Bargaining Strategies

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Bargaining Strategies

480-055 Bargaining Strategiesan improved organizational climate based on personal abilities, trust, and openness rather thanpolitical interests, competition, and job security.Unfortunately, however, the realities of negotiation situations often prevent this ideal frombeing realized, or even approached. Collaboration does have great potential for improvingorganizational effectiveness, but Negotiators who approach every situation in a collaborative modeoften find themselves being exploited by others who are more interested in winning than in theoverall quality or fairness of the outcome.On the other hand, Negotiators who always take a “tough guy” approach may win moreoften than they lose, but they may also be missing out on better or more profitable agreements.Furthermore, managers who regularly “win” interdepartmental negotiations often achieve solutionsthat are suboptimal from the total organization’s perspective.Thus, choosing a negotiating strategy that fits the requirements of the situation is animportant managerial decision. Unfortunately, however, very few administrative situations are eitherpurely “win/win” or purely “win/lose,” so the selection and implementation of an effectivenegotiating strategy is usually not a simple process.Choosing a Negotiating StrategyAssessing a negotiation situation for the purpose of developing an appropriate strategyrequires looking at three broad categories of situational factors: (A) the nature of the problems orissues being addressed; (B) the characteristics of each of the Parties and the relationships betweenthem; and (C) the context in which the negotiations occur. A complete analysis requires looking notonly at each of these elements, but at the interactions among them and at their evolution over time.We will begin, however, by considering each kind of factor independently, and identifying how thesevariables affect the choice of a collaborative or a competitive negotiating strategy.The Problems or Issues Being NegotiatedBy far the most significant situational variable that must be considered is the nature of theproblems being negotiated. More precisely, the important question is the meaning that each problemhas for each Party. Generally, a collaborative negotiating strategy will be more likely to succeed ifeach of the following questions can be answered affirmatively.1. Are the problems themselves primarily technical or procedural, rather than distributive? This isthe most fundamental question. If the issues that separate the Parties generally involve the allocationor distribution of a scarce resource, then the situation is more competitive than cooperative, andcompetitive bargaining is called for.In contrast, collaborative problem solving works best when the issues are unresolvedtechnical or procedural problems whose solutions will benefit all the interested Parties. Technicalproblems lend themselves to rational, analytic problem solving rather than political decision-making.Furthermore, technical problems often serve as a “common enemy” in that the need to resolve thembrings together Parties who might otherwise be more concerned about their differing goals, or aboutmaximizing their individual shares of the outcome.However, assessing the nature of the problems at stake is usually considerably more complexthan a simple judgment about the balance of common and conflicting issues. Since most negotiationsinvolve more than one issue, even parties with vastly different goals or diametrically opposedinterests often collaborate in the search for a “package” of agreements that both sides can live with.4Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 2011


