Bargaining Strategies

There are two general approaches to negotiation— distributive bargaining and integrative bargaining. As Exhibit 14-5 shows, they differ in their goal and motivation, focus, interests, information sharing, and duration of relationship. Let’s define each and illustrate the differences.

Distributive Bargaining

You see a used car advertised for sale online. It appears to be just what you’ve been looking to buy. You go out to see the car. It’s great, and you want it. The owner tells you the asking price. You don’t want to pay that much. The two of you then negotiate. The negotiating strategy you’re engaging in is called distributive bargaining. Its identifying feature is that it operates under zero-sum conditions—that is, any gain I make is at your expense and vice versa. Every dollar you can get the seller to cut from the car’s price is a dollar you save, and every dollar more the seller can get from you comes at your expense. So the essence of distributive bargaining is negotiating over who gets what share of a fixed pie. By fixed pie, we mean a set amount of goods or services to be divvied up. When the pie is fixed, or the parties believe it is, they tend to bargain distributive.

Probably the most widely cited example of distributive bargaining is labor– management negotiations over wages. Typically, labor’s representatives come to the bargaining table determined to get as much money as possible from management. Because every cent labor negotiates increases management’s costs, each party bargains aggressively and treats the other as an opponent who must be defeated.

The essence of distributive bargaining is depicted in Exhibit 14-6. Parties A and B represent two negotiators. Each has a target point that defines what he or she would like to achieve. Each also has a resistance point, which marks the lowest acceptable outcome—the point below which the party would break off negotiations rather than accept a less favorable settlement. The area between these two points makes up each party’s aspiration range. As long as there is some overlap between A’s and B’s aspiration ranges, there exists a settlement range in which each one’s aspirations can be met.

When you are engaged in distributive bargaining, research consistently shows one of the best things you can do is make the first offer, and make it an aggressive one. Making the first offer shows power; individuals in power are much more likely to make initial offers, speak first at meetings, and thereby gain the advantage. Another reason this is a good strategy is the anchoring bias, mentioned in Chapter 6. People tend to fixate on initial information. Once that anchoring point is set, they fail to adequately adjust it based on subsequent information. A savvy negotiator sets an anchor with the initial offer, and scores of negotiation studies show that such anchors greatly favor the person who sets them.

Say you have a job offer, and your prospective employer asks you what sort of starting salary you’d want. You’ve just been given a great gift—you have a chance to set the anchor, meaning you should ask for the highest salary you think the employer could reasonably offer. Asking for a million dollars is only going to make most of us look ridiculous, which is why we suggest being on the high end of what you think is reasonable. Too often, we err on the side of caution, afraid of scaring off the employer and thus settling for too little. It is possible to scare off an employer, and it’s true employers don’t like candidates to be assertive in salary negotiations, but liking isn’t the same as doing what it takes to hire or retain someone. What happens much more often is that we ask for less than we could have gotten.

Another distributive bargaining tactic is revealing a deadline. Erin is a human resources manager. She is negotiating salary with Ron, who is a highly sought-after new hire. Because Ron knows the company needs him, he decides to play hardball and ask for an extraordinary salary and many benefits. Erin tells Ron the company can’t meet his requirements. Ron tells Erin he is going to have to think things over. Worried the company is going to lose Ron to a competitor, Erin decides to tell Ron she is under time pressure and needs to reach an agreement with him immediately, or she will have to offer the job to another candidate. Would you consider Erin to be a savvy negotiator? Well, she is. Why? Negotiators who reveal deadlines speed concessions from their negotiating counterparts, making them reconsider their position. And even though negotiators don’t think this tactic works, in reality, negotiators who reveal deadlines do better.

