Worst Alternative to a Negotiated Agreement: In a negotiation, your WATNA represents one of several paths that you can follow if a resolution cannot be reached. Like its BATNA counterpart, understanding your WATNA is one alternative you can use to compare against your other options along alternative paths in order to make more informed decisions at the bargaining table. See Also: Dealmaking Relationship Rules and Business Negotiations, 10 Hard Bargaining Tactics, Business Negotiators – Find the Right Fit.

Learn how to negotiate like a diplomat, think on your feet like an improv performer, and master job offer negotiation like a professional athlete when you download a FREE copy of Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator.

The following items are tagged watna.


Dealmaking Negotiations: From Handshake to Contract – Draft the Right Agreement

Posted by & filed under Dealmaking.

Some negotiations end with a plan of action rather than a signed contract – for example, a plumber agrees to fix the tile damage caused by his work. Other negotiations wouldn’t be appropriate to commemorate in writing, such as how you and your spouse decide to discipline your young child. But in virtually all significant business negotiations, parties should put pen to paper after negotiating the terms of their deal. In fact, contract law requires certain types of deals to be in writing for them to be enforceable.

How to Negotiate When You’re Literally Far Apart

Posted by & filed under Business Negotiations.

Imagine that you’re the CEO of a sports clothing manufacturer based in Chicago. You recently traveled to Amsterdam, the Netherlands, to meet with a distributor who has a rich and diverse network in the European sports market.

During the business trip, you both express enthusiasm about the possibility of a joint venture and agree to give the potential alliance more thought.

Back home, you learn that one of your competitors has discussed similar plans with the same distributor.

Business Negotiations: Using Bias to Your Advantage

Posted by & filed under Business Negotiations.

Articles in Negotiation have highlighted many of the cognitive biases likely to confront negotiators. Work by researchers Russell B. Korobkin of UCLA and Chris P. Guthrie of Vanderbilt University suggests how to turn knowledge of four specific biases into tools of persuasion.

Negotiating for Continuous Improvement: Monitor and Assess Your Negotiation Skills

Posted by & filed under Negotiation Skills.

Many organizations subject their executives to rigorous performance reviews, yet few companies include negotiation effectiveness as one of the core competencies they track. Instead, negotiation is usually subsumed under categories such as “emotional intelligence,” or “persuasiveness.” The negotiator-related questions posed in most “36-degree assessments” don’t measure the right skills and abilities, such as preparation. When evaluators do assess negotiations, they typically rely only on post hoc accounts and overlook the details of the bargaining experience.

10 Hard Bargaining Tactics

Posted by & filed under BATNA.

Don’t be caught unprepared by hard bargainers, warn Mnookin, Peppet, and Tulumello in Beyond Winning. Here is their Top 10 list of common tactics.

Business Negotiators: Find the Right Fit

Posted by & filed under Dispute Resolution.

When approached by a partner whispering sweet nothings about untold riches and power, it can be tempting to rush through the negotiation process. But if you do, you could find out too late that your Prince Charming is nothing but a frog—and that those glass slippers on your feet pinch. That’s how famed shoe designers Kari Sigerson and Miranda Morrison felt not long after inking their seemingly sweetheart deal with Marc Fisher, the scion of the 9 West shoe fortune, as reported by Jessica Lustig in the August 1 New York Times.

The Paradox of Positions

Posted by & filed under Dispute Resolution.

It’s not difficult for negotiators haggling over seemingly finite resources to become entrenched in their positions. Sometimes the only way to get unstuck is to think appreciatively and creatively about the other side. Rather than trying to determine why a person has taken a particular position, consider what she wants, appreciate it, and try to deliver it.

Status Anxiety in Business Negotiations

Posted by & filed under Business Negotiations.

Sometimes in negotiation we are forced to deal not only with the issues on the table but also with concerns about status.

One famous instance took place in the late 1980s, when Robert Campeau, head of the Campeau Corporation and then one of Fortune magazine’s “50 Most Fascinating Business People,” tried to acquire Federated Department tores, the parent company of the prestigious department store Bloomingdale’s.

A bidding war over Bloomingdale’s escalated between Campeau and R.H. Macy. Campeau won with an irrationally high offer – but had to declare bankruptcy shortly thereafter.

The Deal is Done – Now What?

Posted by & filed under Conflict Management.

At last, the deal is done. After 18 months of negotiation, eight trips across the country, and countless meetings, you’ve finally signed a contract creating a joint venture with a Silicon Valley firm to manufacture imaging devices using your technology and their engineering.

The contract is clear and precise. It covers all the contingencies and has strong enforcement mechanisms. You’ve given your company a solid foundation for a profitable new business. As you file the contract, a question dawns on you: Now what?

In Business Negotiations, Talks With Competitors Carry Risks

Posted by & filed under Conflict Resolution.

They say it pays to keep your friends close and your enemies closer, but in negotiation, keeping your enemies—or competitors—close could end you up in court, as Apple’s recent encounter with the U.S. Department of Justice suggests.

The story begins back in 2007 when, unhappy with Amazon’s low, flat price of $9.99 for e-books, five major U.S. pub¬lishers negotiated a new business model for e-book pricing with Apple, which was getting ready to launch the iPad.

Under the prevailing wholesaling model, publishers sold their books and e-books to retailers like Amazon, which could then set whatever price they liked. Apple and the five publishers agreed to switch to a so-called agency model, which would allow the publishers to set their own prices for e-books in exchange for giv¬ing Apple a 30% sales commission. At least one of the publishers then upped the ante by threatening to delay the release of its digital editions to Amazon unless it switched to an agency model. Amazon reluctantly agreed, and e-book prices rose across the industry to about $14.99.

The publishers and Apple claimed that their goal was to increase competition in the e-book market by opening up alternatives to Amazon’s Kindle reader. But the U.S. Department of Justice didn’t see it that way and accused the parties of colluding to artificially raise e-book prices. The five publishers reached a settle¬ment with the government; Apple did not.