Bargaining Strategies 480-055The common desire to find some agreement can become the driving force that keeps the Negotiatorscoming back to the table to explore each other’s demands, priorities, and willingness to compromise.Thus, even when the issues themselves are basically zero-sum, the Parties share the problem offinding a workable agreement, and that process can be treated as a technical problem that calls for acollaborative effort.2. Are the problems of roughly equal importance to the Parties? This is really a double question,in that both absolute and relative importance are of concern. If the stakes are much higher for oneParty than the other, then their interest and motivation to find a common solution will probably notbe equal. And without equal motivation, effective collaboration is very difficult. Collaborativeproblem-solving can be a tough, demanding, and time-consuming process, and if the Parties areunequally concerned about finding a common solution, then the process will very likely break down.Each Party’s subjective ranking of the issues is also an important consideration. Interestingly,when the Parties place very different preference rankings on the issues, then a distributive agreementis usually easier to reach. Suppose you are negotiating over drilling rights to an oil field with a cattlerancher who owns the property. You want the oil and the rancher wants to retain his grazing land,while both of you are interested in the profits you expect to get. Since your substantive interests arequite different, it should be relatively simple to devise an agreement that gives you access to thedrilling location as long as you do not destroy the surrounding pasture. Compare that kind ofnegotiation with one in which the property where you want to build an oil storage tank is right infront of the rancher’s new $150,000 home overlooking a scenic river valley. In this case, your interestsare diametrically opposed, but your preference rankings are identical (both of you want control overthe appearance of the same piece of property).3. Are the problems complex and uncertain? Problems that are complex, that do not haveobvious solutions, or that demand innovative problem-solving, usually require some collaborationeven if there is ultimately a need to distribute the resulting benefits. Collaboration involves thedifferent Parties combining their unique knowledge and perspectives to devise an improved solution.In a sense, the search for an acceptable package of agreements, mentioned earlier, is an example of acomplex, uncertain problem that confronts all the negotiating Parties equally.4. Are the major issues explicit and objective, rather than implicit and subjective? Collaborativeproblem solving is an analytic but exploratory process in which the participants focus on thesubstance of the problems. Collaborative solutions are generally developed and evaluated on theirmerits, rather than on the basis of who proposed them, or who will get credit for the solution. Yetevery bargaining situation also involves intangible issues like status, self-esteem, and reputation. Ifthese kinds of intangible factors are actually more important than the explicit, objective issues, thencollaborative problem solving will be virtually impossible. Political interests, concern over winningrather than losing, and personal concerns about credibility can completely block attempts to resolveproblems rationally and analytically.While you cannot eliminate or ignore such subjective issues, the diagnostic question is howsignificant they are in a given situation. It is difficult to negotiate subjective or emotional issues, butthey clearly affect the decision-making processes. If emotional issues predominate, then they must berecognized and dealt with before the Parties can move into a collaborative mode.The Parties and Their RelationshipThe second set of structural factors affecting your choice of negotiating strategy involves theindividual and group characteristics of each of the principal Parties, and the nature and quality of therelationship between the actual Negotiators and the Parties they represent. And, since relationshipsexist and evolve at several different levels, assessment in this area is a particularly difficult andcomplex task.Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 20115


480-055 Bargaining StrategiesThe fact is that whenever two departments or two organizations (companies, governmentagencies, public interest groups, etc.) negotiate through designated Representatives (as they almostalways do), there are at least three kinds of relationships involved. As Figure 1 demonstratesgraphically, the Parties relate to each other at an institutional level, the Negotiators relate to eachother at an individual level, and each Negotiator relates to his or her constituency as well.Furthermore, each of these three kinds of relationships can be assessed in both formal and informalterms. At a formal level, the relationships involve authority, power, and task-related dependence; atan informal level they involve status and prestige, politics, familiarity, trust, and perceptions ofcompetence.Figure1Important Relationships in a Negotiating SituationA 1NaNbA 2A 3 B 1B 2B 3ConstituentGroupAConstituentGroupBN a= Negotiator for Group AN b= Negotiator for Group BAdapted from J. S. Adams, “The Structure and Dynamics of Behavior in Organizational Boundary Roles” in Marvin D.Dunnette (ed.) Handbook of Industrial and Organizational Psychology, Chicago; Rand McNally, 1976.The following questions should help you think more specifically about who the Negotiatorsare and how they relate to each other and the Parties they represent. Generally, collaborative problemsolving will be more likely to succeed in situations where these questions can be answered positively.1. Do the Parties understand and accept each other? Collaborative problem-solving is a processthat works well only when all the participants feel free to share openly their knowledge, ideas, andconcerns. In a collaborative climate it is acceptable to propose solutions tentatively; to withdrawproposals after suggesting them; to share information about personal values, budget and equipmentshortages, or management pressures, all of which may be constraining a Negotiator’s flexibility orautonomy. In a competitive bargaining mode, by contrast, most of these tactics would be viewed as asign of weakness and could curtail a Negotiator’s bargaining effectiveness.Thus, collaborative problem solving is facilitated by relationships between the Negotiators(and, ultimately, between the principal Parties they represent) that are open, trusting, and acceptingof each other’s goals, values, and particular constraints. Such relationships require a reasonablefamiliarity with the other Party or Parties, at both the institutional and interpersonal levels. Thus, asales manager and a plant manager who know each other well, have worked together for years, andappreciate each other’s job responsibilities would probably be far more collaborative than, say, aController and a Director of Research who have not previously met personally, who are negotiating anew project accountability measurement system, and who have vastly different views about thesystem’s importance, its probable impact, and its design.6Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 2011