Integrative Bargaining

Jake is a 5-year-old Chicago luxury boutique owned by Jim Wetzel and Lance Lawson. In the early days of the business, Wetzel and Lawson had no trouble moving millions of dollars of merchandise from many up-and-coming designers. They developed such a good rapport that many designers would send allotments to Jake without requiring advance payment. When the economy soured in 2008, Jake had trouble selling inventory, and the designers found they were not being paid for what they had shipped to the store. Despite the fact that many designers were willing to work with the store on a delayed payment plan, Wetzel and Lawson stopped returning their calls. Lamented one designer, Doo-Ri Chung, “You kind of feel this familiarity with people who supported you for so long. When they have cash-flow issues, you want to make sure you are there for them as well.” Ms. Chung’s attitude shows the promise of integrative bargaining. In contrast to distributive bargaining, integrative bargaining operates under the assumption that one or more of the possible settlements can create a win–win solution. Of course, as the Jake example shows and we’ll highlight later, integrative bargaining takes “two to tango”—both parties must be engaged for it to work.

In terms of intra-organizational behavior, all things being equal, integrative bargaining is preferable to distributive bargaining because the former builds long-term relationships. Integrative bargaining bonds negotiators and allows them to leave the bargaining table feeling they have achieved a victory. Distributive bargaining, however, leaves one party a loser. It tends to build animosities and deepen divisions when people have to work together on an ongoing basis. Research shows that over repeated bargaining episodes, a “losing” party who feels positive about the negotiation outcome is much more likely to bargain cooperatively in subsequent negotiations. This points to an important advantage of integrative negotiations: even when you “win,” you want your opponent to feel good about the negotiation.

Why, then, don’t we see more integrative bargaining in organizations? The answer lies in the conditions necessary for it to succeed. These include opposing parties who are open with information and candid about their concerns, are sensitive to the other’s needs and trust, and are willing to maintain flexibility. Because these conditions seldom exist in organizations, it isn’t surprising that negotiations often take on a win-at-any-cost dynamic.

There are ways to achieve more integrative outcomes. Individuals who bargain in teams reach more integrative agreements than those who bargain individually because more ideas are generated when more people are at the bargaining table. So, try bargaining in teams. Another way to achieve higher joint-gain settlements is to put more issues on the table. The more negotiable issues introduced into a negotiation, the more opportunity for “logrolling,” where issues are traded off because people have different preferences. This creates better outcomes for each side than if they negotiated each issue individually. A final piece of advice is to focus on the underlying interests of both sides rather than on issues. In other words, it is better to concentrate on why an employee wants a raise rather than focusing just on the raise amount—some unseen potential for integrative outcomes may arise if both sides concentrate on what they really want rather than on the specific items they’re bargaining over. Typically, it’s easier to concentrate on underlying interests when parties to a negotiation are focused on broad, overall goals rather than on immediate outcomes of a specific decision. Negotiations that occur when both parties are focused on learning and understanding the other side tend to also yield higher joint outcomes than those in which parties are more interested in their individual bottom-line outcomes.

Finally, recognize that compromise may be your worst enemy in negotiating a win–win agreement. Compromising reduces the pressure to bargain interactively. After all, if you or your opponent caves in easily, it doesn’t require anyone to be creative to reach a settlement. Thus, people end up settling for less than they could have obtained if they had been forced to consider the other party’s interests, trade off issues, and be creative. Think of the classic example in which two sisters are arguing over who gets an orange. Unknown to them, one sister wants the orange to drink the juice, whereas the other wants the orange peel to bake a cake. If one sister simply capitulates and gives the other sister the orange, they will not be forced to explore their reasons for wanting the orange, and thus they will never find the win–win solution: they could each have the orange because they want different parts of it!

Myth or Science?

“Communicating Well Is More Important in Cross-Cultural Negotiations”

This statement is true. At no time in human history has the contact between members of different cultures been higher. Supply chains are increasingly multinational networks. Large organizations market their products and services in many nations. Global virtual teams work to make their organizations globally competitive. Most of these supplier/ customer/ manager/ employee relationships include negotiating over something. Only the smallest and most local organization is insulated from the need to negotiate cross-culturally.

