Negotiations

Two Basic Approaches to Negotiations

The literature delineates two approaches to negotiation (Walton & McKersie, 1965). Distributive bargaining is characterized by a situation in which the gains achieved by one party result in an equal loss by the other party. For example, suppose a hospital administrator is negotiating salary with a staff physician. If the administrator concedes an additional $20,000 in pay, then the physician's monetary gain equals the hospital's monetary loss. Distributive bargaining is regarded as zero-sum (win–lose) because the size of the negotiating “pie” is fixed. Integrative bargaining, in contrast, is characterized by a situation in which both sides may gain. If the hospital administrator just mentioned negotiates a higher salary with a group of staff physicians, the financial “loss” to the hospital as a result of the higher salaries may be more than offset by lower physician turnover and a reduction in total labor costs. (Note: See the entry for Employee Turnover for an explanation regarding the costs associated with employee resignations.) The concept of integrative bargaining recognizes that some negotiation issues are variable-sum (win–win) issues. That is, the size of the bargaining pie is not fixed and can be expanded through intelligent and cooperative negotiations.

Negotiation Myths

Thompson (2001) dispels four myths associated with the negotiations process. First, good negotiators are not born; they must develop and cultivate their negotiating skills. Second, experience is not necessarily the best teacher. Good negotiating skills are built by obtaining diagnostic feedback as to what worked and what failed in the negotiating process. Third, tough negotiators are not necessarily the most effective negotiators. Although tough negotiators are the stuff of legends, most negotiations can be conducted effectively without resorting to iron-fisted tactics. Fourth, good negotiators rely less on “gut” feelings and intuition; the keys to effective negotiation are thorough preparation and the effective use of bargaining tactics.

Negotiation Tactics

The negotiation process usually starts with one side making an offer (sometimes an extreme or preposterous offer); the opponent makes a counteroffer, and the two sides continue to talk and make counteroffers either until [Page 383]an agreement is reached or until the parties realize that further negotiations are not possible. During the process of negotiations, some parties want to get as much as they can from the other side (emphasizing a zero-sum approach). Other parties approach negotiations with the idea of broadening the size of the bargaining pie (emphasizing a cooperative, variable-sum approach).

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