Effective Negotiation

Negotiation is described as a discussion between two or more people who are trying to
solve their problem [1]. The word negotiation itself comes from a Latin expression
negotiatus which means to carry on business [3]. Negotiation has been done in our day
to day activities such as distributing the chores to be done by each family members or even
bargaining on a product or service. Several form of negotiation was introduced by Roger
Fisher, William Ury and Bruce Pattons in their book Getting to Yes (1991) which are: [2]
Hard bargaining Assuming our opponent as our enemy and we can only win when
our opponent lose. This imply on a competitive and aggressive way of bargaining.
Soft bargaining Opposite of hard bargaining where the relationship with opponent
is important and we easily give in. Normally we will be taken advantage and
agreement can be reach easily but seldom a good solution.
Principled negotiation Effective negotiation with each other with five fundamental
principles that are:[4]
i.
Separate people from the problem
ii.
Negotiate about interest, not positions
iii. Provide option for mutual gain
iv.
Insist on objective decision criteria
v.
Know your BATNA (best alternative to a negotiated agreement)
Theoretically, negotiation is divided into two types which known as distributive
negotiation and integrative negotiation. Those two types of negotiation works in a different
situations either a win-win outcome are possible or an unavoidable win-lose conflicts.
Distributive negotiations are used in everyday occurrence such as purchasing a house which
only have one issue which is the price and normally in a term of win-lose. Integrative
negotiations in the other hand might have more than one issue and in ongoing basis which
provide a win-win solution. Example of integrative negotiation is Cartoon case study which
have 3 issues that are the financial payment terms, how many runs of episode and the price
that are negotiated between a buyer company and seller company.
Distributive negotiation or also known as hard-bargaining negotiation tends to adopt
an extreme position. It is sometime referred to as the distribution of a fixed pie because
there is a limited amount of thing being divided among the peoples involved with a fixed
value and the peoples involve usually had never have previous interactive relationship, nor to
do so again in the future. In order to reach a realistic outcome, let the other party tell us what
they are willing to give up and it is the best to keep our information out of other party and
suggest alternatives we can offer but willingly compromise.
Integrative negotiation is the combination of techniques in attempt to improve the
quality of the negotiation by providing alternative solutions without assuming there is a fixed
pie to be divided between peoples involve. Also known as principled negotiation or interestbased negotiation, it focus on the interest of the parties rather than the illogical starting point
which approaches negotiation as shared problem and the principled criteria is the basis of

agreement. In general, Integrative negotiation implies some cooperation and involves creative
problem solving aiming for mutual gains.
Negotiation between parties rises when there is a conflict of interest, some ambiguity
about the right solution and opportunity to compromise and reach deals that might satisfy
both parties. Table 1 summarize the two types of negotiations and its characteristics.
Characteristic
Outcome/ Technique
Issues involved

Distributive
Win-Lose
Single, simple, several
issues one at a time
Individual gain
Short term
One have more power
Maximize share of a fixed
pie

Integrative
Win-Win
Multiple, complex

Mutual gains
Long or short term
Similar power
Expand the Pie by creating
Strategy
value and claiming share
Share interest with other
Keep interest hidden
Interest
party
Not Flexible
Flexible
Ability to make trade-off
Fixed Pie
Creative
Solution
Table 1: Distributive versus Integrative negotiations
Motivation
Relationship
Position

Principled Negotiation
The best-known conflict resolution book, Getting to Yes, first published in 1981 by
Roger Fisher and William Ury introduce principled negotiation as the interest-based approach
to negotiation. The book proposes five fundamental principles of negotiation:
i.
ii.
iii.
iv.
v.

Separate people from the problem

Negotiate about interest, not positions
Provide option for mutual gain
Insist on objective decision criteria
Know your BATNA (best alternative to a negotiated agreement)

Separating the people from the problem means separating relationship issues from
substantive issues, and dealing with them independently. People problems, Fisher, Ury and
Patton observe, tend to involve problems of perception, emotion (fear, anger, distrust and
anxiety), and communication. While there is an "objective reality," that reality is interpreted
differently by different people in different situations, perceptions are important because they
define the problem and the solution. Effective negotiation may be very difficult to achieve
when different parties have different understandings which is what we have been calling
framing problems.

