The Secret To Successful Distributive Bargaining
So this thing that we call negotiating actually has two different parts to it. The first is called integrative bargaining and it is where we look for ways to increase the pie of value for all parties, often by identifying differences across issues and making tradeoffs. The second is where we use our negotiation styles and negotiating techniques to try to get as much of the pie for ourselves as we can. This part of the negotiating process is called distributive bargaining and it has to do with the process of dividing up the resource or array of resources that parties have identified. We are all familiar with the process of haggling over issues such as price. What is the best way to get the most out of our distributive bargaining?
How To Perform Distributive Bargaining
All too often people often think that distributive bargaining strategies require adversarial bargaining, such as making tough demands, threats, or bluffs. It turns out that the most effective distributive bargaining strategies do not require you to sacrifice your integrity or resort to dirty tricks. Instead, they require you to set aside plenty of time before your negotiation to engage in clear-eyed preparation.
Studies of distributed bargaining have been done that show which types of tactics worked the best. What distributive bargaining strategies were most effective? The best predictor of “winning” outcomes in a distributive negotiation –claiming the lion’s share of the bargaining range — were negotiators’ estimates of the other side’s bottom line. The more accurately a negotiator estimated his counterpart’s bottom line, the more money that negotiator was able to successfully claim.
These studies have also revealed other important factors that may improve your outcomes in the real world, including setting high aspirations (or “targets”), making an aggressive first offer, and being willing to go to court if necessary. What all of this means for you is that if you take the time to prepare for the distributed bargaining that will be part of your next negotiation then you can be successful.
A Checklist To Use For Successful Distributive Bargaining
- Estimate the other side’s bottom line Most negotiators understand the value of evaluating their own bottom line—the least amount they would accept before walking away from the bargaining table. But we often overlook the importance of estimating the other side’s bottom line. To do so, research the other party’s bargaining strength and interests, which may include examining the outcomes of their past negotiations and their likely best alternative to a negotiated agreement (BATNA). Once at the table, ask lots of questions to determine their interests and constraints as well.
- Set high aspirations Another important part of your negotiation preparation is to set an ambitious yet realistic aspiration level or goal. That doesn’t mean making outrageous demands; rather, prepare arguments that will make your ambitious aspirations seem reasonable.
- Anchor aggressively The negotiator who makes the opening offer in a price negotiation typically gets the better deal, negotiation research shows. Why? Because of the first figure named in a negotiation “anchors” the discussion that follows. If you are well informed about the value of the item you’re negotiating, prepare to drop an ambitious first anchor.
- Identify a strong BATNA When you have a strong BATNA, you will be in a good position to reject a mediocre agreement. As a result, a strong BATNA is typically your best source of power in a negotiation. After identifying your BATNA, you should take steps to improve it, when possible, by conducting your negotiations on multiple fronts.
What All Of This Means For You
In the end, when it comes to effective bargaining strategies, the difference between the distributive and integrative types of negotiations is not great. Both aspects of principled negotiation require you to engage in significant thought and research before you sit down at the table. The more you know about the issues at stake, the other side’s interests and constraints, and your own preferences and limitations, the better positioned you will be to successfully deploy distributive bargaining strategies and claim value in your next negotiation.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills
Question For You: Do you think that distributive bargaining can be done without making threats?
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What We’ll Be Talking About Next Time
As negotiators, we all share the same desire – we’d like to find ways to become better negotiators. However, the prospect of finding a way to make this happen and learn new negotiation styles and negotiating techniques can be very overwhelming and this can cause us to throw our arms up and say that it simply can’t be done. However, the good news is that there are a set of manageable strategies that we can all use in order to become better than we are today.