Negotiation: Strategy and Planning PDF

4 CHAPTER Negotiation: Strategy and Planning Objectives 1. Understand the importance of setting goals for an upcoming negotiation. 2. Explore the major elements of a process for selecting a negotiation strategy and how to e...

4 CHAPTER Negotiation: Strategy and Planning Objectives 1. Understand the importance of setting goals for an upcoming negotiation. 2. Explore the major elements of a process for selecting a negotiation strategy and how to execute that strategy. 3. Consider how most negotiations evolve through understandable stages and phases. 4. Develop a comprehensive set of tools to plan effectively for an upcoming negotiation and evaluate progress. Chapter Outline Goals—The Focus That Drives a Negotiation Strategy Direct Effects of Goals on Choice of Strategy Indirect Effects of Goals on Choice of Strategy Strategy—The Overall Plan to Achieve One’s Goals Strategy versus Tactics The Other Party’s Likely Strategy The Dual Concerns Model as a Vehicle for Describing Negotiation Strategies Understanding the Flow of Negotiations: Phases Getting Ready to Implement the Strategy: The Planning Process 1. Defining the Negotiating Goal 2. Defining the Major Issue Related to Achieving the Goal 3. Assembling the Issues, Ranking Their Importance, and Defining the Bargaining Mix 4. Defining the Interests 5. Knowing Your Alternatives (BATNAs) 6. Knowing Your Limits, Including a Resistance Point 7. Analyzing and Understanding the Other Party’s Goals, Issues, and Resistance Points 8. Setting One’s Own Targets and Opening Bids 9. Assessing the Social Context of Negotiation 10. Presenting the Issues to the Other Party: Substance and Process Planning the Process and Structuring the Context by which Information Is Presented In Conclusion: Some Cautionary Notes about Planning Chapter Summary 108 In this chapter, we discuss what negotiators should do before sitting down to negotiate. Effective strategy and planning are the most critical precursors for achieving negotiation objectives. With effective planning and goal setting, most negotiators can achieve their objectives; without them, results occur more by chance than by negotiator effort. Regrettably, systematic planning is not something that most negotiators do willingly. Although time constraints and work pressures make it difficult to find the time to plan adequately, for many, planning is simply boring and tedious, easily put off in favor of getting into the action quickly. It is clear, however, that devoting insufficient time to planning is one major weakness that may cause negotiators to fail. Here are some consequences of failed planning: Negotiators fail to set clear goals. Negotiators enter negotiation with a vague or incom- plete sense of what they want to achieve, or realize later that what they thought they wanted from a negotiation is not what they really wanted or needed. Negotiators fail to set clear objectives or targets that serve as benchmarks for evaluating offers and packages in progressing toward their goal. Negotiators who do not have clear objectives are not in a position to evaluate proposals quickly and accurately. As a result, negotiators may agree to deals that they later regret. Alternatively, negotiators may become confused or defensive and delay the process, causing the other party to lose patience. If negotiators have not done their homework, they may not understand the strengths and weaknesses of their own positions or recognize comparable strengths and weaknesses in the other party’s arguments. As a result, they may not be able to formulate convincing arguments to support their own position or rebut the other party’s arguments. Negotiators need to consider their alternatives to doing the deal in front of them. If nego- tiators understand what alternatives are available to them if the current deal does not look like it will succeed, they will have more confidence and power to walk away from a bad deal. Negotiators cannot simply depend on being quick and clever during the give-and-take of negotiation. Should the other party plan to win by stalling and delaying, or holding on to a position just to wear the negotiator down, or using other dirty tricks (see Chapter 2), the approach may have to be revised. Negotiators often find that being “a great salesperson” in presenting their position is not helpful when the other party assails that position as unethical, ineffective or unacceptable. Almost every popular book on negotiation devotes at least one or two chapters to plan- ning (e.g., Diamond, 2010; Latz, 2004; Lewicki and Hiam, 2006; Malhotra and Bazerman, 2007; Wheeler, 2013); indeed, there are books that are wholly devoted to how to plan and prepare effectively (e.g., Fisher and Ertel, 1995). Yet there is scant empirical evidence on the impact of carefully planning one’s negotiation process. One study of successful negotia- tors by Rackham (1980) suggested that in the planning process, skilled negotiators (com- pared with “average” negotiators) (1) explored a wider range of options for action; (2) worked harder to find common ground with the other party; (3) spent more time considering the long-term implications of their agreements; and (4) were significantly more likely to set upper and lower limits, or the boundaries of a range of acceptable settlements. FIGURE 4.1 | R  elationship between Key Steps in the Planning Process (Overview of Chapter 4) Goals Strategy Planning Our discussion of strategy and planning begins by exploring the broad process of strategy development, starting with defining the negotiator’s goals and objectives. We then move to explaining ways to develop a strategy to address those goals. Finally, we address the typical stages and phases of an evolving negotiation and how different issues and goals will affect the planning process. Figure 4.1 shows how these elements are related. Although this model sug- gests that the relationships between these elements are direct and linear—that is, goals lead to strategy leads to planning—in fact, many parties often begin midway in this sequence and work their way “backward/forward” until the three steps of the preparation process are aligned. Goals—The Focus That Drives a Negotiation Strategy The first step in developing and executing a negotiation strategy is to determine one’s goals. Negotiators must anticipate what goals they want to achieve in a negotiation and focus on how to achieve those goals. As noted in Chapter 1, negotiators may consider substantive goals (e.g., money or a specific outcome), intangible goals (e.g., winning, beating the other party, or getting a settlement at any cost), and procedural goals (e.g., shaping the agenda or simply having a voice at the table). Effective preparation requires a thorough, thoughtful approach to these goals; negotiators should specify their goals and objectives clearly. This includes listing all goals they wish to achieve in the negotiation, determining the priority among these goals, identifying potential multigoal packages, and evaluating possible trade- offs among multiple goals. Direct Effects of Goals on Choice of Strategy There are four ways that goals affect negotiation: 1. Wishes are not goals, especially in negotiation. Wishes may be related to interests or needs that motivate goals (see Chapter 3), but they are not goals themselves. A wish is a fantasy, a hope that something might happen; a goal is a specific, focused target that a negotiator can realistically develop a plan to achieve. 2. A negotiator’s goals may be, but are not necessarily, linked to the other party’s goals. Linkage between two parties’ goals defines an issue to be settled (see the discussion of issues later in this chapter) and is often the source of conflict. For example, at the beginning, my goal may be to buy a car cheaply and the seller’s goal is to sell it at the highest possible price (and profit); thus, the “issue” is the price I will pay for the car. If I could achieve my goal by myself, without the other party, I probably wouldn’t need to negotiate. 3. There are limits to what realistic goals can be (see the discussion of walkaways and alternatives later in this chapter). If what we want exceeds these limits (i.e., what the  BOX 4.1 Almost all of the research and writing on planning 3. Very challenging goals can also motivate indi- for negotiations argue for the importance of setting viduals to behave unethically. Negotiators goals. Yet challenging goals can also motivate some may then use unethical methods to achieve destructive behaviors: those goals. For example, financial services giant Wells Fargo attempted to motivate its 1. Too much attention on a single goal can make salespeople to meet high goals for opening us overlook other important goals and issues. new customer accounts. The result was that For example, if a negotiator is preoccupied many customers had new accounts opened with the price in an upcoming negotiation, without their permission, creating a major they might overlook other important elements crisis of credibility for Wells Fargo. of a deal. Moreover, this excessive focus on price can reduce a negotiation from a poten- 4. Finally, a narrow focus on one or two goals tially integrative one to a distributive one over may prevent the negotiator from listening the single price issue. to the other party and finding ways to create value. As a result, negotiations remain 2. Prescriptive advice on goal setting says that competitive when they could become more goals should be challenging. But a goal that is collaborative. too challenging might encourage a negotiator to pursue risky implementation strategies, Source: Summarized from L. D. Ordonez, M. E. Schweitzer, make extreme demands, and drive the other A. D. Galinsky, and M. H. Bazerman, “Goals Gone Wild: The party away, threatening the possibility of Systematic Side Effects of Overprescribing Goal Setting,” achieving an agreement. Academy of Management Perspectives 23, no. 1 (February 1, 2009). other party is capable of or willing to give), we must either change our goals or end the negotiation. Goals must be attainable. If my goal—“to buy this car at a cheap price”—isn’t possible because the seller won’t sell the car “cheaply” (notice that “cheaply” is an ambiguous goal at this point), I must either change my goal or find another car to buy (and perhaps from a different dealer). There are also times when goals can trigger destructive, rather than constructive, behavior (see Box 4.1). 4. Effective goals must be concrete, specific, and measurable. The less concrete, specific, and measurable our goals are, the harder it is to (a) communicate to the other party what we want, (b) understand what the other party wants, and (c) determine whether any given offer satisfies our goals. “To get a car cheaply” and “to agree on a price so that the loan payment does not use all of my paycheck” are not very clear goals. What do I mean by “use up my paycheck?” Every week’s paycheck or only one check a month? Do I want the payment to be just under 100 percent of the paycheck, or about 50 percent, or perhaps even 25 percent? Today’s paycheck only or the paychecks expected over the life of the loan? Is this payment the largest amount I think I can possibly pay? Is it the payment I could make with little or no inconvenience? Or is it the payment calculated after reading that one shouldn’t pay more than 15 percent of one’s monthly salary for a car payment? I have to determine exactly how big a pay- ment can comfortably come out of my paycheck at present interest rates and add to that what is available for a down payment in order to be able to negotiate exactly what I am willing to pay a month. However, even this figure is not totally clear. 