Negotiating about interests means negotiating about things that people really want and
need, not what they say that want or need. Often, these are not the same. People tend to take
extreme positions that are designed to counter their opponents positions. If asked why they
are taking that position, it often turns out that the underlying reasons--their true interests and
needs--are actually compatible, not mutually exclusive.
By focusing on interests, difference of opinion parties can more easily fulfil the third
principle which is providing options for mutual gain. This means negotiators should look for
new solutions to the problem that will allow both sides to win, not just fight over the original
positions which assume that for one side to win, the other side must lose.
The fourth rule is to insist on objective criteria for decisions. While not always
available, if some outside, objective criteria for fairness can be found, this can greatly
simplify the negotiation process. If union and management are struggling over a contract,
they can look to see what other similar companies have agreed to use as an outside objective
criteria. If people are negotiating over the price of a car or a house, they can look at what
similar houses or cars have sold for. This gives both sides more guidance as to what is "fair,"
and makes it hard to oppose offers in this range.
Lastly, Fisher, Ury, and Patton advise negotiators to know what their alternatives are.
If you dont know what your alternatives to a negotiated agreement are, you might accept an
agreement that is far worse than the one you might have gotten, or reject one that is far better
than you might otherwise achieve. For this reason, Fisher, Ury, and Patton stress the
importance of knowing and improving your BATNA before you conclude negotiations.
Thompsons Pyramid Model
Integrative negotiation, according to negotiation researcher Leigh Thompson of
Northwestern University, can be described as both a process and an outcome of negotiation.
The parties involved seek to integrate their interests and therefore produce negotiated
outcomes that exceed those normally achieved through distributive bargaining. Thompson
further suggests a pyramid model of integrative agreements, as illustrated in the Figure 1. In
this model, Level 1 agreements are those in which both parties achieve an outcome that is
better than their reservation point, and thus is within the ZOPA. Level 2 agreements produce
an outcome that is even better for both parties than Level 1 agreements, possibly by
introducing a new issue for which both parties have a similar objective. Finally, Level 3
agreements are those for which it is impossible to improve the outcome from the perspective
of both parties, one in which any change that would benefit one party would harm the other
party. Parties ideally seek to reach Level 3 agreements, and therefore leave nothing on the
table. Integrative negotiators do not stop at Level 1; they seek to gain the benefits of higher,
mutually beneficial levels 2 and 3.

Figure 1: Pyramid Model of Integrative Agreements

In reality it is more likely that negotiators can achieve Level 1 agreements in which
both parties exceed their reservation points and BATNAs or, through the development of new
options, that they can negotiate Level 2 agreements that create additional value for both
parties above the minimums achieved in Level 1. Level 3 agreements can be described as
Pareto optimal because they represent improvements above Level 2 for both parties and
achieve an agreement that cannot be improved for one party without harming the other party.
Thus, the outcome of any level of an integrative negotiation is superior to that of a
distributive negotiation.
Effective negotiation will happen when the outcome is wining for all including separating
the people from the problems, focusing on mutual interest, inventing options for mutual gain,
and use objective criteria. In order to have much more comprehensive perception toward that,
some important terms should be defined as shown in Figure 2.
ZOPA [including aspiration, reserve point, surplus] is an acronym which means a
negotiation Zone of Possible Agreement. It is the range or area in which an agreement is
satisfactory to both parties involved in the negotiation process. It is also referred to as the
"Contracting Zone". Negotiation ZOPA or the Contracting Zone is the range between each
parties Reserve Point, and is the overlap area that each party is willing to pay or find
acceptable in a negotiation.
ZONA meanwhile means Zone of No Agreement. It is the range between both parties
aspiration point and reservation point. Aspiration point for seller will be the highest point
they target to achieve and vice versa for buyer which hope to receive the minimum point
possible. Reservation point for both seller and buyer is the point which mark the minimum
price range that the seller affords to lose and the buyer able to pay.

Figure 2: Distributive Negotiation of Seller and Buyer [3]

Trade-off
It is sometimes referred to as a Concession where one or more parties to a
negotiation engage in compromising on issues under negotiation and do so either willingly or
unwillingly. Figure 3 demonstrate the requirement of trade-offs in negotiation.

Figure 3 : Requirement of trade-offs in negotiation

Time Pressure
Time is comparable to money which are invested, spent, saved, and wasted. Time
pressure is the perception that time is scarce. Researchers such as van der Kleij and De Dreu
indicated the following consequences of time pressure. At the individual level, time pressure
leads to:
Faster performance rates, because people stop considering multiple
alternatives
Lower performance quality, due to the engagement in superficial rather than
thorough and systematic processing of information, and
More heuristic information processing, as a result of refraining from critical
searching of a given seemingly adequate solution or judgment.
At group level, increasing levels of time pressure narrows team members focus on a
limited range of task in both team interaction patterns and team task performance. Groups
working under time pressure attend to all of the information available but then selectively
discuss only information that seems especially relevant [6]. They also found that under high
time pressure group members see task completion as their main interaction objective, and the
group attempts to reach consensus and complete the task as quickly as possible, but at the
sacrifice of quality. Groups under mild or no time pressure can, in contrast, consider a wider
set of task features, devote their resources to performing on the task as well as possible, and
tend to employ more effortful systematic information processing that gives serious
considerations to all possible alternative solutions for a task [6].
Escalation of commitment
Escalation of commitment refers to the psychological condition whereby people
continue to support or believe in something that is repetitively failing. In managerial decision
making escalation of commitment can refer to either continuing with a failed project. It may
also refer to overestimating ones own managerial capacity or ability. This is an extension of
problem solving where people do not accept they do not have a solution or they have to let
go. With escalation of commitment there is a compulsion to not let go. This can be where you
have an emotional, psychological or financial investment that may be failing and has led to an
irrational compulsion to stick with it or even escalate your commitment. Example of
escalation of commitment can be in a stock investment where you average down on a falling
stock price or in gambling as you chase losing bets. Other examples are in auctions for art
and houses where an emotional attachment combines with ego.
Winners curse
This event occurs when an under aspiring negotiator sets their target or aspirations
points too low at the outset of a negotiation and is granted an immediate agreement by their
negotiating counterpart. They win the negotiation but seems like they did not achieved a good
result though they received the desired request.

