INTEGRATIVE NEGOTIATION

• In an integrative negotiation scenario, both the parties put forward their interests to try and agree to a solution that creates a
mutual gain for both.
• Here, both parties gain something.
• This method of negotiation is taught in most professional schools today.
• The primary issue that concerns most people regarding the integrative negotiation approach is revealing too much
information.
• These are important types of negotiation in corporates, where in both the parties look in for mutual benefits from any
negotiation.
• Usually, while negotiating, people try to hold their cards as close as possible.
• However, experts say you are supposed to explicitly reveal only preferences and interests.
• This type negotiation makes you effectively negotiate and solve your problems.
 DISTRIBUTIVE NEGOTIATION

• Imagine you are going out to buy a piece of furniture.

• You will try to negotiate the price in your favor and the seller tries to negotiate the price in their favor.
• Here, you both are trying to protect your interests and maximize your outcome.
• When two parties try to maximize their benefit from a transaction, it’s a distributive negotiation.
• It is misunderstood as the only form of bargaining since it’s more commonly used as a negotiation strategy.
• Here, what one party loses is the gain of the other party.
• Now imagine you are going to buy a painting.
• You tell the artist your preferences, and you finalize a piece you like.
 VALUE CREATION IN NEGOTIATION :
• A successful negotiation requires a fine balance between claiming and creating value.
• This balance is critical, yet often misunderstood.
• Value creation occurs when solutions are found that benefit both parties, or at least benefit one of them without
making the other worse off.
• This is commonly called win-win negotiation because both parties leave the bargaining table in the same or
better position than they arrived.
• On the other hand, value claiming refers to how value is distributed in a negotiation.
• Once value creation has been maximized, securing a larger share for one party necessarily leaves the other
with less.
 HOW TO ADD VALUE IN A NEGOTIATION
• 1. Build Trust : Trust is a foundational component of any effective negotiation strategy.
• 2. Find Uncommon Ground : Value creation requires focusing on areas where you and the other party have
different interests and perceptions, rather than commonalities.
• 3. Be Agile : Being a successful negotiator involves knowing how to think on your feet.
 FIGHTING FOR WHAT’S ON THE TABLE
1. The “bargaining table” is a way to refer to the time and place that parties come together to handle a
negotiation.
2. It doesn’t need to be a physical “table”, rather it refers to the act of getting a deal done.
3. Coming together with negotiating counterparts at the “bargaining table” is a situation fraught with potential
mishaps, all of which are compounded by the pressure to get the best deal a negotiator can for herself or her
organization.
4. Before you get to the bargaining table, however, remember that, even when not based in reality, the
expectation that someone is “tough” or “cooperative” becomes a self-fulfilling prophecy.
5. When you approach an allegedly tough competitor with suspicion and guardedness, he is likely to absorb
these expectations and become more a more competitive negotiator.
6. All the more reason to cultivate a cooperative reputation from the start and strive to maintain it at all costs.
 Three guidelines :
• Don’t squander your negotiating power. Objective power doesn’t always translate into strong outcomes.
• Don’t let a lack of power get to you. A lack of objective power can harm people’s sense of psychological
power, with detrimental effects on their outcomes.
• Do take practical steps to boost your power. Even as you work on enhancing your psychological power,
there are steps you can take to improve your actual power at the bargaining table.
 NEGOTIATING AND INFLUENCING BASICS
• PERSUADING involves being able to convince others to take appropriate action.
• NEGOTIATING involves being able to discuss and reach a mutually satisfactory agreement.
• INFLUENCING encompasses both of these.
Persuading :
• Focus on the needs of the other party.
• Argue your case with logic.
• The more hesitant language you use such as "isn't it", "you know", "um mm" and "I mean" the less people
are likely to believe your argument
• Use positive rather than negative language: instead of saying "You're wrong about this", say "That's true,
however ...", "That's an excellent idea, but if we look more deeply ....." or "I agree with what you say but
have you considered ....".
• Subtly compliment the other party. For example: "I see that you've done some really excellent research into
this".
• Even though they may realize this is being done, evidence shows that they will still warm to you and be more
open to your proposals.
• Try to remember the names of everyone you meet. It shows that you are treating them as an individual.
Negotiation :
• Listen carefully to the arguments of the other party and assess the logic of their reasoning
• Clarify issues you are not clear about by asking how, why, where, when and what questions.
• List all the issues which are important to both sides and identify the key issues.
•
• Identify any personal agendas.
• Question generalizations and challenge assumptions.
• Identify any areas of common ground.
• Understand any outside forces that may be affecting the problem.
• Keep calm and use assertive rather than aggressive behavior. Use tact and diplomacy to diffuse tensions.
• Remember: NO is a little word with big power!
• Examples of how negotiation and influencing skills can be developed or evidenced :
• Team sports.
• Suggesting changes to a course representative.
• Persuading others to support your idea in a group situation.
• Negotiating sponsorship for an event or publication.
• Convincing a colleague, manager or anyone else to take a course of action when they were initially reluctant
to see your point of view.
• Suggesting changes in systems, a course of action or ideas and convincing others to support this. This could
be in a group setting at university, in the workplace or any other team situation.
• Political canvassing.
• Successful advertising of an event.
 NEGOTIATION STYLES
• 1. Competitive
• Competitive personalities are results-driven.
• They are focused and assertive in their communication and often aggressive.