111  Goals can also be intangible or procedural. In the car purchase example, intangible goals might include enhancing my reputation among my friends by owning and driving a slick sports car; maintaining an image as a shrewd, pennywise negotiator; or paying a higher price to ensure convenient, reliable transportation. In other negotiations, intangible goals might include maintaining a reputation as a tough but principled negotiator, establishing a prece- dent for future negotiations, or conducting the negotiations in a manner that is fair to all sides and assures each party fair treatment. (Refer back to Chapter 1 for further discussion of intangible goals.) Procedural goals might be to make sure that the seller makes at least two concessions from the opening price, to convince me that they are negotiating “seriously.” Which of these many criteria should you use? The answer depends on you: your spe- cific objectives and your priorities among multiple goals. Trade-offs will be inevitable and can cloud your perspective while negotiating, which is why you have to start by defining what you wanted to achieve right up front. Indirect Effects of Goals on Choice of Strategy Simple and direct goals can often be attained in a single negotiation session and with a simple negotiating strategy. As a result, we often limit our view on the impact of pursuing short-term goals, particularly when the impact is long term. This short-term thinking affects our choice of strategy; in developing and framing our goals, we may ignore the present or future relationship with the other party in favor of a simplistic concern for achieving only the substantive outcome. As only one example, suppose your beloved aging grandparent decides they are too old to drive and asks you whether you want to buy their car. Your grandparent says they know nothing about cars and simply want to sell it to you because they trust you to take care of it. You buy it and then realize that although it was a great deal, you feel guilty that you didn’t pay enough money for it. Moreover, it is a huge gas guzzler that is costing you way too much money. You realize your actual goal was “a fuel-efficient, affordable car,” not just “any affordable car.” Other negotiation goals—particularly ones that are more difficult or require a substan- tial change in the other party’s attitude—may require you to develop a long-range plan for goal attainment. In these cases, progress will be made incrementally and may depend on establishing a strong relationship with the other party—for example, a substantial increase in one’s line of credit with a financial institution or the establishment of a privileged status with an important trading partner. Such relationship-oriented goals should motivate the negotiator toward a strategy choice in which the relationship with the other party is valued as much as (or even more than) the substantive outcome. Thus, relational goals tend to sup- port the choice of a collaborative or integrative strategy (refer back to the dual concerns model described in Chapter 1 and the integrative negotiation process in Chapter 3). Strategy—The Overall Plan to Achieve One’s Goals After negotiators articulate goals, they move to the second element in the sequence: select- ing and developing a strategy. Experts on business strategy define strategy as “the pattern or plan that integrates an organization’s major targets, policies, and action sequences into a cohesive whole” (Mintzberg and Quinn, 1991). Applied to negotiations, strategy refers to the overall plan to accomplish one’s goals in a negotiation and the action sequences that will lead to the accomplishment of those goals. Strategy versus Tactics How are strategy and tactics related? Although the line between strategy and tactics may seem fuzzy, one major difference is that of scale, perspective, or immediacy (Quinn, 1991). Tactics are short-term, adaptive moves designed to enact or pursue broad (or higher-level) strategies, which in turn provide stability, continuity, and direction for tactical behaviors. For example, your negotiation strategy might be integrative, designed to build and maintain a productive relationship with the other party while using a joint problem-solving approach to the issues. In pursuing this strategy, appropriate tactics include describing your interests, using open-ended questions and active listening to understand the other’s interests, and inventing options for mutual gain. Tactics are subordinate to strategy; they are structured, directed, and driven by strategic considerations. In Chapters 2 and 3, we outlined the strate- gies of distributive bargaining and integrative negotiation and the associated tactics that are likely to accompany each strategy. The Other Party’s Likely Strategy From an understanding of the other party’s goals, issues, and bargaining mix, we are likely to be able to understand the other party’s strategy as either leaning toward a distributive or an integrative approach. Research confirms what we might suspect—that the formulation of our own strategy is often guided by our expectations of the other, past experiences with this other, hunches and guesses, and even the most insignificant comments or nonverbal signals by the other party. The Dual Concerns Model as a Vehicle for Describing Negotiation Strategies In Chapter 1, we used the dual concerns model to describe the basic orientation that people take toward conflict (Pruitt and Rubin, 1986). This model proposes that individuals in con- flict have two levels of related concerns: a level of concern for their own outcomes and a level of concern for the other’s outcomes (refer back to Figure 1.3 in Chapter 1). Savage, Blair, and Sorenson (1989) propose a similar model for the choice of a negotiation strategy. According to this model, a negotiator’s unilateral choice of strategy is reflected in the answers to two simple questions: (1) How much concern does the negotiator have for achieving the substantive outcomes at stake in this negotiation (substantive goals)? (2) How much concern does the negotiator have for the current and future quality of the relationship with the other party (relationship goals)? The answers to these questions result in the mix of alternative strategies presented in Figure 4.2. Alternative Situational Strategies The power of this model lies in requiring the nego- tiator to determine the relative importance and priority of the two dimensions in the desired settlement. As Figure 4.2 shows, answers to these two questions suggest at least four types of initial strategies for negotiators: avoidance, accommodation, competition, and collabora- tion. A strong interest in achieving only substantive outcomes—getting this deal, and winning FIGURE 4.2 | The Dual Concerns Model Substantive outcome important? Yes No Yes Collaboration Accommodation Relational outcome important? No Competition Avoidance Source: Adapted from Walter B. Newsom, “The Dual Concerns Model,” The Academy of Management Executive (Briarcliff Manor, NY: Academy of Management, 1989). this negotiation, with little or no regard for the effect on the relationship or on subsequent exchanges with the other party—tends to support a competitive (distributive) strategy. A strong interest in achieving only the relationship goals—building, preserving, or enhancing a good relationship with the other party—suggests an accommodation strategy. If both sub- stance and relationship are important, the negotiator should pursue a collaborative (integra- tive) strategy. Finally, if achieving neither substantive outcomes nor an enhanced relationship is important, the party might be best served by avoiding negotiation. Each of these different strategic approaches also has different implications for negotiation planning and preparation (see also Johnston, 1982). We discuss both nonengagement and engage- ment strategies next. The Nonengagement Strategy: Avoidance Avoidance may serve a number of strate- gic negotiation purposes. In fact, there are many reasons negotiators might choose not to negotiate (similar to the reasons for conflict avoidance discussed in Chapter 1): If one is able to meet one’s needs without negotiating at all, it may make sense to use an avoidance strategy. It simply may not be worth the time and effort to negotiate (although there are sometimes reasons to negotiate in such situations; see this chapter’s section on accommodation). The decision to negotiate is closely related to the attractiveness of available alternatives—the outcomes that can be achieved if negotiations don’t work out. In Chapter 2, we discussed the role that resistance points play in defining a strategy and the possibility that alternative deals are available; in Chapters 2 and 3, we explored the key role of a BATNA in evaluating the value of a particular agreement. A negotiator with very strong alternatives has considerable power because they doesn’t need this negotiation to succeed in order to achieve a satisfactory outcome. Having weak  BOX 4.2 It’s been a long night. Bill Gates, the founder of hesitates. “Bill,” someone prods, “what’s it worth to Microsoft, is sitting around with a group of friends. you to have a pizza?” “Two hundred forty dollars,” They’re famished. Someone gets the idea to call Gates responds. He gets on the phone and says, Domino’s for a late-night delivery. The owner– “OK, I’m Bill Gates and I’ll pay you $240 to bring manager of Domino’s answers the phone, but unfor- this pizza.” They got the pizza. tunately the store has just closed. Disappointed, the caller is ready to hang up when someone in the Source: Volkema, Roger J., The Negotiation Toolkit: How to Get group says, “Tell them you’re Bill Gates and pay Exactly What You Want in Any Business or Personal Situation. them a lot of money to deliver a pizza.” Bill Gates New York, NY: AMACOM, 1999, 6. alternatives puts a negotiator at a disadvantage. The presence of a strong alternative can influence the decision about whether to avoid negotiation in two ways. First, the negotiator with a strong alternative may wish to avoid negotiation strictly on efficiency grounds—it is simply quicker and easier to take the alternative than to get involved in a negotiation. But having a weak alternative may also suggest avoiding negotiation—once negotiations begin, the pressure of the negotiation process may lead to a poor outcome, which the negotiator may feel obligated to accept because the alternative is also very poor. Alternatively, they might gain the desired outcome, but perhaps at a significant cost (see Box 4.2). Active-Engagement Strategies: Accommodation, Competition, and