Because negotiation is an intense communication process, you might think that globalization has placed a premium on communicating well in negotiations. A recent study supported that view, but it also gave important details about what’s necessary to communicate well in cross-cultural negotiations: Clarity —did each party understand each other? Responsiveness —did each party respond quickly and smoothly? Comfort —did each party feel comfortable and trust the other?

The authors found that cross cultural negotiations did have lower communication quality with respect to all three characteristics than did within country negotiations. They also found that higher levels of communication quality contributed to success in cross cultural negotiations—in terms of both the joint gains the parties achieved and their satisfaction with the agreements.

Because communication quality was measured at the end of the negotiation, this study can’t determine cause-and-effect (it’s possible that negotiation outcomes cause the parties to perceive communication more favorably). However, it does suggest that cross-cultural negotiations need not always result in lower outcomes— if the parties commit themselves to communicating clearly, responsively, and in such a way to make the other side comfortable.

The Negotiation Process

Exhibit 14-7 provides a simplified model of the negotiation process. It views negotiation as made up of five steps: (1) preparation and planning, (2) definition of ground rules, (3) clarification and justification, (4) bargaining and problem solving, and (5) closure and implementation.

Preparation and Planning

Before you start negotiating, you need to do your homework. What’s the nature of the conflict? What’s the history leading up to this negotiation? Who’s involved and what are their perceptions of the conflict? What do you want from the negotiation? What are your goals? If you’re a supply manager at Dell Computer, for instance, and your goal is to get a significant cost reduction from your supplier of keyboards, make sure this goal stays paramount in your discussions and doesn’t get overshadowed by other issues. It often helps to put your goals in writing and develop a range of outcomes—from “most hopeful” to “minimally acceptable”—to keep your attention focused.

You also want to assess what you think are the other party’s goals. What are they likely to ask? How entrenched is their position likely to be? What intangible or hidden interests may be important to them? On what might they be willing to settle? When you can anticipate your opponent’s position, you are better equipped to counter arguments with the facts and figures that support your position.

Relationships will change as a result of a negotiation, so that’s another outcome to take into consideration. If you could “win” a negotiation but push the other side into resentment or animosity, it might be wiser to pursue a more compromising style. If preserving the relationship will make you seem weak and easily exploited, you may want to consider a more aggressive style. As an example of how the tone of a relationship set in negotiations matters, consider that people who feel good about the process of a job offer negotiation are more satisfied with their jobs and less likely to turn over a year later regardless of their actual outcomes from these negotiations.

Once you’ve gathered your information, use it to develop a strategy. For example, expert chess players know ahead of time how they will respond to any given situation. As part of your strategy, you should determine your and the other side’s best alternative t o a negotiated agreement, or BATNA. Your BATNA determines the lowest value acceptable to you for a negotiated agreement. Any offer you receive that is higher than your BATNA is better than an impasse. Conversely, you shouldn’t expect success in your negotiation effort unless you’re able to make the other side an offer it finds more attractive than its BATNA. If you go into your negotiation having a good idea of what the other party’s BATNA is, even if you’re not able to meet it you might be able to elicit a change. Think carefully about what the other side is willing to give up. People who underestimate their opponent’s willingness to give on key issues before the negotiation even starts end up with lower outcomes from a negotiation.

Definition of Ground Rules

Once you’ve done your planning and developed a strategy, you’re ready to begin defining with the other party the ground rules and procedures of the negotiation itself. Who will do the negotiating? Where will it take place? What time constraints, if any, will apply? To what issues will negotiation be limited? Will you follow a specific procedure if an impasse is reached? During this phase, the parties will also exchange their initial proposals or demands.

Clarification and Justification

When you have exchanged initial positions, both you and the other party will explain, amplify, clarify, bolster, and justify your original demands. This step needn’t be confrontational. Rather, it’s an opportunity for educating and informing each other on the issues, why they are important, and how you arrived at your initial demands. Provide the other party with any documentation that helps support your position.

