Week 9 Negotiation and Conflict PDF

Organizational 1 Behaviour  2 Agenda Topics to Cover 1. What are the 01 differences between distributive and 02 integrative bargaining?...

Organizational 1 Behaviour  2 Agenda Topics to Cover 1. What are the 01 differences between distributive and 02 integrative bargaining? 03 2. What are the 4 main points you should 04 decide on before entering any 05 negotiation? 06 3. How does one can negotiate effectively?  3 Negotiation More than meets the eye! Negotiation - decision-making situations in which two or more interdependent parties attempt to reach agreement All of us negotiate, almost daily Many small negotiations, few large negotiations Skills apply to the boardroom, personal relationships  4 Negotiation More than meets the eye! Negotiations occur for several reasons: To agree on how to share or divide a limited resource To create something new that neither party could attain on his or her own To resolve a problem or dispute between the parties  5 IT’S NEGOTIATION TIME “This may be the first time that a male subordinate has attempted to get a modest, scheduled raise by threatening to withhold sex from a female superior. It will be a groundbreaking case when it inevitably goes to trial.”  6 Distributive Negotiation Zero-sum games Goals of one party are in fundamental, direct conflict to another party One person’s gain is the other’s loss Maximizing one’s own share of resources is the goal  7 Distributive Negotiation All about value claiming! Minimum preparation for any negotiation will include: Target point (aspiration point) Resistance point (walk away) Asking price, initial offer BATNA – This will influence the other three points!  8 Target A lot like goals, good to have! Your goal in the negotiation What price would you like to sell/buy the item for? Should be realistic, based on available information Subjective  9 Resistance/Reservation Point Know when to walk away and know when to run! The point at which you are indifferent to whether you achieve a negotiated agreement or walk away Beyond the resistance point, you prefer no agreement Never reveal your resistance point!  10 Putting it Together – Buying a House Role of the “Buyer” Target – You would like to buy the house at a price as close to $220,000 as possible Resistance point – You would be willing to pay up to $235,000 before walking away Buyer’s Target Buyer’s Resistance 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  11 Putting it Together – Buying a House Role of the “Seller” Target – You would prefer to sell as close to $240,000 as possible Resistance point – You have decided that you would settle for any offer that yielded at least $225,000 Buyer’s Target Buyer’s Resistance Sellers’s Resistance Seller’s Target 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  12 Bargaining Zone The bargaining zone (or zone of potential agreement - ZOPA) is defined as the space between the two parties’ reservation points $225,000 – 235,000 This is referred to as a “positive bargaining zone” and some form of agreement should be possible Positive Zone Buyer’s Target Buyer’s Resistance Sellers’s Resistance Seller’s Target 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  13 Bargaining Zone What happens if: The Buyer will pay no more than $225,000 (Buyer’s resistance) The Seller’s wants at least $235,000 (Seller’s resistance) This is referred to as a “negative bargaining zone” It is better to walk away rather than to negotiate! Negative Zone Buyer’s Resistance Walk Away! Sellers’s Resistance 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  14 What Exactly is a BATNA? It is different from your reservation point Best Alternative To a Negotiated Agreement (BATNA) Alternatives give the negotiator power to walk away from the negotiation If alternatives are attractive, negotiators can: Set their goals higher Make fewer concessions If there are no attractive alternatives: Negotiators have much less bargaining power  15 What Exactly is a BATNA? It is different from your reservation point Role of the “Buyer” Target – $220,000 Resistance point – $235,000 What would happen if you could buy a similar/same house for $230,000? Buyer’s Target Buyer’s Resistance 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  16 What Exactly is a BATNA? It is different from your reservation point Role of the “Buyer” Target – $220,000 Resistance point – $235,000 What would happen if you could buy a similar/same house for $230,000? Buyer’s Target Buyer’s Resistance 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  17 What Exactly is a BATNA? It is different from your reservation point Role of the “Buyer” Target – $220,000 Resistance point – $235,000 What would happen if you could buy a similar/same house for $230,000? Buyer’s Target Buyer’s Resistance The buyer’s target may also be influenced! 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  18 What Exactly is a BATNA? It is different from your reservation point Role of the “Buyer” Target – $215,000 Resistance point – $230,000 We still have a positive bargaining zone If we “meet in the middle” then the buyer gains value! $227,500 instead of $230,000 Buyer’s Target Buyer’s Resistance Sellers’s Resistance Seller’s Target 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  19 What Exactly is a BATNA? It is different from your reservation point Role of the “Buyer” Target – $215,000 Resistance point – $230,000 We still have a positive bargaining zone If we “meet in the middle” then the buyer gains value! $227,500 instead of $230,000 Buyer’s Target Buyer’s Resistance Sellers’s Resistance Seller’s Target 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245  20 BATNA Vs Reservation Point What exactly is the difference? Reservation Price is BATNA +/- things that make you want to do the deal (premium) switching costs, ego, miscellaneous preferences You know you can purchase a similar/same house for $230,000 (BATNA) however: You have negotiated for hours on this deal You like the person you are dealing with Cute guy/girl living next door You are willing to pay $231,000 Your BATNA ($230,000) plus the $1000 premium  21 The Bottom Line The BATNA serves to help you set the correct resistance point The resistance point is what you use in bargaining Knowing the value of your BATNA helps you protect your resistance point from influence by the other party  22 Rickenbacker 330 Jetglo Semi hollow body Iconic rock guitar played by: The Beatles The Who Led Zappeling U2 Radiohead your professor 22  23 The Opening Offer The power of an anchor People believe it is best to sit back and wait for the first offer Research suggests that it is best to make the first offer This is due to the anchoring effect  24 The Power of an Anchor! (Tversky & Kahneman) Five seconds to answer: 1x2x3x4x5x6x7x8 Median = 512 8x7x6x5x4x3x2x1 Median = 2250 Actual = 40,320  25 Integrative Negotiations All the best negotiators do it! Also known as non- zero-sum or win-win Finding ways to increase the amount of pie on the table Finding solutions that are of value to both parties Involve active listening Value creation (and claiming)!  