Distributive and Integrative Negotiation Essay update PDF

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Negotiation

INVESTING THE DISTRIBUTIVE AND INTEGRATIVE APPROACHES TO NEGOTIATION

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Negotiation

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In order to succeed in the business world, it is crucial to display proper negotiating skills, as negotiation is a routine aspect in business. To manifest these skills in the workplace, an understanding of proper negotiating skills must first be acquired. Negotiation is an interpersonal process in which decisions are made that involve the input of at least two people. Therefore, negotiation is not a task that can be done single-handedly. The negotiation process is carried out when one person cannot reach his or her goals by themselves. Negotiators must thus enter into some form of relationship with one another and have to account for the perspectives and desires of others, while remaining steadfast to those things they value. In a globalizing world built on the interdependence of multiple economies, the importance of negotiation is only growing. It is thus becoming increasingly significant to gain insight into the different forms of negotiation and understand they should be used. Both forms of negotiation, the distributive approach and the integrative approach, are vastly different. Knowing the advantages and disadvantages of each style can help business people know which approach is best suited for the situation at hand. Because it involves a win-lose aspect, the distributive form of negotiation is inferior but is still very necessary in the world of negotiation. Distributive negotiation is often referred to as slicing the pie because each party involved in the negotiation wishes to leave the table with a larger slice than what they were originally given. Negotiating in this manner requires all parties to have a reservation point. From a seller’s perspective, the reservation point refers to the least amount they are willing to accept for an item. For buyers, the reservation point pertains to the highest amount they are willing to forego to purchase the item. The final settlement that is agreed upon will fall above the seller’s reservation point but below the buyer’s reservation point. The range between the two negotiator’s reservation points is called the bargaining zone. When the two negotiator’s reservation points overlap, a positive bargaining zone results; when there is no

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overlap, a negative bargaining zone results, and the parties must pursue alternatives. Once this concept of a bargaining zone, or zone of possible agreements, is understood, it is obvious that “the challenge of negotiation is to reach a settlement that is most favorable to oneself and does not give up too much of the bargaining zone” (Thompson, L. 2015, p. 61). To make this happen, negotiators want the monetary amount of the settlement to be as close to other party’s reservation point as possible. If the negotiator succeeds, they reap the benefits of a negotiator’s surplus, which is the positive difference between the settlement outcome and the negotiator’s reservation point. In order to walk away from a distributive negotiation with a sizeable slice of pie, negotiators must abide by the norms of fairness and spend ample time researching their BATNAs and reservation points, along with those of the counterparty. Many negotiators enter a distributive mediation with mixed-motives, meaning they are motivated to cooperate with the other party to ensure that a settlement will be reached whenever a positive bargaining zone presents itself. However, they are also motivated to compete amongst their counterpart to claim as much of the bargaining surplus as they can. This reinforces the fact that “the best economic outcome for the negotiator is one that just meets the counterparty’s reservation point, thereby including the other party to agree, but allows the focal negotiator to reap as much gain as possible” (Thompson, L. 2015, p. 63). However, because there are at least two negotiators in every situation, each one wants this to be the outcome for themselves. But because distributive negotiation results in a win-lose outcome, both parties cannot be completely satisfied. Understanding how much information to divulge about reservation points can certainly help both parties feel an increased satisfaction. A strong negotiator should not reveal his or her reservation point, as it is likely that the other party will offer this price and no more. Negotiators should also

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never lie about their reservation points. It is obvious that this is unethical, but it can also hurt the negotiator’s reputation and they will not be able to save face if the other party finds out. Face is the value that a person puts on their public image or status as compared to others in negotiation. If face is threatened, the negotiation will move from cooperation towards competition, again reinforcing mixed motives. Because distributive negotiation usually has a mixed motive nature, it is critical to have a good understanding of both sides’ BATNAs and reservation points. The integrative approach, or win-win negotiation, is seen as the favored form of negotiation because it aims to please all parties. In contrast to the distributive approach, integrative negotiation centers around expanding the pie. In this way, “win-win negotiation does not pertain to how the pie is divided but rather, to how the pie is enlarged” (Thompson, L. 2015, p. 92). Drawing on this definition, many negotiators form faulty assumptions of what constitutes integrative proceedings. Win-win does not mean that middle ground between the negotiator’s positions is to be reached, so it is not compromise. An even split is also not synonymous with win-win negotiations because the parties most likely want different things from the negotiation, rather than just splitting the items in discussion in half. It is also important for negotiators to enter into relationships with the other, but they must not seek to fulfill all their interests. Once the negotiators form a relationship, it is crucial that they do not fall victim to false conflict. This occurs when people perceive their interests to be incompatible with the other when they are not. This proves to be the result twenty percent of the time and is know as a lose-lose agreement. This is similar to the fixed-pie perception, the belief that the other party’s interests are directly opposed to themselves; sixty-eight percent of negotiators have this outlook. Because these misconceptions enter the minds of many negotiators, it is important to implement strategies that produce integrative solutions.