Collaboration Competition and collaboration were described extensively in the previous two chapters. Competition is described throughout this book as distributive or win–lose bargaining and collaboration as integrative or win–win negotiation. Accommodation is as much a win–lose strategy as competition, although it has a decid- edly different image—it involves an imbalance of outcomes, but in the opposite direction (“I lose, you win” as opposed to “I win, you lose”). As Figure 4.2 shows, an accommodative strategy may be appropriate when the negotiator considers the relationship outcome more important than the substantive outcome. In other words, the negotiator wants to let the other win, keep the other happy, or not endanger the relationship by pushing hard to achieve some goal on the substantive issues. This strategy is often used when the primary goal of the exchange is to build or strengthen the relationship (or the other party) and the negotiator is willing to sacrifice the outcome just to benefit the other party. An accommodative strategy may also be necessary if the negotiator expects the relationship to extend past a single negotiation episode. The idea is that if “I lose and you win” this time, over multiple negotiations in the relationship the win–lose accounts will balance. In any long-term social relationship, it is probably healthy for one negotiator or the other to accept a suboptimal outcome in a given negotiation while expecting reciprocal accommodation (“tit for tat”) from the other negotiator in the future. Such reciprocity has been called the glue that holds social groups together (e.g., Cialdini, 2009). A negotiator in a long-term relationship with another party should be encouraged to consider accommodative moves early in the relationship- building process—both to build trust with the other party and to be able to ask for reciprocity on those accommodations as the relationship develops. 115  How do these three strategies—competition, collaboration, and accommodation—differ? Table 4.1 summarizes the three types of strategies (distributive, integrative, and accommo- dative) and compares and contrasts them across a number of different dimensions (see also Fleming and Hawes, 2017, for a specific application to business negotiations). In addition to their positive characteristics, as described in the table, each of these three negotiation strategies also has certain predictable drawbacks if the strategy is applied blindly, thoughtlessly, or inflexibly: Distributive strategies tend to create “we–they” or “superiority–inferiority” patterns and may lead to distortions in judgment regarding the other side’s contributions and efforts, as well as to distortions in perceptions of the other side’s motives, needs, and positions (see the discussion of framing biases in Chapter 6). If a negotiator pursues an integrative strategy without regard to the other’s reciprocity, then the other may manipulate and exploit the collaborator and take advantage of the good faith and goodwill being demonstrated. Unthinking pursuit of an integrative process can also lead negotiators to cease being accountable to their constituencies (e.g., their companies) in favor of pursuit of the negotiation process for its own sake (see Chapter 11 for a discussion of negotiator–constituency dynamics). For example, negotiators who approach the process with an aggressive “only I can negotiate this” attitude may produce an agreement that is unacceptable to their constituency, which will then be rejected and force the negotiator to resume discussions that others thought were settled. Accommodative strategies may generate a pattern of repeatedly giving in to keep the other happy or to avoid a fight. This pattern establishes a precedent that is hard to break. It could also lead the other to a false sense of well-being due to the satisfaction that comes with the “harmony” of a good relationship, which may completely ignore the accumulating giveaways on substantive issues. Over time, this imbalance is unlikely to perpetuate, but efforts to stop the giving or restore the balance may be met with surprise and resentment from the other. It is also useful to remember that in presenting these strategies, we are describing pure forms that do not necessarily capture the mixture of issues and motivations that actually characterize the evolution of most negotiation strategies (Lax and Sebenius, 1986). Just as most conflicts are neither purely competitive nor purely cooperative, most negotiation strat- egies reflect a variety of goals, intentions, and situational constraints that tend to make any “pure” strategy difficult to follow. Understanding the Flow of Negotiations: Phases Before we explore the specific planning processes for negotiation, it is important to under- stand the typical sequence of steps, or flow, in a negotiation in order to understand how negotiations are likely to evolve and why planning at the front end is so important. Several researchers have studied the flow of negotiations over time—often by classifying the type of communication parties use at various points in the process. This work has con- firmed that negotiation, like communication in problem-solving groups and other forms of  TABLE 4.1 | Characteristics of Three Engagement Strategies Competition Collaboration Accommodative Aspect (Distributive Bargaining) (Integrative Negotiation) Negotiation Payoff structure Usually a fixed amount of resources to Usually a variable amount of resources to Usually a fixed amount of resources to b be divided be divided divided Goal pursuit Pursuit of own goals at the expense of Pursuit of goals held jointly with others Subordination of own goals in favor of th those of others of others Relationships Short-term focus; parties do not Long-term focus; parties expect to work May be short term (let other win to keep expect to work together in the future together in the future peace) or long term (let the other win to encourage reciprocity in the future) Primary motivation Maximize own outcome Maximize joint outcome Maximize others’ outcome or let them ga to enhance relationship Trust and openness Secrecy and defensiveness; high trust Trust and openness, active listening, joint One party relatively open, exposing own in self, low trust in others exploration of alternatives vulnerabilities to the other Knowledge of needs Parties know own needs but conceal Parties know and convey real needs while One party overresponsive to other’s nee or misrepresent them; neither party lets seeking and responding to needs of other so as to repress own needs the other know real needs Predictability Parties use unpredictability and Parties predictable and flexible when One party’s actions totally predictable, surprise to confuse other side appropriate, trying not to surprise always catering to other side Aggressiveness Parties use threats and bluffs, trying to Parties share information honestly, treat One party gives up on own position to keep the upper hand each other with understanding, respect mollify other Solution search Parties make effort to appear committed Parties make effort to find mutually One party makes effort to find ways to behavior to position, using argumentation and satisfying solutions using logic, creativity, accommodate other manipulation of the other and constructiveness Success measures Success enhanced by creating bad Success demands abandonment of bad Success determined by minimizing or image of the other; increased levels of images and consideration of ideas on avoiding conflict and soothing all hostilit hostility and strong in-group loyalty their merit own feelings ignored in favor of harmon Evidence of Unhealthy extreme reached when one Unhealthy extreme reached when one Unhealthy extreme reached when unhealthy extreme party assumes total zero-sum game; subsumes all self-interest in the abdication to other is complete, at expen defeating the other becomes a goal common good, losing self-identity and of personal and/or constituent goals in itself self-responsibility Key attitude Key attitude “I win, you lose” Key attitude “What’s the best way to Key attitude “You win, I lose” address the needs of all parties?” Remedy for If impasse occurs, mediator or If difficulties occur, group dynamics If behavior becomes chronic, party breakdown arbitrator may be needed facilitator may be needed becomes negotiationally bankrupt 117 ritualistic social interaction, proceeds through distinct phases (Douglas, 1962; Greenhalgh, 2001; Morley and Stephenson, 1977). Holmes (1992) states that “phase models provide a narrative explanation of negotiation process; that is, they identify sequences of events that constitute the story of a negotiation... [A] phase is a coherent period of interaction characterized by a dominant constellation of communicative acts” that “serves a set of related functions in the movement from initiation to resolution of a dispute” (p. 83). Phase research typically addresses three types of ques- tions (Holmes and Poole, 1991): How does the interaction between parties change over time? How do the interaction processes relate to inputs and outcomes over time? How do the tactics used by the parties affect the development of the negotiation? Recent years have seen a marked increase in work on modeling the phases of negotia- tion. This work has been both descriptive and prescriptive—some authors describe what they have observed in natural settings, whereas others advise or prescribe certain activity sequences they feel should lead to more effective negotiation (also refer to our discussion of the Zartman and Berman formula-detail model in Chapter 6). Much of this work is sum- marized in Table 4.2. As the table shows, the various models fit into a simple structure of three phases, or stages: a beginning (or initiation) phase, a middle (bargaining or problem- solving) phase, and a closing (or resolution) phase. However, as Holmes (1992) points out, these stages are likely to be descriptive of successful negotiations. As Holmes notes, “unsuc- cessful negotiations do not proceed through the orderly stages of phase models, but tend to stall interminably in the intermediate phase or cycle within or between the beginning and middle stages, without achieving successful closure” (p. 92, emphasis added). Although phase modeling of negotiation offers much potential value in enhancing our understanding of negotiation, further research is necessary before it becomes a proactive tool for improving negotiation practice. Simple descriptions of the order of events in a negotiation are insuffi- cient to improve negotiation practice. Greenhalgh (2001) has articulated a stage model of negotiation that is particularly rel- evant for integrative negotiation. Greenhalgh suggests that there are seven key steps to an ideal negotiation process (see Figure 4.3): Preparation: deciding what is important, defining goals, thinking ahead how to work together with the other party. Relationship building: getting to know the other party, understanding how you and the other are similar and different, and building trust and commitment toward achiev- ing a mutually beneficial set of outcomes. Greenhalgh