Bargaining Strategies 480-0552. Do the Parties have equal or counterbalancing power? No matter how familiar they are witheach other, the Negotiators are much less likely to establish a collaborative relationship if one of themis significantly more powerful than the other. A power imbalance makes both sides less interested incollaboration. The more powerful Party is generally less interested in expending the time and energythat an active problem solving mode requires, while the less powerful Party will find it much moredifficult to initiate discussion of mutually beneficial ideas. Furthermore, the less powerful side ismuch more likely to feel defensive, threatened, and risk-aversive—especially if it is highly dependenton the other Party for an important resource. Purchasing agents tend to treat sole suppliers with kidgloves, for example, and sales managers who cannot fill all their customer orders find it difficult toapply pressure to manufacturing managers whose plants are operating at full capacity.Relative power is a complex subject with several different dimensions that were discussedearlier in the Organizational Behavior course. As you know, the underlying question is one ofdependency: just how much does each Party need and want what the other has? However, indeveloping a bargaining strategy the most important question focuses on the amount of mutualdependency. If a rough balance exists, then there is a good opportunity to establish a collaborativeclimate, because the mutual need for each other acts to bind the Parties together in a common searchfor a mutually beneficial agreement.In addition, it is well to remember that there are other sources of power in addition to controlover tangible resources. Intangible power—stemming from individual competence, credibility, orprestige—can have just as important an impact on the negotiating climate. Higher status groups oftentake firmer bargaining stances simply because their prestige allows them to hold out longer for whatthey want. Thus, a complete assessment of relative power involves looking at both tangible andintangible sources, and predicting the impact the relative amounts are likely to have on the workingclimate during the negotiations.3. Is there an adequate level of trust in the relationship? Collaboration requires an atmosphere inwhich the Parties can freely share ideas and concerns, and that kind of sharing simply will not occurunless each side is confident that its openness will not be exploited. Trust is an intangible, fragilecommodity that develops over time. Trust grows as the Parties demonstrate to each other theaccuracy and reliability of their statements, and as they gradually open up to each other. The risktakingand experimentation inherent in collaborative problem solving requires a high level of trust.Thus, when the negotiating Parties do not know each other well, or interact only infrequently, theytend to be more formal and less flexible in their demands—and thus more oriented towardscompetitive bargaining.4. Will the relationship continue beyond the present negotiations? When the Parties know orexpect that they will be interacting regularly in the future, they are much more likely to movetowards a collaborative mode. This tendency is a natural result of their recognition that an overly“hard” stance in the present may well be costly in some future negotiation. When people know theywill be interacting frequently or will be dependent on each other in the future, they are much morewilling to work hard at establishing a personally satisfying and organizationally productiverelationship. Furthermore, continuing relationships tend to be important ones with relatively highstakes.5. Do the Negotiators have adequate authority and autonomy? One of the key ingredients ofcollaboration is flexibility. The Negotiators must be able to adjust their demands and even theirdecision criteria in response to each other’s proposals. If one (or both) of the Negotiators is severelyconstrained by his or her department’s policies or guidelines, then the negotiations are likely to beinterrupted frequently by the need to clear new positions with appropriate managers back in their“home” departments. These kinds of interruptions are not only time consuming and frustrating, butthey tend to increase the formality of the negotiations, and to decrease the level of trust and respectthat the Negotiator commands. Each of these consequences tends to make collaboration much moredifficult to achieve.Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 20117