The Winner’s Curse

Posted by & filed under Dealmaking.

Ever win something you wanted, then realize too late you got a raw deal? Here’s how to recognize when backing away is your best bet in a negotiation.

Imagine that while exploring an outdoor bazaar in a foreign country, you see a beautiful rug that would look perfect in your home. While you’ve purchased a rug or two in your life, you’re far from an expert. Thinking on your feet, you guess the rug is worth about $5,000. You decide to make a bid, but a low one. You engage the merchant in some pleasantries and then make an offer of $1,000. She quickly accepts, and the transaction is complete.

How do you feel as you walk away? Pleased with your purchase – which was, after all, far cheaper than you expected – or uneasy about it?

In Sales Negotiations, Learn from a Seller’s Market

Posted by & filed under Dealmaking.

With home sales heating up in some parts of the United States, homebuyers are facing competition they haven’t seen since before the real-estate bubble burst, and it’s showing up in the form of packed open houses, multiple bids above the asking price, and all-cash offers.

To take an extreme case, in New York City, low condominium inventory combined with low mortgage rates have driven prices up 12% over the past year, from $829,000 to $930,000, writes Michelle Higgins in the New York Times. Real-estate agents are capitalizing on the frenzy with tactics like one-day-only showings and tight deadlines for bidders to submit their best-and-final offers.

In such an environment, negotiation might seem futile. After all, if a seller has 20 offers, how could you possibly stand out – other than, perhaps, by overbidding? In fact, there are other ways to separate yourself from the pack, while also ensuring that you make smart financial decisions for yourself.

The Dell Buyout: Michael Dell Weighs His BATNA

Posted by & filed under BATNA.

In negotiation, your best source of power typically is your “best alternative to a negotiated agreement,” or BATNA. By cultivating appealing options away from the table, you free yourself up to walk away in the event of a disappointing deal.

In all likelihood, Dell Inc. founder Michael Dell found himself facing such a BATNA analysis in recent days. Back in February, Dell and private-equity firm Silver Lake Partners announced a deal to buy the company for $13.65 a share. Since then, the deal has faced one obstacle after another, including the threat of a Dell shareholder revolt, the threat of a higher offer from another private-equity firm, and efforts by billionaire activist Carl Icahn to convince Dell to pony up a higher bid. The overarching question: whether Dell would be getting a steal deal, and whether there was any way to stop him.

Types of Power in Negotiation

Posted by & filed under Negotiation Skills.

Social psychologists have described types of power that exist in society, and these types of power emerge in negotiation as well.

Two types of power spring from objective features of the bargaining process.

Why You Should Limit Your Options

Posted by & filed under Dealmaking.

An excess of choices can not only impair your effectiveness at the bargaining table but also reduce your quality of life. In The Paradox of Choice, Barry Schwartz offers these strategies for limiting choice – and improving overall satisfaction:

Deal Making Without a Net: Yahoo’s Tumblr Acquisition

Posted by & filed under Dealmaking.

On May 19, Internet company Yahoo announced that it was purchasing the blogging service Tumblr for about $1.1 billion in cash. The acquisition could put a fresh face on the aging Internet company and provide it with a profitable revenue source—or it could turn out to be another instance of the Web pioneer overpaying for a start-up and failing to nurture it, as was the case after Yahoo bought Flickr and GeoCities.

Negotiate Conditions – And Bring Value to the Deal

Posted by & filed under Dealmaking.

Like a contingency, a condition to a deal is a related though far less common deal-structuring technique. A condition is an ‘if’ statement like a contingency, but, whereas a contingency depends on unknown future events, a condition is entirely within the control of the parties involved.

Negotiation Design Dimensions: A Checklist

Posted by & filed under Negotiation Skills.

Here the Program on Negotiation offers a checklist of negotiation design categories. Whether your overall negotiation design is decide-announce-defend (DAD) or full-consensus (FC), or a hybrid of both, raising these issues is usually preferable to falling into a set of important decisions by default.

We Have a Deal, Now What Do We Do: Three Negotiation Tips on Implementing Your Negotiated Agreement

Posted by & filed under Negotiation Skills.

A recent article in Tufts Magazine by Program on Negotiation faculty member Jeswald Salacuse discusses an oft neglected aspect of negotiation: putting into action what negotiators agree to at the bargaining table.

Normally negotiators focus on the deal-at-hand as well as those present at the negotiation, neglecting other aspects of the negotiated agreement that would not only impact others outside of the room but also require their cooperation for its success.

Professor Salacuse calls this process of putting a negotiated agreement into action “the toughest challenge” in negotiation.

Wheelers and Dealers?

Posted by & filed under Negotiation Skills.

Car salespeople truly understand how to use modest concessions to extract much larger ones.

First, they spend a long time legitimating the sticker price and suggesting that it’s not only fair, but nonnegotiable.

Finding the Right Process in India

Posted by & filed under Negotiation Skills.

In 1995, a new government came into power in the Indian state of Maharashtra and canceled a 20-year power purchase agreement with the Dabhol Power Company, a joint-venture formed by Enron, General Electric, and Bechtel. Claiming that the deal was improper and even illegal, the government declared publicly that it would not renegotiate.

A Cash-Out Transaction: Cox Communications

Posted by & filed under Business Negotiations.

On August 2, 2004, Barbara Cox Anthony and Ann Cox Chambers, two sisters who together owned 73% of Cox Communications, announced that they wanted to cash out the minority shareholders of their company. Their initial offer was $32 per share, or a 14% premium to the preannouncement trading price of approximately $28 per share.

Negotiation in China: The Importance of Guanxi

Posted by & filed under International Negotiation.