argues that this stage is critical to satisfactorily moving the other stages forward. Information gathering: learning what you need to know about the issues, about the other party and their needs, about the feasibility of possible settlements, and about what might happen if you fail to reach agreement with the other side. Information using: assembling the case you want to make for your preferred outcomes and settlement, one that will maximize your own needs. This presentation is often used to “sell” your preferred outcome to the other party. TABLE 4.2 | Phases Models of Negotiation: Labels and Description Phases Prescriptive Models Descriptive Models Initiation Exploration1 Establishing the range5 Preliminaries2 Search for arena, agenda, and issue Diagnostic3 identification6 Introduction and relationship Agenda definition and problem development4 formulation7 Problem solving Expectation structuring, movement, Reconnoitering the range5 and solution development1 Exploring the range, narrowing Positioning, bargaining, exploration2 the range, preliminaries to final Formulation3 bargaining6 Problem clarification and relationship Narrowing differences7 development, problem solving4 Resolution Conclusion1 Precipitating the Settlement2 decision-making crisis5 Details3 Final bargaining, ritualization, Resolution structuring4 execution6 Testing, agreement, and implement7 1. Atkinson (1980) 2. Carlisle and Leary (1981) 3. Zartman and Berman (1982) 4. Donohue, Kaufman, Smith, and Ramesh (1990) 5. Douglas (1962) 6. Gulliver (1979) 7. Putnam, Wilson, and Turner (1990). Source: Adapted from Michael Holmes, “Phase Structures in Negotiation,” in eds. L. L. Putnam and M. E. Roloff, Sage Annual Reviews of Communication Research 20 (1992), pp. 83–105. FIGURE 4.3 | Phases of Negotiation Relationship Information Information Closing Implementing Preparation Bidding building gathering using the deal the agreement Source: Adapted from Leonard Greenhalgh, Managing Strategic Relationships: The Key to Business Success (New York, NY: The Free Press, 2001). Bidding: making moves from your initial, ideal position to the actual outcome. Bidding is the process by which each party states its opening offer and then makes moves from that initial offer toward a middle ground. We described this process exten- sively in Chapter 2. Closing the deal: building commitment to the agreement achieved in the previous phase. Both you and the other party have to assure yourselves that you have reached a deal that you can be happy with, or at least accept.  Implementing the agreement: determining who needs to do what once the agreement is reached. Not uncommonly, parties discover that the agreement is flawed, key points were missed, or the situation has changed and new questions exist. Flaws in moving through the earlier phases arise here, and the deal may have to be reopened or issues settled by mediators, arbitrators, or the courts. Greenhalgh (2001) argues that this model is largely prescriptive—that is, this is the way people ought to negotiate—and he creates a strong case for why this is so. However, examina- tion of negotiators’ actual practice shows that they frequently deviate from this model and that one can sometimes track differences in their practice according to national culture (see Chapter 16). For example, American negotiators typically view the process more in “win– lose,” or distributive, terms; they don’t do much relationship building or planning, and they move directly to bidding, closing, and implementation. In contrast, Asian negotiators spend a great deal of time on relationship building and then truncate the remaining steps toward the end of the negotiation process. Having overviewed the fundamental stages of a negotiation, we now turn to the plan- ning process for executing that negotiation. Getting Ready to Implement the Strategy: The Planning Process The foundation for success in negotiation is not in the game playing or the dramatics. The primary determinant for success in negotiation is in the planning that takes place prior to the dialogue. Effective planning requires hard work through considering the following points: 1. Defining the negotiating goal. 2. Defining the major issues related to achieving the goal. 3. Assembling the issues, ranking their importance, and defining the bargaining mix. 4. Defining the interests. 5. Knowing your alternatives (BATNAs). 6. Knowing your limits, including a resistance point. 7. Analyzing and understanding the other party’s goals, issues, and resistance points. 8. Setting one’s own targets and opening bids. 9. Assessing the social context of negotiation (for example, who is at the table, who is not at the table but has a strong interest in the negotiation outcomes, and who is observing and critiquing the negotiation). 10. Presenting the issues to the other party: substance and process. The remainder of this chapter discusses each of these steps in detail (see also a sum- mary of these 10 steps in Table 4.3, which may be used to plan one’s own negotiation). The list in Table 4.3 represents the collective wisdom of several sources,1 each of which has its own list of key steps that may vary in their order but cover the same basic themes. TABLE 4.3 | Negotiation Planning Guide 1. Define the negotiating goal. 2. List the major issues in the negotiation related to achieving the goal. 3. Define the relative importance of each issue, and define the bargaining mix. 4. Define the interests. 5. Define the alternatives (BATNAs). 6. Define your limits, including a resistance point. 7. Describe your understanding of the other party’s goals, issues, and resistance points. What questions can you ask to learn more about these? 8. Set your targets and opening bid. 9. Assess the social context of the negotiation. 10. Outline how you will present the issues to the other party: what to say and how to say it.  Before commencing this discussion, the authors want to make four observations: First, we assume that a single planning process can be followed for both a distributive and an integrative process. Although we highlight the differences between the two in Chapters 19 and 20, with the exception of the specific tactics negotiators intend to use, and with a selective emphasis on interests and options versus targets and resis- tance points, one comprehensive planning process can be used for either form of negotiation. Second, so far, our discussion has concentrated on distributive and integrative pro- cesses and the differences between them. However, as we note in Chapter 1, there are several structural and contextual factors beyond the bargaining table that may also affect the strategizing and planning processes (e.g., whether there are multiple negotia- tions that need to be “sequenced,”) how the time limits are managed, the role of cul- tural differences, and the broader network of relationships among parties at the table and decision makers away from the table (cf. Lax and Sebenius, 2006; Watkins, 2002, 2006). Lax and Sebenius describe this as “setting the table,” while Watkins talks about it as “shaping the game.” They both point out that while less experienced negotiators primarily focus on strategic and tactical planning for what will take place at the table, more experienced negotiators are more likely to attempt to orchestrate the deal they want by attending to these shaping issues. The broad impact and implications of these structural or contextual elements will be discussed in later chapters. Third, we assume that negotiations will be conducted primarily one to one—that is, you and another individual negotiator. This is the simplest model to understand and plan for. However, it is not uncommon for negotiations to have multiple individuals on each side, agents representing negotiators, or multiple groups of parties represented at the table. The dynamics created by extending negotiations to agents and multiple negotiators will be considered further in Chapters 11, 12, and 13. Finally, while we describe these steps in a relatively linear fashion, complete and up- to-date planning will require a certain degree of shuttling back and forth between steps to ensure alignment of strategy and plan. For example, information often cannot be obtained and accumulated simply and straightforwardly, and information discovered in some of the later steps may force a negotiator to reconsider and reevaluate earlier steps. As a result, the first iteration through the planning process should be tentative, and the negotiator should be flexible enough to modify previous steps as new informa- tion becomes available. We will now explore each of the 10 key steps in detail. 1. Defining the Negotiating Goal We discussed the importance of negotiation goals in Chapter 1 and again at the beginning of this chapter. We pointed out that goals can be substantive (tangible), psychological (intangible), or procedural (how we get to agreement). Goals can have both direct and indi- rect effects on the choice of strategy. Knowing one’s goal is the first and most important step in developing a strategy and executing a negotiation. 2. Defining the Major Issue Related to Achieving the Goal This step usually begins with an analysis of the key issues to be discussed in the negotiation. Some negotiations may consist of only a single issue—for example, the price of a computer desk being purchased at a yard sale or the price of a used car. Other negotiations are more complex. Thus, the purchase of one company by another may include a large number of questions such as price, transfer of inventory, workers who will be retained or laid off, a new headquarters location, and the like. The number of issues in a negotiation, together with the relationship between the nego- tiator and the other party, is often the primary determinant of whether one uses a distribu- tive or integrative strategy. Single-issue negotiations tend to dictate distributive negotiations because the only real negotiation issue is the price or “distribution” of that issue. In con- trast, multiple-issue negotiations lend themselves more to integrative negotiations because parties can use processes such as logrolling to create issue “packages” that are mutually beneficial. A simple representation of this is presented in Figure 4.4. The vertical axis repre- sents increasingly valuable outcomes for the buyer, and the horizontal axis represents increasingly valuable payoffs to the seller. In a one-issue negotiation, each party is striving to realize as much value for themselves as possible. If the buyer dominates, they will receive an outcome high on the buyer’s axis, which will not be advantageous to the seller (e.g., point A); if the seller dominates, they will receive an outcome high on the seller’s axis, but not FIGURE 4.4 | H  ow Issues Affect the Choice between Distributive and Integrative Strategies Increasing Value to Buyer A Claiming Value C Creating Value B Increasing Value to Seller Sources: David Lax and James Sebenius, Manager as Negotiator (New York, NY: Simon & Schuster, 1986); Michael Watkins, Breakthrough Business Negotiation: A Toolbox for Managers (New York, NY: John Wiley & Sons, Inc., 2002). a­ dvantageous