the resources available to us we can arrive at a solution that lets each of us have what we would like. Find a Solution that Brings the Parties Goals Together Another way of reframing the problem is to look for a solution that closes the gap between both parties ideal outcomes whether the parties are the buyers and sellers or, the parties are the two sellers, or the two buyers. The two sellers may need guidance on agreeing on the list price of their home. The two buyers may need guidance on accepting each other s priorities when making a purchase. These respective problems must be solved before going into negotiations between the buyers and sellers in a transaction. Achieving these solutions through this strategy is similar to the previous one, in that it aims to let both parties realize their target objectives in full. Here, what we are looking for is a way to achieve those outcomes without adding resources. Success here requires that we let go of our attachment to a particular way of satisfying our interests, and focus instead on what those interests actually are. We need to know what our real target objectives are, and we need to separate them from our preconceptions about the right solution. Once we ve done this, we can often see that there are ways to get those things other than the positions we have set out. Read the example below to see one way we might bridge the gap between our goals in planning our night out. 88

90 EXAMPLE: Perhaps just maybe there is a restaurant in town that serves both Vietnamese and Mexican food. If we agree to go there for dinner, then we have found a bridge between two goals that looked incompatible. Similarly, we might be able to find a film about the romantic hijinks of zombies that would satisfy both your desire for a romantic comedy and my desire for a horror movie. While the solutions above are a bit farfetched, it is still true that we can often find a bridge between apparently opposed positions if we focus on our fundamental interests. Maybe I do not actually want to go to a certain Vietnamese restaurant that s not my most basic interest. Instead, all I want are some good spring rolls. If the Vietnamese-Mexican restaurant serves these, then I will probably be delighted to go there. Look for a Tradeoff inside the Conflict If we can find more than one important issue in a conflict, we can often trade off on these issues so that one of us achieves her target outcome on the issue that matters most to her, while the other party achieves his target outcome on the other on the one that matters most to him. Even if neither of us sees one issue as more important, we can often still arrive at a mutually acceptable agreement by dividing the issue in this way; it gives each party roughly equal power in the decision-making process and gives each of us at least part of our ideal outcome. Since neither of us is getting our full ideal outcome, it is important that we each feel we are making a fair trade i.e., that we feel our trade is roughly balanced so that neither party feels shorted or manipulated. Read the example below to see one way we might find a tradeoff inside our conflict about planning our night out. EXAMPLE: In discussing how to plan our evening, it might become clear that one of us cares much more about where we have dinner than about which movie we see. 89

91 The other party might then offer to trade the dinner choice for the movie choice: if you care most about where we eat I might offer to let you choose the restaurant, so that you can get your desired outcome on the issue that matters most to you. In exchange, though, I would get to choose which movie we saw. Look for a Tradeoff outside the Conflict We can also try to reframe the problem by looking for a tradeoff outside the conflict. This strategy requires the person who gets his ideal objective to buy out the other party whichever party gives up his ideal outcome must be compensated in some way, and the person who is buying her ideal outcome must find a price that appeals to the other party. This means the person doing the compensating must have a clear idea of the price the other party attaches to his ideal outcome. In most cases, we will not literally pay the other party money to persuade him to let us have our ideal objective. Instead, we are more likely to trade him something else he wants, something unrelated to our present conflict. It could be an activity, it could be some task we perform for him, it could be an object possible payments here are limited only by our imagination. Finding an acceptable form of compensation may take several attempts, however, and it is possible that this method of negotiation could slip into distributive bargaining if one party is extremely attached to an outcome that the other party wants him to give up. Read the example below to see one way we might find a tradeoff outside of our conflict about planning our night out. EXAMPLE: Let s say that we agree about where to have dinner but disagree about which movie to see now we cannot perform the simple exchange we did when we were looking for a tradeoff inside our conflict. 90

92 In this case, though, we might find our tradeoffs elsewhere: I might be willing to see your movie if you will go bird watching with me later in the week, or you might go to my movie if I will agree to play cards with you afterward. We can still find tradeoffs here, even though they revolve around activities that are separate from the subject of our conflict. Note The strategy of making tradeoffs both inside and outside the conflict which allow each party to achieve at least one preferred outcome is sometimes called logrolling. Make Your Ideal Outcome Less Costly for the Other Party This method aims specifically to reduce your costs (whatever they may be money, time, inconvenience, etc.) for giving me the outcome I want. For this method to work, I will need to have a good idea of what costs you face as a result of accommodating my goal(s), as well as an understanding of how much I need to reduce those costs before you will find my goal attractive. Of course, it may be that I cannot afford to reduce your costs to the extent necessary to attain my goal. As is true of all integrative strategies, this approach does not guarantee we will find an outcome we both like. Read the example below to see one way I might decrease your costs in our conflict about planning our night out. EXAMPLE: I might be able to decrease your costs to an acceptable level if I offer to buy your dinner and your movie ticket in exchange for you letting me choose the restaurant and the movie. In this scenario, I get what I want, and you have not spent money on a movie or a meal that you did not really want. 91

93 Notice how this is different from a simple tradeoff: paying for your meal and movie reduces your costs in a way that agreeing to play cards with you later does not, since even if we play cards later you will still have paid to see a movie you did not choose. Creating Alternative Solutions In the approaches discussed, we sought a solution by recasting the problem(s) at issue. We focused on each party s fundamental interests, and our solutions aimed to satisfy those. As an alternative, we can take our definition of the conflict as a given, and then work to solve that conflict creatively. At some points, the rethinking approach and the conflict as given approaches overlap. For example, if I offer you your choice of restaurants in exchange for my choice of movies, this solution does not really change the character of our conflict at all. It is still the case that our solution is a matter of choosing between incompatible outcomes, so this solution could arise either from rethinking the problem in terms of a tradeoff, or from taking the conflict as given. However, if we choose to spend a longer day together in which we do all of the things we would each like to do, then we have fundamentally altered the character of our conflict: it is no longer a matter of determining whether to do one activity or the other in a limited amount of time. Brainstorming If integrative negotiators take the conflict as given, then their goal is to use creative insight to get beyond either I get to have my way, or you get to have your way as a solution to their problem. The most common method used here is called brainstorming, in which each party tries to come up with as many possible solutions as she can. We can brainstorm alone, in pairs, or in small groups. 92

