Fundamentals of Negotiations

Sally has been a loyal employee of Better Made Snacks
for five years. BMS gives each employee a locker to change from
their personal clothes into their factory uniforms.
When some new employees are hired, Sally repeatedly
complained her locker had been broken into and her personal
designer jeans had been stolen. She asked her BMS supervisor to add
the replacement cost of the stolen jeans onto her paycheck. He
refused stating it’s in the employee contract that BMS takes no
responsible for lost or stolen items of employees on company
property. Sally proceeds to file a union grievance against BMS for
being asked to work extra hours outsider her contract
terms.
1.     What approach, according to
our text, did Sally take to the problem by filing the
grievance?
2.     When the owner of BMS found
out, he scolded the supervisor and said, “You should have paid for
the clothes! Do you know how much cost and trouble the grievance is
now costing me?”
What dispute resolution approach from our reading this
week was the owner implying he would have implemented in solving
the problem?
You must cite a specific page(s) from the text upon
which you are relying to receive credit.
Lecture Topics
BOTH ??them and need sources in LECTURE
Week One
Topic 1: Fundamentals of Negotiations

Topic 1.1 | Topic 1.2 | Topic 1.3
Topic 1.1: Negotiations: An Overview

Negotiations take place in our lives every day in some manner,
shape or form. The context may vary, but an examination of our
daily lives discloses negotiations at work (pay, direction a
project may go, who will work overtime), at home with your spouse,
children or parents – whether in discipline or bargaining for
chores or vacation spots or which bills to pay first. We negotiate
with professionals and in transactions, even with our pets.
Upon reflection, it is worth recognizing that not only are
negotiations commonplace in our lives, but essential to an
effective and prosperous society. Negotiations can diffuse
conflicts and serious crisis. They allow business to run more
efficiently and governments to overcome party politics for the
common good of the people they serve.
An examination of how negotiations affect our lives should begin
by identifying and describing different methods of negotiation and
the context in which they may be used – individually or in
combination – to achieve the desired results. Negotiations are not
always successful, and we shall explore during this course some of
the reasons that negotiations breakdown and fail.
Much research has emerged over the past two decades that have
explored cross-cultural differences in negotiation style [Fisher
1980; Tung 1984]. Conclusions of these studies find that people of
different cultures utilize significantly different negotiation
styles and methodologies. Some of these different approaches
include communication styles used, persuasion strategies employed
and protocols followed, often resulting in very different outcomes
based on cultural interest, pressures, mores and customs.
Principled negotiation is seen by many as a very American approach
to conflict.
Principled negotiation is the name given to the interest-based
approach to negotiation set out in the best-known conflict
resolution book, Getting to Yes, first published in 1981 by Roger
Fisher and William Ury. The book advocates four fundamental
principles of negotiation: 1) separate the people from the problem;
2) focus on interests, not positions; 3) invent options for mutual
gain; and 4) insist on objective criteria.
Negotiations, in simplest terms, comes in two forms –
Distributive and Integrative: In distributive (win-lose,
competitive) bargaining, each party tries to secure the most
benefit for themselves, without or little regard for the other
side’s outcome. In integrative (win-win, collaborative) bargaining,
both parties work together to achieve maximum mutual gains.
Distributive bargaining is more appropriate when resources are
fixed and the parties’ interests are directly opposed. Distributive
negotiations are defined by each party’s opening (initial statement
of terms), resistance and target points, that is, their initial
offers, their lowest acceptable bid, and their desired bid. Each
party’s goal is to close a deal as near to the other’s resistance
point as possible. Distributive negotiation strategies seek to
conceal the party’s resistance point, uncover the other side’s
resistance point, or to influence their views of what is possible.
It is power based negotiating.
Integrative negotiation occurs when the parties share a common
goal for each other to achieve a positive outcome. The presence of
shared goals, trust, and clear communication between the parties
effectively facilitates successful integrative negotiation. Often,
seemingly distributive situations may be reframed to permit
integrative solutions. To be successful, integrative negotiators
must focus on commonalties and engage in a free and open flow of
information. They must truly understand each other’s interests and
needs, and must operate in good faith in seeking solutions that
satisfy both sides.
For more on the topic, please refer to your course outline for
reading assignments from the text, and link to the sites below:

http://www.beyondintractability.org/essay/culture_negotiation/

http://conflict911.com/guestconflict/crossculturenegotiation.htm

http://www.strategicdecisionsciences.com/documents/Cross_Cultural_Negotiations.pdf
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Topic 1.2: Approaches to Resolving Disputes:
Interest, Rights and Power

