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BEST APPROACHES TO A MUTUAL AGREEMENT IN NEGOTIATION

The negotiator will need to select a general negotiation approach. There are many techniques but the two most common approaches to negotiation are positional bargaining and interest-based bargaining.  This article will expand your knowledge and open your eye to know how to bargain in your business and get what you want in your business. The interest-based bargaining will be discussed here.

Interest-based Bargaining

Interest-Based Bargaining involves parties in a collaborative effort to jointly meet each other’s needs and satisfy mutual interests.

Rather than moving from positions to counter positions or to a compromise settlement, negotiators pursuing an interest-based bargaining approach attempt interests or needs and those of other parties prior to developing specific solutions.

After the interests are identified, the negotiators jointly search for a variety of settlement options that might satisfy all interests, rather argue for any single position. The parties select a solution from these jointly generated options.

This approach to negotiation is frequently called integrated bargaining because of its emphasis on cooperation, meeting mutual needs and the efforts by the parties to expand the bargaining options so that a wiser decision with more benefits to all can be achieved.

When will interest-based bargaining be used?

  • When the interests of the negotiators are interdependent.
  • When it is not clear whether the issue being negotiated is fixed-sum (In fixed-sum negotiations, the parties’ interests are directly opposed. So, even if the outcome is fixed-sum, this process can be used)
  • When future relationships are a high priority.
  • When negotiators want to establish cooperative problem-solving rather than competitive procedures to resolve their differences.
  • When a compromise of principles is unacceptable.

Attitudes of interest-based bargainers

Resource is seen as not limited. These are attitudes of interest-based bargainers:

  • All negotiators’ interests must be addressed for an agreement to be reached.
  • Focus on interests not positions
  • Parties look for objective or fair standards that all can agree to.
  • Belief that there are probably multiple satisfactorily solutions
  • Negotiations are cooperative problem-solvers rather than opponents.
  • People and issues are separate. Respect people, bargain hard on interests.
  • Search for win-win solutions.
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How to do interest-based bargaining

Interests are needs that a negotiator wants satisfied or met. There are three types of interests:

Substantive interests: This refers to content needs, e.g. money, time, goods or resources, etc.

Procedural interests: These are needs for specific types of behavior or simply put ‘the way that something is done.’

Relationship or psychological interest: These needs refer to how one feels, how one is treated or conditions for ongoing relationship.

(i)Identify the substantive, procedural and relationship interests/needs that you expect to be satisfied as a result of negotiations. Be clear on:

  • Why the needs are important to you?
  • How important the needs are to you?

(ii) Speculate on the substantive, procedural and relationship interests that might be important to the other negotiators.

  • Assess why the needs are important to them.
  • Assess how important the needs are to them.

(iii) Begin negotiations by educating each other about your respective interests.

  • Be specific as to why interests are important.
  • If other negotiators present positions, translate them into terms of interest. Do not allow other negotiators to commit to a particular solution or position.
  • Make sure all interests are understood.

(iv) Frame the problem in a way that it is solvable by a win-win solution.

  • Remove egocentricity by framing problem in a manner that all can accept.
  • Include basic interests of all parties.
  • Make the framing congruent with the size of the problem to be addressed.

(v) Identify general criteria that must be present in an acceptable settlement.

  • Look for general agreements in principle.
  • Identify acceptable objective criteria that will be used to reach more specific agreements.

(vi) Generate multiple options for settlement.

  • Present multiple proposals.
  • Make frequent proposals.
  • Vary the content.
  • Make package proposals that link solutions to satisfy interests.
  • Make sure that more than two options are on the table at any given time.
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(vii) Utilize integrative option generating techniques:

  • Expand the pie: This finds ways that more resources or options can be brought to bear on the problem.
  • Alternating satisfaction: Each negotiator gets 100 per cent of what she/he wants but at different times.
  • Tradeoffs: Exchange of concessions on issues of differing importance to the negotiators.
  • Negotiators trade concessions on issues of higher or lower importance to each. Each negotiator gets his/her way on one issue.
  • Integrative solutions: Look for solutions that involve maximum gains and few or no losses for both parties.
  • Consider two or more agenda items simultaneously
  • Set your sights high on finding a win-win solution

(viii) Separate the option generation process from the evaluation process.

(ix) Work towards agreement.

  • Use the Agreement-in-Principle Process (general level of agreements moving towards more specific agreement)
  • Fractionate (break into small pieces) the problem and use a Building-Block Process (agreements on smaller issues such that when combined, form a general agreement). Reduce the threat level.
  • Educate and be educated about interests of all parties.
  • Assure that all interests will be respected and viewed as legitimate.
  • Show an interest in their needs
  • Do not exploit another negotiator’s weakness
  • Demonstrate trust
  • Put yourself in a ‘one down position’ to other on issues where you risk a small but symbolic loss.
  • Start with a problem solving approach rather than a competitive one.
  • Provide benefits above and beyond the call of duty.
  • Listen and convey to other negotiators that they have been heard and understood.
  • Listen and restate content to demonstrate understanding.
  • Listen and restate feelings to demonstrate acceptance (not necessarily agreement) and understanding of intensity.

(x) Identify areas of agreement, relate them and write down.

Costs and benefits of interest-based bargaining

Costs

  • Require some trust.
  • Require negotiators to disclose information and interests.
  • May uncover extremely divergent values or interests.

Benefits

  • Produce solutions that meet specific interests
  • Build relationships
  • Promote trust.
  • Model cooperative behaviours that may be valuable in future.
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