94 Including more people rather than brainstorming alone can often be helpful, even if those people are not part of our conflict; the more people we can consult for ideas, the more diverse our resulting list of possible solutions will be. Brainstorming groups need to be a manageable size, though: the group must be small enough for each person to have his input heard, and for the members to be able to interact with one another and share ideas. In addition to controlling the size of our group, there are other keys to effective and productive brainstorming: Suspend your judgment of the proposed solutions. This is not the time to decide whether a solution is absurd or practical. If group members criticize each other s solutions, soon people will feel cowed and stop contributing. Similarly, we can stifle our own stream of ideas if we allow a running critique of them in our minds. The goal right now is to lay out as many ideas as possible, so the only thing that merits criticism at this stage is a lack of proposed solutions. Offer unconventional and extreme ideas. The point of brainstorming is not simply to list the solutions we already know about, or the solutions that seem safe. We are trying to explore all possible avenues for solving the problem, even ones which seem crazy or exaggerated. Push yourself to think of the most preposterous solutions you can, and add them to your list alongside your tamer ideas. Keep the proposed solutions short. There will be time later to expand on your ideas or to ask for clarification. Right now we are looking for quantity, and getting caught up in details will only slow us down. Build on other people s ideas. If you are brainstorming alone, you do not have to begin from scratch, sitting there paralyzed until you come up with an original solution. You can think about how other people have approached similar problems (perhaps someone you know or admire, perhaps a solution you have learned about elsewhere), and start building from there. 93

95 Similarly, if you are working with a group, do not get fixated on sharing only your original thoughts. You can make valuable contributions sometimes more valuable contributions by building on what other people have said. o Don t give up too soon. Try to come up with an exhaustive list one that you really feel lists as many possible solutions as you can generate. If you find yourself stuck for ideas, one option is to go back over the solutions you already have, and look for ways to build on them. o Remember that all ideas are equally valid at this stage. If we are working in a group, we should remember the similar point that everyone s input is equally valuable and that all of our contributions belong to the group as a whole. o Do not sort the suggested solutions by how realistic you think they are, or by what you think of the person who offered them. All possible solutions should stand together as equals. It might seem like brainstorming is impractical, since it is likely to produce a lot of solutions that we will never seriously consider as options. However, surprising things can happen when we free ourselves from the restrictions that we usually place on our thinking. Even a solution that looks silly on the surface can contain important insights we may not use the solution in its current form, but it can give us original and inspired ideas about how to solve our conflict, ideas we would never have come up with if we had not arrived at the silly solution first. While brainstorming can give us many useful insights into our conflict and possible solutions, we should still remember that we can only very rarely solve our conflicts merely by thinking intensely and creatively about possible solutions. Even if we do it very well, brainstorming alone does not guarantee a resolution to our conflict. 94

96 We also need to do the difficult and often time-consuming work of learning about the more basic needs and concerns involved in the conflict, and we still need to focus on satisfying those rather than on achieving specific solutions we find particularly attractive. In addition, we must also talk extensively with the other party about possible concessions and commitments on both sides. Choosing a Solution Once we have set out an array of possible solutions to our conflict, we must choose among them. We can narrow our initial list simply by selecting those options that either side particularly likes. We can thus focus on the choices that are strongly favored by at least one party; there is no point in looking at solutions that don t really interest either side. However, it is unlikely that the outcomes which appeal to one party will be the very same outcomes that appeal to the other party. So we still need to find a way to choose among this narrower array of options. To do this, we need criteria we need some guidelines for deciding what counts as a good solution to our problem and both parties need to agree that these criteria are the ones we will use. We need to determine our criteria before we start evaluating our options, or else we are likely to end up creating more disagreements instead of solving the conflict that already exists. Similarly, we should aim for our criteria to be as objective as possible. We want to use criteria both parties can share, rather than each party using its subjective personal preferences to evaluate each option. For example, it might be helpful if we could appeal to shared ideas about what is right or fair during our discussion of possible solutions. 95

97 A response such as I don t think that solution is fair, for the following reasons... is certainly more useful to the negotiation process than a vague claim like I just don t feel good about that idea. When we defined our conflict earlier, one of our aims was to describe it as a specific goal that needed to be addressed. This gives us another good source of criteria. We should ask how well each solution on our narrowed list addresses that goal. We should also ask how satisfactory each solution will be to whoever must put it into practice. Each party will have various views here, and each side needs to be prepared to explain their preferences in terms that others can understand and accept. This is why it is so important that we determine some shared, objective criteria before we start looking at solutions. Obstacles to Successful Integrative Negotiation The integrative approach is a more attractive method than distributive bargaining in some ways. With its emphasis on openness and collaboration, it seems much less threatening and manipulative to many people. Win-win solutions are uplifting, too we often feel better about ourselves when we can resolve a conflict in a way that pleases all parties. Integrative negotiation has the additional benefit of seeming less likely to cross the line into unethical or unkind behavior, and thus probably fits better with the way we prefer to think of ourselves. Even though these positive things are true, there remain a number of reasons why it is often difficult to make integrative negotiation successful. First, there are relatively few negotiations that are or should be either wholly integrative or wholly distributive. As we mentioned at the beginning of this lesson, these methods are not mutually exclusive, and most negotiations contain some issues that are best handled with distributive bargaining and other issues which lend themselves to an integrative approach. 96

98 If people give precedence to the distributive elements of a negotiation, however, conflict and squabbling can destroy the trust and mutual understanding needed for successful integrative negotiation, as well as undermining the motivation to work on creating a shared good. Second, if there have been problems between the parties in the past then their history can make them wary of the integrative approach. Someone who feels he has previously been manipulated and mistreated by the other party is unlikely to be receptive to the suggestion that he share his innermost needs and goals with that person, or to believe that he can trust the other party to do the same. Finally, the most serious obstacle to integrative negotiation is the fact that many people are predisposed to view conflict as a competition and to mistrust the other party, as mentioned earlier. For these people, a good solution to a problem is one that satisfies their needs; whether it satisfies other people s needs is a matter of considerably less interest. This perspective may be a product of a person s culture, or it might simply be a feature of his personality. Whatever its source, it means that many negotiators do not readily see the potential for integrative agreement, and thus do not see integrative negotiation as a viable option. Lesson Summary This lesson introduced the student to the second main approach to negotiation: integrative negotiation. It described how integrative negotiation s collaborative orientation makes it unlike the competitive distributive bargaining approach, as well how the approaches divergent perspectives lead them to take widely different stances on negotiating tactics like information sharing and concessions. An integrative negotiator aims to capture maximum benefit or value for both parties; this goal is far removed from the distributive bargainer s objective of capturing as much benefit or value as she can for herself. 97

