Why Learn to Negotiate? • You are already a negotiator • Nearly every facet of your personal, academic, and professional life involves negotiation • Mastering the art of negotiation will help you make more money, perform better on the job, and have better relationships with the people closest to you
What is Negotiation? • It is a way (often the only way) to get what you want • It is a way to deal with people and to increase your skills in human understanding and interaction • It encourages a cooperative relationship, in which both sides want to reach an agreement • It is NOT the same as manipulation, in which you use unfair or underhanded means to reach your goals
Negotiation is an interpersonal decision-making process by which two or more people agree how to allocate scarce resources • Two Main Types of Negotiation: • Adversarial (Win-Lose): Negotiation is a contest. Each side pursues its own interests – at the expense of the other, if necessary. • Cooperative (Win-Win): Negotiation is a collaboration. Both sides work together for mutual satisfaction.
CASE STUDY: Joe and Sue Carter • For each scenario: • Identify and explain the nature of the problem • Enumerate the different alternatives and choices; list down the advantages and disadvantages of each alternative • Propose a solution and explain why you think it is the best option
Negotiation: a Core Management Competency • Dynamic Nature of Business • Interdependence • Competition • Information Age • Diversity
Major Sins of Negotiation • Leaving money on the table (“lose-lose” negotiation) – occurs when negotiators fail to recognize and exploit win-win potential • 2.Settling for too little (“the winner’s curse”) – occurs when negotiators make too-large concessions, resulting in a too-small share of the bargaining pie
3. Walking away from the table – occurs when negotiators reject terms offered by the other party that are demonstrably better than any other option available to them (usually because of overweening pride or from gross miscalculation) 4. Settling for terms that are worse than your alternative (“agreement bias”) – occurs when negotiators feel obligated to reach agreement even when the settlement terms are not as good as their other alternatives
Why are People Ineffective Negotiators? • Absence of Relevant and Diagnostic Feedback • Confirmation Bias: the tendency for people to see what they want to see when appraising their own performance • Egocentrism: the tendency for people to view their experiences in a way that is flattering or fulfilling for themselves
2.Satisficing • the opposite of optimizing • the acceptance of mediocrity • occurs whenever people settle for something less than they could otherwise have • 3.Self-Reinforcement • the reluctance to try something new or change certain behavior • the fear of losing keeps people from experimenting with change
Negotiation Myths Myth 1: Good Negotiators are Born Myth 2: Experience is a Great Teacher Myth 3: Good Negotiators Take Risks Myth 4: Good Negotiators Rely on Intuition
Characteristics of a Negotiation Situation • There are two or more parties. • There is a conflict of interest between two or more parties. • The parties voluntarily negotiate to get a better deal. • The parties prefer to search for agreement. • The parties expect to give and take. • It involves the management of intangibles and resolving of tangibles.
When You Should Not Negotiate • When you’d lose the farm. • If you’re in a situation where you could lose everything, choose other options rather than negotiate • When you’re sold out • When you’re running at capacity, don’t deal. Raise your prices instead.
When the demands are unethical • Don’t negotiate if your counterpart asks for something that you cannot support because it’s illegal, unethical, or morally inappropriate. When your character or reputation is compromised, you lose in the long run. • When you don’t care • If you have no stake in the outcome, don’t negotiate. You have everything to lose and nothing to gain.
When you don’t have time • When you’re pressed for time, you may choose not to negotiate. If the time pressure works against you, you’ll make mistakes, and you may fail to consider the implications of your concessions. • When they act in bad faith • If you can’t trust their negotiating, you can’t trust their agreement. In this case, negotiation is of little or no value. Stick to your guns and cover your position, or discredit them.
When waiting would improve your position • Perhaps you’ll have a new technology available soon, your financial situation will improve, or another opportunity may present itself. If the odds are good that you’ll gain ground with a delay, wait. • When you’re not prepared • If you don’t prepare, you’ll think of all your best questions, responses, and concessions on the way home. If you’re not ready, just say “no.”
Interdependence – the situation of mutual dependency where both parties need each other • Interdependence & Mutual Adjustment • Interdependence & Perception • Consequences of Interdependent Relationships: • Value Creation – the whole is greater than the sum of its parts (a.k.a. synergy) • Conflict – a sharp disagreement or opposition, as of interests, ideas, etc.
Levels of Conflict • Intrapersonal (Intrapsychic) Conflict • 2. Interpersonal Conflict • 3. Intragroup Conflict • 4. Intergroup Conflict
Conflicts may have both destructive and productive aspects. The objective of negotiation is not to eliminate conflict but to learn how to manage it so that the destructive elements are controlled while the productive aspects are enjoyed.
Destructive Elements of Conflict: • Competitive processes • Misperception and bias • Emotionality • Decreased communication • Blurred issues • Rigid commitments • Magnified differences, minimized similarities • Escalation of the conflict
Productive Functions of Conflict: • Makes organizational members more aware and able to cope with problems • Promises organizational change and adaptation • Strengthens relationships and heightens morale • Promotes awareness of self and others • Enhances personal development • Encourages psychological development • Can be stimulating and fun
Conflict Management • Contending (Competing or Dominating) • Yielding (Accommodating or Obliging) • Inaction (Avoiding) • Problem Solving (Collaborating or Integrating) • Compromising
Concern about others’ outcomes Concern about own outcomes Problem Solving Yielding Compromising Inaction Contending