OBS 220
Chapter 1: Negotiations Essentials
Negotiations
Key communication + influence tool
Interpersonal decision-making process necessary whenever we cannot achieve our objectives
singlehandedly
Not just about resources- but relationship + trust
The mind and heart
Across sections of The Mind and Heart of the Negotiator, we focus on:
the mind- as it involves development of deliberate, rational, and thoughtful strategies for
negotiation
the heart- we care about relationship + trust
we base all our teaching and best practices on scientific research in areas of economics and
psychology, reflecting the idea that both the bottom line and our relationships are important
Relationships vs Economics
o Economic value (money) & people (trust)
o “Taking one for the team”, and later maximize economic gain
o Not advisable; we negotiate in long-term relationships with people who have short-term
memories
o When people make economic sacrifices in hopes of securing or maintaining relationships, they
are often disappointed
Satisficing vs Optimizing
o Satisficing- doing just enough to reach one’s minimum goals
o Optimizing- negotiators capture all the potential gain in a situation
o Over the long run, satisficing can be harmful to individuals and companies, especially when a
variety of effective negotiation strategies and skills can be effectively employed to
dramatically increase economic gains
Short vs Long-term relationships
o Negotiators struggle with which strategy they should use in a single-shot negotiation vs
negotiations that could potentially recur with the same party in future
o Negotiators should assume that the details of negotiation will be accessible to anyone: long-
term implications
Intra- vs Inter-Organisational Negotiation
o Envy and internal competition have a bigger impact when people negotiate internally vs
externally
Low- vs High-Stakes Negotiation
o Negotiators are advised to treat negotiation- however small the stakes may be involved- as a
significant opportunity to enhance economic and relational outcomes
Megan Meiring |
, Types of negotiation:
Win-Win Win-Lose Lose-Lose
Both optimise potential One party prevails, other Both parties made unwise
joint gains expense sacrifices, resulting less
than satisfying
Integrative agreements; May be caused by threat
joint economic value
Negotiation as Core Management Competency
Key reasons effective negotiation skills are important
Knowledge economy
Over 70000 businesses developed since 2010, therefore many companies have disrupted
traditional business models, spurring managers to reinvent themselves as knowledge brokers
in the info economy
Changes rapidly; managers of all ages are continuously negotiating their prof identity,
acquiring new skills, moving into new jobs, industries, and markets
Career coaches encourage millennials to change jobs every 3-4 years; not for higher wage, but
for positive work culture
Specialized expertise
People must continually create possibilities, integrate interest with others, and recognize the
inevitability of competition of both within and btwn companies
Managers must be in a near-constant mode of negotiating opportunities
Negotiation= people participate in joint ventures, partnerships, project teams
Increasing interdependence of people within organizations, both laterally and hierarchically;
know how to integrate interests and work across business units and functional areas
Information technology
managers are expected to negotiate at a moment’s notice (possible to communicate anywhere
in the world)
Because customers expect companies to be accessible to them 24/7, businesses have
reimagined how to respond quickly
Globalization
Effectively cross-cultural boundaries (set aside language or globalization challenges)
Managers need to develop negotiation skills with people of different nationalities,
backgrounds, and personalities
Negotiator with narrow subset negotiation skills will suffer- they must broaden
Negotiation Traps – 4 major shortcomings btwn disputants in a negotiation
1. Leaving money on the table (lose-lose negotiation)- negotiators fail to recognize and capitalize on their
win–win potential
2. Setting for too little (the winner’s curse)- negotiators make a too-large concession, resulting in a too-
small share of the bargaining pie
Megan Meiring |
, 3. Walking away from the table- negotiators reject terms offered by other party that are better than any
other option available to them
4. Settling for terms that are worse than your best alternative (agreement bias)- negotiators feel
obligated to reach agreement even when the settlement terms are not as good as their other
alternatives
Investigations of contract negotiations consider four key objectives when assessing the quality of contracts
What is the likelihood of reaching a good agreement?
Does the agreement fulfil its intended purpose?
Will the agreement last?
Will the agreement lead to subsequent negotiations?
evaluating the
success of
negotiation
prior negotiation post
post-deal
initiate relational
praparation strategy agreements implementatio
negotiation value
n
planning
opening efficiency satisfation durability
worksheet
economic
BATNA first offer fairness reputation
value
develop willingness to
reservation counter-offers individual gain negotiate
price again
develop target
concessions joint gain trust
price
3 key elements to improving your negotiation skills
Diagnostic feedback
More experience= more confident
Overconfidence= unwise risks
Real-world negotiation situations; managers do not receive feedback
If feedback is provided; adjust strategies and perform better
Analysis of success/failure of negotiation
If negotiator has not optimized in situation, “What should I have done differently?”