Although most Americans treat those they know differently than they treat strangers, Chinese behavior towards insiders and outsiders tends to be more extreme than in the United States – and therefore more important in negotiations in China than many Americans understand.

Keeping the Game Out of Court

Posted by & filed under Business Negotiations.

Sometimes those on opposite sides of a bitter dispute can achieve great gains – if only they can spot the ways in which they are similar.

In 2001, the Metropolitan Intercollegiate Basketball Association (MIBA), an organization of five New York-area colleges best known for staging college basketball’s National Invitation Tournament, filed a lawsuit against the National Collegiate Athletic Association (NCAA). MIBA allege that certain NCAA rules governing team participation in preseason and postseason tournaments restricted school’s participation in MIBA tournaments, in violation of various antitrust laws. After four years of litigation, the two parties announced not only that they would settle a lawsuit but also that the NCAA would purchase the rights to the MIBA preseason and postseason tournaments.

The Fiscal Cliff and the Debt Ceiling: Program on Negotiation Chair Robert Mnookin Discusses Recent and Future Negotiations Between Congressional Republicans and the White House

Posted by & filed under Conflict Resolution.

Though Congress and the President were able to reach a deal and avoid the dreaded fiscal cliff, both sides engaged in some tough negotiating which has both bewildered and captivated the United States for months. Given all of the posturing and tough talk, some may ask: Is there a method to this madness?

A Value-Creating Condition Thwarted

Posted by & filed under Business Negotiations.

In late 1999, with its stock in free fall, NCS HealthCare, a provider of pharmacy services to long-term care facilities, began “exploring strategic alternatives” – code in the mergers and acquisitions world that NCS’s board wanted to put the company up for sale.

In 2001, Omnicare, a larger provider in the same general industry, offered to buy NCS for $270 million, a number lower than the value of the company’s debt. The deal would have left the company’s stockholders with nothing, and talks broke down when NCS demanded a higher price. In June 2002, Omnicare’s fierce rival Genesis HealthCare came to the table with an offer for NCS. Fearful of having its deal stolen away by Omnicare, which had just beaten Genesis in a bidding contest for another company, Genesis proposed a condition on the deal. It would make an offer only if NCS’s chairman and president, who together held a majority of the voting shares, committed to the Genesis deal and rejected any competing offer from Omnicare. NCS accepted this condition, and the merger was announced on July 28, 2002.

The Story of Goldman Sachs: Negotiating a Vision

Posted by & filed under Business Negotiations.

In 1986, the investment bank Goldman Sachs was a $38 billion business owned by more than 100 active and retired partners.

While the partnership structure had insulated the company from the vicissitudes of the stock market and given the company a strong culture of teamwork, it had some significant disadvantages, particularly an unstable capital base and an inability to grow by making acquisitions with stock.

In New York, Fast-Food Workers Test Their Negotiation Skills

Posted by & filed under Dispute Resolution.

On November 28, dozens of employees at several fast-food restaurants in New York City walked off their jobs and demanded better pay and unionization. In doing so, they launched what is believed to be the largest coordinated campaign in the United States to unionize fast-food workers from different restaurants, reports Steven Greenhouse in the New York Times.

Are You an Overconfident Negotiator?

Posted by & filed under Business Negotiations.

In 1901, J.P. Morgan wanted to buy the Carnegie Steel Company from its founder, Andrew Carnegie.

Carnegie was 65 years old and considering retirement. As Harold C. Livesay recounts in his book Andrew Carnegie and the Rise of Big Business (Little, Brown, 1975), when Carnegie finally decided he was ready to sell, he jotted down his estimate of his company’s worth in pencil: $480 million. Carnegie had the sheet of paper delivered to Morgan, who took one look and said, “I accept this price.”

Use Time Delays to Advantage

Posted by & filed under Business Negotiations.

For decades, General Electric and the Environmental Protection Agency (EPA) sparred over who would pay for the removal of PCBs, or polychlorinated biphenyls, that GE had discharged into New York’s Hudson River, a cleanup project that is expected to cost hundreds of millions of dollars. The two sides finally came to an agreement in October 2005.

When Time Isn’t Money

Posted by & filed under Conflict Resolution.

Due to deeply ingrained gender stereotypes, women may find it easier to negotiate their time instead of their financial compensation.

Consider that men and women are likely to rely on gender-stereotypic arguments to support their demands in negotiation. For women, the gender-stereotypic notion of being caregivers is readily available and likely to be well received. By contrast, men, who generally are expected to be the primary family breadwinner, have less difficulty negotiating financial issues than women do.

Penguin Sues Its Own Writers: When Business Negotiations Become Bad PR

Posted by & filed under Conflict Resolution.

In this business world, it’s typically smart practice to keep disputes with key partners private, at least until doing so becomes unfeasible for financial or other reasons. That’s why the book publisher Penguin’s decision to file lawsuits against 12 of its authors for breach of contract is being widely judged as a public relations misstep.

Water Diplomacy: Using a Creative Approach

Posted by & filed under Dispute Resolution.

The case of Jordan and Israel shows how even countries at war can negotiate a water agreement if it is framed in non-zero sum terms and trust continues to be built over time. And that is not the only case of a treaty that has succeeded against all odds to bridge conflicting water interests; the Indus Waters Treaty between India and Pakistan and the Ganges Water Treaty between Bangladesh and India are other examples.

Water Diplomacy: Value Creating Approachs to Water Negotiation

Posted by & filed under Conflict Management.

Zero-sum thinking emerges when people conceive of water as a fixed resource – one provided by nature in a given quantity that is either static or diminishing. Based on these assumptions, diplomats often focus on what share of the existing water will be given to each entity. Negotiations of this type typically involve decision makers who are political leaders focused on preserving sovereignty and maintaining state security. They are often unprepared to think about improving the overall efficiency of water use, which, in effect, can “create” more water.