Bargaining and Problem Solving

The essence of the negotiation process is the actual give-and-take in trying to hash out an agreement. This is where both parties will undoubtedly need to make concessions.

Closure and Implementation

The final step in the negotiation process is formalizing the agreement you have worked out and developing any procedures necessary for implementing and monitoring it. For major negotiations— from labor–management negotiations to bargaining over lease terms to buying a piece of real estate to negotiating a job offer for a senior management position—this requires hammering out the specifics in a formal contract. For most cases, however, closure of the negotiation process is nothing more formal than a handshake.

Individual Differences in Negotiation Effectiveness

Are some people better negotiators than others? The answer is more complex than you might think. Four factors influence how effectively individuals negotiate: personality, mood/emotions, culture, and gender.

Personality Traits in Negotiation

Can you predict an opponent’s negotiating tactics if you know something about his or her personality? Because personality and negotiation outcomes are related but only weakly, the answer is, at best, “sort of.” Negotiators who are agreeable or extraverted are not very successful in distributive bargaining. Why? Because extraverts are outgoing and friendly, they tend to share more information than they should. And agreeable people are more interested in finding ways to cooperate rather than to butt heads. These traits, while slightly helpful in integrative negotiations, are liabilities when interests are opposed. So the best distributive bargainer appears to be a disagreeable introvert—someone more interested in his or her own outcomes than in pleasing the other party and having a pleasant social exchange. People who are highly interested in having positive relationships with other people, and who are not very concerned about their own outcomes, are especially poor negotiators. These people tend to be very anxious about disagreements and plan to give in quickly to avoid unpleasant conflicts even before negotiations start.

Research also suggests intelligence predicts negotiation effectiveness, but, as with personality, the effects aren’t especially strong. In a sense, these weak links are good news because they mean you’re not severely disadvantaged, even if you’re an agreeable extrovert, when it’s time to negotiate. We all can learn to be better negotiators. In fact, people who think so are more likely to do well in negotiations because they persist in their efforts even in the face of temporary setbacks.

Moods/Emotions in Negotiation

Do moods and emotions influence negotiation? They do, but the way they do appears to depend on the type of negotiation. In distributive negotiations, it appears that negotiators in a position of power or equal status who show anger negotiate better outcomes because their anger induces concessions from their opponents. Angry negotiators also feel more focused and assertive in striking a bargain. This appears to hold true even when the negotiators are instructed to show anger despite not being truly angry. On the other hand, for those in a less powerful position, displaying anger leads to worse outcomes. Thus, if you’re a boss negotiating with a peer or a subordinate, displaying anger may help you, but if you’re an employee negotiating with a boss, it might hurt you. So what happens when two parties have to negotiate and one has shown anger in the past? Does the other try to get revenge and act extra tough, or does this party have some residual fear that the angry negotiator might get angry again? Evidence suggests that being angry has a spillover effect, such that angry negotiators are perceived as “tough” when the parties meet a second time, which leads negotiation partners to give up more concessions again.

Anxiety also appears to have an impact on negotiation. For example, one study found that individuals who experienced more anxiety about a negotiation used more deceptions in dealing with others. Another study found that anxious negotiators expect lower outcomes from negotiations, respond to offers more quickly, and exit the bargaining process more quickly, which leads them to obtain worse outcomes.

All these findings regarding emotions have related to distributive bargains. In integrative negotiations, in contrast, positive moods and emotions appear to lead to more integrative agreements (higher levels of joint gain). This may happen because, as we noted in Chapter 4, positive mood is related to creativity.

Culture in Negotiations

One study compared U.S. and Japanese negotiators and found the generally conflict-avoidant Japanese negotiators tended to communicate indirectly and adapt their behaviors to the situation. A follow-up study showed that, whereas early offers by U.S. managers led to the anchoring effect we noted when discussing distributive negotiation, for Japanese negotiators, early offers led to more information sharing and better integrative outcomes. In another study, managers with high levels of economic power from Hong Kong, which is a high power-distance country, were more cooperative in negotiations over a shared resource than German and U.S. managers, who were lower in power distance. This suggests that in high power-distance countries, those in positions of power might exercise more restraint.

