BU 288 Organizational Behaviour I Class 9 : Negotiation

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BU 288 - Organizational Behaviour I Class 9
Negotiation

• November 16, 2004

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Agenda

• Announcements
• Negotiation Exercise
• Video The Stanford Video Guide to Negotiation
• Next Class

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Announcements

• Mid Term on Saturday went well. Exit polls
  suggest that either the exam was easier or you
  were all better prepared.
• Due to missing last week, we will be switching
  the order of our classes a bit
• This week, Negotiation
• Next week, Communication, Conflict, and Stress
• Class 12, Power, Politics, and Ethics Exam
  Review

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Final Exam

• 30 Multiple Choice Questions
• 1 point each for a total of 30 points
• cover only the remaining chapters (12 and 13)
• 3 Short Answer Questions (Choose from 10)
• 10 points each for a total of 30 points
• 1 Scenario (Mini Case) (Choose from 2)
• 20 points
• Total exam will be marked out of 80 points.

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Negotiation
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Negotiation

• Negotiating rationally means making the best
  decisions to maximize your interest
• We negotiate all the time
• pricing a new product
• dealing with job recruiters
• mergers and acquisitions
• buying a house
• going to a movie

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Negotiation Perspectives/Strategies

• Distributive negotiations
• fixed amount of resources
• zero-sum conditions
• Integrative negotiations
• variable amount of resources
• expand the pie

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Distributive Strategies

• Act reluctant or disinterested
• Determine how large your first concession will be
• Never accept a first offer
• Do your research - learn as much as you can about
  the other partys position
• Try to learn the bargaining zone

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Distributive Negotiation
Partys Target
Settlement Range
Partys Resistance Point
Others Resistance Point
Others Target
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Planning and Preparation

• A Checklist
• Define the issues
• Have an alternative (BATNA)
• Know interests, not positions
• Set goals
• Define the bargaining range
• List your supporting arguments
• Plan Before You Act!

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Starting to think about integrative solutions

• Asking questions - goal is to create a free flow
  of information
• Attempt to understand the other partys real
  needs and objectives
• Emphasize commonalities and minimize the
  difference
• Search for solutions that meet the goals of both
  sides

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Integrative Strategies

• Build trust and share information
• Ask lots (and lots) of questions
• Give away some information
• Make multiple offers simultaneously
• Search for post-settlement settlements
• Search for a novel solution

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Stephen Coveys Seven Habits

• Habit 4 Think Win-Win
• Habit 5 Seek first to understand,
• then to be understood
• Habit 6 Synergize

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Common Mistakes in Negotiation

• 1 Irrational escalation of commitment
• continuing a previously chosen course of action
  beyond what a rational analysis would recommend
• caused by biases in perception (not processing
  information properly)
• also caused by impression management motives
• negotiation example I want that house

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Mistake 2

• Belief in the Mythical Fixed-pie
• the assumption that your own interests directly
  conflict with the other party
• leads to win-lose thinking

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Mistake 3

• Anchoring and Adjustment
• an anchor is a standard against which future
  adjustments are measured
• very often, the choice of an anchor is based on
  faulty or incomplete information
• the best way to solve the problem is to do your
  homework

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10 Minutes
B R E A K !
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Negotiation Exercise
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Negotiation Exercise
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Negotiation Exercise

• Recruiting Teams stay in this room to prepare
• Candidate Teams go outside in the halls to
  prepare
• You have 15 minutes to read your Negotiator
  Instruction Sheets in preparation for the
  negotiation
• All negotiation will be done in this room (find a
  corner)
• You will have 30 minutes to negotiate an
  employment agreement

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10 Minutes
B R E A K !
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Next Class

• Readings Textbook, Chapters 10, 13