Beneficial for students of negotiation to learn negotiation skills
Focused behavioural practice
Put the learnt negotiation skills into practice
Megan Meiring |
Chapter 1: Negotiations Essentials
Negotiations
Key communication + influence tool
Interpersonal decision-making process necessary whenever we cannot achieve our objectives
singlehandedly
Not just about resources- but relationship + trust
The mind and heart
Across sections of The Mind and Heart of the Negotiator, we focus on:
the mind- as it involves development of deliberate, rational, and thoughtful strategies for
negotiation
the heart- we care about relationship + trust
we base all our teaching and best practices on scientific research in areas of economics and
psychology, reflecting the idea that both the bottom line and our relationships are important
Relationships vs Economics
o Economic value (money) & people (trust)
o “Taking one for the team”, and later maximize economic gain
o Not advisable; we negotiate in long-term relationships with people who have short-term
memories
o When people make economic sacrifices in hopes of securing or maintaining relationships, they
are often disappointed
Satisficing vs Optimizing
o Satisficing- doing just enough to reach one’s minimum goals
o Optimizing- negotiators capture all the potential gain in a situation
o Over the long run, satisficing can be harmful to individuals and companies, especially when a
variety of effective negotiation strategies and skills can be effectively employed to
dramatically increase economic gains
Short vs Long-term relationships
o Negotiators struggle with which strategy they should use in a single-shot negotiation vs
negotiations that could potentially recur with the same party in future
o Negotiators should assume that the details of negotiation will be accessible to anyone: long-
term implications
Intra- vs Inter-Organisational Negotiation
o Envy and internal competition have a bigger impact when people negotiate internally vs
externally
Low- vs High-Stakes Negotiation
o Negotiators are advised to treat negotiation- however small the stakes may be involved- as a
significant opportunity to enhance economic and relational outcomes
Megan Meiring |
, Types of negotiation:
Win-Win Win-Lose Lose-Lose
Both optimise potential One party prevails, other Both parties made unwise
joint gains expense sacrifices, resulting less
than satisfying
Integrative agreements; May be caused by threat
joint economic value
Negotiation as Core Management Competency
Key reasons effective negotiation skills are important
Knowledge economy
Over 70000 businesses developed since 2010, therefore many companies have disrupted
traditional business models, spurring managers to reinvent themselves as knowledge brokers
in the info economy
Changes rapidly; managers of all ages are continuously negotiating their prof identity,
acquiring new skills, moving into new jobs, industries, and markets
Career coaches encourage millennials to change jobs every 3-4 years; not for higher wage, but
for positive work culture
Specialized expertise
People must continually create possibilities, integrate interest with others, and recognize the
inevitability of competition of both within and btwn companies
Managers must be in a near-constant mode of negotiating opportunities
Negotiation= people participate in joint ventures, partnerships, project teams
Increasing interdependence of people within organizations, both laterally and hierarchically;
know how to integrate interests and work across business units and functional areas
Information technology
managers are expected to negotiate at a moment’s notice (possible to communicate anywhere
in the world)
Because customers expect companies to be accessible to them 24/7, businesses have
reimagined how to respond quickly
Globalization
Effectively cross-cultural boundaries (set aside language or globalization challenges)
Managers need to develop negotiation skills with people of different nationalities,
backgrounds, and personalities
Negotiator with narrow subset negotiation skills will suffer- they must broaden
Negotiation Traps – 4 major shortcomings btwn disputants in a negotiation
1. Leaving money on the table (lose-lose negotiation)- negotiators fail to recognize and capitalize on their
win–win potential
2. Setting for too little (the winner’s curse)- negotiators make a too-large concession, resulting in a too-
small share of the bargaining pie
Megan Meiring |
, 3. Walking away from the table- negotiators reject terms offered by other party that are better than any
other option available to them
4. Settling for terms that are worse than your best alternative (agreement bias)- negotiators feel
obligated to reach agreement even when the settlement terms are not as good as their other
alternatives
Investigations of contract negotiations consider four key objectives when assessing the quality of contracts
What is the likelihood of reaching a good agreement?
Does the agreement fulfil its intended purpose?
Will the agreement last?
Will the agreement lead to subsequent negotiations?
evaluating the
success of
negotiation
prior negotiation post
post-deal
initiate relational
praparation strategy agreements implementatio
negotiation value
n
planning
opening efficiency satisfation durability
worksheet
economic
BATNA first offer fairness reputation
value
develop willingness to
reservation counter-offers individual gain negotiate
price again
develop target
concessions joint gain trust
price
3 key elements to improving your negotiation skills
Diagnostic feedback
More experience= more confident
Overconfidence= unwise risks
Real-world negotiation situations; managers do not receive feedback
If feedback is provided; adjust strategies and perform better
Analysis of success/failure of negotiation
If negotiator has not optimized in situation, “What should I have done differently?”
Beneficial for students of negotiation to learn negotiation skills
Focused behavioural practice
Put the learnt negotiation skills into practice
Megan Meiring |