480-055 Bargaining Strategies6. Do the Negotiators prefer collaboration, and have the skills to do it well? The personal valuesand bargaining skills that the Negotiators possess are also important factors affecting the choice of apreferred strategy. If you know that the Negotiators you will be dealing with are “hard” bargainerswho prefer an adversary relationship and value “winning” above all else, then you should expect tobe involved in competitive bargaining even if the issues and the basic nature of the relationship pointtowards collaboration. Don’t lose sight of your own values and preferences, however. Even when youare confronted by a hard, competitive bargainer, it is possible, over time, to move towards a morecollaborative climate. But don’t expect to accomplish such a transition quickly, or even in the contextof one round of negotiations. Moving from a competitive to a collaborative mode can be a long anddelicate process, especially when the initiative comes primarily from one side.The impact of communication skills on choice of bargaining strategy is a subtle one.Therefore, it is a good idea to consider whether the Negotiators in a particular situation are likely tobe sensitive enough to respond to the kinds of implicit signals and shifts of meaning that are soimportant in creating negotiated solutions. Inexperienced or inept Negotiators are much more likelyto miss or misinterpret subtle or nonverbal messages, and the consequences could be very severe. Ifthe other Negotiators appear to be relatively insensitive or incompetent communicators, then atougher, more competitive bargaining stance will be less risky.Contextual FactorsEven if the nature of the issues and the relationship between the Parties both point to acollaborative strategy, that approach may still fail unless certain other conditions also prevail. Thecontext in which the negotiations occur affects their quality in several different ways.1. Do important Others expect the negotiations to be collaborative? Within a single organization,interdepartmental and interdivisional negotiations are profoundly affected by the corporate culture—the sum total of the formal systems, the prevailing norms concerning conflict resolution, and thespecific expectations of senior managers. While these three types of influence will probably not becompletely consistent, nevertheless there is usually a relatively well-defined range of acceptableapproaches to joint decision making. Normally, the Negotiators themselves internalize the culturalexpectations so thoroughly that they do not even consider trying other approaches.The same kinds of external pressures also influence bargaining between representatives ofdifferent companies or organizations, although in more subtle and indirect ways. Since there is nocommon hierarchy or other control mechanism, the two Parties usually have substantially morelatitude to fashion agreements. On the other hand, there may be fewer shared, superordinate goals ofthe kind that encourage collaboration when both Parties are part of the same organization. However,wider social norms, industry traditions, and top management expectations can have just as great animpact on interorganizational situations. Furthermore, many formal interorganizational bargainingsituations are subject to explicit legal constraints that narrowly define acceptable procedures.Union/management bargaining, government contract negotiations, and telephone, utility, andinsurance rate hearings are just a few concrete examples.Actually, in any bargaining situation there are several kinds of audiences and at least twokinds of expectations to be taken into account. Some “outsiders” have a very direct interest in thenegotiation outcomes even though they are not directly involved in the negotiations themselves.Consider, for example, subcontractors who stand to gain significant new business if a majormanufacturer lands a government contract; or, think about the impact of financing a major urbanredevelopment project on downtown employers. These “third parties” who are affected bynegotiations may or may not have any influence over any of the active Negotiators. If they do, thentheir stake in the outcome and the pressures they can bring to bear on the Negotiators do become animportant consideration.8Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 2011


Bargaining Strategies 480-055Outside Parties can have expectations about either the outcomes themselves or about thestrategies that the Negotiators will use. In either case, those expectations can be an important factor inyour own assessment of an appropriate strategy. If the third Parties expect you to be aggressive andcompetitive, and their expectations are important to you (for whatever reason), then it will be moredifficult to develop an effective collaborative strategy. Similarly, if you know that the otherNegotiator has important external relationships, then you know that his or her strategy will beconstrained by the pressures that those relationships create.The existence of important external relationships does not in itself make either collaborationor competitive bargaining more desirable. What does matter is the specific nature of the third Partyexpectations and the impact they have either on you or on the other Party. One frequent response tooutside pressures is to engage in public posturing—making clear, definitive demands at thebeginning of the negotiations and publicizing them widely. This behavior is usually intended—consciously or unconsciously—to prove to the outside world just how firm and committed theNegotiator is. Clearly, such public statements also have the effect of committing the Negotiator morefirmly to his or her demands. In this sense, outside pressures can become destructive of acollaborative relationship.The only way in which outside pressures can facilitate collaboration is when the pressures aredirectly concerned with the negotiating processes, and are supportive of collaboration. For example,consider a company president who directs two division general managers to keep negotiating untilthey come up with an internal pricing system that fully satisfies both of them. The pressure from thepresident will certainly encourage the two general managers to work together rather than at crosspurposes.2. Are the time pressures and other resources consistent with a collaborative approach? Deadlinescan be anathema to creativity. And collaborative problem solving, when it is successful, is a highlycreative activity. If an agreement must be reached quickly, for whatever reasons (contractualobligations, lost business opportunities, bidding deadlines, etc.), then collaboration may be simplyimpractical, even if it would make sense for other reasons. It takes time for Negotiators to explorefully all alternatives, and to build sufficient understanding of each other’s needs and objectives. Onthe other hand, time pressures often facilitate distributive agreements, in that the need to resolve theissues is so imperative the Negotiators make concessions to complete the agreement that they wouldnever make under other circumstances.The availability of other resources also affects the appropriateness of a collaborative strategy.Exploring newly discovered potential solutions sometimes requires extensive (and expensive) datacollection. In other situations a collaborative solution may require both Parties to incur unexpected“investment” costs in order to reap future savings. Thus, collaboration will be more likely to succeedin situations where the important resources are not in short supply (of course, the availability ofsufficient resources may also eliminate the need for distributive bargaining. If there are enoughresources to satisfy everyone’s needs, then there may not be any reason to negotiate at all).3. Do the physical arrangements support a collaborative approach? The location of thenegotiations can have a definite effect on the way the Negotiators relate to each other. Negotiators,like other managers, tend to feel more comfortable, and thus more confident, when they are workingin their own “turf,” or at least in familiar surroundings. A neutral site tends to reduce feelings ofterritoriality or superiority that often affect the balance of power between Negotiators.The location of the negotiations also influences the choice of strategy insofar as it affects theconfidentiality of the proceedings. If the site is open to observers, or is simply close to the offices ofone Negotiator’s constituent group, then collaboration may be more difficult to achieve. Collaborativeproblem solving, as noted earlier, usually involves tentative, exploratory testing of new alternatives.And public visibility can put a solid damper on anyone’s willingness to express new ideas. Discussionmay prove the ideas impractical or even detrimental to the proposer’s own interests, and publicPurchased by Olivia Lee (olivia.thompson.lee@gmail.com) on November 08, 20119