Resolving disputes is one of the uses for negotiation. Three
identifiable means of resolving disputes are: reconciling the
interests of the disputing parties; making a determination between
which party is right or wrong; and identifying the party which has
the more powerful position (or negotiating skill).
We can use a cost/benefit analysis – transaction costs
negotiation model (e.g., litigation, time delays, etc.), that takes
into account overall satisfaction of the parties with the outcome,
short and long term effects on the parties relationships, and
effectiveness of results in limiting future disputes. Different
methods of negotiation may prove more successful in certain cases
or stages of the dispute resolution process, or other circumstances
where negotiation is applied for a desired outcome.
For example, lets look at some of the transaction costs
associated with a workers’ strike: The most obvious costs of
striking are economic. Management payroll and the overhead costs
typically continue to need to be met while the machines stand idle.
Sometimes strikes led to violence and the destruction of company
property. The strikers, too, incur costs—lost wages. There may also
be lost opportunities for the company. For example, a series of
strikes could lead to the loss of a valuable sales contract. In a
family argument, the costs would include the frustrating hours
spent disputing, the frayed nerves and tension headaches, and the
missed opportunities to do more enjoyable or useful tasks. All
dispute resolution procedures carry transaction costs: the time,
money, and emotional energy expended in disputing; the resources
consumed and destroyed; and the opportunities lost.
As stated above, in distributive (win-lose, competitive)
bargaining, each party tries to secure the most benefit for
themselves, without regard for the other side’s outcome. In
integrative (win-win, collaborative) bargaining, both parties work
together to achieve maximum mutual gains. One can see how one
approach can shift between one another depending on the changing
contexts (current circumstance).
Authors. Lax and Sebenius, were among the first to argue that
actually all negotiations were combinations of approaches. First
negotiators try to “create value” by enlarging the pie as much as
they can. (This is the approach advocated by interest-based and
principled negotiation.). But inevitably, the pie will need to be
divided up, which calls for distributive negotiation (power-based).
As such, according to Lax and Sabenius, all negotiation is a
combination of creating and then claiming value inclusively, not
one or the other as other authors suggest.
For more on the topic, please refer to your course outline for
reading assignments from the text, and link to the sites below:

http://goliath.ecnext.com/coms2/gi_0199-2059327/A-transaction-cost-model-of.html

http://www.strategicdecisionsciences.com/documents/Cross_Cultural_Negotiations.pdf
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Topic 1.3: Selecting an Effective Strategy

There are at least 5 readily identifiable negotiating
strategies. Which will be most effective is dependent upon the
specific circumstances, nature, interests and goals of the parties.
Each strategy can be utilized alone or in combination with others
to bring about the desired goal. Often individual parties are
utilizing differing strategies and these may or may not complement
each other, often causing a break down in the negotiations. These
different negotiation strategies are sometimes referred to by
different titles depending on the author.
As much of the negotiation literature focuses on business
(particularly sales) or politics as prime battlegrounds for using
negotiations, two strategies, two strategies seem to prevail –
although sometimes referred to by different names. One strategy is
interest-based (also known as integrative, or cooperative)
negotiating, while the other is power (also known as distributive
or competitive or positional) bargaining.
In Getting to Yes, Roger Fisher and William Ury argue that there
are three approaches: hard, soft, and what they call “principled
negotiation.” Hard is essentially extremely competitive bargaining,
soft extremely integrative bargaining (so integrative that one
gives up one’s own interests in the hopes of meeting the other
person’s interests) and principled negotiation is supposed to be
somewhere in between, but closer to soft, certainly, than hard. l
of these topics are discussed in this section.
Interrelationship among Interests, Rights, and Power: The
relationship among interests, rights, and power can be pictured
rings of inclusive circles – each one inside of another. The
innermost circle represents interests; the middle, rights; and the
outer circle is power. A reconciliation of interests takes place
within the context of the parties’ comparable rights and powers.
For example, the likely outcome of a dispute if taken to court, or
for a union to strike, acts to define the bargaining range
(context) within which a resolution can be found. Similarly, the
determination of rights takes place within the context of power.
One party, for instance, may win a judgment in court, but unless
the judgment can be enforced, the dispute will continue. Once again
it is easy to see, that the process of resolving a dispute often
involves a shift from interests to rights to power and back
again.
For more on the topic, please refer to your course outline for
reading assignments from the text, and link to the sites below:

http://www.beyondintractability.org/essay/negotiation_strategies/
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Practice Question: Name areas of everyday life
where negotiations take place in your life and
identify what negotiation method would likely be the most effective
for each area listed.
Week One
Topic 2: Popular Negotiation Methodologies

Topic 2.1 | Topic 2.2 | Topic 2.3
Topic 2.1: Power Negotiating

As the name implies, a power-based approach to resolving
conflict or negotiating a transaction depends on which side has the
most power or leverage. An end to a disagreement or the take-it or
leave-it transaction is based on the superior power wielded by one
of the parties. We define power, somewhat narrowly, as the ability
to coerce someone to do something he would not otherwise do.
Exercising power typically means imposing costs on the other side
or threatening to do so. For example, an autoworker’s union strike
exercises power by imposing economic costs on the company.
The exercise of power typically takes two forms: acts of
aggression – such as sabotage or physical attack, and withholding
the benefits that derive from a relationship, as when employees
withhold their labor in a strike. In relationships of mutual
dependence, such as between labor and management or within an
organization or a family, the questions of who is more powerful
turns on who is less dependent on the other. If a company needs the
employees’ work more than employees need the company’s pay, the
company is more dependent and hence less powerful.
How dependent one is turns on how satisfactory the alternatives
are for satisfying one’s interests. The better the alternative, the
less dependent one is. If it is easier for the company to replace
striking employees than it is for striking employees to find new
jobs, the company is less dependent and thereby more powerful. In
addition to strikes, power procedures include behaviors that range
from insults and ridicule to beatings and warfare.
All have in common the intent to coerce the other side to settle
on terms more satisfactory to the wielder of power. Power
procedures are of two types: power-based negotiation, typified by
an exchange of threats, and power contests, in which the parties
take actions to determine who will prevail. Determining who is the
more powerful party without a decisive and potentially destructive
power contest is difficult because power is ultimately a matter of
perceptions.