Water Diplomacy: The Role of Science in Water Diplomacy

Posted by & filed under Conflict Management.

Scientific and technical knowledge is important in water negotiations, but not in the ways it has often been used. It is counterproductive to use scientific information to justify arbitrary (political) decisions. For example, scientific information about water has increased dramatically over the last several decades, but our ability to manage water resources has not improved proportionately.

In Dispute Resolution, Try Going to the Top

Posted by & filed under Dispute Resolution.

When two parties are attempting to resolve a contentious dispute, the most effective peacemakers may be those at the highest levels. That’s the lesson from recent productive talks between President Obama and Afghan leader Hamid Karzai on the issue of rules for detaining terrorism suspects.

Water Diplomacy: Understanding Uncertainty, Risk, and Opportunity in Water Management

Posted by & filed under Dispute Resolution.

When countries face contending water claims, one of the biggest obstacles to reaching an agreement is uncertainty. Specifically, there are three types of uncertainty: uncertainty of information, uncertainty of action, and uncertainty of perception. In part 2 of this 5 part series, Program on Negotiation faculty member Lawrence Susskind explains the uncertainties facing negotiators trying to make agreements.

Mediation, Arbitration, and the Promise of Privacy

Posted by & filed under Mediation.

Negotiators often choose to resolve their conflicts through mediation, arbitration, and other alternative dispute resolution methods because of the privacy these methods promise. Unlike the public nature of litigation, mediation and arbitration typically give parties the freedom to hash out sensitive issues without the fear that their discussions and agreement will become public knowledge. Two new cases in the news, however, show that privacy is a nuanced issue in some alternative dispute resolution contexts.

Business Negotiations: Cooperate to Claim Value

Posted by & filed under Business Negotiations.

What happens in negotiations between two individuals who care little about each other’s outcomes? Suppose an engineer and an industrial designer are arguing over the design of a car bumper. The designer only cares about whether the bumper matches the style of the vehicle; the engineer is concerned only about how the bumper connects to the front. After describing the trouble he’s having with the existing design, the engineer presents a solution that the designer deems “ugly.” The designer threatens to involve her boss if the engineer doesn’t revert back to the prior design.

Google Searches for a More Diverse Team

Posted by & filed under Negotiation Skills.

Recently, executives at the Silicon Valley-based internet giant Google noticed a disturbing trend: the company was having difficulty hiring and retaining female employees, from engineers to senior executives, Claire Cain Miller writes in the August 22 issue of the New York Times. Women were dropping out during the job interview process and were not being promoted at the same rate as men. In addition, women have lost ground in top leadership positions since Larry Page took over as the company’s CEO in 2011. The issue at Google reflects a larger trend, as the percentage of women working in professional computing jobs fell from 25% in 2011 to 16% in 2010. In many cases, women have been leaving large computer companies for jobs in the public sector or with start-ups.

Bring Back Your Deal from the Brink: Weigh the Benefits of a Concession

Posted by & filed under Business Negotiations.

Another option for dealing with difficult negotiations is to craft what Harvard Law School professor Robert C. Bordone calls a “workaround” – a strategy for meeting your current goals without the involvement or support of your adversary. You might be able to induce a yes with a tempting concession on a key issue, according to Bordone. Offering a concession can be a risky strategy, as it may only encourage someone to push for more. But if a concession would allow you to move beyond that person once and for all, it may be your best option.

Bring Your Deal Back from the Brink: Probe the Other Side’s Point of View

Posted by & filed under Business Negotiations.

How can you figure out the motives behind someone’s seemingly stubborn position? Begin by questioning her about the problem she is trying to solve. Deal blockers may be held back by financial, legal, personal, or other constraints you don’t know about, according to Harvard Business School professor Deepak Malhotra. A tough stance could also communicate a psychological need that isn’t being satisfied.

Bring Back Your Deal from the Brink

Posted by & filed under Business Negotiations.

What can you do when a difficult person is the main obstacle to a promising deal? There are a number of strategies you can use to bring the deal back from the brink of failure. In a series of posts, the Program on Negotiation will offer ten suggestions.

Becoming a More Balanced Negotiator

Posted by & filed under Negotiation Skills.

How can you avoid being pulled in opposite directions by contradictory imperatives? These three concrete steps can guide you through your next important negotiation.

When an Apology is Most Effective

Posted by & filed under Conflict Resolution.

Some researchers have found that the most effective type of apology depends on the nature of the mistake made.

In a study by Peter Kim of the University of Southern California, Cecily Cooper of the University of Miami, Kurt Dirks of Washington University, and Donald Ferrin of Singapore Management University, participants assumed the role of a manager responsible for hiring a senior level tax accountant. The participants watched one of four videotaped interviews of a hypothetical job candidate. During each video, the interviewer mentioned that the candidate’s previous employer had accused her of filing a tax return that understated the client’s capital-gains income. In one version of the video, the interviewer suggested that the candidate incorrectly filed the tax return because she is incompetent – she didn’t understand the mistake she made. In another version, he accused her of deliberately underreporting the earnings.

Resolving Conflicts on the High Seas

Posted by & filed under Conflict Resolution.

In negotiation over a limited pool of resources, conflicts often spring up over what constitutes a fair agreement. If two business partners are going their separate ways, they might have different ideas about how their shared assets should be divided, for example. Currently, such a dispute is playing out between China and four of its Southeast Asian neighbors over claims to the South China Sea. According to a report issued by the research organization International Crisis Group (ICG), recapped by Jane Perlez in the New York Times in late July, the disputes have reached an impasse that could lead to an open conflict.

Do You Need a Broker?

Posted by & filed under Conflict Resolution.

According to conventional wisdom, you should always hire a real estate agent when you’re trying to buy a house. The broker’s market expertise will help you decide what moves to make and what price to pay. Because the seller usually has his own broker, the motto “fight fire with fire” applies as well. Perhaps most important, home buyers don’t even have to pay their brokers; the seller’s broker splits the commission with your agent. Hiring a buy-side broker splits the commission with your agent.