99 Because the approaches have these divergent aims, their methods are quite different as well. The first step in integrative negotiation is clarifying the problem: parties must work together to come up with a neutral, simple definition of their conflict that both sides can accept. Once they ve agreed about their conflict s subject matter, their next step is working to understand the motivations and concerns that lie behind each party s position. Before they can start crafting creative solutions, integrative negotiators must make sure they have a good grasp on why each party wants what she does; this information is essential to appreciating which alternatives can genuinely satisfy each party. In addition, having this information can help each party to understand why the other side s position is reasonable and valid. While they will probably still disagree, negotiation can proceed much more amicably if both parties see one another as people with legitimate concerns and needs. The last step in integrative negotiation is working creatively to solve our conflict. We can do this by rethinking our problem in various ways (for example, trying to expand the pie or looking for a tradeoff outside the conflict), or we can take the problem as given and try to brainstorm our way to a creative solution. Once we have an array of attractive solutions, we must decide among them using neutral, objective, predetermined criteria. Having come this far, we don t want our negotiation to fall apart simply because we can t agree on a fair way to choose a solution. Integrative negotiation is attractive in many ways: for example, it aims to be fair, it encourages both parties to understand and respect each other and it focuses on solutions that maximize benefit for everyone involved. Many people find this approach much more appealing than distributive bargaining s selective presentation of information and aggressive efforts to pressure the other party s bottom line. Even though it has some clear benefits, there are still obstacles to using integrative negotiation successfully. The greatest impediment is that many people approach 98

100 conflict from a competitive and mistrustful perspective, and this makes it difficult for them to see the integrative potential in a given problem. In addition, past problems between the two parties can make it very difficult to bring them together in a collaborative project that requires trust and honesty. Lastly, very few conflicts are wholly integrative or, for that matter, wholly deliberative; we need to know when to use each method. Otherwise, we risk stalling negotiations or intensifying a conflict by applying the wrong method to a particular issue. 99

101 Lesson 4: High-Pressure Tactics and Ethics in Negotiations Lesson Topics This lesson focuses on the following topics: Introduction Why High-Pressure Tactics and Unethical Conduct are Problematic High-Pressure Negotiation Tactics Responding to High-Pressure Tactics Ethical Considerations and Concerns 100

102 Lesson Learning Objectives By the end of this lesson, you should be able to: Summarize the purpose of high-pressure negotiating tactics, and give examples of both the tactics and strategies for managing the high-pressure negotiator. Apply an ethical standard in negotiations, and explain why unethical behavior is a potential problem in negotiation. Describe the motives one might have to engage in unethical conduct. Identify conditions conducive to unethical conduct. Effectively assess outcomes in determining courses of action used in managing unethical behavior. Introduction This lesson will help you to understand negotiation in the context of broader social and cultural ideas about what it means to treat people well and fairly. If one party leaves a negotiation feeling that he has been wronged even if he is mistaken this is likely to create further conflict. This kind of defective negotiation does not solve our initial disagreement in a mutually acceptable way; instead, it increases the problems we have to solve. Good negotiation aims at creating outcomes that both parties genuinely support and will carry out these are called stable outcomes. This means that good negotiators should avoid tactics that can be expected to make the other side feel angry, manipulated, or swindled. High-pressure negotiation strategies are one approach that tends to have this negative result. They generally rely on deception, intimidation, or escalation of the conflict. Some negotiation theorists prefer these hardball tactics, but they have many potential drawbacks, including driving the other party away from negotiation, damage to your reputation, and negative publicity. Reasons like these, in combination with the fact that these tactics rarely produce stable outcomes, suggest that we should be extremely careful with the high-pressure approach. 101

103 Unethical behavior can have similar effects. When two parties are competing for a benefit or value, sometimes they are more concerned with winning the competition than with treating each other appropriately. Negotiators must remember that they have ethical standards guiding their interactions. Sometimes these are clearly laid out, like a professional code of ethics, but more often each negotiator must rely on her internal ideas about what is right and wrong to guide her behavior. Even a professional code of ethics does not tell us precisely what to do in every situation. Upon completion of this lesson you will know why a stable outcome is important to a successful negotiation process. You will be able to identify the basic characteristics of common high-pressure negotiation tactics, as well as some of their common pitfalls. In addition, you will be able to describe strategies for dealing constructively with the other party when they use hardball tactics against you. You will recognize the basic motives for unethical behavior, and how they tend to push people to behave in unacceptable ways. You will be able to distinguish the basic criteria for picking out a good solution, and be able to separate ethical criteria from other considerations. Lastly, you will be able to apply a simple method for determining whether an outcome meets your ethical standards. Why High-Pressure Tactics and Unethical Conduct are Problematic When we negotiate, the goal is a mutually acceptable solution. There are many ways to get to a solution that both parties say they accept; for example, a distributive negotiator can use high-pressure tactics to intimidate the other party into agreeing to a deal he would not have accepted in a less hostile bargaining process. This solution is technically mutually acceptable, since both parties agreed to it. However, the person who felt pressured and intimidated is likely to resent the solution and the way it was achieved once he is away from the negotiation process and has time to reflect on it. 102

104 Effective negotiation is not about tricking people into agreeing to things they don t really want. When we do this, we may feel clever, and pleased that we have achieved our own objectives. Nonetheless, if it leads directly to further conflict then our negotiation has not actually been successful. Someone who feels he was treated unfairly may seek revenge, or he may refuse to honor the negotiated deal. In both cases, we have not truly resolved our conflict because we are still importantly at odds with the other party. We want solutions that both parties genuinely accept outcomes in which both parties honor the negotiated deal, and which do not immediately generate further conflict. This is the only way to achieve a stable outcome from negotiation. This does not mean that we cannot ever pressure people, or that we must always relinquish our ideal objectives. However, it does mean that we must be wary of negotiation tactics that are likely to leave the other party feeling that he has been tricked or manipulated. In addition, most of our personal, community, and business relationships depend on our maintaining certain ethical standards that is, they require us to live up to certain benchmarks of right and wrong conduct. We cannot simply abandon those standards when we encounter someone whose goals are in conflict with ours. Just as most of us recognize that killing the other party is not generally an acceptable way to resolve a clash between goals, we should recognize that negotiators are bound by other widely-accepted rules about appropriate behavior. When we violate these rules, we risk the same problem: unstable negotiation outcomes. However, we also risk our reputation as ethical people, and we sometimes risk criminal prosecution. For all of these reasons, ethics should be an important consideration throughout any negotiation process. 103

