The Nature of Negotiation PDF

Negotiation is a daily occurrence, driven by the need to share resources, create opportunities, and resolve disputes. Fundamentals include give-and-take, managing tangible and intangible factors, and understanding interdependence dynamics. Lewicki, R. J. (2024). Nego...

Negotiation is a daily occurrence, driven by the need to share resources, create opportunities, and resolve disputes. Fundamentals include give-and-take, managing tangible and intangible factors, and understanding interdependence dynamics. Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education. Sustainable Development Goals (SDG) SESSION OBJECTIVES UNIT I: INTRODUCTION TO NEGOTIATION a) The Nature of Negotiation Characteristics of a Negotiation Situation Interdependence Mutual Adjustment Value Claiming and Value Creation Conflict Negotiations occur for several reasons: 1) to agree on how to share or divide a limited resource, such as land, or money, or time; 2) to create something new that neither party could do on his or her own, or 3) to resolve a problem or dispute between the parties. Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Bargaining and Negotiation Bargaining - describes the competitive win-lose situations (haggling). Negotiation - refers to win-win situations (to find mutually acceptable solutions). Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education. Heart of Negotiation Is it just a give-and-take to reach an agreement? Negotiation is a process by which two or more parties attempt to resolve their opposing interests. Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education. The Nature of Negotiation | Characteristics of Negotiation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  CHARACTERISTICS OF A NEGOTIATION SITUATION There are two or more parties. Negotiation is a process between individuals, within groups, and between groups or organizations. There is a conflict of needs and What one wants is not necessarily what the other one wants, and the parties must desires between two or more search for a way to resolve the conflict. parties The parties negotiate by choice! We negotiate because we think we can improve our outcome or result, compared with not negotiating or simply accepting what the other side offers. It is a strategy pursued by choice; seldom are we required to negotiate. There are times to negotiate and times not to negotiate. When negotiating, a give-and-take To reach an agreement, both sides will modify their opening statement to find a is expected. middle ground; they compromise. Truly creative negotiations may not require compromise; instead, the parties may invent a solution that meets the objectives of all parties. The Nature of Negotiation | Characteristics of Negotiation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  CHARACTERISTICS OF A NEGOTIATION SITUATION The parties prefer to negotiate and search for Negotiation occurs when the parties prefer to invent their own solution agreement rather than to fight openly, have one for resolving the conflict, when there is no fixed or established set of side dominate and the other capitulates, rules or procedures for how to resolve the conflict, or when they choose permanently break off contact, or take their to bypass those rules. dispute to a higher authority to resolve it Successful negotiation involves the Tangible factors: the price or the terms of agreement. management of tangibles and also the Intangible factors: The underlying psychological motivations that resolution of intangibles may directly or indirectly influence the parties during a negotiation. The Nature of Negotiation | Characteristics of Negotiation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Examples of intangible factors include: The need to The need to The need to The need to The need to “win” or avoid look “good” to defend an appear “fair” or maintain a good losing. those you’re important “honorable” or relationship representing. principle or to protect one’s with the other precedent in a reputation party. negotiation.  There are times when the urge to win overwhelms logic. There are several key factors that may play into this situation. Rivalry Time pressure The spotlight The presence of attorneys – or an audience  QUESTION! What are the key characteristics that define a negotiation situation? The Nature of Negotiation | Characteristics of Negotiation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  DISCUSSION Reflect on a recent negotiation you were involved in. whether it was for something major like a supplier contract agreement or something minor like deciding who will message your business adviser. Describe the situation, the parties involved, the key interests and goals of each party, and the outcome. What strategies did you use, and what did you learn from the experience? Thi s Photo by Unknown Author i s l icensed under CC BY-SA The Nature of Negotiation | Interdependence Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Working interdependently allows parties to achieve a possible outcome that is better than they could achieve by working on their own. Most relationships between parties may be characterized in one of three ways: Independent parties are able to meet their own needs without the assistance of others. Dependent parties must rely on others for what they need; the dependent party must accept and accommodate to that provider’s whims and idiosyncrasies. Interdependent parties When the parties depend on each other to achieve their own preferred outcome which are characterized by interlocking goals. The Nature of Negotiation | Interdependence Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Types of Interdependence Affect Outcomes Zero-sum, or distributive: Competitive situation where there is only one winner. The individuals are so linked together that there is a negative correlation between their goal attainments. To the degree that one person achieves their goal, the other’s goal attainment is blocked. Non-zero-sum or integrative: Also known as a mutual-gains situation, there is a positive correlation between the goal attainments of both parties. To the degree that one person achieves their goal, the other’s goals are not necessarily blocked, and may in fact be significantly enhanced. The Nature of Negotiation | Interdependence Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Alternatives Shape Interdependence BATNA: Best Alternative to a Negotiated Agreement. Whether you