480-055 Bargaining Strategiesknowledge of those findings could be embarrassing or costly. When the negotiations are conducted inone Party’s office, the “home team” Negotiators are more directly subject to observation or closequestioning by their constituents. They are thus more likely to feel pressured in one direction oranother. Therefore, collaboration will generally be most effective when the negotiations are beingconducted in relative privacy at a neutral site.This analysis has identified three clusters of situational variables that can affect the success ofa collaborative problem solving strategy. The nature of the issues being negotiated is probably themost fundamental factor. The telling question is the extent to which the Parties’ goals areincompatible. If one Party gets everything it wants, will the other Party or Parties be unable to getwhat they want? If the answer to this question is yes, then the situation has at least some distributiveor competitive characteristics. As we have seen, however, a number of other factors also affect thechoice of a bargaining strategy. In fact, it is sometimes possible to redefine both goals and issues toeliminate the basic conflict. The potential for that kind of redefinition is what makes collaborativeproblem solving such a compelling approach in so many situations.When you are faced with a joint decision-making problem, give some consideration to each ofthe variables we have discussed, and then use a profile like the one displayed in Figure 2 to assess thespecific characteristics of the situation. Only rarely will you encounter a situation where all of thevariables line up along either the cooperative or the competitive ends of the scales. Nevertheless, acomprehensive diagnosis will usually point towards one strategy or the other. Of course, manycommon negotiating situations do contain both cooperative and competitive elements. We will nowconsider more carefully the kinds of dilemmas that arise in such “mixed” bargaining situations—those that call for both collaborative problem solving and distributive bargaining approaches.Mixed BargainingCollaborative problem solving and competitive bargaining clearly have distinctively differentpurposes. Mixed bargaining is not a middle-ground strategy; rather it refers to an approach thatcombines both purposes, and thus involves engaging in both strategies.Mixed bargaining is a particularly difficult process because of the inherent incompatibility ofthe goals, styles, and techniques that characterize the two major strategies. Just consider thedifferences in the climate and in the consequences for the Negotiators between collaboration anddistributive bargaining, as summarized in Figure 3. As you know, it is almost impossible forindividuals to switch back and forth between such vastly different ways of behaving and relating toeach other.Even more significantly, actions that a Negotiator takes to enhance collaboration may actuallyweaken his or her position when the negotiations move into a competitive mode. To take a simpleexample, consider a production scheduling problem that was negotiated between a plant managerand a sales manager. A collaborative problem solving discussion revealed that the plant had idleequipment during the third shift that could be used to expedite a critical order for a major customer.Once the sales manager knew about the excess capacity, he pressured the plant manager to use itmuch more often, giving sales more delivery flexibility but increasing plant scheduling problems andovertime costs, and reducing maintenance time on the equipment. From the corporation’s point ofview the added sales and customer satisfaction might have been worth the added labor cost.However, the plant manager’s initial willingness to problem-solve in an emergency may haveresulted in added manufacturing costs and reduced flexibility over the longer term.10Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 2011