105 High-Pressure Negotiation Tactics The approaches discussed in this section are not strictly unethical or illegal that is, they do not involve violations of well-understood ethical rules, or laws. However, these strategies are focused on pressuring the other party to accept a solution he would normally reject. As a result, these approaches are not likely to generate a stable outcome. Instead, they can generally be expected to leave the other party angry and motivated to create further conflict. Even if the person using the highpressure tactics can argue that technically he has done nothing wrong, the other party may still feel he has been wronged. Some negotiation theorists focus on these tactics, painting negotiation as a kind of wrestling match a process of dominating and manipulating the other party. This approach is sometimes presented as the standard in distributive bargaining. It is true that these tactics only have a place in distributive bargaining (since they are fundamentally competitive). Still, we might reasonably wonder whether even a distributive bargainer should use them since doing so means undertaking the risk of harming his reputation, the possibility of negative publicity, and dealing with the other party s anger and possible revenge. In addition, these tactics can backfire badly. Instead of pressuring the other party into agreement they can leave the negotiator worse off than he was before. Because they can go wrong in many ways, we should be clear that these tactics are presented here as cautionary examples: they are strategies that any negotiator would do well to avoid. In addition, even if we reject high-pressure strategies, the people we negotiate with may not, so we need to know about these strategies if we are to be properly prepared for negotiation. 104

106 Deception Blatantly lying to the other party about issues central to the negotiation is generally recognized as unethical and is often illegal. However, deception can be used as a high-pressure negotiation tactic without explicitly lying to the other party about critical information. For example, I might open a negotiation with an absurdly high or low figure (sometimes called a highball or lowball offer), in the hopes of pressuring the other party to re-evaluate his own position. If I am considering buying your house, for example, I might initially offer you a price considerably below what you are asking. This could make you abandon negotiation with me, and so it is a risky strategy if I actually want your house. Even if you continue negotiation, though, I am likely to have a difficult time justifying my very low offer. This strategy is only likely to work on an unprepared seller who does not understand the value of her home. I can also use deception to pretend that one issue in my bargaining mix is much more important to me than it really is. My goal here is to persuade you that this is so, and then offer you this item as a tradeoff later in negotiation it becomes a kind of false concession since I am actually not conceding anything I care about. However, if you know the truth of my position, or want an explanation for why this item matters so much to me, I had better be prepared to do some fast and convincing talking. Intimidation All of the methods people use to intimidate each other in daily life can be used in negotiation, so a negotiator can do a lot to intimidate the other party. For example, she can bring a large team with her, she can use aggressive body language when she presents her position, she can criticize the other party s appearance, or she can demean the other party s preparation and knowledge. 105

107 Making the other party angry or afraid or both increases his stress level and can make him feel less sure of himself and her position. This stress and uncertainty can lead to making more concessions than he had anticipated, defending his position more weakly and generally being much more accommodating to the other party than he had originally intended to be. Another common intimidation strategy is for a two-person negotiation team to play good cop/bad cop with the other party. In this approach, one person presents himself as tough, demanding, and basically unpleasant, while the other member of the team tries to seem reasonable and accommodating. The goal here is to get the other party to think the reasonable person is on her side, even though he is really just acting as foil for the unpleasant person. Often the unpleasant person leaves the negotiation at some point, which is when the reasonable person tries to influence the other party s goals, and tries to pressure her into making a quick deal before the unpleasant person gets back. Intimidation can work in negotiation because most people are at least somewhat vulnerable to being intimidated. However, many overt intimidation strategies are seen as unkind and unfair. In addition, it is generally not difficult for the other party to see what you are trying to do. The more subtle strategies like good cop/bad cop, or the use of body language that differs from your normal behavior often require that the other party be fairly gullible, that negotiators be good actors, and that negotiators prepare their roles extensively beforehand. Escalation Escalation strategies try to intensify or prolong the conflict. This is not generally the negotiator s true goal, but he hopes that the threat of a worse or longer conflict will pressure the other party to agree to his current offer. Bluffing like this can be dangerous; if the other party doesn t relent, you must be prepared and willing to follow through on your threat. 106

108 For example, let s say I want a raise. I feel that if I simply ask for one, I will see no real results. So instead, I tell my manager that I want a raise or else I will quit. This intensifies the conflict: before, it was simply a matter of getting more money now it is matter of keeping my job. If my manager does not agree to my request, I had better be ready to quit. If I get no raise but don t follow through on my threat, then my future statements about what I am willing to do to achieve my goals (particularly any future threats to leave) are unlikely to be taken seriously. Additionally, I should expect that my manager will not take kindly to what is clearly an attempt to pressure her into doing my bidding. People do not generally react well when others try to pressure them into making a certain choice, even if they might have willingly made that choice on their own. It might have been that my manager would have given me a raise, but is now unwilling to do so because she does not want to give other workers the impression that this is the right way to deal with her. All escalation strategies carry a similar risk. Responding to High-Pressure Tactics When we encounter high-pressure tactics, we have three basic options for how to react: 1. We can respond with similar high-pressure tactics of our own. 2. We can ignore the other party s attempt to pressure us. 3. We can openly discuss the tactics the other party is using. Responding in Kind One way to react to a high-pressure negotiator is by using hardball tactics of our own. This is probably the least effective way of dealing with high-pressure negotiators, since it carries all the same risks of any use of hardball tactics. However, it is a common response because high-pressure tactics tend to make people feel cornered and defensive. 107

109 If they do not either leave the negotiation or give in to the other party s pressure, people who are on the receiving end of high-pressure strategies frequently lash out at the other party with behavior similar to his own. We should be very careful with this way of reacting. Not only is it inherently risky, but it is also necessary that a high-pressure negotiator be well-prepared. If we are pushed into using hardball tactics especially if we had not anticipated that the negotiation would have this tone we are unlikely to be fully ready to use them. Nonetheless, this response can work. It can show the other party that you are equally capable of pressuring him, and cause him to reevaluate how he will treat you. Ignoring the High-Pressure Tactics Another possibility is to simply ignore the other party s efforts to pressure you. This requires a good understanding of your own reactions, and some ability to control them. For example, you may find it difficult not to be insulted when the other party criticizes your understanding of the conflict. To stay calm and defeat his efforts to intimidate you, you need to stay positive and stay focused on the real subject matter of the negotiation. Ignoring high-pressure tactics effectively takes some skill and often requires a great deal of self-control. The point is not simply to grit one s teeth and endure the other party s aggressive behavior. Instead, one needs to react in ways that tell the other party he is wasting his time by using this approach, and that it will not get him what he wants. For example, one can respond to threats by changing the subject, or shifting the discussion back to more central issues that involve the other party. Similarly, the party who is feeling pressured could ask for a time-out, and use it to collect herself and plan a new direction for negotiation. 108

