Image Credit: EL
In order to get what you want out of your next negotiation, you are going to have to get strategic. The ultimate goal is to make sure that everyone involved in the negotiations feels that there was enough value in the negotiations so that they were able to get what they want. This means that you are going to have to understand what strategies are available to you and how to go about using them.
Using Distributive Bargaining
Negotiators recognize the value of both collaborating and competing when they come to the bargaining table. They look for different ways to increase the pie of value for all parties, often by identifying differences across issues and making tradeoffs. And they can also rely on distributive bargaining strategies to try to claim as much of that larger pie for themselves. This, of course, brings up the question of what are distributive bargaining strategies?
Distributive bargaining refers to the process of dividing up the resource or array of resources that parties are negotiating about. In many negotiations, that means haggling over many issues with one always seeming to be the price. In comparison, integrative bargaining involves collaboration or integrating across multiple issues in order to create new sources of value. Negotiators often think that using distributive bargaining strategies requires adversarial bargaining, such as making tough demands, threats, or bluffs. But in fact, the most effective distributive bargaining strategies do not require a negotiator to sacrifice their integrity or resort to dirty tricks. Rather, they require them to set aside plenty of time before the negotiation in order to engage in some clear-eyed preparation.
What Distributive Bargaining Strategies Should We Use?
In a study that was done, students engaged in a settlement negotiation simulation that drew on an example of distributive bargaining. In the study pairs of students playing the roles of plaintiff’s and defendant’s attorneys were told to attempt to negotiate a settlement of an age-discrimination lawsuit. This case was based on a real case, in which the plaintiff was suing his former employer for $200,000. Before the negotiations started both sides received the same information about the merits of the case and the relevant legal standards. The “facts” were designed to give neither side an edge.
So what distributive bargaining strategies were most effective? It turns out that the best predictor of “winning” outcomes in this distributive negotiation were negotiators’ estimates of the other side’s bottom line. The more accurately a negotiator estimated the other side’s bottom line, the more money that negotiator successfully claimed.
The study identified some other important factors that may improve your settlement outcomes in the real world. These included setting high aspirations (or “targets”), making an aggressive first offer, and being willing to go to court if necessary.
How Should You Use Distributive Bargaining Strategies?
During your next negotiation you are going to want to estimate the other side’s bottom line. Most negotiators understand the value of taking the time to evaluate their own bottom line – the least amount they would accept before walking away from the bargaining table. But all too often we often overlook the importance of estimating the other side’s bottom line. In order to do so, research the other party’s bargaining strength and interests, which may include examining the outcomes of her past negotiations and her likely best alternative to a negotiated agreement (BATNA). Once you are at the table, ask lots of questions to determine their interests and constraints as well.
Going into the negotiation you are going to want to set high aspirations. An important part of your negotiation preparation is to set an ambitious yet realistic aspiration goals. This doesn’t mean making outrageous demands; rather, prepare arguments that will make your ambitious goals seem reasonable.
Always anchor aggressively. The negotiator who can make the opening offer in a price negotiation typically gets the better deal, considerable negotiation research shows. Why is this? It’s because the first figure named in a negotiation “anchors” the discussion that follows. If you are well informed about the value of the thing that you’re negotiating, prepare to drop an ambitious first anchor.
Take the time to identify a strong BATNA. When you come into a negotiation with a strong BATNA, you will be in a good position to reject a mediocre agreement. As a result, your strong BATNA is typically your best source of power in a negotiation. After identifying your BATNA, you should take steps to improve it, whenever possible, by conducting the negotiations on multiple fronts.
What All Of This Means For You
Our goal in any negotiation that we participate in is to walk away with the best deal that is possible. In order to make this happen, we need to determine what approach is going to work the best with the other side. The more that we know about who we will be negotiating with, the better we will be able to craft a strategy that will get us what we are looking for.
In the end, when it comes to creating and using effective bargaining strategies, the difference between distributive and integrative negotiation is not that great. Both aspects of negotiation require you to engage in significant reflection and research long before you sit down at the table. The more you know about the issues that are being negotiated, the other side’s interests and constraints, and your own preferences and limitations, the better positioned you will be to successfully deploy distributive bargaining strategies and claim value in your next negotiation.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: If you choose to use distributive negotiating in your next negotiation, how would you know if you set your aspirations too high?
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What We’ll Be Talking About Next Time
When we enter into a negotiation, our goal is to reach a deal with the other side. The idea that we might not be able to do this is something that hopefully does not cross our mind when we are just starting out. However, as the negotiations go one, the possibility that we are negotiating with difficult people and that it might not be possible to reach a deal with them has to cross our minds. What criteria can we use in order to make a judgement call as to if this deal is going to be successful or not?