Summary Class notes - Negotiation

Course
- Negotiation
- Richard
- 2014 - 2015
- VU
- psy
281 Flashcards & Notes
1 Students
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Summary - Class notes - Negotiation

  • 1414710000 session 1

  • What makes a bad negotiation?
    -settling for too little (winner's curse)
    -Settling for terms that are worse than your current situation (agreement bias)
    -Walking away from the table (hubris)
    -Leaving money on the table (lose-lose negotiation)
  • What makes a bad negotiation? (4 points)
    -settling for too little (winner's curse)
    -Settling for terms that are worse than your current situation (agreement bias)
    -Walking away from the table (hubris)
    -Leaving money on the table (lose-lose negotiation)
  • Name the Course structure for negotiation
    Frameworks (tools to organize your framework)+Findings (what works, what doesn't) + Practice (hands on experience) + Feedback (outcomes, other's perception) +Reflection (your analysis)
  • What is the best way to negotiate?
    Actually there is no 'cook book' solution. asses your negotiating in a safe invironment. examine others, You should compare your strategy with others and receive feedback on your interaction. 
  • Name a couple of things (less helpfull and more helpfull) of that are helpful as a coach for negotiating in giving and receiving feedback. 
    less helpfull: 
    • character judgement ( 'you're too nice, your problem is you give too much)
    • categorical observations (' you always share too much information')
    • no reinforcement
    • no suggested changes
    more helpful:
    • Specific behavior 
    • contigencies (when X happens, you seem to do Y)
    • reinforcement
    • suggestions. 
  • What is BATNA
    Best alternative to a negotiated agreement
  • What is AP?
    the Aspiration Point or Target price meaning the price you actually really want 
  • What means RP?
    Reservation price, your bottom line or walkaway point
  • What means ZOPA?
    ZOPA is Zone of Potential Agreement or Bargaining Zone, is defined by the difference between the two party's RP's
  • What do you need to under stand the ZOPA or Bargaining Zone?
    'know thyself, know thy enemy. A thousand battles, a thousand victories'. 
    'Know thy BATNA, know thy enemy's BATNA'
  • What do you need to negotiate effectively?
    -your RP
    -a central goal is to uncover your partner's RP while not revealing yours
  • Essentials of Neg. Ch 1: What is the difference between bargaining and negotiating?
    Bargaining: win-lose situations, such as haggling over prices at the market. 
    Negotiating: win-win situations, parties try to find mutually acceptable solutions to a complex conflict. 
  • Name 6 characteristics of negotiation situations (Essentials of Neg. Ch1):
    1. There are 2 or more parties
    2. There is a conflict of needs and desires between 2 or more parties
    3. The parties negotiate by choice
    4. There is a give-and-take process (however, truly creative negotiators do not compromise, but rather invent solutions that are satisfying to all parties involved).
    5. The parties prefer to negotiate instead of fighting openly
    6. Successful negotiations involve the management of tangibles (prices or agreement) and the resolution of intangibles (need to win/be fair)
  • Name 8 situations when you shouldn't negotiate (Essentials of Neg. Ch 1):
    When (you):
    1. could lose everything
    2. are sold out
    3. the demands are unethical
    4. don't care
    5. don't have the time
    6. they act in bad faith
    7. waiting would improve your situation
    8. are not prepared 
  • 4 key factors leading to bad decisions (Essentials of Neg Ch 1):
    1. Rivalry
    2. Time pressure
    3. The spotlight
    4. The presence of attorneys (= lawyers)
  • Def. of interdependence:
    Interdependence - the parties depend on each other, either they must to achieve their objectives, or they choose to in order to achieve better results. The parties have interlocking goals.
  • Def. of independence:
    Independence - parties are able to meet their objectives, without the help of others. 
  • Def. of dependence:
    Dependence - parties must rely on others for what they need. 
  • 2 types of interdependence (Essentials of Neg. Ch 1):
    - Zero-sum/distributive situation: negative correlation between goal attainment of two/more parties (e.g. 100m sprint game) or when parties compete for scarce resources (e.g. dividing the budget of an organisation between departments)

