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Negotiations: Author Hal Stack for Chelst and Canbolat In creating value, be sure to approach the negotiation as a joint problem-
solving exercise. Ask diagnostic questions to better understand the other party’s interests and priorities. Share information to help the other side better
understand your interests and priorities. It is important to note that initiating the sharing of information and the reciprocity that often follows contributes to
building trust. Keep in mind that it is in your interest to help the other side solve their problem. Finally, be prepared to provide reasons for your proposals and
reasons for your disagreement with the other party’s proposals.
15.4.3 Value Claiming
Once the parties have succeeded in enlarging the pie, they must still divide it. The challenge is to claim your share of the pie while not undermining
the cooperation required to make the pie bigger. Negotiators, then, must effectively incorporate both cooperative and competitive strategies as they
necessarily practice “mixed motive” bargaining.
In claiming value, the parties begin by reviewing their respective BATNAs and reservation and target prices. The parties probe each others’ valuation of the
issues and explore information differences that the parties may have about the issues and their values. Based on the information available, the parties determine
if they will make the first offer and how much they will offer. If they are well prepared, they will make the first offer and try to anchor the negotiations around
their first offer.
Concessions will be made in small increments, slowly, to avoid overshooting the other party’s reservation price. While it is good to open with an
ambitious goal, the offer must be discussable. In making concessions, one should make reciprocal concessions, not unilateral concessions. Offer to agree with the
other party on issue 1 if they would be willing to agree to issue 2. Note that small concessions and long times between them signal to the other side that you are
unlikely to make additional concessions. In making offers, avoid stating ranges, such as a pay increase of 2 to 3 percent. The other party will focus on the end of
the range that favors their interests. Be prepared to provide the rationale for your offer and clearly label concessions you have already made. Finally, enable the
other party to save face. Through this process of give and take, the parties narrow the gap between them to the point where they recognize that they are
close to closure. 15.4.4 Closure
At some point the parties must bring the negotiations to closure. When there is no zone of agreement, the parties will end the negotiations. When the
parties feel they are close to an agreement, there are a variety of strategies for achieving closure. A take-it-or-leave-it approach may be seen as an ultimatum
and escalate into a power struggle resulting in a suboptimal outcome and increased transaction costs. An appeal to “fairness” may increase the other
2 Negotiations: Author Hal Stack for Chelst and Canbolat
party’s understanding of your interests and priorities, but typically the parties will have different views of what is fair. Sometimes dealing with the other
party’s objections and summarizing both the agreements and the concessions the parties have made will convince the other party that it is time to end the
“negotiation dance” and agree to a settlement. Packaging the issues with their beneficial trades will often bring the negotiations to closure. Some negotiators
find it helpful to present equivalent packages and let the other party select the one it prefers. A common approach, of course, is to “split the difference.”
When the parties cannot reach an agreement, there may be interventions available such as mediation or arbitration. Mediators can help the parties put
together an agreement, but the parties decide whether to accept it. Arbitration differs from mediation in that the arbitrator determines the final outcome. Both
options, however, have their limits. Mediators may focus on getting an agreement, any agreement, to the detriment of one or both parties’ best interests.
Arbitrators are often accused of simply spitting the difference between the parties’ final offers.
While the exercise of power may be used to bring the negotiations to closure, it is not without cost. By choosing to use power, you have increased the
probability that the other side will use power as well. The result may well be a damaged relationship, increased legal fees, delays, loss of market share, or
worse. Power should be exercised strategically: you should avoid idle bluffs and target high-priority interests. At the same time, your purpose in exercising power
is to bring the other party back to the table and negotiate an agreement. Thus, you must leave the other party a way back to the table that enables him or her to
save face. Your best source of power, of course, is a strong BATNA, which will enable you to walk away from the negotiations as needed.
Even after the parties reach agreement, there may be opportunities for increasing the value of the agreement through the use of a “post-settlement
settlement.” The concept of the post-settlement was first developed by Howard Raiffa 2003 as a way to optimize negotiation outcomes. After an initial
agreement has been reached, the parties agree to reopen the negotiations in search of an agreement that is better for both sides. If a better agreement is
found, then both sides share in the gain. If a better agreement acceptable to both sides is not found, then the parties stay with the original agreement. Under the
terms of the post-settlement settlement, the parties can only improve their respective outcomes by improving the other party’s outcomes. Seventy-five
percent of the time when negotiators use post-settlement settlement, they achieve a better agreement Thompson 2008.
15.5 Negotiating a Deal