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Understanding how to use strategies that deal not only with how to slice the pie but also how to expand it will help produce win-win solutions. The first of these strategies is to make a presettlement settlement, or a formal, initial, and partial agreement that will be replaced by a long-term agreement. This resolves some issues and helps begin the negotiation process. Perspective taking, that is when negotiators attempt to see the world through the counterparty’s eyes, is another important strategy. Stepping into another’s shoes can help parties discover hidden potential and react effectively to the other’s anchor. While only about seven percent of negotiators actually adhere to this strategy, asking questions about underlying interests is important. While negotiators may lie about their BATNAs, they have no reason to lie about their wants, so these questions help discover value. In relation, revealing information about one’s own interests signals the principle of reciprocity, meaning if one side shares information, the other side will most likely be willing to share similar information. Because distributive negotiation settles only one issue, skilled negotiators expand the set of issues by unbundling. Once there are more issues to debate, package deals, should be made so there are no trade-offs. To assess these multiple issues, two or more offers of equal value should be presented to the counterparty. This makes the negotiator seem more flexible and helps overcome aversion. The negotiators can then logroll or make value-added trade-offs to make gains on issues important to them and concede on issues of little importance to them. This strategy of trading off helps negotiators capitalize on differences, another important strategy. Capitalizing on “differences in beliefs-or expectations about uncertain events-pave the way toward integrative agreements” (Thompson, L. p. 107). Finally, a postsettlement settlement in which both parties research alternative options that are more favorable than the current one can be made. The current settlement becomes the BATNA

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for each, and the new settlement is more favored. Implementing these strategies can increase the chances of ending the negotiation with an integrative solution. While countless differences have been stated between the integrative and distributive approaches to negotiation, similarities can certainly be made. Obviously, both are forms of negotiation that aim to form an agreement between both parties. Before entering into these negotiations, whether the integrative or distributive approach is being used, BATNAs must be determined. BATNA stands for best alternative to a negotiated agreement, and every negotiator must determine their best alternative. This is to be used when a proper agreement cannot be met. Once it is established, “negotiators should be willing to accept any set of terms superior to their BATNA and reject outcomes that are worse than their BATNA” (Thompson, L. 2015, p. 37). After this is determined, negotiators, independent of the approach they are using, must set their reservation point, or the least amount they wish to receive from the negotiation. Both kinds of negotiations also involve concessions, which are the reductions negotiators make while negotiating. All parties must understand it is very likely they will have to forego something they wished to gain from the negotiation in order to reach an agreement. Differences between the two methods then start to unfold after this point because the integrative approach using concessions and the search for beneficial substitutes, while the distributive process only uses concessions. These differences prove each approach to have advantages and disadvantages. While it may not be as highly regarded as the integrative method, the distributive approach can work in negotiation. The advantage of the distributive method is that it is very cost effective “if an agreement is in the cards” (Bartos, O. 1995, p. 59). Distributive negotiations only deal with one issue and have a very fixed amount of resources, so there is much less up for debate. Relationships with the other negotiators is not a priority because the negotiators are

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usually self-motivated, meaning if they are not pleased with the deal, they will resort to their BATNA. While time certainly is crucial to many businesspeople, the disadvantages of distributive negotiation must be considered. Because many negotiators prefer the integrative method, it is obvious that there must be downsides to the distributive approach. As previously stated, this method is only effective if an agreement is already in the cards. Therefore, “if an agreement is not in the cards, the approach does nothing to improve the chances of an agreement” (Bartos, O. 1995, p. 59). Using this method, the negotiators tend to stick to their own interests, and it can thus be very difficult to reach a proper negotiation because it is often that there is a negative bargaining zone. The result is win-lose, meaning that one party is always dissatisfied. Distributive negotiators may also be lying when discussing their BATNA or reservation points, making the conservations pointless. While it is still a valid negotiation approach, the cons may outweigh the pros for distributive negotiation. Because it is seen as the preferred method, there are many advantages to integrative negotiation. This form proves to be efficient because all negotiators have the potential of walking away from the table with full satisfaction, since this method intends to produce a win-win outcome. Using this method can also “improve the chances of an agreement” (Bartos, O. 1995, p. 59). Because there are more issues at hand and the negotiators prioritize their relationship with the other, there is much more room to please both parties. Using the logrolling method, one party may give up something they do not care much about and gain something they were deeply invested in, which is beneficial to everyone involved. Since it is likely that everyone may be please, the integrative method’s advantages are large in scope.

Negotiation Just because the integrative approach can please all negotiators, it does not always work out this way. In order to reach the win-win result, lots of time and energy must go into the negotiation. Searching for ways to please all sides can become very tedious, so the integrative “disadvantage is that search is time-consuming and may not end in the best agreement possible” (Bartos, O. 1995, p. 59). Negotiators forego the best agreement when they fail to recognize their mutual interests, which results in a lose-lose situation. Entering with the fixed-pie perception is one of the method’s greatest errors, and it can prove to be catastrophic for the negotiation. Despite these negatives, the possibility of a win-win negotiation makes the integrative approach worthwhile. Understanding the differences between the negotiation styles help businesspeople choose when to implement each form. The distributive approach should be used when there is only one issue at hand and the negotiators are competitive and self-interest, while the integrative approach works best for multiple issue situations when the negotiators are collaborative. While each method has its own positives and negatives, the integrative approach reigns supreme because it has the possibility of making each negotiator a winner. No matter which style is used, all negotiators need to research their BATNAs and reservation points, as well as those of their competitors to make the negotiation effective.

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Negotiation References Bartos, O.J., 1995. Modeling Distributive and Integrative Negotiations. The Annals of the American Academy of Political Social Science, 542, pp.48–60. Thompson, L.L., 2015. The Mind and Heart of the Negotiator 6th ed., Boston, MA: Pearson.

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