26 Integrative Negotiations What makes it different? Focus on commonalities rather than differences Address needs and interests, not positions & issues Commit to meeting the needs of all involved parties Exchange information and ideas Invent options for mutual gain 26  27 A Story to Remember  28 Buying a Condo Integrative Potential? Buying a condo: Issues 1. Price 2. Possession date 3. Electronics 4. Appliances 5. Paint  29 Issue #1 - Price Price was a purely distributive issue (win/lose) Should have been able to make a deal (positive bargaining range)  30 Issue #2 – Possession Date Possession date was a common issues You both wanted the same thing! If you didn’t agree on April 1 – why? st  31 Issues # 3 & 4 Electronics (TV & Sound System) Buyer Seller 1. Electronics included 60 10 2. TV only 10 10 3. Sound system only 10 10 4. Electronics not included 10 20 Appliances (Washer & Dryer) Buyer Seller 1. Appliances Included 25 10 2. Washer only 10 10 3. Dryer only 10 10 4. Appliances not included 10 60 Creating value through logrolling!  32 Logrolling Logrolling Often value is created Buyer – 60 + 10 = 70 when we trade an Seller – 60 +10 = 70 issue of less Total = 140 importance for an issue of more importance! Non-logrolling We often feel the need Buyer – 10 + 10 = 20 to “defeat” our counterpart – this Seller – 10 +10 = 20 destroys value Total = 40  33 Issue #5 - Paint Paint - integrative issue Seller didn’t have to paint Save $1000 Buyer would have just painted another colour Could have worked this into the price  34 Recognizing Integrative Potential The negotiation includes more than one issue Not just $$$ It is possible to add more issues to the mix May not even realize this until we explore interests Timing, finance, looking strong The negotiation is likely to recur over time Relational issues, long term benefits The parties have varying preferences across the issues Different reasons for wanting what you want  35 Reaching Integrative Potential 1. Understand the problem fully 1. Ask why, not what 2. Generate alternative solutions 3. Never quit negotiating  36 Four Hallmarks Value is created Value is claimed Other party feels good Protect or enhance the negotiation relationship  37 Become a master of negotiation Learn from Leighton Wilks and Michael Scott OBHR 493: Business Negotiation with Leighton Wilks or with me The Office, Season 3. episode 19: “the negotiation” https://www.youtube.com/w atch?v=6kfgXoclrjk&feature =youtu.be  38 CONFLICT RESOLUTION Win-win-win!  39 The Office 39  40 Sources of conflict at work Incompatible goals: goals of group A interfere with group B’s Differentiation: differences in training, beliefs, experiences, values Interdependence: own tasks/rewards depend on others' performance Ambiguity: unclear or complete lack of rules on how work is done F*ck you Resources: when groups compete for the same limited resources Group Identification: In-groups based on common interest, background, etc. 40  41 Types of conflict Task/Cognitive Conflict (Assertiveness) Conflict that is task-oriented and related to differences in perspectives and judgments regarding an issue May involve conflict of ideas, norms of civility, shared goals Functional because can lead to identifying solutions to problems Affective/Relationship Conflict (Cooperativeness) F*ck you Conflict is emotional and aimed at a person, not an issue Personality clashes; Conflicting individual goals May result in stress, retaliation, poor communication, poor decisions Process Conflict 41  42 A Classic Paradox Boulding (1964) Groups of managers to solve complex problems Half of the groups had a “devil’s advocate” Groups with DA performed better More alternatives, higher performance In all groups, the DA was asked to leave!  43 Conflict and Non-linear relationship Outcomes Positiv e Org outcomes Negati ve High Low Levels of  44 The Dual Concerns Yes, it’s another 2x2 matrix Model  45 Forcing Satisfy personal needs at the expense of the other person Formal authority, bullying, manipulation, etc. Outcome: You feel vindicated; other person feels defeated Breeds hostility, resentment, retaliation  46 Avoiding Neglect interests of both parties by sidestepping or postponing Reflects inability to handle emotion of conflict Outcome: Nothing (or things get worse) Tends to be use more by collectivistic  47 Accommodating \ Yielding Satisfy other party’s concerns but neglect your own Preserve a relationship at the expense of genuine appraisal of issues Outcome: Other person takes advantage of you; decreased power and credibility May be able to get more out of next negotiation  48 Compromise Seek partial satisfaction for both parties Expedient, not effective, solutions Outcome: Gamesmanship (sometimes) and suboptimal resolutions  49 Collaborating \ problem This sounds like a win-win situation to me solving Seek to address concerns of both parties No assignment of blame Outcome: When collaborating is possible, problem likely to be resolved  50 Conflict Management Strategies A summary slide: this time with cute animal images Forcing: Imposing one’s will/goals on the other party (Win-Lose Orientation) Avoiding: Ignoring the issues creating the conflict Accommodating \ Yielding: Accepting and implementing the other party’s will/goals Compromising: Giving up some things to reach an outcome. Search for middle ground. Collaborating\ Problem Solving: Attempting to find a solution that satisfies both parties’ goals as much as  51 Conflict resolution outcomes by type and method 7-51