Another study looked at differences between U.S. and Indian negotiators. Indian respondents reported having less trust in their negotiation counterparts than did U.S. respondents. These lower levels of trust were associated with lower discovery of common interests between parties, which occurred because Indian negotiators were less willing to disclose and solicit information. In both cultures, use of question-and-answer methods of negotiation were associated with superior negotiation outcomes, so although there are some cultural differences in negotiation styles, it appears that some negotiation tactics yield superior outcomes across cultures.

Gender Differences in Negotiations

Do men and women negotiate differently? And does gender affect negotiation outcomes? The answer to the first question appears to be no. The answer to the second is a qualified yes.

A popular stereotype is that women are more cooperative and pleasant in negotiations than are men. The evidence doesn’t support this belief. However, men have been found to negotiate better outcomes than women, although the difference is relatively small. It’s been postulated that men and women place unequal values on outcomes. “It is possible that a few hundred dollars more in salary or the corner office is less important to women than forming and maintaining an interpersonal relationship.”

Because women are expected to be “nice” and men “tough,” research shows women are penalized when they initiate negotiations. What’s more, when women and men actually do conform to these stereotypes—women act “nice” and men “tough”—it becomes a self-fulfilling prophecy, reinforcing the stereotypical gender differences between male and female negotiators. Thus, one of the reasons negotiations favor men is that women are “damned if they do, damned if they don’t.” Negotiate tough and they are penalized for violating a gender stereotype. Negotiate nice and it only reinforces and lets others take advantage of the stereotype.

Anger and Conflict Across Cultures

we’ve discussed anger as a negotiating tactic, but do different cultures view the expression of anger differently? Evidence suggest they do, meaning the use of anger is not a consistently wise negotiation strategy.

One study explicitly compared how U.S. and Chinese negotiators react to an angry counterpart. Chinese negotiators increased their use of distributive negotiating tactics, whereas U.S. negotiators decreased their use of these tactics. That is, Chinese negotiators began to drive a harder bargain once they saw that their negotiation partner was becoming angry, whereas U.S. negotiators actually capitulate somewhat in the face of angry demands.

Why do East Asian negotiators respond more negatively to angry negotiators? In a second study, researchers found that European Americans tended to give larger concessions when faced with an angry negotiation partner, whereas Asian negotiators again gave smaller ones.

This difference may occur because individuals from East Asian cultures feel that using anger to get your way in a negotiation is not a legitimate tactic, so they respond by refusing to cooperate when their opponents become upset.

What’s My Negotiating Style?

Evidence also suggests women’s own attitudes and behaviors hurt them in negotiations. Managerial women demonstrate less confidence than men in anticipation of negotiating and are less satisfied with their performance afterward, even when their performance and the outcomes they achieve are similar to those for men. Women are also less likely than men to see an ambiguous situation as an opportunity for negotiation. It appears that women may unduly penalize themselves by failing to engage in negotiations that would be in their best interests. Some research suggests that women are less aggressive in negotiations because they are worried about backlash from others. There is an interesting qualifier to this result: women are more likely to engage in assertive negotiation when they are bargaining on behalf of someone else than when they are bargaining on their own behalf.

Third-Party Negotiations

To this point, we’ve discussed bargaining in terms of direct negotiations. Occasionally, however, individuals or group representatives reach a stalemate and are unable to resolve their differences through direct negotiations. In such cases, they may turn to a third party to help them find a solution. There are three basic third-party roles: mediator, arbitrator, and conciliator.

A mediator is a neutral third party who facilitates a negotiated solution by using reasoning and persuasion, suggesting alternatives, and the like.

