BUS403: Negotiations and Conflict Management (2016.A.01)

What are the Most Important Elements?

There are two general approaches to negotiation: distributive and integrative. When engaged in distributive negotiation, you should focus on getting your opponent to agree to your specific target point or get as close to it as possible. In contrast, integrative negotiation operates under the assumption that at least one settlement is possible that can create a win-win solution. The former's strategies are win-lose (competing, forcing, and manipulating), while the latter's are win-win (collaboration, compromising, and BATNA).

In general, integrative negotiation is preferable to distributive because integrative builds long-term relationships and facilitates working together in the future. It allows each negotiator to leave the bargaining table feeling they have achieved a victory. Distributive negotiation, on the other hand, leaves one party a loser.

Where Does This Happen in My Life?

I use distributive bargaining when I go shopping. For example, say I like a handbag that costs $150. I do not want to pay this much for a bag since I am a student. Because of this, I will try to negotiate with the seller for a lower price. If I can buy it cheaper, every dollar beneath the original price that I can get the seller to agree to is a savings, but for the seller, that money is lost income. Thus, distributive negotiation means that we are bargaining over who gets what share of a fixed pie. I prefer not to use this kind of negotiation in most cases.

Now, let's take a look at integrative negotiation. In my country, July is in the middle of the tourist season. Once, while I was working at a hotel, a client came to me. He said that he found information about my hotel from a hotel review site, and reviewers there liked our hotel a lot. He wanted to bring a tour group to stay at our hotel but said our rates were too high.

To negotiate, we discussed the situation:

"When your guests will come?"

"They will come at the beginning of July and stay for two weeks. I will be bringing more groups to stay here each year, assuming this goes well. Because I will be a returning customer, do you think that you can give me a discount?"

During the dialogue, I realized that they really wanted to stay at our hotel, and I didn't want to risk losing a potential client. So, I told him:

"As you might know, our entire hotel is usually booked during July, since it's prime tourist season. A lot of our guests do find deals from time to time. Since I know that you will bring your guests to our hotel in the future, I believe that I can give you a special discount". We reached an agreement, and both got what we wanted: I was able to book the rooms at a slightly discounted rate (and with the promise of future business), and the client got a better price.

What am I Seeking to Change?

In the workplace, I often see more distributive negotiation than integrative. Many people do not know how to negotiate effectively or understand the conditions needed for integrative negotiation to succeed. I witnessed a lot of negotiations that failed due to a lack of information or trust or because of one party's inflexibility. Unfortunately, many organizational cultures and interpersonal relationships are not characterized by openness, trust, and flexibility.

Effective negotiation requires:

1. Trying to get as much information as possible about the other party's interests and goals. If you know what your opponent's real needs are or their strategy, you can anticipate and respond to their positions and behaviors.
2. Planning a concrete strategy before negotiating. In other words, you should know why the negotiation is important to you and whether or not your position is strong enough to let you play hardball and show little or no willingness to compromise. You should use your core concerns as a checklist of sensitive areas to look for in yourself and others.
3. Beginning with a positive gesture. I observed these kinds of approaches almost at all the meetings I attended. In the end, making a minor concession can help you achieve a beneficial outcome.
4. Addressing the problem, not the personality. You need to be able to negotiate with anyone, even those you don't like. In every case, you should concentrate on the negotiation itself, not your opponent's personal characteristics. If you attack them personally, they will defend their self-esteem and not help you find a solution to the problem. Separate the person from the problem.
5. Maintaining a rational, goal-oriented frame of mind. Do not get tricked by emotional outbursts from your opponent. If they respond this way, let them, but don't counterattack in kind. Keep your cool, and focus on the problem.
6. Not taking initial offers very seriously. Everyone has an initial position, but these initial offers tend to be extreme and idealistic. You will find this often in real life, especially when negotiating over the price of goods. Focus on other person's interests, your own goals, and your principles while you offer alternatives.
7. Emphasizing win-win solutions. Although many negotiations fail in practice, win-win solutions often can be found. Don't miss opportunities for trade-offs that could benefit both sides, and be sure to look for alternatives that do things like "expanding the pie" or cutting costs for compliance.
8. Insisting on using objective criteria. When you make your decision, address the principles and results, not emotions or pressure. Try to get the other party to focus on objective criteria that can help you both, and use those criteria to assess any proposed alternatives. Do not give in to emotional pleas, assertiveness, or stubbornness if the underlying rationale does not meet your objective criteria.

How do I Practice these Techniques?

As a theory, it is simple to tell someone to follow these guidelines during a negotiation. In practice, though, it can be quite complicated. A negotiation that involves multiple parties and high stakes always requires an advanced understanding of the five core concerns. When you face these kinds of complex situations, keep thinking about the core concerns. Remember the rules we talked about above, and try to follow them. At first, you may not be successful, but keep practicing until you master them.

Source: Odonchimeg Myagmar, http://odnoo.wikidot.com/the-importance-of-the-integrative-negotiation
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