Chapter 1
The Nature of Negotiation
Negotiations occur for several reasons:
1. To agree on how to share or divide a limited resource, such as land, or money, or time
2. To create something new that neither party could do on his or her own
3. To resolve a problem or dispute between the parties
Negotiation is a form of decision making in which two or more parties talk with one another in an effort to
resolve their opposing interests. The term is used to refer to win-win situations such as those that occur
when parties are trying to find a mutually acceptable solution to a complex conflict.
Characteristics of a Negotiation Situation
There are several characteristics common to all negotiation situations:
1. There are two or more parties – that is, two or more individuals, groups, or organizations
2. There is a conflict of needs and desires between two or more parties – that is, what one wants is
not necessarily what the other one wants – and the parties must search for a way to resolve the
conflict
3. The parties negotiate by choice – that is, they negotiate because they think they can get a better
deal by negotiating than by simply accepting what the other side will voluntarily give them or let
them have
4. When people negotiate, they expect a “give-and-take” process that is fundamental to their
understanding of the word negotiation. The movement of parties may be toward the “middle” of
their positions, called a compromise. However, truly creative negotiations may not require
compromise; instead, the parties may invent a solution that meets the objectives of all parties
5. The parties prefer to negotiate and search for agreement rather than fight openly, have one side
dominate and the other capitulate, permanently break off contact, or take their dispute to a
higher authority to resolve it. Negotiation occurs when the parties prefer to invent their own
solution for resolving the conflict, when there is no fixed or established set of rules or procedures
for how to resolve the conflict, or when they choose to bypass those rules
6. Successful negotiation involves the management of tangibles (e.g., the price or terms of
agreement) and also the resolution of intangibles. Intangible factors are the underlying
psychological motivations that may directly or indirectly influence the parties during negotiation
(e.g., the need to “win”, the need to look “competent” to the people you represent or the need to
defend an important principle or precedent in a negotiation)
Intangibles are often rooted in personal values and emotions. They can have an enormous influence on
negotiation processes and outcomes; it is almost impossible to ignore intangibles because they affect
our judgment about what is fair, or right, or appropriate in the resolution of the tangibles. Intangibles
become a major problem in negotiation when negotiators fail to understand how they are affecting
decision making or when they dominate negotiations on the tangibles.
Interdependence
One of the key characteristics of a negotiation situation is that the parties need each other in order to
achieve their preferred objectives or outcomes. When the parties depend on each other to achieve their
own preferred outcome, they are interdependent. Most relationships between parties may be
characterized in one of three ways: independent, dependent, or interdependent. Independent parties are
able to meet their own needs without the assistance of others. Dependent parties must rely on others for
what they need. Because they need the help of the other, the dependent party must accept and
accommodate that provider’s whims and idiosyncrasies. Interdependent parties, however, are
characterized by interlocking goals – the parties need each other in order to accomplish their objectives
,and hence have the potential to influence each other. Having interdependent goals does not mean that
everyone wants or needs exactly the same thing.
A competitive situation is also known as a zero-sum or distributive situation, in which individuals are so
linked together that there is a negative correlation between their goal attainments. Zero-sum, or
distributive, situations are also present when parties are attempting to divide a limited or scarce
resource, such as a pot of money. In contrast, when parties’ goals are linked so that one person’s goal
achievement helps others to achieve their goals, it is a mutual-gains situation, also known as a non-zero-
sum or integrative situation, where there is a positive correlation between the goal attainments of both
parties.
Mutual adjustment
When parties are interdependent, they have to find a way to resolve their differences. Both parties can
influence the other’s outcomes and decisions, and their own outcomes and decisions can be influenced
by the other. This mutual adjustment continues throughout the negotiation as both parties act to
influence the other. It is important to recognize that negotiation is a process that transforms over time,
and mutual adjustment is one of the causes of the changes that occur during a negotiation.
Negotiations often begin with statements of opening positions. Each party states its most preferred
settlement proposal, hoping that the other side will simply accept it, but not really believing a simple
“yes” will be forthcoming from the other side. If the proposal isn’t readily accepted by the other,
negotiators begin to defend their own initial proposals and critique the other’s proposals. When one party
agrees to make a change in their position, a concession has been made. Concessions restrict the range of
options within which a solution or agreement will be reached.
The dilemma of honesty concerns how much of the truth to tell the other party. On the one hand, not
telling the other party everything about your situation may give that person the opportunity to take
advantage of you. On the other hand, not telling the other person anything about your needs and desires
may lead to a stalemate.