to the buyer (e.g., point B). If they are equally strong, the best they can do is some point along a line between points A and B (e.g., point C). Any point along the A–C–B line represents a possible solution to the single-issue negotiation. However, multiple issues may allow the parties to “create value” by finding solutions that improve the outcomes for both parties. The choice of whether to pursue a claiming-value or creating-value strategy is described as the “negotiator’s dilemma” (Lax and Sebenius, 1986). Single-issue negotiations and the absence of a long-term relationship with the other party are the strongest drivers of claiming-value (distributive) strategies; multiple-issue negotiations and the importance of a long-term relationship with the other party are the strongest drivers of creating-value ­(integrative) strategies. While the number of issues affects strategy, it does not preclude the possibility that single-issue negotiations can be made integrative or that multiple-issue negotiations will remain distributive. Single-issue negotiations can often be made integrative by working to increase the number of issues. For instance, in buying a house, both parties may begin by believing that price is the only issue but may quickly realize that other issues are equally central: how the purchase will be financed, date of sale, or date of occupancy. They might also identify other issues, such as appliances or patio furniture to be included, repair of a broken fence, or payment for fuel oil left in the storage tank. During the purchase process, the buyer’s lawyer, mortgage financer, or real estate agent might draw up a list of other things to consider: taxes to pay, escrow amounts for undiscovered damage problems, or a written statement that the seller must leave the house in “broom-clean” condition (as well as the fees to be paid to all these professionals!). Note that it does not take long to generate a fairly detailed list. In any negotiation, a complete list of the issues at stake is best derived from the following sources: 1. An analysis of all the possible issues that need to be decided. 2. Previous experience in similar negotiations (e.g., buying your fifth house vs. buying your first). 3. Research conducted to gather information (e.g., study the neighborhood, have the house inspected, or read up on how to buy a house). 4. Consultation with experts in that industry (real estate agents, mortgage lenders, attorneys, home repair experts, or friends who have bought a house recently). Similarly, even in multiple-issue negotiations, the opportunity to create value may be lost in competitive dynamics that minimize trust and information sharing and that treat each issue in a distributive manner. This is discussed further in the next section. Before considering ways to manage the list of issues, a word of caution is necessary. Note that we have used a simple, traditional example here—The purchase of a house. Many negotiations will differ markedly from this example because a traditional agreement or con- tract is not the issue. In addition, many negotiations are not based on quantitatively defined issues like the price of a house. In these situations, defining the key issues may be much more complex and elusive. For example, suppose a manager gets signals from their boss that their performance is not up to par, yet whenever the manager tries to confront the boss to obtain a realistic performance appraisal, the boss won’t talk directly about the problem (which raises the manager’s anxiety even further). Although the conflict in this situation is evident, the issues are elusive. The central issue for the employee is the performance appraisal and why the boss won’t give it. Maybe the boss is uncomfortable with the ­performance appraisal process or has a problem confronting other people about poor per- formance. Perhaps the boss is so preoccupied with their own job security that they don’t even realize the impact they are having on the manager. In a situation like this one, where the issues are important but somewhat elusive, the manager needs to be clear about both what the issue is (in this case, getting a clear performance evaluation and getting the boss to talk about it) and how to initiate a productive discussion. 3. Assembling the Issues, Ranking Their Importance, and Defining the Bargaining Mix The next step in planning is to assemble all the issues that have been defined into a compre- hensive list. The combination of lists from each side in the negotiation determines the bar- gaining mix (see Chapter 2). In generating a list of issues, negotiators may feel that they put too much on the table at once or raise too many issues. This may happen if the parties do not talk frequently or if they have lots of business to transact. As we noted in step 2, how- ever, introducing a long list of issues into a negotiation can make success more, rather than less, likely—provided that all the issues are real. Large bargaining mixes allow many possible combinations for settlement, thus increasing the likelihood that a particular “package” of component elements will meet both parties’ needs and, therefore, lead to a successful settle- ment. At the same time, large bargaining mixes can lengthen negotiations because they present too many possible combinations of issues to consider, and combining and evaluat- ing all these mixes can make valuing the deal very complex. After assembling issues on an agenda, the negotiator next must prioritize them. Priori- tization includes three steps: 1. Determine which issues are most important and which are less important. Once negotia- tion begins, parties can easily be swept up in the rush of information, arguments, offers, counteroffers, trade-offs, and concessions. For those who are not clear in advance about what issues are more or less critical, it is easy to lose perspective and agree to suboptimal settlements or to get distracted by long debates over points that are relatively unimportant. When negotiators do not have priorities, they may be more likely to yield on those points aggressively argued by the other side rather than to yield based on their own priorities. Priorities can be set in a number of ways. One simple way is for the negotiator to rank-order the issues by asking, “What is most important?” “What is second most important?” and “What is least important?” An even simpler process is to group issues into categories of high, medium, or low importance. When the negotiator repre- sents a constituency, it is important to involve that group in setting priorities. Priori- ties can be set for both interests and more specific issues. A third, more precise method is to award a total of 100 points to the total package of issues and then to divide the points among the issues in proportion to each issue’s relative importance. If the negotiator has confidence in the relative weighting of points across the issues, then trading off and “packaging” possible settlements together becomes more systematic (see Simons and Tripp, 1997, for one example).  It is also important to set priorities (and possibly assign points) for both tangible and intangible issues. Intangible issues are often difficult to discuss and rank-order, yet if they remain subjective and not quantified, negotiators may overemphasize or underemphasize them. It is easy to push such issues aside in favor of concrete, specific, numerical issues—and negotiators must be careful not to let the “hard bargaining” over numbers drive out more ephemeral discussion of intangible issues and interests. More than one negotiator has received a rude shock when their constituency has rejected a settlement because it ignored the intangibles or dealt with them suboptimally in the final agreement. Finally, negotiators may also wish to specify a bargaining range for each issue in the mix. Thus, not only would a “best possible” and “minimally acceptable” package be specified, but also a target and minimally acceptable level would be specified for the most important issues in the mix. Sometimes assigning points to each issue, based on the issue’s relative importance to the others, can help a negotiator “keep score” as various elements of the bargaining mix are assembled. 2. Determine whether the issues are linked together or separate. If the issues are sepa- rate, they can be easily added or subtracted (here is where points can help); if connected, then settlement on one will be linked to settlement on the others and making concessions on one issue will inevitably be tied to some other issue. The negotiator must decide whether the issues are truly connected—for instance, whether the price they will pay for a house is dependent on what the bank will loan them—as opposed to simply being connected in their own mind for the sake of achieving a good settlement. 3. Be willing to use “carrots” and “sticks.” Be willing to create incentives to motivate the other toward your high-priority issues and disincentives to motivate the other away from your less preferred alternatives. 4. Defining the Interests After defining the issues, the negotiator must proceed to define the underlying interests and needs. As we discussed in Chapter 2, positions—An opening bid or a target point—are what a negotiator wants. Interests (Chapter 3) are why the negotiator wants them. A target point of $200,000 for a condo would be a position; this is what the negotiator hopes to pay. The underlying interest would be “to pay a fair market price, and one I can afford, for that ­two-bedroom condominium.” Although defining interests is more critical to integrative negotiation than to distributive bargaining, even distributive discussions can benefit from one or both parties identifying the key interests. If issues help us define what we want, then understanding interests requires us to ask why we want it. Asking “why” questions helps to surface critical values, needs, or principles underlying the negotiation (Ury, 1991) (see Chapter 7). Like goals, interests may be Substantive, that is, directly related to the focal issues under negotiation. Process-based, that is, related to how the negotiators behave as they negotiate. Relationship-based, that is, tied to the current or desired future relationship between the parties.  Interests may also be based on the intangibles of negotiation—including principles or standards to which the parties wish to adhere, the informal norms by which they will negoti- ate, and the benchmarks they will use to guide them toward a settlement—to achieve a fair or reasonable deal or to get the negotiation concluded quickly. Wallihan (2003) offers several excellent examples that help highlight why getting at interests may be essential to understanding another side’s position. In one case, a union negotiated for a lower wage than management was actually willing to offer; in that case, the union was actually trying to hold wages down so management would not be tempted to con- tract with nonunion crews. In a second case, a buyer asked a building contractor to quote a higher bid, just so the builder would have an incentive to complete the job well and on time rather than be demotivated by a low bid. From the point of view of “positions,” having buy- ers ask for a higher bid or unions ask for a lower wage would be seen as irrational; however, from an interests perspective, the requests make eminently good sense. 