110 We should remember that ignoring these tactics is much different from giving in to them. Weakness lies in allowing the other party to pressure you not in refusing to be drawn into his strategies. People sometimes think that ignoring hardball tactics is a feeble response, but this is not so. When you will not play his game, you can remain calm while the other party wears himself out trying to bend you to his will. Likewise, it is not the case that responding in kind is a stronger response than ignoring hardball tactics. If you respond in kind, you will have to invest just as much energy in these power games as the other party does, energy that could probably be better used elsewhere. Discussing the High-Pressure Tactics Rather than simply ignoring the other party s attempts to pressure us or reacting with our own hardball strategies, we might try taking a step back from what is happening and openly discussing the process itself. For example, to a negotiator who has just made a low-ball offer, we might say: You know, that offer is a lot lower than I was expecting. Would you tell me why your offer is so low? or I get the sense that your low offer is an attempt to get me to lower my asking price. Is that true? When we bring the tactics out into the open we should avoid attributing bad intentions to the other party. Discussing tactics is not a chance to launch a character attack on the other party, no matter how much we might think he deserves it. The goal here is to talk about the methods being used and how we would like to change them; this should be our focus. Therefore we should not open our discussion with a statement like Why are you trying to lowball me? This will make the other party defensive and does not facilitate open discussion of the negotiation methods being used. Instead it is more likely to prompt the other party to deny that he is doing anything wrong. 109

111 Openly discussing the other party s attempts to pressure you can be an extremely effective strategy. It shows him that you know what he is doing and pulls the plug on his high-pressure tactics, just like responding in kind does. However, it does not require you to invest energy in playing risky power games nor does it require that you concede anything to the other party so this response also has all the advantages of ignoring the other party. In addition, it has the added benefit of allowing us to move to a more general level in the negotiation and speak openly about what tactics we will and will not accept during the process. Ethical Considerations and Concerns This discussion of ethics does not aim to tell negotiators what they should and should not do. That is something each negotiator must work out for him- or herself, and what counts as the right course of action often depends on particular features of a negotiation. Most negotiators have already developed standards of right and wrong, and this lesson does not aim to change those. Instead, the point is to provide negotiators with some tools for thinking about the ethical challenges they may face. We do not have to agree about exactly what actions are right to talk meaningfully about the role ethics plays in negotiation. As long as you agree that some actions are right while others are wrong, then there is some standard by which you make moral judgments. It is true, however, that we do not all value ethical behavior to the same degree, and this can cause us to react very differently to ethical considerations in negotiation. For some people, doing the right thing is critically important. Other people like to do the right thing, but not if it is too inconvenient or costly. We must each make our own decisions about how much morality matters to us, and we should remember that the other party may place a different value on a moral outcome than we do. 110

112 Even though we may have different ethical standards, there are still many behaviors that most of us would agree have no place in reasonable, fair negotiation. Outright lying is one action we discussed earlier that is generally recognized as morally unacceptable in negotiation, especially among integrative negotiators. Other behaviors most negotiators see as unethical and thus as out of place in any negotiation are: Racism, sexism, and other language or conduct directed solely at demeaning the other party (or the group of which he is a part). Harmful or cruel treatment of the other party. Taking bribes or kickbacks for accepting an outcome that affects people other than yourself (this is ethically problematic because you receive a benefit that is not shared with the other people affected by the solution). Illegal or directly coercive threats (for example, it might be all right for me to threaten to quit my job unless I get a raise, but it is not all right for me to threaten to kidnap your child if you don t give me a raise). Acts or threats of violence. Most of us would agree that these behaviors have no place in negotiation. Yet a fair number of people still engage in this sort of conduct, especially the tamer sorts like lying and demeaning the other party. Why? Motives for Unethical Conduct In negotiation, there are four major motives for unethical behavior: 1. The desire for gain 2. Competition for scarce resources 3. Perceived injustice 4. The belief that unethical behavior will not have negative consequence. 111

113 Pursuit of Gain Negotiation is about dividing up a contested benefit or value. Sometimes this value is monetary; in other cases, the benefit is less tangible. In all cases, though, the parties are looking to maximize their own gain sometimes in combination with maximizing the other party s gain, sometime not. Our desire for gain underwrites most negotiation; after all, if we did not want to gain something for ourselves, we would simply have yielded and walked away from the conflict. It is not the case that the desire to maximize one s benefit is unethical in itself. It becomes unethical when we do not place limits on what we are willing to do to obtain benefit, or when we are unwilling to impose limits on the amount of benefit to which we think we are entitled. Since we know this motive can push people to act unethically, we should be especially alert for unethical behavior when acting in this way would greatly increase one or both parties gain. Competing for Scarce Resources Many conflicts arise from competing for resources. In cases where only one negotiator can win like the pie-division example we discussed earlier, or when two people are nominated for the same award resources are limited, and scarcity of resources tends to make them seem more valuable. When competing for valuable and limited resources, the desire to get those resources for oneself (or to keep the other party from having them) can motivate unethical behavior. This is a different issue than mere pursuit of gain, because not all pursuit of gain occurs in a competitive context. I can do unethical things to maximize my own gain like counterfeiting money, for example that do not directly affect the other parties involved in the conflict. Unethical behavior in competitive contexts, on the other hand, focuses on outdoing the other competitors. 112

114 Perceived Injustice The pursuit of justice and fairness is itself a good thing; it s something most of us recognize as an ethical goal. It can become problematic, though, when one party believes she has been tricked, swindled, or humiliated by the other side. Her desire for revenge or retribution can motivate her to do unethical things in an effort to recover what she believes is rightfully hers. A negotiator may perceive injustice or unfairness arising from various aspects of a negotiation: its outcome, the negotiating methods, or the rules and context of the negotiation itself. Self-serving conceptions of fairness and justice compound the problem here. It is bad enough when genuine injustice leads people to behave unethically. However, when we feel we are losing a negotiation it is easy to develop highly self-serving ideas about what is fair or just. When we focus too narrowly on our own goals, we are easily led to think an outcome is fair or proper for us which we would surely see as unreasonable if the other party demanded it. Similarly, we are often inclined to describe as unfair outcomes that do not give us the amount of benefit or value we had hoped to get, simply because they do not meet our expectations. We should remember that an unfair or unjust outcome is one in which people do not get that to which they are rightly entitled not one in which people simply don t get what they want. Belief that Unethical Behavior Will Not Have Negative Consequences Parties in a negotiation are more likely to behave unethically if they believe that sort of behavior will not be detected, or will not be punished if it is detected. Some people think it is important to do the right thing regardless of the consequences, and get their motive to be ethical from inside themselves. However, others primary motivation to be ethical is external, and comes from the threat of the bad consequences that often follow from unethical actions. 113