The second dilemma is the dilemma of trust: How much should negotiators believe what the other party
tells them? If you believe everything the other party says, then they could take advantage of you. If you
believe nothing that the other party says, then you will have a great deal of difficulty in reaching an
agreement. How much you should trust the other party depends on many factors, including the
reputation of the other party, how they treated you in the past, and a clear understanding of the pressures
on the other in the present circumstances. When people make a concession, they trust the other party
and the process far more if a concession is returned.
Value claiming and value creation
Zero-sum, or distributive, situations are ones in which there can be only one winner or where the parties
are attempting to get the larger share or piece of a fixed resource, such as an amount of raw material,
money, time, etc. In contrast, non-zero-sum, or integrative or mutual gains, situations are ones in which
many people can achieve their goals and objectives. Distributive bargaining accepts the fact that there
can only be one winner given the situation and pursues a course of action to be that winner (“value
claiming”). In contrast, integrative negotiation attempts to find solutions so both parties can do well and
achieve their goals. The purpose of the negotiation is to “create value” – that is, to find a way for all parties
to meet their objectives, either by identifying more resources or finding unique ways to share and
coordinate the use of existing resources.
Most actual negotiations are a combination of claiming and creating value processes. The implications
for this are significant:
1. Negotiators must be able to recognize situations that require more of one approach than the
other
2. Negotiators must be versatile in their comfort with, and use of, both major strategic approaches
3. Negotiator perceptions of situations tend to be biased toward seeing problems are more
distributive/competitive than they really are
,The tendency for negotiators to see the world as more competitive and distributive than it is, and to
underuse integrative, creating-value processes, suggests that many negotiations yield suboptimal
outcomes.
Value may be created in numerous ways, and the heart of the process lies in exploiting the differences
between the negotiators. The key differences among negotiators include these:
1. Differences in interest
Finding compatibility in different interests is often the key to unlocking the puzzle of value
creation
2. Differences in judgments about the future
How parties see the present and what is possible that needs to be created – or avoided – can
create opportunities for the parties to get together
3. Differences in risk tolerance
People differ in the amount of risk they are comfortable assuming
4. Differences in time preference
Differences in time preferences have the potential to create value in a negotiation
Conflict
A potential consequence of interdependent relationships is conflict. It can result from the strongly
divergent needs of the two parties or from misperceptions and misunderstandings. Negotiation can play
an important role in resolving it effectively. Conflict may be defined as a “sharp disagreement or
opposition, as of interest, or a belief that the parties’ current aspirations cannot be achieved
simultaneously”. Four levels of conflict are commonly identified:
1. Intrapersonal or intrapsychic conflict
These conflicts occur within an individual. Sources of conflict can include ideas, thoughts,
emotions, values, predispositions, or drives that are in conflict with each other
2. Interpersonal conflict
Between individuals – co-workers, spouses, siblings, roommates, or neighbors
3. Intragroup conflict
Within a group – among team and work group members and within families, classes, living units,
and tribes. It affects the ability to the group to make decisions, work productively, resolve its
differences, and continue to achieve its goals effectively
4. Intergroup conflict
Between organizations, ethnic groups, warring nations, or feuding families or within splintered,
fragmented communities
Conflict is not simply destructive or productive, it is both. The objective is not to eliminate conflict but to
learn how to manage it to control the destructive elements while enjoying the productive aspects.
Negotiation is a strategy for productively managing conflict.
Effective control management
Contending (also called competing or dominating) is
the strategy in the lower right-hand corner. Actors Yielding Problem
other’s outcomes
pursuing the contending strategy pursue their own
Concern about
solving
outcomes strongly and show little concern for
whether the other party obtains their desired
outcomes. Threats, punishments, intimidation, and (Compromising)
unilateral action are consistent with a contending
approach.
Inaction Contending
Yielding (also called accommodating or obliging) is in
the upper left-hand corner. Actors pursuing the Concern about own outcomes
yielding strategy show little interest or concern in
whether they attain their own outcomes, but they are quite interested in whether the other party attains
their outcomes. It involves lowering one’s own aspirations to “let the other win” and gain what they want.
, Inaction (also called avoiding) is the strategy in the lower left-hand corner. Actors pursuing the inaction
strategy show little interest in whether they attain their own outcomes, as well as little concern about
whether the other party obtains their outcomes. Inaction is often synonymous with withdrawal or
passivity; the party prefers to retreat, be silent, or do nothing.
Problem solving (also called collaborating or integrating) is the strategy in the upper right-hand corner.
Actors pursuing the problem-solving strategy show high concern for attaining their own outcomes and
high concern for whether the other party attains their outcomes. In problem solving, the two parties
actively pursue approaches to maximize their joint outcome from the conflict.
Compromising is located in the middle. As a conflict management strategy, it represents a moderate
effort to pursue one’s own outcomes and a moderate effort to help the other party achieve their
outcomes.