5. Knowing Your Alternatives (BATNAs) What will happen if the other party refuses to accept some proposed items for the agenda or states issues in such a way that they are unacceptable? Good preparation requires that you establish two clear points: your alternatives if this deal cannot be successfully completed and your limits—the least acceptable offer from the other that you will agree to sign. Alternatives (i.e., best alternatives to this negotiated agreement, or BATNAs) are other agreements negotiators could achieve and still meet their needs. Alternatives are very impor- tant in both distributive and integrative processes because they define whether the current outcome is better than another possibility (with a different negotiating partner). In any situ- ation, the better the alternatives, the more power you have because you can walk away from the current deal and still know that your needs and interests can be met (see also Chapters 2, 3, and 8). In the house-purchase example, the more a buyer has researched the real estate market and understands what comparable houses are available, the more the buyer knows that they can walk away from this specific deal and still have acceptable housing choices. 6. Knowing Your Limits, Including a Resistance Point A resistance point is the place where you decide that you should stop the negotiation rather than continue, because any settlement beyond this point is not minimally acceptable (refer back to Chapter 2). If you are the seller, your resistance point is the least you will take for the item you have for sale; if you are the buyer, your resistance point is the most you will pay for the item. Setting resistance points is a critical part of planning. Most of us have been involved in buying situations in which the item we wanted wasn’t available but we allowed our- selves to be talked into a more expensive model. Moreover, some competitive situations generate intense pressures to escalate the price you have to pay. For example, in an auc- tion, if there is a bidding war with another person, one may pay more than was planned before the auction. Gamblers, analogously, may encounter a losing streak and end up losing more money than they had planned because they did not set a resistance point. Clear resistance points help keep people from agreeing to deals that they later realize weren’t very smart. 7. Analyzing and Understanding the Other Party’s Goals, Issues, and Resistance Points Earlier in this section, we discussed the importance of assigning priorities to one’s own goals and objectives. Gathering information about the other party is also a critical step in preparing for negotiation. Learning the other’s issues, preferences, priorities, interests, alter- natives, and constraints is almost as important as determining one’s own. If negotiators have not had the opportunity to meet with people from the other side, then they should find a way to understand the negotiation from the other party’s perspective or to gather informa- tion to learn about their issues, interests, and priorities. Negotiators might speak to the other party prior to the formal meeting. It may also be possible to speak to others who know the other party or to people who have been in the other party’s situation before. The goal is to understand how the other party is approaching the negotiation and what they are likely to want. (see Giacomantonio, ten Velden, DeCristiofaro, and Beersma, 2020, for a review of earlier studies). By comparing this assessment against your own, you can begin to define areas where there may be strong conflict (both parties have a high priority for the same thing), simple trade-offs (both parties want the same group of things but with differing pri- orities), or no conflict at all (both parties want very different things and both can easily have their objectives and interests met). What information does one party need about the other party in order to prepare effec- tively? Several key pieces of background information will be of great importance, including their Broad, overall goals and objectives. Issues and the likely bargaining mix. Interests and needs. Resistance points and alternatives. In theory, it would be extremely useful to have as much of this information as possible before negotiations. In reality, it may not be possible to obtain this information before the negotiation starts. If this is the case, negotiators should plan to collect as much of this information as possible during the opening stages of deliberations. Let us briefly discuss each of these. The Other Party’s Goals As we indicated earlier, understanding your own goals is the first step in planning a negotiation. Similarly, you should make an effort to understand or anticipate the other party’s goals. Asking the other party to discuss their goals (either at the table or before negotiations) and gathering information about the other party prior to nego- tiations are two common ways to gain such an understanding. Most importantly, you should attempt to understand whether the other party has the same goals as you do. We commonly assume that the other party’s goals are the same as ours and, therefore, that we will be in a head-to-head standoff about who will achieve that goal. Discovering that the other may have a different goal may be the first, and most important, step to determining whether the differ- ent goals are sufficiently compatible that you can invent a solution by which both parties achieve your goals. The Other Party’s Issues and Bargaining Mix The more information you can gather about the other through initial research, the better. Which data are most relevant will depend on the issues and likely elements in the bargaining mix. An analysis of the other party’s business history or previous negotiations, successful and otherwise, might provide useful clues. Financial data about the other party might be obtained through channels such as Internet searches, financial statements, company records, stock reports, interviews and court documents, or legal judgments. You might investigate the other party’s inventories. Sometimes you can learn a great deal simply by visiting with the other party. Another way to learn is to ask questions of people who have done business with the other party. The more you can get even a general sense of how much the other is capable of addressing and meeting other negotiator issues or needs, and of what issues the other will bring to the bar- gaining table, the better you can predict how the process is likely to unfold. The Other Party’s Interests and Needs In addition to learning about the other party’s major issues and resources, you also need to get information about their current interests and needs (see Chapter 3). This information may be obtained through a variety of approaches: Ask for a preliminary meeting, in order to have a broad discussion of what the other party would like to achieve in the upcoming negotiations (focus on broad interests, not just issues). Anticipate the other party’s interests (as if you were “in their shoes”). In that meeting, share your own interests. Ask others who know or have negotiated with the other party. Think of as many questions as you can to ask the other party about their goals, issues, interests, strategies, and constituencies. Read how the other party portrays themselves in the media. The importance of the issues or interests, along with the nature of the past relationship with the other party, will influence the depth to which you will probe to get information. Although it does take time and effort to get information, the results are usually more than worth the investment because valuable information can often be gathered through a phone call or visit. The Other Party’s Resistance Point and Alternatives (BATNA) You also need to get a sense of the other party’s resistance point and alternatives. What is the maximum they can give you? And what will the other party do if this negotiation does not succeed? Under- standing the other party’s limits and alternatives is important because it will give you some information about how far you can “push” them. How good are the other’s alternatives (BATNAs)? If the other party has a strong and viable alternative, they will probably be con- fident in negotiation, set high objectives, and be willing to push hard for those objectives, or threaten to move to their BATNA. In contrast, if the other party has a weak alternative, then they will be more dependent on achieving a satisfactory agreement with you and be less likely to push hard. Bear in mind that in a distributive negotiation, the other party may be less likely to disclose this information and/or may misrepresent their limits and alternatives so as to BOX 4.3 Many negotiators fail to achieve their goals and Listen to the other party’s “unreasonable” objectives because they are too preoccupied with demands, and treat them as opportunities to selling their own deal while spending far too little learn about their interests. If you can under- time working to understand the other party’s goals stand the rationale and interests underlying and priorities. these demands, you may be able to discover Researchers Deepak Malhotra and Max ways to address them and still realize your Bazerman of the Harvard Business School argue own goals and interests. that negotiators should spend far more time devel- Create common ground with adversaries. Get oping questions for the other party that will to know the other party! While you may be uncover the other party’s interests, explore reasons strongly opposed to each other on a key issue that party might reject their proposal, and expand of negotiation, you may have a lot in common the number of possible options for a win–win settle- on many other issues. Build a relationship that ment. Malhotra and Bazerman outline five major allows you to understand the other party bet- principles of this investigative negotiation approach: ter, to build trust, and hence to be more able to Ask the other side why it wants what it wants. find agreement on issues of common interest. As we noted frequently in Chapter 3, negotia- Continue your investigation even after the tors need to get behind positions to understand deal appears to be lost. You may be able to interests. Asking “why” questions of the other learn things that allow you to either resurrect is a major way to achieve this understanding. the deal or to strike a new and better deal in Seek to lessen the severity of the other party’s the future. constraints. Help the other party “solve the problems” that their limitations might impose Source: Deepak K. Malhotra and Max H. Bazerman, so that it will be easier for them to say yes to “Investigative Negotiation,” Harvard Business Review 89, your proposals. no. 7 (September 2007), pp. 72–76, 78, 148. ­ ressure you into a deal that is better for the other party. In an integrative negotiation, there p should be more openness between the parties, which should lead to more accurate disclo- sure of limits and alternatives. See Box 4.3 for some helpful advice on how to do this inves- tigative negotiation. 