CMN 6060: Negotiation, Mediation, and Facilitation
The Seven Elements
of Negotiation
Seven Elements
Communication Relationship
Interests
Options
Objective Criteria
Alternatives Commitment
Seven Elements
People Communication Relationship
Interests
Problem Options Circle of Value
Objective Criteria
Decision Alternatives Commitment
Key Points
Beyond positional bargaining, all negotiations
involve the Seven Elements
Negotiations take many paths
External factors can influence the negotiation
1. Communication
Primary Functions
Ability to have a conversation
Ability to understand each other
Ability to control the flow of information
1. Communication
Challenges
Asymmetrical information
Ambiguous information
Information overload
Choice of medium
Language barriers
Use of agents
2. Relationship
The New Yorker (2017, April 10)
Relationship
Primary Functions
Establish sufficient trust
Work through difficult issues
Provide a source of value
3. Interests
Golden Rule
Do unto others as you would have others do unto you
Platinum Rule
Treat others the way they want to be treated,
not how you want to be treated
The New Yorker (2017, March 20)
Position
What you’re asking from the other side
(demand, offer, or request)
vs.
Interest
Why something is important to you
(underlying reason, hope, or need)
Listen for Interests
Ask open-ended questions
Fluffy
Takeaways
Many interests are not economic
Positional bargaining fails on non-economic issues
Focusing on interests separates the people from the problem
Failing to explore interests can have negative consequences
4. Options
In Wikipedia. Retrieved November 5, 2017, from [Link]
Bed, Bath & Beyond. Retrieved February 23, 2020, from [Link]
Options
Ideas for possible terms of an agreement
Ideas about how the negotiation process should proceed
Options - Brainstorming
Benefits
Builds trust and relationship
Fosters ownership of ideas
Signals commitment
Tips
Keep sessions informal
Generate many ideas
Postpone judgment
Generating ideas
People Communication Relationship
Interests
Problem Options Circle of Value
Objective Criteria
Decision Alternatives Commitment
Deciding on the best ideas
People Communication Relationship
Interests
Problem Options Circle of Value
Objective Criteria
Decision Alternatives Commitment
5. Objective Criteria
Independent standards of legitimacy
Objective Criteria
Published financial information
Peer-reviewed statistical or scientific data
Legal rights
Professional standards
Precedents
Widely accepted processes and decision-making rules
Benefits of Objective Criteria
Narrows your differences
Refocuses positional bargaining
Protects you from pressure
Confers a psychological advantage
Protects status and reputation
Separates the people from the problem
6. Alternatives
Actions you can take on your own
away from the negotiating table
if you don’t reach an agreement
Benefits of having alternatives
Improves self-confidence
Signals confidence to the other party
Strengthens your bargaining position
“Sorry—what we really want is a beginner with experience.”
Risk of having no alternative?
You are likely to accept any offer
BATNA
Best Alternative to a Negotiated Agreement
An action you can take independently
Basis for determining whether or not to accept an agreement
Reservation Price (“Bottom Line”)
The most you are willing to give up (as a buyer)
The least you are willing to accept (as a seller)
BATNA
An action you can take without the other side
vs.
Reservation Price (“Bottom Line”)
A position or demand
Both can change over time
7. Commitment
1) Choosing among different options
2) Making sure they are better than your BATNA
3) Committing to the other side
4) Deciding what form the agreement should take
5) Finding ways to make the agreement last
ZOPA
Zone of Possible Agreement
Seller
Highest Price
Seller’s Target Price = $500
Seller’s
Range
Seller’s Reservation Price = $250
Lowest Price
Buyer
Highest Price
Buyer’s Reservation Price = $375
Seller’s
Range
Buyer’s
Range
Buyer’s Target Price = $125
Lowest Price
Zone of Possible Agreement (ZOPA)
Highest Price
Seller’s Target Price = $500
Buyer’s Reservation Price: $375
Seller’s
Range
ZOPA
Buyer’s
Range
Seller’s Reservation Price: $250
Buyer’s Target Price = $125
Lowest Price
ZOPA – Generalized
Best for Party A
Terms Party B can agree to
Range
for
Party A
ZOPA
Range
for
Terms Party A can agree to Party B
Best for Party B
ZOPA Challenges
Ambiguous reservation values
Incomplete information
Changing reservation prices
Multiple parties and issues
Diagnosing Problems
Communication Relationship
Interests
Options
Objective Criteria
Alternatives Commitment
Evaluating Success
Communication Relationship
Interests
Options
Objective Criteria
Alternatives Commitment
Negotiation Simulation: 67 Fish Pond Lane
Find your group and negotiating partner (same role)
Prepare your approach with your negotiating partner
(10 minutes)
Negotiate for 30 minutes (stay in role)
Return to debrief with the entire class