115 We often like to think we are the first sort of person, but the truth is that many of us are the second sort, at least at times. Because this is true, we will frequently see unethical behavior in negotiation situations that lack structures to ensure negative consequences for unethical behavior. These structures can be as simple as both sides stating their commitment to an ethical outcome, or as complex as an ethics review committee appointed to evaluate the outcome independently. The point is that there must be some element of the negotiations process that can act as an external motivation for those people who lack internal motivations to be ethical. Conditions that Conduce to Unethical Behavior The previous discussion should help us see that certain contexts, and certain kinds of conflicts, are especially prone to result in unethical behavior. In addition to watching out for the influence of these motives, we want to be wary of negotiations in which: Parties are unfamiliar with each other s behavior in past negotiations. One party has considerably more information about the conflict than the other party. It is difficult for one party to determine whether the other is behaving unethically, either because this information is not easily obtained or because there are insufficient resources (time, money, etc.) to obtain it. It is difficult to punish or expose unethical behavior. Finally, it is easy to forget that we should be watching ourselves for unethical behavior, too. We should hold ourselves accountable to the same ethical standards that we use to evaluate the other party. In addition, we should not let the preceding discussion mislead us into thinking that we only need to worry about ethics occasionally. Ethical issues are at work in every negotiation, and if we care about treating other people appropriately we must be aware of them. 114

116 If we decide, for whatever reason, to do something unethical, then we should be honest with ourselves about the fact that we are behaving immorally. It is much more comfortable to invent a story for ourselves about why this action is actually acceptable in this particular situation. Generally, though, these stories are just rationalizations and at some level we know that we have acted wrongly. If we are not honest with ourselves about what we are doing, it is easy to get into the habit of selfdeception about our conduct. We do not want to end up lying to ourselves on a regular basis about whether we have treated our negotiating partners and the other people in our lives in a fair and just way. Determining the Right Course of Action Basic Considerations for Assessing Outcomes We now have a better sense of the motives and negotiation contexts that can be ethically problematic. However, knowing about things we shouldn t do does not tell us much about how to figure out what we should do. When we are deciding how to deal with a conflict between two parties goals, various considerations can help us to determine what it would mean to handle that conflict well: Practical considerations Prudential considerations Ethical considerations All of these have some place in deciding how we should deal with other negotiators, but they are not all equally important and individuals often value them in different ways. Practical judgments rely on standards like simplest, cheapest, and quickest. They are straightforward assessments of outcomes, and by themselves they don t tell us anything about what we should do in a situation. 115

117 For example, the fact that a solution is the cheapest one is only important if we care about cost; unless we have a pre-existing interest in a specific practical consideration, it doesn t give us any reason to do anything. Practical conclusions are also relative to specific situations; the course of action which is the cheapest solution in one negotiation can be quite a costly solution in another context. Prudence is a matter of looking after one s own interests, and thus prudential considerations are claims about what is best (or worst) for a particular person, group, or organization. These claims are relative to the individual: the solution that best serves my company s interests might be rather bad for your company s interests. Since most people are concerned to see their interests protected and their goals realized, it is usually understood that one should follow a prudent course of action unless there are other reasons against it (for example, the course of action that best serves my interests might also be prohibitively expensive). Prudential considerations are thus generally taken to give us some important information about what we should do. Ethical judgments rely on a standard of right and wrong that is not relative to the individual or the particular situation. In this way, ethical criteria are broader than either practical or prudential criteria. If I say that a course of action is morally wrong, I usually mean more than just that it would be wrong for me to do that or that it would be wrong in only this case. Instead, I generally mean that it would be wrong for anyone in a similar situation to act that way. Ethical judgments are also thought to be a significant source of information about what we should do. In general, the fact that you know an act is wrong is understood to be a reason against pursuing that course of action, just as knowing an act is right is thought to be a reason for doing that act. 116

118 Notice that practical and prudential criteria do not tell us anything about right and wrong. The fact that a solution is the quickest tells me nothing about whether it would be a morally good thing to do. Likewise the fact that a solution is the one that best serves my interests tells me nothing about whether it is ethically right for me to do that thing. For example, let s say I need money right now. The fastest and easiest thing for me to do might be to take your money. Because stealing the money is a convenient and easy way to get the money I need, I feel it is the solution that I believe best serves my interests. All of this can be true and yet it is still not morally right for me to steal your money. Practical and prudential criteria can show us that one morally good option is better than another, but they cannot make an unethical course of action morally right. The example helps us to see that these criteria do not always line up neatly. For example, it may be that the cheapest and most beneficial solution is also one I believe to be morally wrong. If it is important to me that I do the morally right thing, then in this case I will have to choose a solution that does not do as well under the other two criteria. In addition, people frequently confuse what is prudent (or efficient ) with what is right and thus sometimes believe that negotiation outcomes that serve their interests are the same as outcomes which are morally right. Testing Possible Outcomes against Our Own Ethical Standard As mentioned at the beginning of this lesson, most negotiators already have established standards of right and wrong. When we are negotiating, our main ethical task is determining whether our acts are ones we genuinely believe to be right. All we are trying to do here is to make certain that our acts line up with our beliefs we are making sure that we are behaving according to the standards we claim to support. This is not the same as proving that our acts are right. However, if we undertake this simpler task, we will be doing a lot more than many people do. 117

119 Thinking about these standards before we act will also spare us many regrets and the anguished conscience that often comes with doing an act one knows to be wrong. The easiest way to figure out whether our actions are measuring up to our ethical standards is to ask ourselves some questions that examine the act from a broader perspective: Would I feel comfortable talking openly about this action? Do I feel I could defend it to my coworkers, to my child, to the press? If I find that I don t want other people to know about what I m doing, this should warn me that it may be at odds with my ethical beliefs. Would I want someone to do this to a person I care about? If I think it would be wrong to treat those close to me this way, it s probably wrong to treat most other people that way, too. Would there be bad consequences if everyone acted this way? If there would be bad consequences, then I am probably making a special exception of myself by acting this way, for no reason other than that I want to achieve my goals. If I go ahead with this action, I am effectively saying that the moral rules that apply to everyone else do not apply to me. The people on the receiving end of my actions may quite reasonably ask why that should be the case. Our answers here help to reveal our true moral evaluation of an act, which can be different from the way we see the act in the context of our conflict. If our proposed outcome does not pass these tests, we can be fairly certain that it s an act that is wrong according to our ethical standard. If it is important to us to do the right thing, then we need to make this information known in the negotiation somehow. Depending on the negotiation we might express our ethical judgment simply by rejecting the proposed outcome, or we might prefer discussing our concerns more openly. 118

