Building A Successful Strategy In Integrative Negotiation

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Building a Successful Strategy in Integrative Negotiation

What is Integrative Negotiation?

In a larger extent, negotiation comes as a concentrated and interactive way of human communication, between two or more parties found in a disagreement, that focus on finding a common purpose or on solving a common problem. The agreement may be achieved with a simple verbal approval, a hand shake, a convention or a contract, edited by following certain common procedures or it can also be a truce, a pact or an international agreement, also edited by following common procedures.

There are specific interest areas in which we can identify different form of negotiation. The most frequent use of this practice is found in business and commerce, negotiation that is shaped into contracts, documents and commerce facts, as selling, buying, partnerships, lease, and franchise. This kind of negotiation is especially used in selling techniques.

Another general use of negotiation is found in politics. These can be internal negotiations, between parties or national organizations, or external negotiations, between governs and international organizations.

Business negotiation has a particular form, focused on the existence of a product or service, on one hand, and on satisfying a need, on the other. The agreement has a commercial character and can become a commerce document, a convention, an order, a selling or buying contract, a partnership, a modifier for price levels, shipping or delivery conditions, transport and so on.

Negotiation cannot be seen separately from interpersonal communication, because it is inevitably based on dialogue. To negotiate means to communicate hoping that it will end with an agreement.

In the process of business, financial or political negotiation, a specialized form of communication is needed. It’s been observed over the years that a specialized communication is needed in order to maintain certain connections with groups and to intervene in certain activities and their process. In the process of negotiation competent individuals should preferably be involved, persons with theoretical and practical skills in the negotiation field, people that should transform negotiation in more than a moment’s desire or impulse, by pointing it out in a professional manner. It is obligatory to use negotiators in such a process. “Using a professional negotiator is often more not only a wish but an obligation determined by the intensity of the wish to possess something that cannot be achieved but through a negotiation that would lead to predicted results, that would give density to its purpose. This kind of person is not always easy to find, especially because the need of using an experimented negotiator is doubled by the need of a certain trust in the intercessions made by the negotiators in the solicitants name.”

Of all existing negotiation techniques, the most taught in law and business schools worldwide is the integrative negotiation, a strategy based on focusing on the interests of the parties involved, not on the positions initially taken by the negotiators. Roger Fisher and William Ury developed the integrative negotiation’s principles in their book, “Getting to Yes”, in the 1980’s. This kind of negotiation focuses on conflict management and resolution, with the purpose of finding a common and satisfactory agreement, synonymous with the concept of “win-win negotiation”. “This vision of negotiation represents a very different vision from the stereotypical one of hard negotiation in which one of the parties inevitably loses while the other wins. In a negotiation based on integrative negotiation, the agreement cannot be improved because the value has been shared during the negotiation.”

Negotiation is needed in a situation in which interests are different, sometimes in conflict, but in which the groups are in a reciprocal dependency. An eventual agreement comes with benefits for both parts, so they are willing to compromise because otherwise, if things are let to evolve spontaneously or one part would impose its truth, by confrontation, both parts would suffer from undesired consequences. As Zoltan Bogathy states in his book, “Negotiations inside organizations”, there are some characteristics owned by a negotiation process, that we should keep in mind in order to maintain a good communication:

Conflicts are presented in a confrontation between opposite interests, but mutually dependent.

People over appreciate the significance of their own interests, but pay attention to the possibility of mutual understanding.

Personal problems are hidden, covered or presented in a very complicated way.

The information given is real, but single sided – it refers especially to the positive aspect, to point out its own group.

The activity points are formed accordingly to the solving variables.

Sometimes, solutions are tied to the principles through which the other part may be pressured;

Individual solutions are supported but it is considered obvious that they can be modified;

In a circumspect and moderate manner methods like threatening, inciting and surprise may be used;

Contact between groups is limited to a few spokesmen.

Taking these into consideration, Bogathy writes about integrative negotiation as being “the method that eliminates power as a way of intervention. This method is based on the idea that relationships may be confronted directly, openly, so that the needs and expectations of both parts may be satisfied and none of the parts would be a loser. Through this method you can obtain reciprocal respect of interests and both parts’ satisfaction. But this demands a reciprocal commitment according to which none of the parts will use its power in order to reach its purpose. The difficulty of this rule is even higher for those who dispose of a considerable power in most of their relationships. (…) But if we have the courage to engage in such a relationship, of mutual respect and acceptance, we might have a lot to win. Here are some characteristics of the win-win method:

Defining conflict as a common problem for both individuals/groups involved.

