«3 Chapter Distributive Bargaining T he negotiation model known today as distributive bargaining was first identified by R. E. Walton and R. B. ...»
“In thinking about Taylor, he thinks he is too valuable not to keep him, and in the HR director’s job!” The issue of Taylor’s worth in the new organization was totally changed from fact to only his lofty opinion of himself, and Lane ended up in the position.
Negotiation scholar David Venter suggests four types of frames to consider in a negotiation situation: reframing the issue, focus framing, contrast framing, and negative framing (see Table 3.2).
Reframing Offers To be perfectly clear, the value of two offers can be identical, but the manner in which they are framed or worded can substantially affect how
they are received and thus possibly accepted. For example, in a research study people were asked to choose between two plans of action, when three plants were scheduled to be closed and 6,000 employees laid off:
Plan A: This plan will save one of the three plants and 2,000 jobs.
Plan B: This plan has a one-third probability of saving all three plants and all 6,000 jobs but has a two-thirds probability of saving no plants and no jobs.
Then participants were asked to choose between plan B (same wording) and plan C:
Plan C: This plan will result in the loss of two of the three plants and 4,000 jobs.
The two pairs of choices contained the exact same values or facts—plans A and C both will save only one plant of the three plants, and 2,000 of 6,000 jobs. Yet 80% of 72 Chapter 3 Distributive Bargaining Table 3.2 Four Types of Frames
the people in the study choose plan A in the first set of options, but then 80% chose plan B in the second set. The only difference was the positive framing of plan A compared to the negative framing of plan C.24 In his book Getting Past No, William Ury suggests that negotiators should, in practice, never reject an opponent’s offer, but instead reframe it or literally “change the frame around the picture” so it satisfies the interests of both parties. Ury further suggests that reframing is the most valuable tactic in negotiations—and the single most valuable tool in reframing is the question asked, which should focus interests on each side. Ury suggests that the most useful reframing questions include the following:25
• Ask why: Instead of treating the other party’s offer as an adversarial position, use it as an opportunity to better understand their interest or to test the firmness of the position. For example, “Why did you choose that exact number?” or “Why are you so determined to settle on that number—where did it come from?” A powerful “why” question can invoke the fairness norm: “Why is that a fair price?” Even if the other party refuses to directly defend the fairness of their number, the very fact that it cannot be easily defended inserts doubt in their mind about their own position, and thus makes it easier to achieve a concession.
• Ask why not: If the other party will not reveal the source of their position, asking “why not” can help uncover their real interests. For example: “Why not simply divide the difference equally?” or “Why not change our assumptions and see what figure the actuary gives us?” The answer to your question may reveal important information about the true interests of the other party.
Chapter 3 Distributive Bargaining
• Ask what if: Instead of disagreeing with the offer of the other party, acknowledge it and respond with an option. For example: “I understand you believe you must have a 12% increase. What if we agreed to that figure—but to help pay for it, health care co-pays were changed?”
• Ask for advice: If asked in a constructive manner, the other party may develop
an option that represents positive movement toward a settlement. For example:
“How would you suggest I present that offer to my manager when company policy restricts us from providing service beyond one year?” or “I can agree to your price, if you can find a way to cover my delivery charges.” Opponents often appreciate the opportunity to help develop mutually agreeable options, and once involved, may even develop a sense of ownership in the options suggested, and thus help one of them become a settlement point.
Reframing Personal Attacks Making personal attacks has, unfortunately, become a common tactic in negotiations. The other party may simply get caught up in the “heat of battle,” or may actually plan on using personal attacks as a means of getting the other party emotionally involved and thus possibly less focused on their objectives. Personal attacks may be direct, such as: “I can’t stand dealing with lowlife people like you!” or “You are simply too stupid to realize that I’m going to win.” Or, they may be indirect, attacking your skill as a negotiator: “Are you sure you can afford this vacation home?” or “I don’t think you can analyze this proposal in time for us to reach a deal—you’d better get help.” How should you respond to personal attacks? First and foremost, prepare yourself for the possibility. If you have never been exposed to such a tactic, but expect it might occur in your next encounter, then as part of your preparation think about how you will respond—and most important, don’t let a personal attack get you emotionally involved. If your emotions take over your strategy, then you have given the other party a major advantage.
For example, a few years ago a real estate developer bought two-thirds of a valuable piece of lakefront property, expecting to buy the other third that was for sale and was the key to the total development project. The developer had already made one critical mistake by purchasing the first two-thirds of the property with no guarantee that he could buy the other third; he failed to realize the significant leverage he had given the other party who owned the last one-third of the property. Then in the first face-to-face meeting to discuss the remaining third of the property, he became enraged when the owners indicated they would prefer to sell their third of the land to someone else, even if at the same price. The developer took this negotiation tactic—introducing the existence of another buyer who is not at the table—as a personal attack and repeatedly asked, “Why isn’t my money just as good as theirs?” and “Why do they only need to match my offer, but I must beat their offer?” In what is an all too common response when someone becomes emotionally involved, the developer angrily left the meeting, hired an attorney, and spent the next several months in court. In the end, he paid the same amount that the owners of the last one-third of the property had asked in the beginning, which was approximately just a little more than what he paid per for acre for the first twothirds of the property. But his emotions led him to waste thousands of dollars on legal expenses and court fees.