120 If we think our actions and proposed solutions are morally right, we will have a much easier time justifying and explaining them to the other party because we can appeal to ethics as a more general and neutral criterion. Notice, too, that you can use these questions to help explain yourself when you feel someone is treating you unethically in a negotiation. The questions can readily be turned around and put to the other party, and may well help him see at the very least why you are rejecting a particular outcome, or why you object to his behavior. At best, they may encourage him to reconsider his position and strategy entirely. Dealing with Unethical Conduct Dealing with unethical conduct from the other party is a complex process, much of which depends upon particular features of our negotiation. However, we can say some general things about our possible options for managing it. When we are confronted with someone else s unethical behavior in negotiation, we have the same options as we had for dealing with high-pressure tactics: we can respond with unethical behavior of our own, we can discuss the unethical behavior openly, or we can ignore the unethical behavior. Responding in kind is risky, just as it was with high-pressure tactics. It carries additional risks because unethical behavior can do more harm than hardball tactics, both to the person who acts and the person who is acted upon. For example, it is one thing to be known as a fierce high-pressure negotiator, but it is something else entirely to have a reputation as a liar and a cheat. Similarly, some of the harms caused by unethical conduct (like racial discrimination, or genuine coercion) are also illegal, and the person who acts in these ways faces the possibility of criminal prosecution. In addition, if we genuinely care about behaving ethically then responding in kind is not a real option for us no matter how the other party provokes us. 119

121 Open discussion of the perceived problem can be very helpful, though we must be tactful here since most people react badly to accusations of unethical conduct. If we can get the other party to acknowledge that he is acting improperly, we may be able to work out a solution on our own. When the other party will not admit that he is doing anything wrong and either his actions or the proposed outcome are likely to have serious repercussions, we should probably look for help from someone outside the negotiation. Ignoring another negotiator s unethical behavior can be very difficult, and it is often not a good strategy. We cannot disregard someone physically threatening us, for example, in the same way we can disregard his lowball offer; there is much more at stake. In addition, we may feel that ignoring the other party s unethical behavior amounts to doing something morally wrong ourselves. For example, imagine that we are a hazardous waste processor, and a factory negotiating with us says that they will pour their waste in a landfill rather than pay our rates. Presuming they are serious and not just trying to pressure us into dropping our rates, many people would feel that it was morally wrong to simply let the factory do as it wishes and ignore the fact that their proposed solution can harm our entire community. Ethics and State Law Texas Deceptive Trade Practices Act: A State Law with Side Effects An interesting state law has been the Texas Deceptive Trade Practices Act; it is a strong consumer protection act. 120

122 To sustain an action under the DTPA, a plaintiff must establish the following elements: The plaintiff is a consumer. The defendant can be sued under the DTPA. The defendant committed an act that is actionable under the DTPA. The defendant s actions were a producing cause of damage. The DTPA defines a consumer as an individual, partnership, corporation who seeks or acquires by purchase or lease, any goods or services. Obviously, this definition is quite broad and this is no accident. Notably, the DTPA gives consumer status to businesses, in addition to individuals. This issue has been of most concern to small businesses. The main requirement is that the entity must have made a misrepresentation to a consumer. False, misleading, or deceptive acts or practice were actionable. These acts are specifically enumerated under Section of the Texas Property Code and are affectionately known as the Laundry List. The list includes 27 separate acts, so we are not going to list them here. However, the most commonly pursued claims involved the following: Representations that goods possess characteristics that they do not possess Representations that goods are of a certain quality that they are not Representations that goods are new when they are used Failure to disclose information concerning goods or services that was known at the time of the transaction if such failure to disclose was intended to induce the consumer into a transaction into which the consumer would not have entered into had the information been disclosed 121

123 It is important to note more things about this list. First, unlike the other causes, a laundry list violation requires that consumers rely on the wrongful act to their detriment. Second, the standard for acceptable reliance is quite low. An act is actionable if it has the capacity to deceive an unthinking, or credulous person. For many years, brokers and agents were faced with a difficult decision when threatened with a DTPA law suit. The risks if they lost in court were huge. Sometimes if they could settle for a decent amount, they were willing to do that to avoid the risk even though they felt they had done nothing wrong. It opened the door to many bogus claims from people just hoping for a settlement. From the time the act was adopted, service providers were exempted. However, the courts never exempted real estate service. Thanks to the efforts of the Texas Association of REALTORS, the 2011 Texas Legislature added a specific exemption for Real Estate Brokerage to the Act. (Deceptive Trade Practices-Consumer Protection Act, as amended, Section et seq., Business & Commerce Code.) This means that unless a Texas licensee commits an unconscionable act, misrepresents a material fact about the property, or fails to disclose something with the intent of inducing a consumer into a transaction, they can no longer be liable under DTPA. This was a tremendous win for the real estate industry in Texas. Be certain you are well informed about the disclosure laws in your state. The time to understand is before you are being sued, not after. Since the Texas Real Estate License Act already required full disclosure of any material facts about the property, day-to-day activities of licensees did not change. Protection from bogus claims changed considerably. 122

124 Is Your Advertising Legal? Be sure that all of your advertising complies with your state laws and with the Code of Ethics. Good business practices demand that you always disclose your professional status and the company/broker you work with. Never misrepresent the property in advertising. Never promise anything you cannot deliver, and if there are conditions on anything you are offering, be sure to include the conditions. Let s review what the Rules of the Texas Real Estate Commission say about advertising. TREC Rules Texas Administrative Code. Texas Real Estate Commission. &ch=535 (a) For the purposes of this section, an advertisement is a written or oral statement or communication by or on behalf of a license holder which induces or attempts to induce a member of the public to use the services of the license holder or service provider. The term advertisement includes, but is not limited to, all publications, radio or television broadcasts, all electronic media including , text messages, social networking websites, and the Internet, business stationery, business cards, signs and billboards. The provisions of this section apply to all advertisements by or on behalf of a license holder unless the context of a particular provision indicates that it is intended to apply to a specific form of advertisement. (b) The following information is not considered an advertisement or advertising: (1) a communication from a license holder to a member of the public after the member of the public agreed for the license holder to provide services, provided the first communication from the license holder contains the information required by this section; or 123

125 (2) real estate information, including listings, available to the public on a license holder s website, extranet or similar site that is behind a firewall or similar filtering software which requires a password or registration to access that information. (c) An advertisement must clearly and conspicuously contain the name of the broker, either a business entity or an individual. For purposes of this section, the broker, or a salesperson sponsored by the broker, may use the broker s assumed name instead of the name in which the broker is licensed, if the assumed name is registered with the commission under subsection (e) of this section. An advertisement may not contain an assumed name unless a broker has registered that assumed name with the commission. If the broker s name or its assumed name includes a salesperson s name, the advertisement must include another assumed name of the broker that does not include a salesperson s name, or the designated agent s name. (d) For purposes of this section and (b)(23) of the Act, deceptive or misleading advertising includes, but is not limited to, the following: (1) advertising that is inaccurate in any material fact or in any way misrepresents any property, terms, values, services, or policies; (2) advertising a property that is subject to an exclusive listing agreement without the permission of the listing broker and without disclosing the name of the listing broker unless the listing broker has expressly agreed to waive disclosure; (3) failing to remove an advertisement about a listed property within a reasonable time after closing or termination of a listing agreement, unless the status is included in the advertisement; (4) an advertisement by a salesperson which identifies the salesperson as a broker; or 124