8. Setting One’s Own Targets and Opening Bids After negotiators have defined the issues, assembled a tentative agenda, and consulted oth- ers as appropriate and necessary, the next step is to define two other key points: the specific target point, where one realistically expects to achieve a settlement, and the opening bid, representing the best deal one can hope to achieve. Setting a Target There are numerous ways to set a target. Negotiators can ask, “What is an outcome that I would be pleased with?” “At what point would I be reasonably satis- fied?” “What have other people achieved in this situation?” “What would be a fair and reasonable settlement?” Targets may not be as firm and rigid as resistance points or alter- natives; negotiators might be able to set a general range or a class of several outcomes that 130 would be equally acceptable. There are several principles to keep in mind when setting a target point: 1. Targets should be specific, difficult but achievable, and verifiable. A lot can be learned about setting a target point from researchers who have studied goal setting as a moti- vation and performance management tool (e.g., Locke and Latham, 1984). First, goals need to be specific. If negotiating a salary, a negotiator should set a specific number (e.g., $75,000) rather than a more general goal (e.g., anything better than $60,000 a year). Second, goals should be difficult but achievable. A goal should be set so that it is an improvement over the current situation or circumstances, but not so difficult that it can’t be achieved. Finally, it should be possible to define a goal so that it is clear when it is or is not achieved. This is not a problem for a quantifiable goal like a payment amount or a dollar salary, but it can be a problem for a more diffuse goal (e.g., “get a decent salary that will pay me what I am worth.” “Decent” and “what I am worth” are highly subjective targets, and it will be difficult for the negotiator—and others—to judge when that goal has been truly achieved). 2. Target setting requires proactive thinking about one’s own objectives. When approaching a negotiation, it is possible to pay too much attention to the other party—how they behave, what they will probably demand or settle for, and what it is like to deal with that party. If negotiators focus attention on the other party to the exclusion of them- selves, they may set their goals strictly as a reaction to the other’s anticipated goals and targets. Reactive strategies are likely to make negotiators feel threatened and defensive and lessen their flexibility and creativity (and perhaps limit the goals they think are achievable). In contrast, being proactive about target setting permits negotia- tors to be flexible in what they will accept and improves the likelihood of arriving at a mutually satisfactory outcome. 3. Target setting may require considering how to package several issues and objectives. Most negotiators have a mixture of bargaining objectives, so they must consider the best way to achieve satisfaction across multiple issues. To package issues effectively, nego- tiators need to understand the issues, the relative priorities across the issues, and the bargaining mix. It is possible to define and evaluate some of these packages as “open- ing bids” and others as “targets” in the same ways as evaluating individual issues. When packages involve intangible issues, or issues for which it is difficult to specify definite targets, it is harder to evaluate and compare the packages explicitly, but efforts should be made to do so. 4. Target setting requires an understanding of trade-offs and throwaways. Packaging raises another possible challenge: What if the other party proposes a package that puts issues A, B, and C as major issues in their opening bid but only casually mentions issue D? The other party’s next offer never mentions issue D, but issue D is something you can easily give them. If you can give easily on issue D, would the other party be willing to take less on A, B, or C? Negotiators may want to consider giving away “something for nothing” if such an item can be part of the transaction. Even if an issue is unimportant or inconsequential to you, it may be valuable or attractive to the other party. Awareness of the actual or likely value of such concessions in a package can considerably enrich the value of what you offer to the other party at little or no BOX 4.4 One of the major questions that negotiators ask is interested. As one or more of these actors enter the whether to start “high” (i.e., as the seller, to make a auction, they create excitement and attract other more extreme offer) or to start “low” (i.e., make a parties into the bidding; some of the actors become more modest ask)? Researchers have shown that enmeshed in sunk cost dynamics and drive the whether you believe you are in a “negotiation” or in price up. Hence, in an auction, lower starting offers an “auction” can make a dramatic difference in the tend to lead to higher final settlements. answer to this question. As the researchers note, the primary factors In a negotiation, there is a fixed number of contributing to these different dynamics are actors (e.g., two); when someone puts a number on things called “anchoring effects”—powerful psy- the table, the other party responds to that offer chological effects that occur when a starting with a counteroffer, and the give-and-take often numeric value (in a negotiation, an auction, or leads to agreement. In these situations, high start- another “estimation”) influences how subsequent ing offers often end in higher negotiated outcomes numeric values are introduced and judged. We (because the offer and counteroffer define the bar- explore the powerful role of anchoring effects gaining range and the parties move toward the mid- more completely in Chapter 6. dle of that range). In contrast, in an auction, the Source: Adam D. Galinsky, Gillian Ku, and Thomas Mussweiler, number of actors is unknown. In these situations, “To Start Low or to Start High? The Case of Auctions Versus low starting offers can attract other actors into Negotiations,” Current Directions in Psychological Science 18, the auction, parties who might not otherwise be no. 6 (December 1, 2009), pp. 357–61. cost to yourself. Using the house example, the seller may have eight months left on a local parking-lot pass or access to a community recreation facility. Because the money the seller paid for the pass is nonrefundable, the pass will be worthless to the seller once they leave the area, but the buyer could determine that acquiring the pass would be very valuable. To evaluate these packages, negotiators need to have some idea of what each item in the bargaining mix is worth in terms that can be compared or traded-off across issues. As mentioned earlier, it may be desirable to find a common dimension such as dollar value or a scale of utility points to compare issues in the bargaining mix, or to compare tangibles with intangibles, so that one can evaluate all items in the mix on a common dimension. For example, in some labor negotiations, each side often tries to value an issue in dollar cost/benefit terms. Even if the fit is not perfect, any guide is better than none. Moreover, if intangibles are a key part of the bargaining mix, nego- tiators must know the point at which they are willing to abandon the pursuit of an intangible in favor of substantial gains on tangibles. Setting an Opening Bid Similarly, there are numerous ways to set an initial asking price. An opening bid may be the best possible outcome, an ideal solution, something even better than was achieved last time. It is easy to get overly confident, however, and to set an opening that is so unrealistic that the other party immediately laughs, gets angry, or walks away before responding. While openings are usually formulated around a “best possible” settlement, it is also easy to inflate them to the point that they become self-defeating because they are too unrealistic in the eyes of the other negotiator or observers with a more realistic perspective. See Box 4.4 for some helpful advice on setting an opening bid. 132 9. Assessing the Social Context of Negotiation When people are negotiating for themselves—for example, buying a used mountain bicycle or exercise machine—they can determine the bargaining mix on their own. But when people negotiate in a professional context, complexity increases dramatically. First, there may be more than two negotiators at the table or in a situation to dramatically affect what happens at the table. Multiple parties at the table often lead to coalitions of negotiators who align with each other in order to win the negotiation (cf. Wheeler, 2004, and our discussion of coalition dynamics in Chapter 12). Second, negotiators also have “constituents”—bosses, superiors who make the final decision, political contacts, or other parties who will evaluate and critique the solution achieved. Moreover, there may be observers of the negotiation who also watch and critique the negotiation. When one has a constituent or observer, other issues arise, such as who conducts the negotiation, who can participate in the negotiation, and who has the ultimate power to affirm negotiated agreements; these issues are addressed in Chapter 11. Finally, negotiation occurs in a context of rules—a social system of laws, customs, common business practices, cultural norms, and political cross-pressures. One way to assess all the key parties in a negotiation---for yourself and the other party/ parties---is to complete a “field analysis.” Imagine that you are the captain of a soccer team, about to play a game on the field (see Figure 4.5). Assessing constituents is the same as assessing all the parties who are in the soccer stadium: 1. Who is, or should be, on our team on our side of the field (e.g., Side A)? Perhaps it is just the negotiator (a one-on-one game). But perhaps we want other help: an attorney, an accountant, or an expert to assist us; someone to coach us, give us moral support, or listen closely to what the other side says; a recorder or note-taker. 2. Who is on the other side of the field (Side B)? This is discussed in more detail in the next section. 3. Who is on the sidelines and can affect the play of the game (Side C)? Who are the negotiation equivalents of substitute players, owners, managers, and strategists? This includes one’s direct superior or the person who must approve or authorize the agree- ment reached. Most importantly, these considerations directly affect how decisions will be made about what is acceptable or unacceptable to those on each side. 4. Who is in the stands (D)? Who is watching the game, is interested in it, but can only indirectly affect what happens? This might include senior managers, shareholders, competi- tors, co-workers, financial analysts, the media, or others. When multiple parties enter the negotiation—whether they are parties on the sidelines who are active in the negotiation or “interested parties” who may be affected by the settlement—negotiations will become more complex. The nature of these complexities is explored in Chapters 11, 12, and 13. 