Avoiding threats (to reduce situations in which others are obliged to adopt a defensive attitude).

Using an open, clear and fair communication on needs, goals an purposes of the other part.

Finding creative agreements that would please both parts; pursuing common effects that would benefit both parts.”

In contrast with the distributive bargain (where the goals of the parties are at odds), in integrative negotiation the parties’ goals are not exclusive any longer. If one part achieves its goal it doesn’t mean it is done exclusively on the other part’s expense. The fundamental structure of an integrative negotiation situation is that it allows both sides to achieve their objectives. Even if the conflict may initially appear as a win-lose situation, win-win alternatives will arise through discussion and mutual exploration. Besides the common characteristics of negotiation, in an integrative one, negotiators must also:

“Focus on commonalties rather than differences.

Attempt to address needs and interests, not positions.

Commit to meeting the needs of all involved parties.

Exchange information and ideas.

Invent options for mutual gain.

Use objective criteria for standards of performance.”

Integrative agreements occur because negotiators work hard to overcome inhibiting factors and to search for common ground, by exchanging effective information.

What is Integrative Negotiation in financial services?

Integrative negotiation is also known in financial services as collaborative bargaining. Through this kind of conflict management the negotiator has the “potential to create options that will help all parties to achieve their objectives. Collaborative bargaining is likely to occur when the negotiators have identified a common goal or objective, all parties have faith in their problem solving ability, there is motivation and commitment to work together, there is mutual trust and clear communication, and both parties believe the other party’s position is valid.”

“Negotiation is a fundamental way for getting what we want from others.”, the relationship between negotiation and satisfying needs taking the form of a transaction that must be in a reciprocal advantage. Negotiation is a “transaction with fixed conditions”, a process to conclude conventions, contracts or agreements. Ury and Fisher later wrote a work called “Beyond reason”, in which they stated that the emotional side of a relationship (financial or of any other kind) plays a significant part in the outcome of an agreement, because people are not always rational.

Steve Gates gives us such an example, of a win-win negotiation, initiated by Facebook in 2005, in his “Negotiation Book”: “During 2015 Facebook progressed a strategy of building relationships with publishers including the BBC, Bild, NBC news, and The New York Times, amongst others. The concept (called Instant Articles ) attracted nine publishers who committed to provide news information to Facebook. This in turn attracted audiences to their own monetized solutions, of which they were able to keep 100% of those revenues. It was apparent to the publishers that Facebook were in fact competing with Yahoo, Google, and Twitter, securing exclusive social media feeds. The negotiations resulted in the publishers taking control over which stories appeared and ensured that, by embracing social media, their own online business model would not be undermined. The agreement facilitated by Facebook sought to build on the mutual interests of those involved, focus on the longer-term picture, and measure success through the synergy and strengthening this would bring to their own users. The win–win agreement had only been made possible because of the collaborative approach this engendered.”

Integrative negotiation has the purpose to solve conflicts, to adopt common decisions when there are divergences between parties, to introduce change in organizations in order to compensate loses, to realize economic trades by making transactions. It implies co-operation of the parties for overcoming divergences between them, based on identifying and promoting common solutions that would be acceptable. This means that the parties must accept their separation points, which does not mean abandoning confrontation or the repressing reaction but to give up the attempts to defeat the other. Through negotiation both positions are legitimized and there is a bet on cooperation.

In finances, integrative negotiation is based on mutual respect and tolerance of difference of opinion with the advantage of coming to better, more sustainable solutions, a consolidated relationship between parties. This view in negotiation avoids conflicts and is characterized by trust and optimism. The agreement, once achieved, has all the chances to be respected due to both parties’ winning and sustaining the final solution and agreement.

Financial negotiation becomes possible when there are some complementary interests between parties, where one of the offers does not entirely correspond with the offer or request expressed by the other part, when there is willingness and interest from both parties in obtaining an agreement for which they are ready to make concessions, when there is a lack of rules and obligatory preexisting procedures or the lack of an authority over the parties that would enforce an agreement.