• Competitive negotiators are strategic thinkers therefore have very little time for pleasantries.
• 2. Collaborative
• Collaborative negotiators are open and honest, and understand the concerns and interests of the other party.
• They like to find creative solutions to make sure both parties are satisfied.
• 3. Compromising
• A compromising negotiator’s main concern is doing what is fair for both parties and finding middle ground.
• They would rather compromise on your own outcome to satisfy the other party.
• 4. Avoiding
• Avoiding personalities really dislike negotiations!
• They may try to avoid situations that may result in conflict as they find them intimidating and stressful by
staying behind the scenes of a negotiation.
• 5. Accommodating
• Accommodating negotiators spend a great deal of time building and maintaining relationships with the other
party.
• They are highly sensitive to the emotions, relationships and body language within the negotiation situation.
 STAGES OF NEGOTIATION
• 1. Preparation
• Effective preparation helps you gather the necessary information prior to negotiation and can
improve the quality of your negotiations.
• 2. Open discussion
• Sharing information between parties at the start of a negotiation can help you create a more
positive outcome for all sides.
• 3. Clarification of goals
• Similar to how sharing basic information can help parties reach a shared understanding,
sharing key goals may produce more effective negotiation between parties.
• 4. Negotiation
• The negotiation process often comprises several rounds of discussions, offers and
counteroffers.
• What Is Cognitive Bias?
• Cognitive biases generally involve decision-making based on established concepts that may or may not be
accurate.
• Think of a cognitive bias as a rule of thumb that may or may not be factual.
• We’ve all seen movies where a thief wears a police uniform to pass through a security checkpoint.
• The real police officers assume that because the person is wearing a uniform like theirs, they must be a real
police officer.
• That’s an example of a cognitive bias :
• Confirmation Bias: Have you noticed that you put more weight into the opinions of those who agree with
you? Investors do this too.
• How often have you analyzed a stock and later researched reports that supported your thesis instead of
seeking out information that may poke holes in your opinion?
• Gambler's Fallacy: Let’s assume that the S&P has closed to the upside five trading sessions in a row.
• You place a short trade on the SPDR S&P 500 (SPY) because you believe chances are high that the market
will drop on the sixth day.
• While it may happen, on a purely statistical basis, the past events don’t connect to future events.
• There may be other reasons why the sixth day will produce a down market, but the fact that the market is
up five consecutive days is irrelevant.
• Status Quo Bias: Humans are creatures of habit.
• Resistance to change spills over to investment portfolios through the act of repeatedly coming back to the
same stocks and ETFs instead of researching new ideas.
• Although investing in companies you understand is a sound investment strategy, having a short list of go-
to products might limit your profit potential.
• Risk-Averse Bias: The bull market is alive and well, yet many investors have missed the rally because of the
fear that it will reverse course.
• Risk-averse bias often causes investors to put more weight on bad news than good news.
• These types of investors typically overweigh safe, conservative investments and look to these investments
more actively when markets are rocky.
• This bias can potentially cause the effects of risk to hold more weight than the possibility of reward.
• Bandwagon Effect: Warren Buffett became one of the most successful investors in the world by resisting
the bandwagon effect.
• His famous advice to be greedy when others are fearful and fearful when others are greedy is a
denouncement of this bias.
• Going back to confirmation bias, investors feel better when they are investing along with the crowd.
• But as Buffett has proven, an opposite mentality, after exhaustive research, may prove more profitable.
• What Is Emotional Bias?
• Emotional biases typically occur spontaneously based on the personal feelings of an individual at the
time a decision is made.
• They may also be deeply rooted in personal experiences that also influence decision-making.
• Emotional biases are usually ingrained in the psychology of investors and can generally be harder to
overcome than cognitive biases.
• Emotional biases are not necessarily always errors.
• In some cases, an investor’s emotional bias may help them to make a more protective and suitable
decision for themselves.
• Here are a few examples:
• Loss-Aversion Bias: Do you have a stock in your portfolio that is down so much that you can’t stomach
the thought of selling?
• In reality, if you sold the stock, the money that is left could be reinvested into a higher-quality stock.
• But because you don’t want to admit that the loss has gone from a computer screen to real money, you
hold on in hopes that you will, one day, make it back to even.
• Overconfidence Bias: “I have an edge that you (and others) do not.”
• A person with overconfidence bias believes that their skill as an investor is better than others' skills.
• Take, for example, the person who works in the pharmaceutical industry.
• They may believe in having the ability to trade within that sector at a higher level than other traders.
• The market has made fools out of the most respected traders. It can do the same to you.
• Endowment Bias: Similar to loss-aversion bias, this is the idea that what we do own is more valuable than
what we do not.
• Remember that losing stock? Others in its sector may show more signs of health but the investor won’t sell
because they still believe, as before, it’s the best in its sector.
• Key Differences
• In general, a bias is usually the result of prejudice when choosing one thing over another.
• Biases can be influenced by experience, judgment, social norms, assumptions, academics, and more.
• Cognitive biases generally involve decision-making based on established concepts that may or may not be
accurate.
• Emotional biases typically occur spontaneously based on the personal feelings of an individual at the time a
decision is made.
• Emotional biases are usually not based on expansive conceptual reasoning.
• Both cognitive and emotional biases may or may not prove to be successful when influencing a decision.