5. What is going on in the broader environment in which the negotiation takes place (Space E)? A number of “context” issues can affect negotiation: What is the history of the “game” relationship with the other party, and how does it affect the overall expectations they bring to this negotiation (see Chapter 10)? What kind of a relationship with the other party is expected or desired for the future, and how do these expectations affect the current negotiation (see Chapter 10)? FIGURE 4.5 | A Field Analysis of Negotiation E D E C A B C E D E A. The direct actors (who is on the field on our side?) B. The opposition actors (who is on the field on their side?) C. Indirect actors (who is on the sidelines?) D. Interested observers (who is in the stands?) E. Environmental factors (what is going on in the broad environment of the game—outside the stadium, but shaping and defining what happens in the stadium?)  How often do we expect to negotiate in the future—that is, how many rounds of negotiation will there be? Multiround negotiations create issues of managing prec- edents, planning future agendas, and ensuring that current agreements are enacted and monitored (Wheeler, 2004). What are the deadlines or time limits? To extend the game metaphor, games have a finite time period that is broken down into periods or segments. Are there similar constraints that bound this negotiation? What are the “rules of the game” by which this agreement will be managed? Is there a set of fixed rules, such as a legal structure that will bind and enforce con- tracts? What are the common and acceptable practices in the legal system in which the deal is being done? Is the rule structure itself negotiable so that we can make up our own rules about how certain problems and situations will be han- dled? Will one party try to impose rules unilaterally, and what can the other side do? Are negotiations occurring across cultures, and what cultural rules or prac- tices may apply (see Chapter 16)? Finally, is there a forum in which certain nego- tiations should take place—A public space, a private office, a lawyer’s office, a courthouse—and are there dispute resolution mechanisms in place to guide how we should behave if we cannot agree? Are referees, or “third parties,” available to officiate the game and intervene when there has been a breach of the rules (see Chapter 19) (Watkins, 2002)? What is common and acceptable practice in the ethical system in which the deal is being done (see Chapter 5)? How will we decide if one party “cheats”—are there clear rules about what is and is not fair? Considering these questions is important to the progress of the negotiation process. A negotiator bargaining on behalf of others (a company, union, department, club, family, etc.) must consult with them so that their concerns and priorities are included in the mix. In the house-buying illustration used earlier, let’s assume that one member of a couple is doing the negotiating, and the other can’t attend the meeting. If that person fails to consider their partner’s concerns about the condition in which the house is left, or their children’s wish that the move not occur during the school year, then the negotiated resolution may be rejected by the constituents. A negotiator who is representing a constituency is accountable to that constituency and must include their wishes in proposals—subsequently either fulfill- ing those wishes for them through negotiation or explaining why their desires were not met. When negotiating for a large constituency, such as an entire company, a union, or a com- munity, the process of consulting with the constituency can be elaborate and exhaustive. The negotiator may recognize that the constituency’s wish list is unrealistic and unobtain- able, requiring the negotiator to negotiate with the constituency over what should be included on the agenda and what is realistic to expect. It is also critical to understand what happens when the two parties get close to an agreement. Does the negotiator have author- ity to reach agreement, or does the approval of the constituents have to be obtained? Con- stituents control negotiators by limiting how much they can decide on their own, and understanding these limits will keep negotiators in alignment with their constituents. (We explore this further in detail in Chapter 11.) 10. Presenting the Issues to the Other Party: Substance and Process Once you have thoroughly worked your way through the previous planning steps, the last step is to think through the execution of your plan. There are two major components to consider here: how you will present and frame the issues and interests and how you should structure the process by which this information is presented. Presenting and Framing the Issues First, consider how you will present your case to the other negotiator. In addition, you will need to consider how to provide ample supporting facts and arguments for your case and to be able to anticipate and refute the other party’s arguments with counterarguments. Because of the breadth and diversity of issues that can be included in negotiations, it is not possible to specify all the procedures that can be used to assemble information. There are, however, some good general guides that can be used. A negotiator can ask these questions: 1. What facts support my point of view? How can I (and or theory) validate this information as credible? 2. Whom may I consult or talk with to help me elaborate or clarify the facts? What records, files, or data sources exist that support my arguments? Can I enlist experts to support my arguments? 3. Have these issues been negotiated before by others under similar circumstances? Can I consult those negotiators to determine what major arguments they used, which ones were successful, and which were not? 4. What is the other party’s point of view likely to be? What are their interests? What arguments is the other party likely to make? How can I respond to those arguments and seek more creative positions that go further in addressing both sides’ issues and interests? 5. How can I develop and present the facts so they are most convincing? What visual aids, pictures, charts, graphs, expert testimony, and the like can be helpful or make the best case? In Chapters 7 and 8, we offer extensive advice on how to use power and how to structure the presentation of information to be maximally influential. Planning the Process and Structuring the Context by which Information Is Presented Malhotra (2015) convincingly argues that focusing on the “preliminaries” of a negotiation is as important as what happens once the negotiation begins. Setting these preliminaries can occur before one gets to the table or in a conversation with the other party before the formal negotiation begins. A negotiator should consider a number of elements of protocol or process: What agenda should we follow? We briefly mentioned this issue in step 7, in assessing the social structure. A negotiator may unilaterally draw up a firm list of issues well before the initial negotiation meeting. This process is valuable because it forces negotiators  to think through their positions and decide on objectives. The unilateral list of issues constitutes a preliminary agenda for negotiation. It is what the negotiator wants to discuss and the order in which they want to discuss them (e.g., least versus most important issue first, etc.). Pendergast (1990) suggests five major concerns to be considered in developing a negotiation agenda: 1. Scope: What issue should be considered? 2. Sequence: In what order should those issues be addressed? 3. Framing: How should the issues be presented (see Chapters 6 and 7)? 4. Packaging: Should the issues be taken one at a time or in various groupings/ packages? 5. Formula: Should we strive to first get an agreement on general principles, or should we immediately begin to discuss each of the issues? While the negotiator may propose agendas unilaterally, this approach has a potential risk. If the negotiator’s list differs from a preset agenda or the other side’s preferred list, the negotiator may bring issues to the table that the other party is unprepared to discuss or may define priorities that cannot be achieved realistically. Negotiators do not welcome public surprises or the embarrassment that may come when the other side raises an issue they are completely unprepared to discuss. In this situation, experienced negotiators will ask for a recess to get information and prepare themselves on the new issue, thus creating unanticipated delays. They may even refuse to include the new item on the agenda because they haven’t had time to prepare for it. If the other party is also accountable to a constituency, they may not want to reopen earlier decisions or take the time to evaluate the new issue. For this reason, many professional negotiators such as labor negotiators and diplomats often exchange and negotiate the agenda in advance. They want to agree on what issues will be included on the agenda before engaging in the substantive discussion of those issues. Where should we negotiate? Negotiators are more comfortable on their home turf— their own office, building, or city. They know the space, they feel comfortable and relaxed, they have direct access to all the amenities—assistants, research information, expert advice, and so on. In cross-cultural negotiations (see Chapter 16), language and cultural differences may come into play, and the parties may have to travel across many time zones, stay in unfamiliar locations, eat unfamiliar food, and deal with unique cultural styles and nuances. If negotiators want to minimize the advantage that comes with home turf, then they need to select neutral territory in which neither party will have an advantage. In addition, negotiators can choose the degree of formality of the environment. Formal deliberations are often held in board or conference rooms or hotel meeting rooms; informal deliberations can be held in restaurants, cocktail lounges, or rented conference rooms. How should we begin? Research has shown that the tone set by the negotiators in the first five minutes can significantly influence how the negotiation evolves. Negotiations are more productive when each party speaks, shows that they are listening to the other, and shows that they are actively seeking a mutually acceptable outcome (Curhan and Penfield, 2007).  What is the time period of the negotiation? If negotiators expect long, protracted delib- erations, they might want to negotiate the time and duration of sessions. When do we start? How long do we meet? When do we need to end? When can we call for coffee breaks or time to caucus with our teams? What might be done if negotiation fails? What will happen if we deadlock? Can we “redo” the deal? Will we go to a third-party neutral (see Chapter 19)? Might we try some other techniques? (See Chapters 17 and 18 for suggestions on getting negotiations back on track.) How will we keep track of what is agreed to? Many negotiator