Bargaining Strategies 480-055Figure 2Factors Affecting Choice of Negotiating StrategyThe IssuesCollaborativeStrategyDistributiveStrategyNature of IssuesTechnical orProceduralResource Allocationor ExchangeBasic Importance of Issues to the Parties Equal UnequalPriority Ranking of Issues:Technical Equal DifferentDistributive Different EqualProblem Complexity High LowParties and RelationshipsParties’ Understanding and Acceptance of Each Other High LowBalance of Power Equal UnequalLevel of Trust High UnequalExtent of Relationship Continuing One TimeNegotiator Authority and Autonomy High LowValues and SkillsPreferCollaborationPrefer AdversaryApproachContextual FactorsSalience of Outsider PressuresDepends on substantive nature of pressureTime and Other Resources Ample ScarcePhysical Arrangements Neutral and Private PublicFigure 3Collaborative versus Competitive BargainingCollaborative StrategyCompetitive StrategyBasic Objective Increase total gain Increase own gainInformation Exchange Maximum: candid sharing Minimal: strategic disclosuresPurpose of Communication Share problems; help each other;create new alternativesDefine demands; identifyconstraints, persuadeOpenness to Change Maximum: Solutions viewed astentativeMinimum: firm commitmentessentialNature of Relationship Informal; close; trusting; altruistic Formal; distant; respectful;exploitiveFocus of Attention Common problem Winning and not losingPurchased by ELAM Program (elam@drexelmed.edu) on November 08, 201111


480-055 Bargaining StrategiesMixed bargaining actually presents Negotiators with several critical behavioral and tacticaldilemmas. 2 Some of the most important dilemmas are:Flexibility v. commitment. Collaboration requires an open, exploratory, and tentative attitudetowards the problem and possible solutions. In contrast, competitive bargaining is enhanced bytaking a firm, committed position and demanding concessions from the other Party.Information sharing v. withholding. Collaboration involves a joint search for new solutions thatwill increase the total payoff. Collaboration thus requires sharing ideas, proposals, and constraints ina spirit of mutual help. Competitive bargaining, on the other hand, requires withholding informationthat may be detrimental to one’s own demands and deliberately ignoring information that wouldincrease concern for the other Party’s needs.Discussing real needs v. giveaways. Problem solving calls for candor and focusing on genuinepreferences, needs, and concerns. Success in competitive bargaining, in contrast, is often facilitated byenlarging the list of problems and demands well beyond “bottom line” objectives. These “giveaways”can then be conceded as a part of the “horse trading” that is expected in the final stages of distributivebargaining.Giving Negotiators autonomy v. restricting them. When the Negotiators have extensiveautonomy and authority to make commitments and concessions, then collaboration is much morefeasible. The Negotiators can react to each other and to new proposals instantaneously, maintainingthe underlying climate of mutual support and assistance. On the other hand, competitive bargainingoften benefits from narrow constraints on a Negotiator’s authority. The Negotiator’s need to clearproposals with higher authorities can serve to delay commitments and buy time to assess theconsequences of new alternatives. Furthermore, the fact that the Negotiator’s hands are tied oncertain issues serves as a useful way to avoid making concessions without completely disrupting theworking relationship between the Negotiators.Deadlines v. open-ended discussion. Collaboration takes time; it requires an exploratory,creative dialogue between the Negotiators. Deadlines inhibit creativity by reducing the time availableto consider innovative suggestions. Deadlines serve a very useful purpose in competitive bargaining,however, in that they force the Negotiators to make difficult priority decisions, to concede onunimportant issues, and generally to push towards reaching agreement before time runs out.These five dilemmas are by no means a comprehensive list. In fact, each of the situationalvariables discussed earlier poses a comparable dilemma. To the extent that the Negotiators caninfluence the conditions under which they interact, they are faced with a number of critical choices,and the choices they make will either enhance or reduce their effectiveness.Tactical SuggestionsNegotiating successfully in mixed situations is largely a matter of carefully sorting out andsequencing the treatment of the issues that separate the Parties. The issues being discussed can beexpanded, contracted, combined, separated, or linked up in a wide variety of ways. ExperiencedNegotiators focus most of their attention on how the issues can best be “bundled” or “unbundled” tocreate a “package” of agreements that will be acceptable to all of the involved Parties. It is importantto remember, however, that the order in which the issues are discussed is just as important as howthey are linked up with each other. While it is difficult to define general principles for “bundling”2 These dilemmas are spelled out in more detail in R.E. Walton and R.B. McKersie, “Bargaining Dilemmas inMixed Motive Decision Making,” Behavioral Science, Vol. II, 1966.12Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 2011