Is the Devil in the Details?

Posted by & filed under Business Negotiations.

You’re close to a deal, but concerns linger. Some of the contract seems less than precise. What in the world does “reasonable best efforts” mean, for example, or “good faith”? Negotiators in this commonplace situation face a choice: push for more precision now or sign the deal and hope the ambiguities won’t cause trouble down the road.

Roger Fisher Papers Open at Harvard Law School Library

Posted by & filed under Negotiation Skills.

Roger Fisher, one of the cofounders of the Program on Negotiation at Harvard Law School and Samuel Williston Professor of Law, Emeritus, was honored on the 8th of April with a celebration of his career, research, and contributions to both the HLS community and the field of negotiation.

Negotiation, Envy, and Lies in Conflict Management

Posted by & filed under Conflict Management.

In previous posts, the widespread belief that some people are honest negotiators and others are not has been shown to be inapplicable to real-world negotiations. Rather, because people respond strongly to their environment, ethical standards often vary depending on the context.

Bargaining at a Fever Pitch: A Bold Bid

Posted by & filed under Negotiation Skills.

Have you ever won an auction only to realize later that you overbid for the prize? In competitive bidding situations, it’s easy to get carried away in the heat of the moment and overpay.

Crisis Negotiations in Europe

Posted by & filed under International Negotiation.

On June 5, another casualty in the European debt crisis emerged, as Spain announced that it soon would be unable to borrow in the bond market without assistance from other European Union nations. Emilio Botin, the chairman of Banco Santander, said about 40 billion euros, or $50 billion, in European funds would be needed to repair Spain’s banking sector, according to Bloomberg News.

The Darker Side of Perspective Taking

Posted by & filed under Conflict Resolution.

Many negotiation experts recommend that you try to take the other party’s perspective, particularly when attempting to resolve disputes.

Recent research by Nicholas Epley of the University of Chicago and Eugene Caruso and Max Bazerman of Harvard University suggests a dark side to this generally sound negotiation advice. The researchers ran a series of experiments in which they asked participants to determine the fair division of a scarce resource. Half of the subjects (the “self-focused condition”) were asked how much would be fair for them to take. The other subjects (the “other-focused” condition) were asked to think about what would be fair for others to take and then write down how much would be fair for each party (not just themselves) to take.

Do Attitudes Influence Results?

Posted by & filed under Conflict Management.

Many people consider negotiations to be stressful and threatening. Others view them as challenges to be overcome. Do these different attitudes influence the outcomes that people reach? New research by professors Kathleen M. O’Connor of Cornell University and Josh A. Arnold of California State University sheds light on this important question.

Anchor Trials or Balloons in Conflict Resolution

Posted by & filed under Conflict Resolution.

The power of anchors in negotiation has been demonstrated time and again. Sellers who demand more tend to get more. Indeed, the initial asking price is usually the best predictor of the final agreement.

A trio of researchers may have found an important exception to this rule, however; lower starting numbers set by the seller in an auction can lead to higher ultimate prices. Professors Gillian Ku of the London Business School and Adam D. Galinsky and J. Keith Murnighan of Northwestern’s Kellogg School of Management found this result both in laboratory experiments and from data taken from online eBay auctions.

The Enduring Power of Anchors

Posted by & filed under Negotiation Skills.

In past issues of Negotiation, we’ve reviewed the anchoring effect – the tendency for negotiators to be overly influenced by the other side’s opening bid, however arbitrary. When your opponent makes an inappropriate bid on your house, you’re nonetheless likely to begin searching for data that confirms the anchor’s viability. This testing is likely to affect your judgment – to the other party’s advantage.

Psychologists Amos Tversky and Daniel Kahneman identified the anchoring effect in 1974. Participants watched a roulette wheel that, unknown to them, was rigged to stop at either 10 or 65, the estimated the number of African countries belonging to the United Nations. For half of the participants, the roulette wheel stopped on 10. They gave a median estimate of 25 countries. For the other half, the wheel stopped on 65. Their median estimate was 45 countries. The random anchors dramatically affected judgment.

When Umbrella Agreements Spring Leaks in Dispute Resolution

Posted by & filed under Dispute Resolution.

Negotiators tend to want the best of both worlds. When reaching an agreement, they want to nail down parties’ respective rights and responsibilities, but they also want to retain the flexibility to deal with ever-changing business conditions.

One solution to this apparent dilemma is to craft umbrella, or framework, agreements. (The term umbrella is more commonly used in the business world, while framework is more widely used in legal and diplomatic circles.) Such agreements set out general principals that will apply to more specific give-and-take contracts in the future. An umbrella agreement between a soft-drink company and a grocery chain, for example, would typically cover issues such as exclusivity, invoicing, confidentiality, and termination. Subsequent short-term contracts would set prices and promotional allowances for specific products.

Conflict Management – Evenhanded Decision Making

Posted by & filed under Conflict Management.

As discussed in past articles, anchoring and framing can bias important decisions in negotiation. A buyer may make a more generous offer than she intended, for example, after a seller drops anchor on a bold demand. A litigant who focuses on his chances of winning in court – a positive frame – may be less likely to settle than if he concentrated on a negative frame: his corresponding chances of losing.

Many researchers have studied how such biases are amplified or moderated by mood, expertise, and personality. Groundbreaking work by professors John D. Jasper and Stephen D. Christman of University of Toledo now suggests that our susceptibility to decision biases is hardwired.

Great Negotiator Award 2012

Posted by & filed under Negotiation Skills.