Social Dilemma
Social dilemmas are formally defined by two outcome-relevant properties:
Each person has an individual rational strategy which yields the best outcome
(or pay-off) in all circumstances (the non-cooperative choice, also known as
the dominating strategy);
If all individuals pursue this strategy it results in a deficient collective
outcomeeveryone would be better off by cooperating (the deficient
equilibrium).
Researchers frequently use the experimental games method to study social dilemmas
in the laboratory. An experimental game is a situation in which participants choose between
cooperative and non-cooperative alternatives, yielding consequences for themselves and
others. These games are generally depicted with an outcome matrix representing valuable
outcomes for participants like money or lottery tickets. The dilemma will involve more than
two people as done in the game.
Prisoners Dilemma
The Prisoners Dilemma Game was developed by scientists in the 1950s. The cover
story for the game involved two prisoners who are separately given the choice between
testifying against the other (non-cooperation with ones partner) and keeping silent
(cooperation with ones partner). The outcomes are such that each of them is better off
testifying against the other but if they both pursue this strategy they are both worse off than
by remaining silent. This dilemma only involves two parties that differentiate it from social
dilemma.
Mythical Fixed Pie mind-set
In the business world, one of the most destructive assumptions we bring to
negotiations is the assumption that the pie of resources is fixed. The mythical-fixed-pie mindset leads us to interpret most competitive situations as purely win-lose. For those who
recognize opportunities to grow the pie of value through mutually beneficial trade-offs
among issues, the complexity of such negotiations is an asset. Once negotiators have broken
the assumption of a mythical fixed pie, the search for value can begin.
Framing (Defining what the conflict is about)
Conflict scholars use the term "framing" to mean the process of describing and
interpreting an event. The way one interprets or frames a conflict is based on what has
happened to that person (or group of people) in the past, what values are important to them,
and whether they see the situation as a threat or a potential benefit. The way one frames a
conflict is important for many reasons. For one, it determines whether a situation is seen as a
conflict at all. If one person makes a rude comment to another person, the recipient of the

comment may take offense (thus framing the situation as a conflict) while another might just
ignore it, or laugh about it.
Secondly, one's frame determines what one will do about a situation. If a situation is
considered unimportant, it will probably be ignored. If the conflict is considered important,
however, the people involved need to decide how they are going to handle it. If they think it
is a resolvable problem, they may try to talk about it informally or try to negotiate a solution.
If they think it is only resolvable by force, then they are likely to use that approach.
Often disputants frame conflicts in adversarial or win-lose terms. They assume that
they have a conflict of interests and that the only way to get what they want is if the other
party does not get what he or she wants. Rather than seeking a win-win solution, they
therefore seek ways to build their power so that they can force the other side to give in. When
both sides do this, the inevitable result is escalation, a hardening of positions, an increased
danger of destructive confrontation (perhaps even violence) and a much diminished
possibility of solving the problem. By reframing the conflict in a win-win (or integrative
way), the conflict can often be handled much more constructively.

Reference:
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6.

"Negotiation," International Online Training Program on Intractable Conflict, Conflict

Research Consortium, University of Colorado, retrieve
from: http://www.colorado.edu/conflict/peace/treatment/negotn.htm
Negotiation, Michelle Maiese , October 2003, retrieve from:
http://www.beyondintractability.org/essay/negotiation
Whats Negotiation Skill all about?, Payambarpour, November 2012, retrieve
from: https://payambarpour.wordpress.com/tag/batna/
Principled Negotiation," International Online Training Program on Intractable
Conflict, Conflict Research Consortium, University of Colorado, retrieve from:
http://www.colorado.edu/conflict/peace/treatment/pricneg.htm
Framing," International Online Training Program on Intractable Conflict, Conflict
Research Consortium, University of Colorado, retrieve from:
http://www.colorado.edu/conflict/peace/treatment/frame-s.htm
Time pressure and group performance: Exploring underlying processes in the
Attentional Focus Model Janice R Kelly & Timothy J Loving, Journal of
Experimental Social Psychology, Volume 40, Issue 2, March 2004, Pages 185198