Integrative Bargaining: A Win-Win Negotiation Strategy, Study notes of Negotiation

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INTEGRATIVE

BARGAINING

• ISHA CHUGH ASSISTANT PROFESSOR GARGI COLLEGE UNIVERSITY OF DELHI

COLLECTIVE BARGAINING AND

NEGOTIATION SKILLS

UNIT 4

TOPIC: INTEGRATIVE

BARGAINING

✓ INTEREST-BASED BARGAINING ✓ WIN-WIN BARGAINING

• INTEGRATIVE IS A NEGOTIATION STRATEGY IN WHICH PARTIES COLLABORATE TO FIND A "WIN-WIN" SOLUTION TO THEIR DISPUTE.
• FOCUSES ON DEVELOPING MUTUALLY BENEFICIAL AGREEMENTS BASED ON THE INTERESTS OF THE DISPUTANTS.
• INTERESTS INCLUDE THE NEEDS, DESIRES, CONCERNS, AND FEARS IMPORTANT TO EACH SIDE. THEY ARE THE UNDERLYING REASONS WHY PEOPLE BECOME INVOLVED IN A CONFLICT.
• INTEGRATIVE REFERS TO THE POTENTIAL FOR THE PARTIES' INTERESTS TO BE COMBINED IN WAYS THAT CREATE JOINT VALUE OR ENLARGE THE PIE.
• POTENTIAL FOR INTEGRATION ONLY EXISTS WHEN THERE ARE MULTIPLE ISSUES INVOLVED IN THE NEGOTIATION. THIS IS BECAUSE THE PARTIES MUST BE ABLE TO MAKE TRADE-OFFS ACROSS ISSUES IN ORDER FOR BOTH SIDES TO BE SATISFIED WITH THE OUTCOME.

THE NEGOTIATORS GENERALLY TRY TO ACHIEVE

TWO GOALS

1. To create as much value

as possible for both the sides

2. To claim as much value as

possible for their own interests

 There are often many interests behind any one position. If parties focus on identifying those interests, they will increase their ability to develop win-win solutions  Integrative solutions are generally more gratifying for all involved in negotiation, as the true needs and concerns of both sides will be met to some degree. It is a collaborative process and therefore the parties actually end up helping each other. This prevents ongoing ill will after the negotiation concludes. Instead, interest-based bargaining facilitates constructive, positive relationships between previous adversaries.

STRATAGIES THAT HELP NEGOTIATORS TO CREATE WIN-WIN SITUATION

Creating Options  After interests are identified, the parties need to work together cooperatively to try to figure out the best ways to meet those interests.  Often by "brainstorming" -- listing all the options anyone can think of without criticizing or dismissing anything initially, parties can come up with creative new ideas for meeting interests and needs that had not occurred to anyone before. The goal is a win- win outcome, giving each side as much of their interests as possible, and enough, at a minimum that they see the outcome as a win, rather than a loss.

STRATEGIC MODEL OF INTEGRATIVE NEGOTIATIONS

 Nonspecific Compensation

In nonspecific compensation, one party gets what it wants by repaying the other party with something unrelated to the original source of conflict. The party simply “buys off” the other party’s concessions, and is able to obtain what it wants by selling something the other party has realized it wants or needs. An example of this type of integrative agreement is one of the above-mentioned milk companies paying the other one for the privilege of using the platform first.

 Logrolling

In logrolling, one party concedes on issues it perceives as a low priority, which the other party perceives as having a high priority. Each party gets at least part of its demands it considers most important or most valuable. Logrolling has been considered a nonspecific compensation because in the milk company example, the company that gives up its right to deliver first because it considers the extra money more important than being first.

 Bridging

In bridging, neither party gets its original demands, but they are able to come up with new solutions that satisfy the underlying reasons for their demands. Each party’s goals have become compatible, and in the process of using this method, each party’s underlying interests and positions are discovered. An example of bridging could be the following. The milk companies discover that the assumption that delivering their milk first would give them an advantage was incorrect, but for their situations, a different delivery time would provide them with the same advantage.

KEYS TO SUCCESSFUL INTEGRATIVE NEGOTIATION  Willing participation of both the parties All the parties should openly discuss as well as list all issues of concern to either party and be willing to participate in an integrative process in order to seek mutual gains. If one party is unwilling or resorts to concealing its interests, this process may not be easily employed.  Recognition of relationship The parties should openly recognise they have a valuable relationship that they seek to maintain after the negotiation process has ended. Thus they negotiators acknowledge that their continued relationship is of equal or even greater importance than one-time distributive gain.

THOMPSON PYRAMID MODEL OF INTEGRATIVE AGREEMENTS

• Level 1 Agreements are those in which

both parties achieve an outcome that is

better than their reservation point or

BATNA.

• Level 2 Agreements produce an outcome

that is even better for both parties than

Level 1 agreements, possibly by

introducing a new issue for which both

parties have a similar objective.

• Level 3 Agreements are those for which it

is impossible to improve the outcome

from the perspective of both parties, one

in which any change that would benefit

one party would harm the other party.

• Parties ideally seek to reach Level 3 agreements, and therefore “leave nothing on the table.” Integrative negotiators do not stop at Level 1 ; they seek to gain the benefits of higher, mutually beneficial levels 2 and 3.
• In reality it is more likely that negotiators can achieve Level 1 agreements in which both parties exceed their reservation points and BATNAs or, through the development of new options, that they can negotiate Level 2 agreements that create additional value for both parties above the minimums achieved in Level 1.
• Level 3 agreements can be described as pareto optimal because they represent improvements above Level 2 for both parties and achieve an agreement that cannot be improved for one party without harming the other party.