Difference Between Distributive and Integrative Bargaining
- Pages: 6
- Word count: 1287
- Category: Negotiation
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1) The difference between distributive and integrative bargaining Negotiation approaches are generally described as either distributive or integrative. At the heart of each strategy is a measurement of conflict between each party’s desired outcomes. Consider the following situation. Chris, an entrepreneur, is starting a new business that will occupy most of his free time for the near future. Living in a fancy new development, Chris is concerned that his new business will prevent him from taking care of his lawn, which has strict requirements under neighborhood rules. Not wanting to upset his neighbors, Chris decides to hire Matt to cut his grass. In a distributive bargaining approach, each negotiator’s objective is in direct conflict with the other. Looking at our situation, each party is concerned about the final price and has a limited number of resources. In starting a new business, Matt’s cash flow is low and there is limit on what he will spend for the service. On the other hand, Chris wants to ensure a high fee but also guarantee he will not lose money after buying gas for his lawnmower. The goal in distributive bargaining is not to find a mutually accepted outcome, but rather that one side gains preferential treatment.
In other words, the final result is a win-lose scenario. In distributive bargaining, each party must decide before the negotiation where certain breakpoints lie. For Chris, maybe he cannot afford more than $20 for the service, but is willing to pay $15. Conversely, Matt cannot accept less than $12, but would prefer $18. The spread between the resistance points, $12-$20, defines the bargaining range and where a settlement is likely to occur. If the resistance points did not overlap, a negotiation would not be possible. As the negotiation occurs, the challenge will be in discovering and influencing each other’s resistance point. Conversely, consider that while meeting to discuss a price, both parties realize there are different interests at stake. Chris’ priority is a low price while Matt prefers a longer contract. In this case, negotiators may then use an integrative bargaining strategy where each side can achieve their objective. In other words, the final result is a win-win scenario.
This approach requires a fundamentally different process. First, negotiators who take an integrative approach view a negotiation as problem solving rather than adversarial. The measurement of success is not whether one party is doing better, rather is the overall objectives met. The challenge to integrative bargaining is ensuring a free flow of information, so each party understands the overall objectives, and maintaining a high level of trust. 2) Common perception errors and how they affect negotiation Negotiations are a very social experience and participates enter into discussions guided by their perceptions. These can be derived from pervious experiences, relationships or the physical or mental environment and can impact the success of a negotiation. Often times, perception is not a deliberative process, but is done at a cognitive level. There are four major perceptual errors negotiators make: stereotyping, halo-effect, selective perception and projection. Negotiators should be aware of these errors and be prepared to discuss the negative aspects of their effects. Stereotyping seems like a dated practice in today’s world, but it is a common error and negotiators should be concerned with its impact.
The practice of stereotyping occurs when an individual assigns attributes to another solely on the basis of the other’s membership in a particular social or demographic category. Using the lawn mower example, consider if Matt has a preconceived notion that those who own their own business have lots of money and, as a result, he expects a higher fee. That stereotype will impact the bargaining range and could result in an impasse, where neither party reaches wins. Halo-effect is another factor that could affect negotiations and is similar to stereotyping. In this error, a negotiator views another party through a narrow lens of one attribute. As a result, this one attribute acts like a screen, keeping the negotiator from accurately viewing multiple traits. For example, our entrepreneur Chris may have observed that Matt does a poor job trimming bushes.
Consequently, observation could override other considerations that might have more relevance to the job at hand. Another perceptual error is selective perception, which describes how we categorize and interpret information in a way that favors one category or interpretation over another. There are a variety of reasons why individuals are susceptible to selective perception, but it stems from a person’s prior experiences – relating known information to the current circumstance. Selective perception usually perpetuates stereotypes and halo-effect. The final error is projection, where an individual’s current emotional state tends to influence the perception of others. It is generally a defense mechanism intended to protect an individual’s self-concept. For example, if Chris previously had someone who poorly cut his lawn and Matt looked like him, Chris may consider Matt’s services undesirable.
3) The challenges that come from multiparty negotiations
Multiparty negotiations occur when more than two parties are working together to achieve an objective. Overall, increasing the number of negotiators creates complexity and multiple priorities and perspectives must be considered. The multiparty negotiation can occur often in the work environment where parties from various business units meet to solve overlapping problems. As a result, there are several challenges a negotiation must overcome. Overall, the problem lies in managing relationships in the group.
First, a feature of multiparty negotiations is that parties will often form coalitions. This can be split into two types of groups, those who form to create a winning side and those who create blocking coalitions. The creation of a winning coalition forms when parties agree to join forces to make an advantageous agreement for the members. Alternatively, a coalition can form to create a protective stance against arrangements that may threaten the group. Another challenge in a multiparty negotiation is the group interaction. Because the number or parties increased, there are a number of new pressures on the group dynamic and new interests and perceptions need to be aligned. Individuals also have less power to control the negotiation. In a bilateral negotiation, when parties reach an impasse either one can simply walk away from the table. However, in a multiparty discussion, it is much more difficult.
If one party were to stop negotiation it is very likely the negotiation will continue without them. Additionally, the procedural rules become less clear. It takes much longer to complete the negotiation and negotiators will need to spend considerable time discussing how to manage the process. Additionally, the importance of decision rules grows in importance. In a multiparty negotiation, the failure to establish decision rules at the outset can make consensus building much more difficult. In a bilateral negotiation, the decision rule is simply that each party comes to an agreement. By adding parties, a clearer decision framework needs to be created. This includes discussions on how decisions should be made, whether it is consensus, unanimity or majority ruled. Finally, the addition of parties makes the gathering and sharing of information much more difficult. Negotiations need to be flexible enough to allow new information into a discussion. However, by increasing the size of a group, the amount of new information grows. This makes is challenging to develop creative alternates to solutions and meet participate objectives.
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