126 (5) advertising a property in a manner that creates a reasonable likelihood of confusion regarding the permitted use of the property. (e) A broker, individually or as the designated officer, manager or partner of a business entity licensed as a broker shall notify the commission in writing within 30 days after the broker, or a salesperson sponsored by the broker, starts or stops using an assumed name in business other than the name in which the person is licensed. (f) An advertisement placed by a license holder must include a designation such as agent, broker or a trade association name that serves clearly to identify the advertiser as a real estate agent. (g) A broker or salesperson may not place an advertisement that in any way: (1) implies that a salesperson is the person responsible for the operation of a real estate brokerage business; or (2) causes a member of the public to believe that a person not authorized to conduct real estate brokerage is personally engaged in real estate brokerage. (h) Except as provided by subsections (c) and (g) of this section, a business entity licensed as a real estate broker may do business in the name in which it was chartered or registered by the Office of the Secretary of State. (i) A license holder may not utilize a copyrighted trade name unless the license holder has legal authority to use the name. 125

127 (j) A real estate license holder placing an advertisement on the Internet, electronic bulletin board or the like must include on each page on which the license holder s advertisement appears any information required by this section and (b)(23) of the Act. For purposes of this subsection, page means each HTML document of a website, which may include several screens of information that are viewed by scrolling down to the end of the document. (k) A real estate license holder placing an advertisement by using an electronic communication, including but not limited to and discussion groups, text messages, and social networking websites must include in the communication and in any attachment which is an advertisement, the information required by this section and (b)(23) of the Act. For purposes of advertising on social networking websites that limit the number of characters in a communication and the required information would consume more than 10% of the available character limit, a license holder may include a direct hyperlink containing the words TREC DISCLOSURE which links to the information required by this section and (b)(23) of the Act. (l) An advertisement placed where it is likely to attract the attention of passing motorists or pedestrians must contain language that clearly and conspicuously identifies the person publishing the advertisement as a real estate broker or agent. This subsection does not apply to signs placed on or providing directions to real property listed for sale, rental or lease with the broker who has placed the sign, provided the signs otherwise comply with this section and the Act. (m) An advertisement containing an offer to rebate a portion of a license holder s commission must disclose that payment of the rebate is subject to the consent of the party the license holder represents in the transaction. 126

128 If payment of the rebate is contingent upon a party s use of a selected service provider, the advertisement also must contain a disclosure that payment of the rebate is subject to restrictions. (n) If an advertisement offers, recommends or promotes the use of services of a real estate service provider other than the license holder and the license holder expects to receive compensation if a party uses those services, the advertisement must contain a disclosure that the license holder may receive compensation from the service provider. (o) A license holder may not advertise information regarding service providers that ranks such providers unless the ranking is based on disclosed objective criteria. (p) A license holder may not advertise that such license holder offers, sponsors, or conducts commission approved courses in conjunction with an approved school or other approved organization unless the license holder is approved by the commission to offer such courses. (Source: &ch=535) Safe Harbor Policy TREC has adopted a safe harbor policy for staff and enforcement to use in directing license holders as to what might be considered clear and conspicuous in advertising. On a sign or other advertising media, the broker s name or assumed name must be at least 50 percent of the size of the largest item of contact information. 127

129 Lesson Summary Hardball negotiation tactics and unethical behavior generally undermine negotiations. Both approaches tend to anger the person who receives this treatment, and he often leaves the negotiation feeling that he has been manipulated or outright cheated. Someone who feels this way is very likely to seek revenge, and may try to break off whatever agreement emerged from the negotiation. With results like these, the negotiation can hardly be considered a success. It is not surprising that those subjected to high-pressure negotiating tactics often feel this way. Deception, intimidation, and threats of escalation all generally elicit negative responses in the broader social and business worlds, and we should not expect that things will be any different in the context of negotiation. In addition, this approach to negotiation is fraught with risk, since hardball tactics leave us open to bad publicity, damaged reputations, and dealing with the other party s angry responses. Further, this approach often takes a great deal of time and energy, all of which might be spent more productively elsewhere. Even though most high-pressure tactics are not overtly unethical, there are still many reasons to think they are not a good strategic choice. Even if we see the drawbacks of high-pressure tactics, the other party may not. In these situations we need to have strategies ready that will allow us to engage his hardball tactics constructively. There are three basic options open to us here: ignoring his behavior, openly discussing his behavior, or responding in kind. The character of our particular conflict and negotiation will often determine which approach we choose. However, we should always remember that responding in kind exposes us to all the same risks that we would face by opening our negotiation with high-pressure tactics. 128

130 Unethical behavior is similarly likely to produce unstable negotiation outcomes. It more often leads to the other party pursuing revenge or redress, since he can appeal to broadly shared ideas about what is right to show that he has been mistreated. Some people will accept being outwitted by a crafty high-pressure negotiator, but relatively few people will simply give in when someone is lying to them, coercing them, or defrauding them. Unethical negotiators also face all the same risks described above, and sometimes the possibility of criminal prosecution as well. Even though unethical behavior is clearly quite risky, people frequently behave this way. There are four major motives for unethical behavior: the desire for gain, competition for scarce resources, perceived injustice, and the belief that unethical behavior will not have bad consequences. We must be especially watchful of both parties conduct when these motives are in play. In addition, we should be on the lookout for unethical acts in negotiations where people are unequally informed about each other or the conflict itself, and in which it is difficult to detect or punish unethical behavior. Beyond just watching out for unethical acts, we also need a sense of how to figure out when we re acting ethically. Toward this end, we need to be familiar with the three basic types of criteria used to evaluate outcomes: practical, prudential, and ethical. We should also understand how they interrelate, and be particularly aware that practical and prudential criteria tell us nothing about right and wrong. Only ethical criteria can give us that kind of information. 129

131 Lastly, we want to be sure that our actions are in line with the ethical standards we claim to support. One simple way to do this is to ask ourselves a few questions that can help us to see how our proposed action or outcome looks from a broader perspective. If doing the right thing is important to us, we want to be sure we carry that concern into negotiation, and that we accept only outcomes that satisfy our moral principles. 130

132 Lesson 5: Common Problems in Negotiations and Real World Practice Lesson Topics This lesson focuses on the following topics: Introduction Central Issues of the Negotiation Process Evaluating Other Parties and Their Positions Evaluating the Basic Character of Our Conflict Evaluating Offers and Counteroffers Evaluating the Final Outcome Insight and Field Applications of Negotiation Concepts 131