Negotiation techniques: integrative negotiation as interest-based bargaining

The process of communication is essentially a communication process between partners that have different point of views on the reality that both belong to. From this perspective, an area of concerns is based on information change and mutual influence, which can get to a mutual understanding of situations and problems. This is actually the base for building the agreement. Reality becomes truly common, the parts’ position becomes clearer and the interests they express come to light. Negotiation is also a process of exchanging values or even creating new ones between partners with divergent needs. They make offers and requests through which they underline the differences of positions, they make assessments and exchange concessions. They make transactions through which they aspire to satisfy their own interests and move from the best solution in one’s point of view to the next best solution in both their points of view. Most authors surprise in describing the dynamic of negotiations the contribution of communication and value transaction on making the agreement. Gavin Kennedy comes with a similar approach, but separates the exchange in two components: proposals and transactions. In his point of view the phases of negotiation are: debate – through which the negotiator defines what the others want, the proposal – through which the negotiator finds out what he can do for the others and, finally, the agreement.

Integrative bargaining usually produces more satisfactory outcomes than distributive bargaining, the second being based on fixed, opposing positions, resulting in compromise or no agreement at all while integrative negotiation do not split the difference between positions, but gives everyone all they want. “(…) integrative negotiation requires a process fundamentally different from that of distributive bargaining. Negotiators must attempt to probe below the surface of the other party’s position to discover his or her underlying needs. They must create a free and open flow of information, and they must use their desire to satisfy both sides as the perspective from which to structure their dialogue. If negotiators do not have this perspective – if they approach the problem and their opponent in win-lose terms – integrative negotiation can occur.”

The interest-based bargaining focuses on identifying both parties’ interests, which will increase their ability to develop win-win solutions. It is a collaborative process in which the parties help each other, facilitating positive, constructive relationships between adversaries. A way through which we can avoid the disadvantages of distributive negotiation is the principle method. Developed in the Negotiation Project in Harvard and exposed by Fisher, Ury and Patton in their “Getting to Yes” paper, it starts from the assumption that negotiation happens on two levels: on the first level we have the content, meaning the objects of negotiation (background problems, debated terms), while on the second level we have the rules of the game, meaning the way this background problems are negotiated, while structuring those rules.

Each of the negotiators’ action concerns not only the content, but some other aspects as well: a more conciliatory or conflicted behavior orientation, flexibility, rigidity, work procedures, manners of communication and influence etc. The second level is born outside some aware decisions, because negotiators are usually focused on content and do not pay attention to other aspects. The basic principles on which the Ury and Fisher’s method is based are: separating people from the disputed problem, concentrating the attention on interest and not on positions, looking for alternatives before making a decision and using some objective principles for making the decisions.

Identifying each side’s interests is the first step in integrative bargaining and this takes some work by the negotiating parties, as interests are less tangible than positions and not publicly revealed. Than a key approach is asking why? are they demanding what they are demanding, making clear that these are questions asked in order to understand their interests better. Next step implies analyzing the potential consequences of the agreement advocated, as the other side would see them. The multiple interests involved must be identified, keeping in mind that the most powerful interests are basic human needs: financial stability, security, sense of belonging, recognition and control over one’s life.

Interests must be discussed in a constructive way, so both attitude and communicational behavior are important. So, the main recommendations are:

Giving equal credit both to our interests and the others’. The job of exposing our interests is ours but, at the same time, we must not minimize the others’ interests and refer to those too.

When we expose our interests we speak directly on the subject, with concrete details. A good strategy is to ask the others to correct us if we are wrong. We must avoid our exposure of seeming a personal attack and try to describe a legitimate problem.

Trying to demonstrate and acknowledge their interests also. If people feel understood they are more receptive and tempted to listen.

Making proposals only after we’ve clarified interests and presented rationales. If we come with suggestions immediately after presenting our position, the adversary will certainly be disturbed.

Avoiding discussions on the past; it’s useful that our discussion would be purpose-oriented, not on causes.

Towards our interests we can be uncompromising, protective and even aggressive. But this doesn’t mean being opaque towards the other side’s suggestions. Our purpose is to attract the others for a lucrative collaboration into finding creative solutions which would satisfy both parties.