The Nature of Negotiation
Negotiations occur for several reasons:
1. To agree on how to share or divide a limited resource, such as land, or money, or time
2. To create something new that neither party could do on his or her own
3. To resolve a problem or dispute between the parties
Negotiation is a form of decision making in which two or more parties talk with one another in an effort to
resolve their opposing interests. The term is used to refer to win-win situations such as those that occur
when parties are trying to find a mutually acceptable solution to a complex conflict.
Characteristics of a Negotiation Situation
There are several characteristics common to all negotiation situations:
1. There are two or more parties – that is, two or more individuals, groups, or organizations
2. There is a conflict of needs and desires between two or more parties – that is, what one wants is
not necessarily what the other one wants – and the parties must search for a way to resolve the
conflict
3. The parties negotiate by choice – that is, they negotiate because they think they can get a better
deal by negotiating than by simply accepting what the other side will voluntarily give them or let
them have
4. When people negotiate, they expect a “give-and-take” process that is fundamental to their
understanding of the word negotiation. The movement of parties may be toward the “middle” of
their positions, called a compromise. However, truly creative negotiations may not require
compromise; instead, the parties may invent a solution that meets the objectives of all parties
5. The parties prefer to negotiate and search for agreement rather than fight openly, have one side
dominate and the other capitulate, permanently break off contact, or take their dispute to a
higher authority to resolve it. Negotiation occurs when the parties prefer to invent their own
solution for resolving the conflict, when there is no fixed or established set of rules or procedures
for how to resolve the conflict, or when they choose to bypass those rules
6. Successful negotiation involves the management of tangibles (e.g., the price or terms of
agreement) and also the resolution of intangibles. Intangible factors are the underlying
psychological motivations that may directly or indirectly influence the parties during negotiation
(e.g., the need to “win”, the need to look “competent” to the people you represent or the need to
defend an important principle or precedent in a negotiation)
Intangibles are often rooted in personal values and emotions. They can have an enormous influence on
negotiation processes and outcomes; it is almost impossible to ignore intangibles because they affect
our judgment about what is fair, or right, or appropriate in the resolution of the tangibles. Intangibles
become a major problem in negotiation when negotiators fail to understand how they are affecting
decision making or when they dominate negotiations on the tangibles.
Interdependence
One of the key characteristics of a negotiation situation is that the parties need each other in order to
achieve their preferred objectives or outcomes. When the parties depend on each other to achieve their
own preferred outcome, they are interdependent. Most relationships between parties may be
characterized in one of three ways: independent, dependent, or interdependent. Independent parties are
able to meet their own needs without the assistance of others. Dependent parties must rely on others for
what they need. Because they need the help of the other, the dependent party must accept and
accommodate that provider’s whims and idiosyncrasies. Interdependent parties, however, are
characterized by interlocking goals – the parties need each other in order to accomplish their objectives
,and hence have the potential to influence each other. Having interdependent goals does not mean that
everyone wants or needs exactly the same thing.
A competitive situation is also known as a zero-sum or distributive situation, in which individuals are so
linked together that there is a negative correlation between their goal attainments. Zero-sum, or
distributive, situations are also present when parties are attempting to divide a limited or scarce
resource, such as a pot of money. In contrast, when parties’ goals are linked so that one person’s goal
achievement helps others to achieve their goals, it is a mutual-gains situation, also known as a non-zero-
sum or integrative situation, where there is a positive correlation between the goal attainments of both
parties.
Mutual adjustment
When parties are interdependent, they have to find a way to resolve their differences. Both parties can
influence the other’s outcomes and decisions, and their own outcomes and decisions can be influenced
by the other. This mutual adjustment continues throughout the negotiation as both parties act to
influence the other. It is important to recognize that negotiation is a process that transforms over time,
and mutual adjustment is one of the causes of the changes that occur during a negotiation.
Negotiations often begin with statements of opening positions. Each party states its most preferred
settlement proposal, hoping that the other side will simply accept it, but not really believing a simple
“yes” will be forthcoming from the other side. If the proposal isn’t readily accepted by the other,
negotiators begin to defend their own initial proposals and critique the other’s proposals. When one party
agrees to make a change in their position, a concession has been made. Concessions restrict the range of
options within which a solution or agreement will be reached.
The dilemma of honesty concerns how much of the truth to tell the other party. On the one hand, not
telling the other party everything about your situation may give that person the opportunity to take
advantage of you. On the other hand, not telling the other person anything about your needs and desires
may lead to a stalemate.