Bargaining Strategies 480-055issues, the following suggestions are all concerned in one way or another with how to createsuccessful packages in mixed bargaining situations.1. Separate collaborative and competitive bargaining in time and space. It is not always feasible toachieve a complete separation, but to the extent possible be very clear (both with yourself, and withthe other Negotiators) about which mode you are engaging in. When you are explicit about yourpurposes, the differences in your behavior that accompany each strategy are much more acceptable.There are many ways to achieve this kind of separation. Labor-management Negotiatorsoften precede formal bargaining sessions with “fact-finding” discussions intended to clarify eachside’s basic assumptions, background information, and expectations. Such sessions frequently lead toinnovative proposals that would probably never have evolved in formal, competitive bargainingsessions. Another separation technique is to use a formal agenda that very precisely defines thesequence of topics to be discussed. The use of subcommittees, meeting separately from the mainnegotiating teams, also facilitates separating different kinds of issues. A more subtle, but equallyeffective tactic is to use different meeting rooms, perhaps in very different locations, for each kind ofdiscussion. Similarly, a quick recess followed by a private conversation in the hallway or anotheroffice, is a common technique for suddenly shifting the tone of a discussion. (Private meetingsbetween principal Negotiators also permit more candid expressions of personal or organizationalproblems that cannot be expressed publicly. Such sharing serves to demonstrate trust and buildpersonal relationships, though at the same time it increases a Negotiator’s vulnerability.)Another technique sometimes used by experienced negotiating teams is to have differentpeople act as principal Negotiators during the different kinds of negotiations. Some individuals aremore skilled at creating new solutions and achieving consensus, while others are more effective atpresenting demands, holding firm, and persuading others to concede. The use of different people isanother direct way of signalling a shift from one mode to another; and the new Negotiator is usuallysomewhat less confined by what has already been discussed or agreed to.2. Sequence topics so that collaboration can precede distributive bargaining. Prenegotiation factfindingsessions are a good example of this principle. Collaborative experiences, as just suggested, canbuild trust, understanding, and working familiarity between Negotiators that significantly improvethe quality of later competitive bargaining sessions.Be careful, however, not to sacrifice your own interests or imply agreement with the otherside’s position during these initial discussions. If you do, you may discover that you have alreadyconceded the major distributive issues. And, as already noted, if you share too much information incollaborative sessions, you may leave yourself with no fall-back positions when you get tocompetitive bargaining.3. Alternatively, seek an agreement on percentage allocations first, and then move into collaborativeproblem solving. This approach is the exact opposite of the preceding one. It involves competitivebargaining first, primarily to avoid the vulnerability that sometimes results from early collaboration.When using this approach, the Negotiators first agree on a predetermined formula that defines howmuch of the eventual payoff each Party will receive. Then they work together to maximize the totalpayoff. For example, a company and a union might agree to split any productivity savings on a 50–50basis, and then jointly brainstorm changes in work rules that will increase productivity withoutcreating unemployment.4. Create packages of issues that can generate “victories” for each Party. This tactic stresses theimportance of finding ways for all Parties to benefit from an agreement, and to demonstrate to theirconstituencies or other audiences that they “won.” Very often the first item on a formal negotiatingagenda is to decide what issues are to be addressed, and those decisions in themselves usuallyprovide ample opportunities for both collaboration and horse trading. In any negotiation thatinvolves important competitive bargaining it is almost mandatory that there be enough issues on thePurchased by ELAM Program (elam@drexelmed.edu) on November 08, 201113


480-055 Bargaining Strategiesagenda for each Party to find a combination of benefits and concessions that it can live with.Negotiators seriously interested in reaching a settlement can almost always find ways to allocateresources, exchange resources, or exchange concessions, if there are enough different issues on thetable between them.SummaryDeveloping a negotiating strategy that fits the unique characteristics of a specific situation isnot a simple task. Because negotiating requires a subtle and complex blend of both cooperative andcompetitive approaches, it will probably always remain something of an art. Yet, like other artists,effective Negotiators develop their skills primarily through practice; they build a repertoire ofanalytical and interpersonal skills by paying careful attention to their successes and failures. Theframework suggested here should help you think about negotiating situations in ways that willenhance your ability to learn from your own negotiating experiences. Negotiating is an art, but it isalso a fundamental management tool.14Purchased by ELAM Program (elam@drexelmed.edu) on November 08, 2011

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