Integrative Bargaining

NEGOTIATION SKILLS

Executives negotiate with customers and suppliers, with large shareholders and creditors, with people inside their companies and across national borders. Being an important preliminary part of working with others, managing people often means reaching an agreement with them. Wherever parties with different interests and perceptions depend on each other for results, negotiation matters.

Negotiation is a process (either formal or informal) of interpersonal communication designed to produce mutual agreement and gain, where interpersonal differences exist between individuals.

Negotiation Strategies

Negotiation strategies articulate the negotiator’s overall game plan, which is designed to achieve desired goals.

Distributive Bargaining

It is also called competitive or win-lose. Distributive bargaining is a competition over who is going to get the most of the limited resources. The goals of the parties appear irreconcilable. There is “a fixed pie belief”. Parties set aggressive targets, start high, concede slowly, and employ threats, bluffs.

Integrative Bargaining

Win-win negotiating is a positive-sum approach: each party gains without a corresponding loss for the other party. The focus shifts from battling over the division of the pie to the means of expanding it by uncovering and reconciling underlying interests. Win-win negotiations can work only when issues are integrative in nature and all parties are committed to an integrative process.

	Integrative Bargaining	Distributive Bargaining
Flow of information	Create a free and open flow, share information openly.	Conceal information, or use it selectively and strategically.
Understanding the other	Attempts to understand what the other side wants and needs.	Make no effort to understand the other side, or use the information to gain strategic advantage.
Attention to commonalities and differences	Emphasized common goals, interests.	Emphasized differences in goals, interests.
Focus on solutions	Search for solutions that meet the needs of both sides.	Search for solutions that meet your own needs or even block the other from meeting their need.

The best tested overall program for effective negotiations has been developed by the Harvard Negotiation Project. The strategy is referred to as principled negotiation, meaning about the same thing as integrative negotiation.

In principled negotiations your aim is to get an agreement that is beneficial to both parties, for both to have a powerful incentive to implement it and stick to its conditions.

Principled negotiation centers on four basic points.

1. People. Separate the People from the Problem.

Fisher and Ury recommend: “The participants should come to see themselves as working side by side, attacking the problem, not each other”.

2. Interests. Focus on Interests, Not Positions.

The intent here is to overcome the drawback of focusing on people’s stated positions when the true object of a negotiation is to satisfy the underlying interests of both sides.

3. Options. Invent Options for Mutual Gain.

An effective negotiation strategy is generating several workable options before you enter the negotiation. Both parties must realize that the outcome of negotiation is not inevitably one position winning over the other.

4. Criteria. Insist on Using Objective Criteria.

To overcome stubbornness and rigidity on one or both sides, it is helpful to insist that the agreement reached must reflect some fair standard such as market value, expert opinion, customary settlements, or law.