74 Chapter 3 Distributive Bargaining What are successful responses to personal attacks on your character or abilities?
First, as was just discussed, prepare yourself for the possibility. If you have never experienced such an encounter, then consider role-playing with someone who is experienced. Get used to the name-calling and keeping your mind focused on the issues at hand. Practice resisting the temptation to defend yourself—or worse, to respond with similar personal attacks. Both of these responses are perfectly natural, and tempting, but almost never productive. Instead they usually raise the emotional level of the other party to even higher levels, and decrease the likelihood of reaching an agreement. Instead, consider the advice of Roger Fisher and William Ury in their landmark book Getting to Yes. First, recognize a personal attack for what it is, and respond by sitting back and letting the other party blow off steam. Keep in mind, it’s only a tactic to gain advantage over you, so don’t let it reach your emotions. It might be helpful to respond with: “I think we all need a break, and in fact let’s take a 15minute break.” Second, reframe their attack on you as an attack on the problem or issues at hand. In the real estate example just described, the buyer—instead of reacting emotionally and hiring an attorney—could have responded with: “When you indicate that you would just as soon sell your property to someone else, even at the same price, what I hear is there may be other interested buyers, and since this is a valuable piece of property, that is certainly a possibility. But I’m prepared to make you a fair offer today. What do suggest is a reasonable price?” That response would have reframed the personal attack back to the issue of settling on a price for the property.
And it would have advanced negotiations without insulting the seller or falling for their tactic of introducing another possible buyer. Third, consider responding with silence or a question. Silence is a powerful tool in many negotiation situations (see Box 3.4). Silence after receiving a personal attack may cause the other party to become uncomfortable, and feel they have caused a stalemate. Thus, they may feel compelled to break the silence by making a positive statement and getting things back on track: “Well, that is not really a fair thing to say, let’s get back to work.” A carefully worded statement might achieve the same response. In the previous real
“Silence Is Golden” When negotiations reach a critical point— the breakdown will feel uncomfortable and such as when one party makes a verbal attack, make a conciliatory statement or concession refuses to make any concessions, or threatens in order to get the other party to continue to to walk out—one tactic that might turn the negotiate. If not, the silent party has not lost tide is silence. A negotiator who says nothing anything, and most likely will have commuin response to a verbal attack, unreasonable nicated his or her displeasure with the actions demand, or threat does, in fact, send a clear of the other side. Experienced negotiators signal to the other party. Often, after a few have learned that “silence is golden” when minutes of silence, the negotiator who caused applied in appropriate situations.
Source: Michael R. Carrell and Christina Heavrin, The Everyday Negotiator (Amherst, MA: HRD Press, 2004), 118–121.
FINAL NEGOTIATED PRICEAt some point in the negotiation process, the parties involved believe they are close to a settlement. Before making a declaration such as “Well, I guess we’re done” or “I think we have a deal,” an experienced negotiator will consider a few critical points.
First, although price was the major issue being negotiated, ask if it is really the only issue. For example, a homeowner and home repair contractor agree on a price for siding installation, and they sign a standard form stating the price and a brief description of the work to be done. However, after the work is finished, the homeowner refuses to pay the contractor, perhaps because he is unhappy with the work, or it was completed later than they expected, or perhaps just because the homeowner thinks he can get away with not paying. If other issues had been negotiated as well—such as exactly how it will be determined when the work is finished (does the contractor or homeowner alone decide?), what interest the contractor is entitled to collect if payment is late, and who pays legal fees if the case goes to court—then both parties would be better served. A contract that specifies these issues in addition to the price can be critical to preventing common disputes, which arise in about 12% of all home repair contracts, according to the National Association of Remodeling Industry.27 In most simple distributive bargaining situations, shaking hands and exchanging a product for cash is all there is to it. However, if an immediate exchange of cash for goods is not possible, the bargainers should consider the classic economic principle of “the time value of money.” This basic concept has caused many deals to sour after an agreement is reached. Thus a second point to consider is the need for a contingency contract. A contingency contract is an agreement that specifies how a future event will change specific issues contained in the contract. If such a future issue cannot be foreseen, a contingency contract can allow the parties to reach agreement on all other issues, and then provide for exactly how the terms will be finalized once the future event is known.
Contingency contracts are commonplace in business, but they can also be useful in personal negotiations among family, friends, or neighbors. For example, three adult children over a period of several months distributed all of the property, household, and personal items in the estate of their late parents. As their parents wished, the process had gone smoothly and without any serious disagreements. Only the disposition of their parents’ home of 40 years remained to be negotiated. The parents’ Will specified that all estate items were to be divided equally, thus the logical solution was to sell the home and divide the proceeds into equal thirds. One of the three, however, asked her siblings if she could buy their two-thirds interests in the house so she could live in it. Because the other two had no similar desire and liked the idea of a family member keeping the house, they responded positively to the proposal.
76 Chapter 3 Distributive Bargaining Exactly how should they negotiate a “fair” sale price might be considered a common distributive bargaining situation, except the parties were not adversaries and had a continuing relationship (relational norm). They agreed to hire a trusted real estate agent to inspect the house and suggest a market price. Then they signed a written contract, which of course contained the market price. All three believed they had negotiated in a fair and responsible manner for all concerned. However, at the request of the one who was buying the house, the other two agreed to wait until she sold her existing home before closing the deal on their parents’ home. They thought this a reasonable request, since she could not easily afford two house payments.