The Program on Negotiation at Harvard Law School, in conjunction with the Future of Diplomacy Project at Harvard Kennedy School, honored distinguished statesman and former Secretary of State James A. Baker III as the recipient of their Great Negotiator Award for 2012. Secretary Baker served under President George H.W. Bush from 1989 to 1992.

A panel discussion was held on the afternoon of March 29 and included Program on Negotiation faculty members James Sebenius and Robert Mnookin, as well as Harvard Kennedy School faculty member Nicholas Burns. The Great Negotiator Award was created twelve years ago by the Program on Negotiation to recognize an individual whose lifetime achievements in the field of negotiation and dispute resolution have had a lasting impact.

Specific versus Abstract Negotiation Skills Training

Posted by & filed under Negotiation Skills.

Researchers have argued that negotiators learn more from cases and real-world experiences when they can take away an abstract version of the lesson. Such abstractions come from analogies developed across two or more different negotiation contexts, say Leigh Thompson and Dedre Gentner of Northwestern University and Jeffrey Loewenstein of the University of Texas, who propose that such analogical reasoning be incorporated into negotiation training.

But researchers Simone Moran and Yoella Bereby-Meyer of Ben Gurion University and Max H. Bazerman of Harvard Business School argue that teaching people more general negotiation principles – such as “value can be created” – enables a more successful transfer to a broader range of new negotiation tasks than focused analogies.

Fostering Cultural Intelligence in International Negotiations

Posted by & filed under International Negotiation.

In a Harvard Business Review article, P. Christopher Earley and Elaine Mosakowski describe the value of improving your cultural intelligence, or the ability to make sense of unfamiliar contexts and adapt to them. Some people are naturally skilled at determining whether a person’s behavior is unique to him or determined by his culture. For others, this process requires more effort. Regardless, this ability is important for successful international negotiations.

Earley and Mosakowski illustrate this point through a domestic and an international example. Peter, a Los Angeles-based sales manager for Eli Lilly pharmaceuticals, was transferred to the company’s Indianopolis headquarters. In L.A., Peter’s confrontational, high-pressure style was the norm and effectively motivated his sales staff. In Indianopolis, his new team disliked his hard charging ways and avoided the challenges he set for them.

Taking ADR Too Far

Posted by & filed under Dispute Resolution.

More and more companies are inserting alternative dispute resolution (ADR) clauses in their contracts with customers and vendors, and even in agreements with their own employees. ADR processes such as mediation and arbitration can be beneficial for all concerned if they help avoid the cost, delay, and uncertainty of going to court. Mediation, in particular, may offer creative solutions, protection of confidentiality, and preservation of important relationships.

Why You Should Make More Than One Offer

Posted by & filed under Dealmaking.

Effective negotiators seek opportunities to create value. By making tradeoffs across issues, parties can obtain greater value on the issues that are most important to them. But how can you be sure you’re making the right offer?

Victoria Husted Medvec and Adam D. Galinsky of Northwestern University argued that, in negotiations involving many issues, you can create a great deal of value by making multiple equivalent simultaneous offers or MESOs. This strategy entails identifying several proposals that you value equally and presenting them to the other side.By making multiple offers, the theory goes, you appear more flexible, collect information about the other side’s preferences based on which offer she likes best, and increase the odds of reaching agreement.

Cultural Notes

Posted by & filed under International Negotiation.

As members of organizations and families, we all know from experience that even people with identical backgrounds can have vastly different negotiating styles and values. Nonetheless, we continue to be intrigued by the idea that distinct patterns emerge between negotiators from different cultures.
Researchers do confirm a relationship between national culture and negotiation style and success. An ongoing research project sponsored by Northwestern University’s Dispute Resolution Research Center is exploring the link between process and outcomes – specifically, how cultural tendencies lead to certain process choices, which, in turn, can lead to better or worse negotiation results.

Your Own Worst Enemy

Posted by & filed under International Negotiation.

Why do some people get under our skin? Something they do or say pushes our hot buttons. Annoyance doesn’t foster productive negotiation, of course, but it’s not our fault that they’re getting on our nerves. Or is it?

Psychologists caution that when we have strong visceral reactions to other people, we should examine our own feelings and attitudes, not just theirs. If we’re honest with ourselves, we may recognize in other people’s behavior the dark side of our own nature.

Barbara Gray, professor of management and organization at Pennsylvania State University, calls this internal demon our nemesis. It’s always lurking inside us, ready to pounce.

Sacred Issues in Negotiation

Posted by & filed under International Negotiation.

In a classic New Yorker cartoon, a dinner guest shows up for the party, hands the host a $20 bill, and announce that this was the amount he had planned to spend on a bottle of win before he ran out of time. Negotiation buffs might admire the guest for making an efficient tradeoff that saved him the effort of shopping and gave the host $20 to spend as he wished. But most people would view the guest’s behavior as highly inappropriate. Why?

Being Fair and Getting What You Want

Posted by & filed under Negotiation Skills.

Imagine that you and your business partner agree to sell your company. You get an offer that pleases you both, so now you face the enviable task of splitting up the rewards.

Some background: Your partner put twice as many hours into the firm’s start-up as you did, while you worked fulltime elsewhere to support your family. Your partner, who is independently wealthy, was compensated nominally for her extra time.

Negotiating Systems

Posted by & filed under Negotiation Skills.

While most negotiation research aims to sharpen individual managers’ skills, there is growing scholarly and professional interest in an organizational approach to negotiation.A systemic perspective evaluates the training, authority, procedures, and resources that manager need to improve their companies’ “return on negotiation,” as consultant Danny Ertel puts it. Looking at negotiations broadly reveals important design questions.

Leading Horses to Water

Posted by & filed under Negotiation Skills.

The hardest step in negotiation is often the first. Costly lawsuits can drag on it everyone is afraid to be the first to blink. Prospective buyers and sellers can waste endless hours dancing around a possible deal. And in collective bargaining, labor and management teams sometimes paint themselves into corners by refusing to negotiate “matters of principle.”