should or should not agree on something in a negotiation depends upon the attractiveness of your best available alternatives. Negotiators need to understand their BATNA, as well as the other parties’. The value of a person’s BATNA is always relative to the possible settlements available in the current negotiation. A BATNA may offer independence from, dependence on, or interdependence with someone else. ❑ Remember that every possible interdependency has an alternative; negotiators can always say “no” and walk away, although the alternative might not be a very good one. The Nature of Negotiation | Interdependence Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  QUESTION! What is interdependence in the context of negotiation, and how does it differ from independence and dependence? The Nature of Negotiation | Interdependence Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  DISCUSSION In your current or past business, Describe a situation where you had to work interdependently with others to achieve a common goal. What were the key challenges and benefits of this interdependence? How did you manage differences in interests, risk tolerance, and time preferences to create value for all parties involved? Share specific strategies or approaches you used to enhance collaboration and achieve successful outcomes. Thi s Photo by Unknown Author i s l icensed under CC BY-SA The Nature of Negotiation | Mutual Adjustment Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Mutual Adjustment and Concession Making If the proposal isn’t readily accepted by When one party agrees to make a Negotiations often begin with the other, negotiators begin to defend change in their position, a concession statements of opening positions. their own initial proposals and has been made. critique the others’ proposals. Each party states its most preferred Each party’s rejoinder usually Concessions restrict the range of settlement proposal. suggests alterations to the other options within which a solution or party’s proposal and perhaps a change agreement will be reached. in their own position. When a party makes a concession, the bargaining range – the range of possible agreements between the two party’s minimally acceptable settlements – is further constrained. The Nature of Negotiation | Mutual Adjustment Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  Two Dilemmas in Mutual Adjustment The dilemma of honesty concerns how much of the truth to tell the other party. ▪ Telling the other party everything about your situation may give that person the opportunity to take advantage of you. ▪ Not telling the other person anything about your needs and desires may lead to a stalemate. The dilemma of trust is how much negotiators should believe what the other party tells them. ▪ If you believe everything the other party says, then they could take advantage of you. ▪ If you believe nothing they say, then you will have a great deal of difficulty in reaching an agreement. The Nature of Negotiation | Mutual Adjustment Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  The search for an optimal solution through the processes of giving information and making concessions is greatly aided by trust and a belief that you’re being treated honestly and fairly Two efforts in negotiation help to create such trust and beliefs – one is based on perceptions of outcomes and the other on perceptions of the process. Perceptions of the trustworthiness Outcome perceptions can be and credibility of the process can be shaped by managing how the enhanced by conveying images that receiver views the proposed result. signal fairness and reciprocity in proposals and concessions. The Nature of Negotiation | Mutual Adjustment Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  QUESTION! What are the two dilemmas that negotiators face in mutual adjustment, and how can they impact the negotiation process? The Nature of Negotiation | Mutual Adjustment Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  DISCUSSION In your current or past business, How did the group practice mutual adjustment? Identify areas where you demonstrated strength and areas where you needed help. How did you communicate your needs and strengths to others, and how did you adjust your approach based on the feedback and actions of others? Discuss the strategies you used to build trust and facilitate effective mutual adjustment, and reflect on what you learned from the experience. Thi s Photo by Unknown Author i s l icensed under CC BY-SA Should there be adjustments in your current business roles that will allow the team to be more effective, and efficient?  What is your takeaway from this session? ----------------------------------------------------------------------------- The Nature of Negotiation Characteristics of a Negotiation Situation Interdependence Mutual Adjustment The Nature of Negotiation | Value Claiming and Creation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  QUESTION! What are the two types of interdependent situations? ZERO-SUM, OR NON-ZERO-SUM, OR DISTRIBUTIVE SITUATIONS INTEGRATIVE OR MUTUAL GAINS SITUATIONS The Nature of Negotiation | Value Claiming and Creation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  The structure of the interdependence shapes the strategies and tactics negotiators employ. ZERO-SUM, OR DISTRIBUTIVE NON-ZERO-SUM, OR INTEGRATIVE OR SITUATIONS MUTUAL GAINS SITUATIONS Approach Distributive bargaining – accepts the fact that Integrative negotiation – attempts to find there can only be one winner given the solutions so both parties can do well and achieve situation and pursues a course of action to their goals. be the winner. Purpose Claim value—to do whatever is necessary Create value, or find a way for all parties to to claim the reward or gain the largest piece meet their goals and share the reward. possible. Most negotiations are a combination of claiming and creating value The Nature of Negotiation | Value Claiming and Creation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education. There are significant implications to this: Generally, distributive bargaining is most appropriate when time and resources Negotiators must be able to recognize situations that are limited, when the other is likely to be competitive, and when there is no likelihood of future interaction with the other party. require more of one approach than the other. Most other situations should be approached with an integrative strategy. Negotiators must be versatile in their comfort with Not only must negotiators be able to recognize which strategy is most appropriate, but they must be able to employ both approaches with equal and use of both strategic approaches. versatility. Negotiator perceptions of situations tend to be biased Accurately perceiving the nature of the interdependence between the parties is critical for successful negotiation, though most negotiators fail to do so. toward seeing problems as more distributive / Research shows that people are prone to several systematic biases in the way they competitive than they really are. perceive and judge interdependent situations.  