    - Non-zero-sum/integrative situation - pos. correlation between goal attainment of two/more parties (e.g. good music composer + good lyrics writer = good song/ 1 + 1 = 3)
  • Explain BATNA (Essentials of Neg. Ch 1):
    BATNA stands for best alternative to a negotiated agreement. This is always relative to the possible settlements available. It could either imply; interdependence, dependence or independence. 
  • What is one of the key causes for changes during a negotiation (Essentials of Neg. Ch 1)?
    Mutual Adjustment: the actions of one party effects how the other party will act in the future. Thus, negotiators try to get as much info as possible of the other party, to accurately decide how much to give and/or take. 
  • What is the right term for 'when one party agrees to make a (negative) change in his/her position during the negotiation'? (Essentials of Neg. Ch 1)
    Then that party makes a concession. Concessions restrict the range within which a solution or agreement will be made (e.g. a job seeker lowers his salary request -> less bargaining range).
  • What are 2 sorts of dilemmas in mutual adjustment? (Essentials of Neg)
    1. Dilemma of honesty - how much of the truth should you tell the other party? (other party could take advantage of knowledge)
    2. Dilemma of trust - how much should you believe of what the other party tells you? (he/she could be lying)
  • Name 2 efforts used to create trust (Essentials of Neg):
    1. Perceptions of fair outcomes - how does the receiver perceive the results? E.g. your potential employer could argue that a high start salary is not important, considering the high promotion chances. Therefor. you will receive the outcome as fair, even though the salary is lower than you hoped for in the beginning. 
    2. Perceptions of a fair process - people trust each other more, when a concession of one party is responded by a concession of the other.


    NB: satisfaction with negotiation is as much determined by the process as by the results. 
  • What is value claiming (distributive situations)? (Essentials of Neg)
    To do whatever it takes to claim the reward
  • What is the purpose in integrative situations? (Essentials of Neg)
    To create value rather than claiming it!
  • Most negotiations tend to be a combination of both, value claiming and creation, which has several implications: (Essentials of Neg - 3 points)
    1. Negotiators must be able to recognise situations that require more of one approach than the other. 
    2. Negotiators must be versatile/flexible in their comfort and use of both major strategic approaches. 
    3. Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive/competitive than they really are. -> leads to suboptimal solutions of the conflict
  • 4 key differences among negotiators: (Essentials of Neg)
    1. Differences in interests
    2. Differences in judgements about the future 
    3. Differences in risk tolerance 
    4. Differences in time preference (quick vs slow settlement)
  • Def. of conflict:
    Sharp disagreement or opposition, as of interests, ideas etc. This includes the perceived divergence of interest or a belief that the parties' current aspirations cannot be achieved simultaneously. Conflicts result form the interaction of interdependent people who perceived incompatible goals and interference from each other in achieving those goals. 
  • What are the 4 levels of conflict? (Essentials of Neg)
    1. Intrapersonal conflict: within subject
    2. Interpersonal conflict: between subject
    3. Intragroup conflict: within group
    4. Intergroup conflict: between group 
  • Name 8 dysfunctions of conflict (Essentials of Neg)
    1. Competitive, win-loase goals -> competitive, not integrative process
    2. Misperception and bias -> conflict leads to stereotyping of other party 
    3. emotionality -> emotions overwhelm thinking
    4. Decreased communication -> worsens relationship
    5. Blurred issues -> one conflict leads to more conflicts 
    6. Rigid commitments -> parties are locked in yes-no positions
    7. magnified differences, minimised similarities -> polarisation
    8. Escalation of conflict -> less communication, more defensive, less tolerant
  • Name 7 possible positive outcomes of conflict (Essentials of Neg)
    1. Discussing conflicts makes organisational members more aware and able to cope with problems.
    2. conflict promise organisational change and adaptation.
    3. Conflict strengthens relationships and heightens morale. 
    4. Conflict promotes awareness of self and others. 
    5. Conflict enhances personal development
    6. Conflict encourages psychological development (take others' perspectives/become less egocentric)
    7. Conflict can be simulating and fun. 
  • Essentials in Neg: Effective conflict management - what are the two concerns postulated by the dual concerns model?
    -> People in conflict have two independent types of concerns: concerns about their own outcomes and concerns about other's outcomes. 
    See graph!! Includes: Yielding, Problem solving, Contending, Inaction, and in the middle -> compromising 
  • Essentials in Neg: Figure showing a conflict diagnostic model. It includes 7 dimensions of reanalysing any dispute and determining how easy or difficult it is to resolve the conflict. 
    See table
  • What are the 5 strategies for conflict management? Name and explain! (Essentials of Neg.)
    1. Contending (also competing/dominating) -> one part maintains to their points and tries to persuade the other to yield. 
    2. Yielding -> lowering ones own aspirations to let the other win. 
    3. Inaction (also avoiding) -> withdrawal of passivity 
    4. Problem solving -> approach to maximise joint outcome form conflict  
    5. Compromising 
  • Styles of handling interpersonal conflict: 
    Integrating - name 3 situations in which it is appropriate and 3 in which it is not!
    Integrating:
    Appropriate: Issues are complex; Synthesis of ideas is needed to come up with better solutions; time is available for problem solving 

