Negotiation

Distributive Negotiation and Integrative Bargaining

Graphics courtesy of PM Study CircleOpens in new window Negotiation is a particularly important conflict resolutionOpens in new window technique for operational managers and other organizational members in situations where the parties to a conflict have approximately equal levels of power.

During negotiation the parties to a conflict try to come up with a solution acceptable to themselves by considering various alternative ways to allocate resources to each other.

Sometimes the sides involved in a conflict negotiate directly with each other. Other times a third-party negotiator is relied on.

Third-party negotiators are impartial individuals who are not directly involved in the conflict, and have special expertise in handling conflicts and negotiations; they are relied on to help the two negotiating parties reach an acceptable resolution of their conflict.

When a third-party negotiator acts as a mediator, his or her role in the negotiation process is to facilitate an effective negotiation between the two parties; mediators do not force either party to make concessions, nor can they force an agreement to resolve a conflict.

Arbitrators, on the other hand, are third-party negotiators who can impose what they believe is a fair solution to a dispute that both parties are obligated to abide by.

Distributive Negotiation and Integrative Bargaining

Two major types of negotiation are distributive negotiation and integrative bargaining.

In distributive negotiation, the two parties take a competitive, adversarial stance as they perceive that they have a “fixed pie” of resources that they need to divide. Each party realizes that he or she must concede something but is out to get the lion’s share of the resources.

The parties see no need to interact with each other in the future, and do not care if their interpersonal relationship is damaged or destroyed by their competitive negotiation.

Again, in distributive negotiations, conflicts are handled by competition; for example, one issue at stake might be price. When you are negotiating with a merchant in a flea market, 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, the parties perceive that they might be able to increase the resource pie by trying to come up with a creative solution to the conflict.

They do not view the conflict competitively, as a win-or-lose situation; instead they view it cooperatively, as a win-win situation in which both parties can gain.

In integrative bargaining, conflicts are handled through collaboration and/or compromise. 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.

Strategies to Encourage Integrative Bargaining

Operational managersOpens in new window in all kinds of organizations can rely on five strategies to facilitate integrative bargaining and avoid distributive negotiation:

1. Emphasizing superordinate goals,
2. Focus on the problem, not the people.
3. Focus on interests, not demands.
4. Create new options for joint gain.
5. Focus on what is fair.

1.     Emphasizing superordinate goals.

Superodinate goals are goals that both parties agree to, regardless of the source of their conflict. Increasing organizational effectiveness, increasing responsiveness to customers, and gaining a competitive advantage are just a few of the many superordinate goals that members of an organization can emphasize during integrative bargaining.

Superordinate goals help parties in conflict to keep in mind the big picture and the fact that they are working together to survive and prosper.

2.     Focusing on the problem, not people.

People who are in conflict may not be able to resist the temptation to focus on the other party’s shortcomings and weaknesses, thereby personalizing the conflict. Instead of attacking the problem, the parties to the conflict attack each other.

This approach is inconsistent with integrative bargaining and can easily lead both parties into a distributive negotiation mode. All parties to a conflict need to keep focused on the problem or on the source of the conflict and avoid the temptation to discredit one another.

3.     Focusing on interests, not demands.

Demands are what a person wants; interests are why the person wants them. When two people are in conflict, it is unlikely that the demands of both can be met. Their underlying interests, however, can be met, and meeting them is what integrative bargaining is all about.

4.     Creating new options for joint gain.

Once two parties to a conflict focus on their interests, they are on the road to achieving creative solutions to the conflict that will benefit them both.

This win-win scenario means that rather than having a fixed set of alternatives from which to choose, the two parties can come up with new alternatives that might even expand the resource pie.

5.     Focusing on what is fair.

Focusing on what is fair is consistent with the principle of distributive justice, which emphasizes the fair distribution of outcomes based on meaningful contributions that people make to organizations.