Successful coordination of interdependence has the potential to lead to synergy, which is the notion that “the whole is greater than the sum of its parts.” Differences in interests. Differences in judgments Differences in risk tolerance. Differences time preference. about the future. Negotiators seldom value all items in a People differ in their evaluation of A company with a cash flow problem One negotiators may want to realize negotiation equally. what something is worth or the future can assume less risk of expanding its gains now, while the other may be value of an item. operations than one that is cash-rich. happy to defer gains into the future. Finding compatibility in different interests is often the key to unlocking How parties see the present and what is Differences in time preferences have the puzzle of value creation. possible that needs to be created – or the potential to create value in a avoided – can create opportunities for negotiation. the parties to get together. The Nature of Negotiation | Value Claiming and Creation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  QUESTION! What is the difference between value claiming and value creation in negotiation? The Nature of Negotiation | Value Claiming and Creation Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  DISCUSSION Reflect on your experiences in negotiations. whether in a professional or personal context. Describe a specific situation where you would choose to use value-claiming strategies and another situation where you would opt for value-creation strategies. Explain the factors that influenced your decision in each case, such as the nature of the relationship, the goals of the negotiation, and the potential for future interactions. How did you or would you balance these approaches to achieve the best possible outcome? Thi s Photo by Unknown Author i s l icensed under CC BY-SA The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  A potential consequence of interdependent relationships is conflict Conflict arises: When the strongly divergent needs of the two parties. From misperceptions and misunderstandings. When the two parties are working toward the same goal and generally want the same outcome. When both parties want very different outcomes. Negotiation can play an important role in resolving conflict effectively. The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  DEFINITION: Conflict may be defined as a sharp disagreement or opposition, as of interests, ideas, etc., and includes the perceived divergence of interest or a belief that the parties’ current aspirations cannot be achieved simultaneously. Conflict results from the interaction of interdependent people who perceived incompatible goals and interference from each other in achieving those goals. The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  LEVELS OF CONFLICT: One way to understand conflict is to distinguish it by level. Intrapersonal or intrapsychic Interpersonal conflict. Intragroup conflict. Intergroup conflict. conflict. These conflicts occur This is conflict between This is conflict within a This is conflict between within an individual. individuals. group – among team and organizations, ethnic Sources of conflict can Conflict occurs between work group members groups, warring nations, include ideas, thoughts, co-workers, spouses, and within families, or feuding families or emotions, values, siblings, roommates, or classes, living units, and within splintered, predispositions, or drives neighbors. tribes. fragmented that are in conflict with communities. each other. Negotiations at this level are the most complex. The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  FUNCTIONS AND DYSFUNCTIONS OF CONFLICT Most people believe that conflict: Is an indication that something is wrong, broken, or dysfunctional? Creates largely destructive consequences. Elements that contribute to conflict’s destructive image include: Competitive, win-lose goals. Misperception and bias. Emotionality. Decreased communication. Blurred issues. Rigid commitments. Magnified difference, minimized similarities. Escalation of the conflict. This Photo by Unknown Author is licensed under CC BY-SA-NC The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  These are the processes commonly associated with escalating, polarizing, “intractable” conflict. However, conflict has many productive aspects. Discussing conflict makes members more aware and able to cope with problems. Conflict promises organizational change and adaptation. Conflict strengthens relationships and heightens morale. Conflict promotes awareness of self and others. Conflict enhances personal development. Conflict encourages psychological development – it helps people become more accurate and realistic in their self-appraisals. This Photo by Unknown Author is licensed under CC BY-NC-ND Conflict can be stimulating and fun. Conflict is not simply destructive or productive; it is both. The objective is not to eliminate conflict but to learn how to manage it to control the destructive elements while enjoying the productive aspects. Negotiation is a strategy for productively managing conflict. The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  QUESTION! What are the levels of conflict? The Nature of Negotiation | Conflict Lewicki, R. J. (2024). Negotiation (9th ed.). McGraw-Hill Education.  DISCUSSION Think of a time when a negotiation you were involved in led to conflict. Reflect on what you learned from this experience and how it has influenced your approach to handling conflict in future negotiations. Thi s Photo by Unknown Author i s l icensed under CC BY-SA  What is your takeaway from this session? ----------------------------------------------------------------------------- The Nature of Negotiation Value Claiming and Value Creation Conflict