Managing Expectations

Posted by & filed under Conflict Management.

Successful negotiators work hard to ensure that when they and their counterpart leave a negotiation, both sides feel satisfied with the agreement. Why should you care whether the other side is pleased with the deal or not? First, because satisfied negotiators are more likely to uphold the terms of a deal. Even a lengthy contract cannot cover every possible contingency, and the costs of enforcement are high.

Powerful Thoughts

Posted by & filed under Business Negotiations.

For many people, thinking about the role of power in negotiation can be paralyzing. In fact, the same people who are anxious about negotiating in general tend to be anxious about exerting their power during negotiation. Why? Perhaps because most of us realize that power, even when not explicitly discussed, is often the precipitating and driving force of negotiation processes and outcomes. Obviously, power can generate competition and conflict. But when channeled effectively in negotiations, it can be a catalyst for win-win outcomes.

So You Want to Buy a Car?

Posted by & filed under Business Negotiations.

How can you negotiate the best possible price for a new car? This is a common negotiation question, and naturally so. A car is one of the most significant purchases you’ll ever make—and the price is almost always negotiable. Here are a few tips to improve your performance:

Fine-Tuning Your Contract

Posted by & filed under Business Negotiations.

When negotiators sign on the dotted line, they sometimes worry about the wrong concerns. “Did I overpay?” wonders the buyer as he inks the sales agreement. Across the table, the seller is thinking, “I bet if I’d pushed a little harder, I would have gotten more.”

Beware Your Lawyer’s Biases

Posted by & filed under Business Negotiations.

Parties in litigation are often overly optimistic about their chances of winning in court. This tendency reduces the bargaining range for settlement because one or both parties perceive their walkaway alternative (namely, letting the courts decide) to be more attractive than it actually is. According to conventional wisdom, lawyers can help their clients overcome this overoptimism bias by providing an objective assessment of a case’s merits and encourage acceptance of a deal.

Small Talk, Big Gains?

Posted by & filed under Business Negotiations.

According to conventional wisdom, small talk builds rapport and gets both sides a better deal in the end. But in fact, the question of whether to engage in small talk can be highly context-specific. New York City investment bankers, for example, tend to be far less likely than Texas oil executives to engage in small talk at the outset of a negotiation.

Pick the Right Agent

Posted by & filed under Business Negotiations.

So, you’ve decided to use an agent in your next negotiation. Now what?

It’s important not to rush headlong into the process of choosing an agent—picking the first one you speak to, for example, and sending him off to talks the next day. You need to choose your agent carefully, then establish a clear, detailed understanding of each other’s responsibilities and expectations. The following are critical steps in picking an agent and negotiating his contract.

“Are We Exclusive?”

Posted by & filed under Business Negotiations.

Ron McAfee, a carpenter and roofing expert, spent considerable time working with a condominium association on the design of a new roof deck. After gaining agreement on the proposed layout, design, and materials, McAfee submitted a written bid of $12,500. One of the board members subsequently showed McAfee’s plans to another roofer, who offered to do the job for $10,250. The condo association voted unanimously to go with the cheaper roofer, and McAfee was left with nothing to show for his time and effort.

Eyeing the Competition

Posted by & filed under Business Negotiations.

Ford vs. GM. Coke vs. Pepsi. Oxford vs. Cambridge. These famous rivalries remind us that the top two achievers in a given realm often compete fiercely with each other. Researchers Stephen M. Garcia and Richard Gonzalez of the University of Michigan and Avishalom Tor of the University of Haifa have produced a useful series of studies on when competition between entities will exist—with findings that are relevant to all negotiators.

How to Lighten Your Burdens

Posted by & filed under Business Negotiations.

For decades, General Electric (GE) and the Environmental Protection Agency sparred over who would pay for the removal of PCBs, or polychlorinated biphenyls, that GE had discharged into New York’s Hudson River, a cleanup project expected to cost hundreds of millions of dollars. In October 2005, the two sides came to an agreement.

How Status Conscious are You?

Posted by & filed under Business Negotiations.

Sometimes in negotiation, we’re forced to deal not only with the issues on the table but also with concerns about status. One famous instance took place in the late 1980s, when Robert Campeau, head of the Campeau Corporation, tried to acquire Federated Department Stores, the parent company of the prestigious department store Bloomingdale’s. A bidding war over Bloomingdale’s escalated between Campeau and R.H. Macy. Campeau won with an irrationally high offer—and had to declare bankruptcy shortly thereafter.

When We Expect Too Much

Posted by & filed under Business Negotiations.

How often have you heard a friend or colleague refer to a contract as being “in the bag,” only to find out later that the deal didn’t go through? There always turns out to be a good reason a negotiation fell apart. Yet the fact remains that most negotiators are overconfident about their chances of reaching agreement. A common cognitive bias, overconfidence causes us to have unrealistically high expectations of success, in negotiation and in many other aspects of life.

Learning from the Soda Wars

Posted by & filed under Business Negotiations.

This past November, in an unusual move, Costco, the largest wholesale club in the United States, removed Coca-Cola products from its shelves and posted messages telling shoppers that Coke products would not be available until the company lowered its prices.

To Avoid Disaster, Plan Ahead

Posted by & filed under Business Negotiations.

In the midst of the recent financial crisis, accusations of greed on Wall Street have sounded across the globe. Greed may be a significant factor in the collapse of credit markets, but it’s not the only one. Overlooked in cries to punish the “bad apples” is the role of a mistake that virtually all negotiators make: ignoring how our short-term decisions will affect us and others in the future.

Making the First Move

Posted by & filed under Business Negotiations.

Should you make the first offer? Few questions related to negotiation have yielded more attention and debate. The conventional wisdom among some: Don’t make the first offer, or risk “showing your cards” and perhaps unknowingly giving away some of the bargaining zone.