    Inappropriate: Taks or problem is simple; immediate decision is required; other parties are unconcerned about outcome.
  • Styles of handling interpersonal conflict: 
    Obliging - name 3 situations in which it is appropriate and 3 in which it is not!
    Obliging:
    Appropriate: You believe you may be wrong; issue is more important to the other party; you are willing to give up something in exchange for something from the other part in the future

    Inappropriate: Issue is important to you; you believe you are right; the other party is wrong or unethical 
  • Styles of handling interpersonal conflict: 
    Dominating - name 3 situations in which it is appropriate and 3 in which it is not!
    Dominating:
    Appropriate: issue is trivial; speedy decision is needed; unpopular course of action is implemented

    Inappropriate: Issue is complex; issue is not important to you; both parties are equally powerful
  • Styles of handling interpersonal conflict: 
    Avoiding - name 2 situations in which it is appropriate and 3 in which it is not!
    Avoiding:
    Appropriate: Issue is trivial; potential dysfunctional effect of confronting the other party outweighs benefits of resolution

    Inappropriate: Issue is important to you; it is your responsibility to make decisions; parties are unwilling to defer ( issue must be resolved)
  • Styles of handling interpersonal conflict: 
    Compromising - name 3 situations in which it is appropriate and 2 in which it is not!
    Compromising:
    Appropriate: Goals of parties are mutually exclusive; parties are equally powerful; consensus cannot be reached

    Inappropriate: One part is more powerful; problem is complex enough to need a problem-solving approach. 
  • What does BATNA literally stands for?
    = Best alternative to a negotiated agreement
  • Getting to Yes, Ch 6: Negotiations should meet two objectives. Name them.
    • to protect you against making an agreement you should reject
    • to help you make the most of your assets you do have
  • Getting to Yes: What is the (use of) a bottom line in a negotiation?
    • If you are buying, a bottom line is the highest amount you would pay. 
    • If you are selling, a bottom line is the lowest amount you would accept. 
    • It helps you to resist pressure and temptations of the moment. 
  • Getting to Yes: What is the cost of using a bottom line? (4 points)
    • It limits your ability to benefit from what you learn during negotiations. 
    • It inhibits imagination
    • Reduces the incentive to invent a tailor-made solution
    • A bottom line is almost certain to be too rigid and is likely to be set too high
  • Getting to Yes: Is there an alternative to the bottom line? 
    There is! Know your BATNA. = the standard against which any proposed agreement should be measured. Your BATNA is not only a better measure but also has the advantage of being flexible enough to permit the exploration of imaginative solutions. 
  • Getting to Yes: Whether you should or should not agree on something in a negotiation depends entirely upon what?
    The attractiveness of your best available alternative. If you haven't thought carefully enough about your BATAN, you negotiate with 'your eyes closed'.
  • Getting to Yes: What is a trip wire in a negotiation? (5 points)
    • Although your BATNA is the true measure by which you should judge any proposed agreement, you may want another test as well. 
    • In order to give you early warning that the content of a possible agreement is beginning to run the risk of being too unattractive, it is useful to identify one far from perfect agreement that is better than your BATNA. 
    • Before accepting any agreement worse than this trip-wire package, you should take a break and reexamine the situation. 
    • Like a bottom line, a trip wire can limit the authority of an agent. 
    • A trip wire should provide you with some margin in reserve. 
  • The better your BATNA, ...
    … the greater your power. 
  • Getting to Yes: What are the 3 steps of developing your BATNA?
    1. Invent a list of actions you might conceivably take if no agreement is reached.
    2. Improve some of the more promising ideas and convert them into practical alternatives.
    3. Select, tentatively, the one alternative that seems best. 
  • Getting to Yes: Why is it important to consider the other side's BATNA?
    Knowing their alternative, you can realistically estimate what you can expect from the negotiation. (If both sides have attractive BATNA's, the best outcome of the negotiation - for both parties - may well be not to reach agreement. 
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4.1 In negotiations 3 things play a role:
  1. Interests: what the involved parties actually care about
  2. Issues: the things the involved parties say to care abut
  3. Positions: the positions the parties take on the issues
Getting to Yes, Ch1: At which two levels does the game of negotiation take place?
  1. Negotiation addresses the substance: e.g. salary, terms of lease. price 
  2. Negotiation focuses on the procedure for dealing with the substance: how you will negotiate - soft/hard bargaining, etc.
Negotiate a Job Offer: In vivo - 6 things you should keep in mind during the negotiation:
  1. Think about the best way to position and present your opening offer. 
  2. Assume the offer is negotiable 
  3. immediately reanchor the interviewer by reviewing your needs and your rationale 
  4. Reveal neither your BATNA nor you reservation point
  5. Rehearse and practice 
  6. Comparables and benchmarks - be aware that social comparison plays an important role (you don't want to be underpaid)
Name the step After in the steps claiming value before, during, and after negotiation (4 points)
Wrap up:

