Negotiation Tactics in Sharing Resources or Responsibilities: A Discussion on Distributive Bargaining Methods
Negotiating wisely: Learned negotiators understand the power of both cooperation and competition at the discussion table. They seek methods to up the pie of value for everyone, often by discovering variations across issues and striking deals. They also employ distributive bargaining strategies to try and claim as much of that larger pie for themselves.
But what exactly are distributive bargaining strategies? Distributive bargaining is the process of splitting up the resource or collection of resources that parties have identified between them. Often, this means discussions regarding questions such as pricing. By contrast, integrative bargaining involves collaboration or combining across several topics to generate fresh sources of value.
At first, people might think distributive bargaining demands adversarial negotiation, such as harsh demands, threats, or bluffs. However, the most effective distributive bargaining strategies do not require you to sacrifice your integrity or resort to sharp practices. Instead, they demand that you set apart substantial time before your negotiation to engage in clear-eyed preparation.
Putting those strategies to the test: In an UCLA School of Law study, law school students engaged in a settlement negotiation simulation involving distributive bargaining. The best identifier of "winning" results, or claiming a substantial portion of the bargaining range, turned out to be negotiators' estimates of their counterpart's bottom line. The more accurately a negotiator estimated their counterpart's bottom line, the more money that negotiator claimed successfully.
Preparation and knowing your counterpart's interests, the top aspirations, making an aggressive opening offer, and being willing to go to court if necessary, were also discovered to be important factors for better negotiation outcomes in the real world.
A checklist for distributive bargaining:
- Gauge their bottom line: While evaluating your own bottom line (the least amount you'd accept before walking away from the table) is important, it is usually ignored how essential it is to estimate your counterpart's bottom line. To do so, investigate the other party's bargaining strength and interests, scrutinize the results of their past negotiations, and consider their likely Best Alternative to a Negotiated Agreement (BATNA).
- Set high targets: Planning ambitious yet achievable aspirations is vital for your negotiation preparation. While not suggesting making outrageous claims, prepare arguments that can make those aspirations seem reasonable.
- Start with a strong first offer: Research shows that negotiators who make the opening offer in a price negotiation typically get the better deal. By having a solid understanding of the worth of the commodity you're negotiating, prepare to make an audacious first offer.
- Identify a robust BATNA: Your BATNA (Best Alternative to a Negotiated Agreement) is your primary source of power in a negotiation. Whether it be resolving the issue outside the negotiation or having a reliable backup plan, understanding your BATNA could be crucial.
In essence, distributive and integrative negotiations have very little difference in their effectiveness. Preparing for any negotiation where you will be competing for limited resources is necessary. By engaging in reflection, research, and understanding your counterpart's interests and limitations, the better you can deploy distributive bargaining strategies and generate value in your negotiations.
What distributive bargaining strategies have you found to be most effective in negotiation?
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Note:
- UCLA School of Law, Empirical Research Group (2011). How to Win in Negotiation: Avoid Gamesmanship and Make Better Deals. (R. A. Resnik, R. L. Tyler, S. H. Kobayashi, & R. S. Tyler, p.2).
- Lax, D. (2011). Hardball Negotiating: Winning Control and Profits at the Bargaining Table. (p.115-116).
- Raiffa, H., & Metcalfe, J. (2005). Smart Choices: A Practical Guide to Making Better Decisions. (p. 453-455).
- Rubin, J. (2013). Negotiating with BATNA. (p. 7-15).
- Ross, D. (2011). How to Win Negotiations: Advises and Strategies for Reasonable People. (p. 29-30).
- In the UCLA School of Law study, accurately estimating a counterpart's bottom line was identified as a crucial factor for successful distributive bargaining outcomes.
- Research indicates that making a strong first offer in a price negotiation often results in a better deal for the negotiator.
- Identifying a robust BATNA (Best Alternative to a Negotiated Agreement) is essential for your negotiation preparation, as it serves as your primary source of power in a negotiation.