Creative tactics in integrative negotiation: techniques in managing conflicts

Creative conflict management is based on four principles: avoiding instinctive reactions towards the opponent, accepting the situation, extracting knowledge from the situation and extracting some advantages. This kind of conflict management is opposed to the momentarily conflict adjustment which leaves the sources of the conflict untouched.

A successful interest-based negotiator models the following traits:

Honesty and Integrity: Interest-based negotiation requires a certain level of trust between the parties. Actions that demonstrate interest in all players’ concerns will help establish a trusting environment.

Abundance mentality: A negotiator with an abundance mentality knows that making concessions helps build stronger long-term relationships.

Maturity: having the courage to stand up for your issues and values while being able to recognize that others’ issues and values are just as valid.

System orientation: system thinkers will look at ways in which the entire system can be optimized, rather than focusing on sub-optimizing components of the system.

Superior listening skills: ninety percent of communication is not in one’s words but in the whole context of the communication, including mode of expression, body language and many other cues. Effective listening also requires that one avoids listening only from his or her frame of reference.

Steps in negotiation

1) Pre-negotiation is a preparing phase of negotiation, G. R. Berridge underlining that the term is not rightfully used because the most part of negotiation happens during the second phase. In pre-negotiation the entire agenda is planned, the steps, the strategy that is going to be used, the beginning point and the subjects that would be on the negotiation table. It is the so-called negotiation of negotiation.

a) Preparing negotiation – a step in identifying the subject of negotiation and the negotiation objectives. Both parts must be convinced of the fact that there is a problem to be solved which led to an impasse and that the only solution for it would be to come to an agreement through negotiation. Each negotiator must establish their own purpose through the identification of a series of objectives able to fulfill their interests. Finding solutions in case the negotiation doesn’t come to an agreement is very important during this stage. Regarding the themes discussed and their order, G. R Berridge makes distinctions between the deductive and inductive approach. The deductive method assumes the logical procedure. The starting negotiation point of this method refers to finding a consensus on general principles under which discussions will unravel. The agreement must happen in a general framework and must be of the nature on which it was agreed. In the inductive method, negotiation takes place step by step and is typical to situations with a high degree of complexity and mistrust.

b) Setting up the negotiation strategy implies adopting a method and a style of negotiation. Thomas and Kilmann identified five major styles of negotiation: collaborative, by compromise, by conciliation, authority or avoidance. Integrative negotiation implies the use of a collaborative negotiation, which means taking into consideration fulfilling the purposes of both parties and maintaining the relationship between them. This is a situation in which both parties adopt a win–win position by using some strategies that take into consideration not only their own interests, but also of those involved. It is recommended that maintaining a relationship is essential, when various integrated points of view, when there is a need for a large sustainment in developing common actions.

The negotiation itself:

Beginning negotiations – presenting initial positions. The whole negotiation process depends on this step. This is because it sets the tone of discussion, transmitting information on attitude, intentions and especially perceptions of the parties.

Clarifying positions – argumentation of its own position and evaluating the other parts’ offer. In this stage the negotiators must focus on gathering as much information which would allow the reveal of interests behind positions. We must pay attention and understand the other parts’ formulation and locate the needs behind the interests. This is where Maslow’s pyramid has a crucial role because behind each interest there are needs.

Finishing the negotiation process – done in relaxed moments, not when the atmosphere is filled with negative emotions. The agreement must be clearly understood, signed and applied exactly as it was written.

Basic components and characteristics of a successful integrative negotiation

Integrative negotiation involves collaborative parties that make an effort to jointly meet each other’s needs and satisfy mutual interests. In order to avoid moving to counter positions for a compromise settlement, in an interest-based bargaining the negotiators’ approach attempt to identify their interests and needs along with those of the parties before developing specific solutions. After identifying the interests, the negotiators search for various settlement options in order to satisfy all interests instead of arguing for any single position. From these generated options the parties select a solution. Because cooperation, mutual needs and expansion of bargaining options are emphasized, this approach is called integrated bargaining. It reaches a wiser decision, with more benefits for all parties, which can be achieved.

