2 What Is Negotiation?Leigh Thompson: “An interpersonal decision-making process necessary whenever we cannot achieve our objectives single-handedly”Ex. Buying a car; buying a house; things at workMost people are not great negotiators b/c of:Faulty feedbackConfirmation biasEgo-centrismSatisficing—settling for lessSelf-Reinforcing Incompetence
3 Myths of Negotiation 1. Negotiations are fixed-sum. 2. You need to be either tough or soft.3. Good negotiators are born.4. Experience is a great teacher.5. Good negotiators take risks.6. Good negotiators rely on intuition.
4 Preparation Is the Key Situation & parties Issues & bargaining mix InterestsGoalsBids & tacticsLimits & alternatives
5 BATNA Best Alternative to a Negotiated Agreement (Fisher & Ury, 1981) Good for:Knowing when to walk awayTesting proposalsAccepting things that are superior to your BATNA and rejecting things that are inferior to your BATNA
6 BATNARealistic, not idealisticNot staticStick to it
7 Example: Car Buying How do you strengthen your BATNA? What makes a dealer’s BATNA stronger?
8 Car Buying $19,000=compromise $15,000 $18,000 $20,000 $22,000 Your APDealer’s RPYour RPDealer’s AP$15,000$18,000$20,000$22,000Bargaining Zone$19,000=compromise
9 Example: Job Hunting Your BATNA Recruiter’s BATNA How is it strengthened?Recruiter’s BATNAHow is it weakened?
10 Reservation Point Lowest point you can go Ex: If BP offered you a job, what would Exxon-Mobile have to offer to match it?Includes any relevant issuesDetermines when you should walk away
16 So What? BATNA & Reservation Point Target Point Bargaining Range Judge agreementsImprove agreementsNo raw dealsTarget PointSomething to shoot forBargaining RangeDetermines flexibility in strategy & concessionsBargaining ZoneKnow if agreement is possible
17 Anchor Point Reference point Can be arbitrary Adjusted as appropriateCan be arbitrarySet your anchor first!…sometimes(Make the 1st offer w/ a goodanchor)
18 No preparation = no success. The big ideaPreparation is the key.No preparation = no success.