Should You Go Dutch?

Posted by & filed under Business Negotiations.

Most everyday auctions are English: they begin with an opening bid, continue with ascending bids, and end when the bidding stops. But for some assets, the seller opens at a very high price, then moves down rather than up if all bidders are silent.

What Makes Negotiators Happy?

Posted by & filed under Business Negotiations.

The question above may seem silly. Getting more of what we care about seems the obvious answer. Yet negotiators often don’t know how to accurately assess a good outcome; instead, they rely on outside indicators to determine their satisfaction, for instance by comparing their outcomes to those of others. Your negotiated annual salary of $100,000 appears quite different if you learn that others in your position are earning $110,000.

Is Your Agent Faulty?

Posted by & filed under Business Negotiations.

Top executive pay attorney Joseph Bachelder was representing a client who’d just been chosen as a company’s next CEO. After a first session with the board’s representative to hammer out a compensation package, Bachelder took his client aside and informed him that he would get everything he wanted from the negotiation, according to the Wall Street Journal.

When Their Agent is the Problem

Posted by & filed under Business Negotiations.

The benefits of hiring an agent are well known. Yet negotiation experts often overlook the ways in which you can use the other side’s agent to your advantage.

Check Your Confidence

Posted by & filed under Business Negotiations.

Many negotiators understand the importance of estimating the other side’s reservation price—the worst deal he would accept from you. However, despite the fact that such estimates often are based on hints, clues, and speculation, negotiators are frequently overconfident that their estimates are accurate.

When It Pays to Delay

Posted by & filed under Business Negotiations.

Kathy, a serial entrepreneur, was negotiating the acquisition of a boutique software-development firm when a dispute arose regarding the valuation of one of the software firm’s assets. Specifically, the firm owned the rights to a technology patent of uncertain value. The firm’s owner argued that this patent was worth millions. Kathy agreed that the patent had potential, but there was a problem. The technology potentially infringed on existing patents, and the holders of these patents would almost certainly challenge the firm’s patent in court. If the patent could withstand these legal challenges, it would indeed be worth millions. If not, it might be worthless.

Is Your Role Not Quite Right? Negotiate a Better “Fit”

Posted by & filed under Business Negotiations.

What happened the last time you faced a new leadership opportunity? Whether you were called on to head a team, a task force, a unit, a division, or a company, chances are you negotiated the compensation and perquisites of the appointment—your salary, title, vacation, and bonus. But did you look beyond these basics and negotiate for what you would need to succeed in the new role? New leaders often fail to address issues critical to their ability to perform on the job, including their fit with the role, Judith Williams, Carol Frohlinger, and I learned from interviews with more than 100 women who had taken on leadership positions.

Tough Tactics: Do ‘Death Threats’ Really Work?

Posted by & filed under Business Negotiations.

What would you do if someone threatened you? Strike back? Run away? Beg for mercy? Try to negotiate?

Last April, The New York Times in effect held a gun to the heads of Boston Globe employees – twice. The confrontation, say experts at the Harvard Program on Negotiation, offers valuable lessons in handling high-risk, high-stakes situations.

Background: Sixteen years earlier, The Times bought The Globe for $1.1 billion, the highest price ever paid for an American newspaper. The investment paid off at first, then the newspaper business started heading south. In 2008, The Globe lost $50 million; in 2009, it was on track to lose $85 million.

So The Times threatened to shut the paper down unless employee unions agreed to $20 million in pay cuts, lower severance pay, and an end to lifetime job guarantees for certain employees. Half the concessions – $10 million – were to come from The Globe’s largest labor union, the Boston Newspaper Guild.

Business Negotiation Skills: Negotiate Before the Damage is Done

Posted by & filed under Business Negotiations.

Suppose you work for a specialty bicycle manufacturer and have negotiated a one-year contract to buy 500 headlamps per month from a supplier for $10 each, with payment due 30 days after receipt. The seller makes five deliveries; you promptly pay $5,000 after each shipment. The seller fails to make the sixth delivery, however, and announces it will not be able to make any of the remaining shipments because of a production glitch that has made the headlamps extremely expensive to produce. What recourse do you have?

Beware the Pressure of Sunk Costs in Business Negotiations

Posted by & filed under Business Negotiations.

Think about what your house, condominium, or some other valuable asset might be worth in today’s market. Did the price you paid for it affect your answer?

“Ignore sunk costs,” accounting professors and economists tell us. The amount of money and effort we’ve invested in the past, they say, is irrelevant to our future investments.

How an Indie-Pop Band Used Integrative Negotiation to Keep Their Name

Posted by & filed under Business Negotiations.

When interests collide, some managers dig in their heels: You get your way or I get mine. Others go for a compromise where the plan is to give up as little as possible. Neither strategy is likely to lead to the best outcome. But businesses, nonprofits, government agencies … and even rock ‘n’ rollers … have discovered better ways, as we shall see.

How to Avoid the “Winner’s Curse”

Posted by & filed under Business Negotiations.

Imagine that at the beginning of class, a professor produces a jar full of coins and announces that he is auctioning it off. Students can write down a bid, he explains, and the highest bidder wins the contents of the jar in exchange for his or her bid.

The Value of Making Several Offers in Business Negotiations

Posted by & filed under Business Negotiations, Daily.

What’s the right number of options to put forward in financial negotiations? In their April 2005 article in the Negotiation newsletter, “Putting More on the Table: How Making Multiple Offers Can Increase the Final Value of the Deal,” Northwestern professors Victoria Husted Medvec and Adam D. Galinsky write that issuing three equivalent offers simultaneously can be a good strategy in financial negotiations.

Concealed information in Business Negotiations

Posted by & filed under Business Negotiations, Daily.

The Clearinghouse at PON offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. The following role simulation explores client/attorney relationships and the complexity of information exchange.