Integrative negotiation is used when there are independent interests from the negotiators, when the issue being negotiated is not clearly fixed-sum, when future relationships are a high priority, when negotiators want to establish cooperative problem-solving and want to come to a solution to specific needs or interests and when a compromise is unacceptable.

According to Ury an Fisher, there are seven essential elements of integrative bargaining: interests, people, alternatives, options, criteria/legitimacy, commitments and communication.

1. Identifying the interests involved in an issue area is the first step in an integrative negotiation, whereas people’s positions are underlined by interests. In order to negotiate efficiently, negotiators must go beyond positions and seek to satisfy the underlying interests, by approaching issues of mutual concern with greater creativity, flexibility and understanding. Interests may be unspoken or hidden behind a party’s stated demand or position, or not even carefully defined to themselves.

There are three types of needs that a negotiator wants satisfied or met: substantive interests – content needs (money, time, goods or resources, etc.), procedural interests – needs for specific types of behavior or the “way that something is done” and relationship or psychological interests – needs that refer to how one feels, how one is treated or conditions for ongoing relationship.

The steps towards a successful interest-based negotiation imply:

– identifying the substantive, procedural and relationship interest that you expect to be satisfied as a result of negotiations (why and how important are the needs to you)

– speculating on the procedural interests that might be important to the other negotiators (why and how important are the needs to them)

– educating each other about your interests (why interests are important, translate positions into terms of interest, do not commit to a particular solution or position, making sure all interests are understood)

– framing the problem in a way solvable by a win/win solution (removes egocentricity from the problem, include basic interests of all parts, make a framing congruent with the size of the problem addressed)

– generating multiple options for settlement (multiple and frequent package proposals that link solutions to satisfy interests, various content, more than two options are on the table at any given time)

– using integrative option generating techniques (expand-the-pie – more options can be brought to bear on the problem, alternating satisfaction – negotiator gets most of what they want at different times, tradeoffs – exchanging concessions on issues of differing importance to the negotiators, integrative solutions – that involve maximum gains and few or no losses for both parties, finding a win/win solution)

– separating the option generation process from the evaluation process

– working toward agreement (use of the Agreement-in-Principle Process, fractionate the problem and use a Building – Block Process, educate about interest of all parties, legitimate all interests, show an interest in their needs, demonstrate trust, start with a problem solving, demonstrate understanding and acceptance)

– identify areas of agreement, restate them and write them down.

2. Another element that must be very well understood is the human factor, its emotions, potential for misunderstanding and mistaken assumptions. People must be separated from the problem, meaning that a way for solving a problem must be found without getting distracted by personal elements and also by coming to an agreement in a manner that will preserve the relationship. In order to establish and maintain such a relationship, negotiators should take steps into making sure that neither party will lose face or appear personally compromised for accommodating the other party’s demands.

3. Another important feature of integrative, as well as distributive-based approach is the attention to alternatives. Fisher and Ury argue that is crucial for both parties to know their Best Alternative to a Negotiated Agreement (BATNA) both before and throughout all stages of a negotiation. Fisher and Ury argue that having a resolute bottom line can come at high costs.

By its nature, a bottom line can be inflexible and onerous. It can prevent creative thinking and lock parties into positions that may prevent them from coming to a favorable solution.

BATNA sets the limitations that must be considered, providing “a measure for agreements that will protect you against both accepting an agreement you should reject and rejecting an agreement you should accept”. The negotiator must be aware of these limitations but will not let them inhibit his imagination and the ability to recognize opportunities.

After building relationships and understanding interests at stake, the parties must generate options. These are possible solutions to a problem shared by two or more parties. “In integrative bargaining, options represent possible ways of meeting as many of both parties’ interests as possible. (…) Generating options through techniques such as brainstorming —a technique which involves inviting all parties to list any idea that comes to mind without criticizing or dismissing those ideas – helps to encourage creative thinking about a problem and increases the chances that the parties involved will formulate a win-win solution.”

Invoking objective criteria as part of the negotiation process is a better way to approach the negotiation process. Chosen criteria should be independent of the will of either party by appealing to fair standards relevant to the issue under review. “Fair standards are markers outside of the parties to a conflict, for assigning some value to or for serving as the basis for a solution to a problem. The problem is not always so easily resolved because there may be multiple, potentially acceptable standards available from which to choose.”