  • Codify the agreement (get it in writing)
  • Consider post-settlement settlement ( when a deal is locked people loosen up and creativity can emerge)
  • Manage ongoing relationships and reputation 
  • Reframe your outcomes ( be satisfied)
Should You Make the First Offer? What does the anchoring effect imply? (3 points)
  • First offers in situations of great ambiguity and uncertainty -> they exert a strong pull throughout the rest of the negotiation! 
  • People insufficiently adjust there valuations away form the anchor. 
  • It is a very rubout effect: anchors affect the judgment of even those who think being immune to such influences.
Styles of handling interpersonal conflict: Avoiding - name 2 situations in which it is appropriate and 3 in which it is not!
Avoiding:
Appropriate: Issue is trivial; potential dysfunctional effect of confronting the other party outweighs benefits of resolution

Inappropriate: Issue is important to you; it is your responsibility to make decisions; parties are unwilling to defer ( issue must be resolved)
What makes a bad negotiation? (4 points)
-settling for too little (winner's curse)
-Settling for terms that are worse than your current situation (agreement bias)
-Walking away from the table (hubris)
-Leaving money on the table (lose-lose negotiation)
There is a six-step scoring system for multi-issues, name the six steps.
  1. Identify the issues and possible outcomes
  2. Identify the best and worst outcomes within each issue
  3.  Value the outcomes within each issue
  4. Attach a weight to each value
  5. Normalise the issue weights
  6. Multiply the outcome values and issue weights
6.3 Name 5 steps for repairing a relationship:
  1. If the relationship is in difficulty try to understand what has caused it and how you can improve the situation.
  2. Repair the trust, this is a long and ongoing process. It requires adequate explanations for past behaviour, apologies, and perhaps even reparations.
  3. Try to take the pressure of so that both feel free to talk about what happened from their point of view.
  4. Try to find out how you can respect each other again, and appreciate the positive things you have done for each other.
  5. To balance emotion try to find a way both parties can express the emotions and won’t be left with a grudge to one another.
6.3 What is the idiosyncratic deal? (Flexibility vs Fairness)
The idiosyncratic deal is the unique ways that employers may come to treat certain employees compared to other in the same office or environment. Every employee is able to negotiate his salary, flextime, holiday days etc.) this might be unfair for other employees. Some observations about idiosyncratic deals:
1. They are more common when workers
a.Have one or more batna’s
b.Are willing to negotiate
c.Have strong market and business knowledge
d.Are located in small or start-up firms
e.Work in more knowledge-oriented firms
2. They are more common in certain countries such as the US, the UK and  
    New Zealand
3.Idiosyncratic deals are more likely to work effectively when
a.There is a high quality relationship between manager and employee
b.Responsibilities and role requirements are well understood and accepted.
c.Performance criteria are clear and well specified
d.Workers trust the performance appraisal process
e.Ther is shared understanding of performance criteria among co-workers
f.Co-workers have mutually supportive relations
g.Co-workers trust the manager
h.When flexibility Is limited, legitimate reasons are stated and clear.