The second dilemma is the dilemma of trust: How much should negotiators believe what the other party
tells them? If you believe everything the other party says, then they could take advantage of you. If you
believe nothing that the other party says, then you will have a great deal of difficulty in reaching an
agreement. How much you should trust the other party depends on many factors, including the
reputation of the other party, how they treated you in the past, and a clear understanding of the pressures
on the other in the present circumstances. When people make a concession, they trust the other party
and the process far more if a concession is returned.
Value claiming and value creation
Zero-sum, or distributive, situations are ones in which there can be only one winner or where the parties
are attempting to get the larger share or piece of a fixed resource, such as an amount of raw material,
money, time, etc. In contrast, non-zero-sum, or integrative or mutual gains, situations are ones in which
many people can achieve their goals and objectives. Distributive bargaining accepts the fact that there
can only be one winner given the situation and pursues a course of action to be that winner (“value
claiming”). In contrast, integrative negotiation attempts to find solutions so both parties can do well and
achieve their goals. The purpose of the negotiation is to “create value” – that is, to find a way for all parties
to meet their objectives, either by identifying more resources or finding unique ways to share and
coordinate the use of existing resources.
Most actual negotiations are a combination of claiming and creating value processes. The implications
for this are significant:
1. Negotiators must be able to recognize situations that require more of one approach than the
other
2. Negotiators must be versatile in their comfort with, and use of, both major strategic approaches
3. Negotiator perceptions of situations tend to be biased toward seeing problems are more
distributive/competitive than they really are
,The tendency for negotiators to see the world as more competitive and distributive than it is, and to
underuse integrative, creating-value processes, suggests that many negotiations yield suboptimal
outcomes.
Value may be created in numerous ways, and the heart of the process lies in exploiting the differences
between the negotiators. The key differences among negotiators include these:
1. Differences in interest
Finding compatibility in different interests is often the key to unlocking the puzzle of value
creation
2. Differences in judgments about the future
How parties see the present and what is possible that needs to be created – or avoided – can
create opportunities for the parties to get together
3. Differences in risk tolerance
People differ in the amount of risk they are comfortable assuming
4. Differences in time preference
Differences in time preferences have the potential to create value in a negotiation
Conflict
A potential consequence of interdependent relationships is conflict. It can result from the strongly
divergent needs of the two parties or from misperceptions and misunderstandings. Negotiation can play
an important role in resolving it effectively. Conflict may be defined as a “sharp disagreement or
opposition, as of interest, or a belief that the parties’ current aspirations cannot be achieved
simultaneously”. Four levels of conflict are commonly identified:
1. Intrapersonal or intrapsychic conflict
These conflicts occur within an individual. Sources of conflict can include ideas, thoughts,
emotions, values, predispositions, or drives that are in conflict with each other
2. Interpersonal conflict
Between individuals – co-workers, spouses, siblings, roommates, or neighbors
3. Intragroup conflict
Within a group – among team and work group members and within families, classes, living units,
and tribes. It affects the ability to the group to make decisions, work productively, resolve its
differences, and continue to achieve its goals effectively
4. Intergroup conflict
Between organizations, ethnic groups, warring nations, or feuding families or within splintered,
fragmented communities
Conflict is not simply destructive or productive, it is both. The objective is not to eliminate conflict but to
learn how to manage it to control the destructive elements while enjoying the productive aspects.
Negotiation is a strategy for productively managing conflict.
Effective control management
Contending (also called competing or dominating) is
the strategy in the lower right-hand corner. Actors Yielding Problem
other’s outcomes
pursuing the contending strategy pursue their own
Concern about
solving
outcomes strongly and show little concern for
whether the other party obtains their desired
outcomes. Threats, punishments, intimidation, and (Compromising)
unilateral action are consistent with a contending
approach.
Inaction Contending
Yielding (also called accommodating or obliging) is in
the upper left-hand corner. Actors pursuing the Concern about own outcomes
yielding strategy show little interest or concern in
whether they attain their own outcomes, but they are quite interested in whether the other party attains
their outcomes. It involves lowering one’s own aspirations to “let the other win” and gain what they want.
, Inaction (also called avoiding) is the strategy in the lower left-hand corner. Actors pursuing the inaction
strategy show little interest in whether they attain their own outcomes, as well as little concern about
whether the other party obtains their outcomes. Inaction is often synonymous with withdrawal or
passivity; the party prefers to retreat, be silent, or do nothing.
Problem solving (also called collaborating or integrating) is the strategy in the upper right-hand corner.
Actors pursuing the problem-solving strategy show high concern for attaining their own outcomes and
high concern for whether the other party attains their outcomes. In problem solving, the two parties
actively pursue approaches to maximize their joint outcome from the conflict.
Compromising is located in the middle. As a conflict management strategy, it represents a moderate
effort to pursue one’s own outcomes and a moderate effort to help the other party achieve their
outcomes.