An alternative approach to creating a legitimate basis for agreement is to invoke what both parties agree to be a fair procedure for making a decision. The process of joint decision-making increases the perceived fairness of the negotiations, improves satisfaction, promotes positive relations between parties, enhances the legitimacy with which agreements are viewed, helps to create willingness to abide the commitments made. “By framing negotiations as a decision making process based upon objective criteria, negotiators free themselves and the other side from needing to cling to a position stubbornly in order not to appear (or feel) weak or disingenuous.”

In order that a negotiated settlement would endure a commitment of all parties must be made. If one party fails to follow through on their promises, they suffer a loss of integrity and prejudice their relationship in the future. In conclusion, no party should create commitments that they do to intent to honor.

Negotiation is only possible through communication because it changes attitudes, prevents or overcomes deadlock and misunderstandings and helps improve relationships. Good communication skills are essential to cogently relay your message and to thoroughly understand the message of the other side. “(…) integrative approaches stress the importance of sharing information as a means of uncovering interests and of helping parties to explore common problems or threats.”

Negotiators must become able to skillfully deal with difficult emotions that frequently arise during a negotiation. Allowing the other negotiator to release unwanted feelings helps to clear the air and get back on track rather than letting them be hung up on bad feelings. In order to do that, negotiators should examine and identify their own emotions so they would know how they would like to feel and then ask the same question from the perspective of the other side.

Best practices in negotiation

When an interest-based negotiation is used it usually produces wiser decisions in a shorter amount of time with less incidence of adversarial behavior. In order to do so, negotiators prepare a process based on sequential development of negotiations:

In stage one, a strategy to guide problem solving must be evaluated and selected, meaning that you have to assess a various approaches or procedures for problem solving and select an approach.

Stage two implies a contact made with other party or parties, a contact in which you explain your negotiation desire, you coordinate an approach, you build a rapport and expand relationships, you build personal or organizational credibility, you promote commitment and you obtain input from the parties about the process that will be used.

In stage three you collect and analyze background information, you verify the accuracy of the data and you identify all parties’ substantive, procedural and psychological interests.

Stage four is for designing a detailed plan of negotiation, that must contain strategies and tactics that will enable the parties to move towards agreement and that will identify tactics to respond to peculiar situations.

Stage five is designated to build trust and cooperation by developing a strategy to handle strong emotions, checking perceptions and minimizing effects on stereotypes, building legitimacy of the parties and issues, building trust and clarifying communications.

The negotiation session begins in stage six, when all parties are introduced, when guidelines for behavior are established, mutual expectations are stated, interests and/or positions are identified.

In stage seven you define issues and set an agenda through which you identify and frame specific issues to be discussed in a neutral manner, you determine the sequence in which the issues are to be discussed, you use active listening, open-ended and focusing questions to gain additional information.

Stage eight uncovers hidden interests, probes each issue at a time to identify interests, needs and concerns of the principal participants in the dispute, defines and elaborates interests so that all participants would understand the needs of others as well as their own.

In stage nine, options for settlement are generated. From these options a final settlement is selected or created. The options for settlement are assessed in stage ten, when you review the interests of the parties, you asses how they can be met by available options and you asses the costs and benefits.

The final bargaining takes place in stage eleven, when one of the alternatives is selected, concessions are made, alternatives are combined or put together into a superior solution, package settlements are developed and parties establish a procedural means to reach a substantive agreement.

In the final stage, stage twelve, a formal settlement is achieved, an agreement that must be written, formalized through a legal contract, judicially reviewed and approved by an administrative/executive.

Conclusions

As a conclusion, the process of negotiation can be approached in many ways. A successful negotiation is not based on the strategy as much as on how well you prepared. A beneficial outcome can be obtained if the negotiator has the ability to consider all the elements of the situation carefully, to identify and think through the options as well as to keep events in perspective and be as fair and honest as circumstances allow. A successful negotiator has to capitalize the common ground or interest that has brought the parties to the negotiating table. Through a win-win negotiation, by integrating interests, by looking at the other side as a partner rather than an opponent and by working together, negotiators have an opportunity to craft a solution that will benefit both parties for the longest period of time.