What is distributive negotiation? Distributive negotiation involves haggling over a fixed amount of value—that is, slicing up the pie. In a distributive negotiation, there is likely only one issue at stake, typically price. When you are negotiating with a merchant in a foreign bazaar, or over a used car closer to home, you are generally involved in a distributive negotiation, as it may be difficult to add issues other than price to the mix.
By comparison, in integrative bargaining, more than one issue is available to be negotiated. Whenever multiple issues are present—such as salary, benefits, and start date, in the case of a job negotiation—negotiators have the potential to make tradeoffs across issues and create value. Often, what looks like a distributive negotiation is, in fact, an integrative negotiation, as there may be additional issues you can add to the discussion.
When preparing for a distributive negotiation, the following four strategies can help you claim as much of the pie as possible:
- Work to Improve Your BATNA
“Nothing can help a negotiator get a bigger slice of the pie than having a great BATNA,” writes Kellogg School of Management professor Leigh L. Thompson in her book The Mind and Heart of the Negotiator. Your BATNA is your best alternative to a negotiated agreement—that is, what you’ll do if you don’t reach your goal in the current negotiation. A job seeker’s BATNA might be another job or the decision to go to grad school, for example. You can try to improve your BATNA in distributive bargaining by researching the various alternatives available to you and perhaps pursuing several negotiations at the same time. For instance, a job seeker is likely to ask for more when they have two or three good offers when they just have one.
- Determine Your Reservation Point
In a distributive negotiation, your reservation point is the figure that indicates you are indifferent between accepting the deal you’ve negotiated and instead of turning to your BATNA. For example, you might decide you are willing to pay up to $4,000 for a particular used car but will walk away if the other party insists on more than $4,000. It’s important to determine your reservation point before you negotiate, as there’s a good chance your counterpart will try to convince you to accept less than you should. When you know what your reservation point is in advance and keep it at the forefront of your mind, you will be less likely to cave into unreasonable demands.
- Assess the Other Party’s BATNA and Reservation Point
Naturally, you won’t want to aim higher than your reservation point—but how high? To help determine the most you’ll be able to get in a distributive negotiation, take some time to research the other party’s likely BATNA and reservation point. For example, before negotiating for a particular used car, you might research the availability of similar cars in your area and their market value, determine how long the car has been for sale, and so on. When you know how low (or high) they may be willing to go on price, you’ll have a better sense of how high (or low) you can aim.
- Determine the ZOPA
Armed with a sense of each party’s reservation point and BATNA, you should be able to determine if a zone of possible agreement, or ZOPA, exists in your distributive negotiation. The ZOPA is the range of all possible deals that both parties would accept. Your reservation point will be at one end of the ZOPA, and the other party’s reservation point will be at the other. For example, if you’re willing to spend up to $4,000 on the used car you’re interested in and believe the seller might be willing to part with her car for $3,700, the ZOPA ranges from $3,700 to $4,000. Your goal should then be to get as close to $3,700 as possible. By contrast, if there is no overlap between your reservation point and the other party’s (for example, if you won’t pay more than $4,000 and they won’t take less than $4,100), then you should look for a better deal elsewhere.
What other advice do you have for those who are facing a distributive negotiation?