Using Empathy to Negotiate More Ethically

You may have noticed that much of our advice for negotiating effectively depends on understanding the perspective and goals of the person with whom you are negotiating. Preparing checklists of your negotiation partner’s interests, likely tactics, and BATNA have all been shown to improve negotiation outcomes. Can these steps make you a more ethical negotiator as well? Studies suggest that it might.

Researchers asked respondents to indicate how much they tended to think about other people’s feelings and emotions and to describe the types of tactics they engaged in during a negotiation exercise. More empathetic individuals consistently engaged in fewer unethical negotiation behaviors like making false promises and manipulating information, and emotions. To put this in terms familiar to you from personality research, it appears that individuals who are higher in agreeableness will be more ethical negotiators.

When considering how to improve your ethical negotiation behavior, follow these guidelines:

1. Try to understand your negotiation partner’s perspective, not just by understanding cognitively what the other person wants, but by empathizing with the emotional reaction he or she will have to the possible outcomes.

2. Be aware of your own emotions, because many moral reactions are fundamentally emotional. One study found that engaging in unethical negotiation strategies increased feelings of guilt, so by extension, feeling guilty in a negotiation may mean you are engaging in behavior you’ll regret later.

3. Beware of empathizing so much that you work against your own interests. Just because you try to understand the motives and emotional reactions of the other side does not mean you have to assume the other person is going to be honest and fair in return. So be on guard.

Mediators are widely used in labor–management negotiations and in civil court disputes. Their overall effectiveness is fairly impressive. The settlement rate is approximately 60 percent, with negotiator satisfaction at about 75 percent. But the situation is the key to whether mediation will succeed; the conflicting parties must be motivated to bargain and resolve their conflict. In addition, conflict intensity can’t be too high; mediation is most effective under moderate levels of conflict. Finally, perceptions of the mediator are important; to be effective, the mediator must be perceived as neutral and non-coercive.

An arbitrator is a third party with the authority to dictate an agreement. Arbitration can be voluntary (requested by the parties) or compulsory (forced on the parties by law or contract). The big plus of arbitration over mediation is that it always results in a settlement. Whether there is a negative side depends on how heavy-handed the arbitrator appears. If one party is left feeling overwhelmingly defeated, that party is certain to be dissatisfied and the conflict may resurface at a later time.

A conciliator is a trusted third party who provides an informal communication link between the negotiator and the opponent. This role was made famous by Robert Duval in the first Godfather film. As Don Corleone’s adopted son and a lawyer by training, Duval acted as an intermediary between the Corleone's and the other Mafioso families. Comparing conciliation to mediation in terms of effectiveness has proven difficult because the two overlap a great deal. In practice, conciliators typically act as more than mere communication conduits. They also engage in fact-finding, interpret messages, and persuade disputants to develop agreements.

Summary and Implications for Managers

While many people assume conflict lowers group and organizational performance, this assumption is frequently incorrect. Conflict can be either constructive or destructive to the functioning of a group or unit. As shown in Exhibit 14-8, levels of conflict can be either too high or too low to be constructive. Either extreme hinders performance. An optimal level is one that prevents stagnation, stimulates creativity, allows tensions to be released, and initiates the seeds of change without being disruptive or preventing coordination of activities.

What advice can we give managers faced with excessive conflict and the need to reduce it? Don’t assume one conflict-handling strategy will always be best! Select a strategy appropriate for the situation. Here are some guidelines:

● Use competition when quick decisive action is needed (in emergencies), when issues are important, when unpopular actions need to be implemented (in cost cutting, enforcement of unpopular rules, discipline), when the issue is vital to the organization’s welfare and you know you’re right, and when others are taking advantage of noncompetitive behavior.

● Use collaboration to find an integrative solution when both sets of concerns are too important to be compromised, when your objective is to learn, when you want to merge insights from people with different perspectives or gain commitment by incorporating concerns into a consensus, and when you need to work through feelings that have interfered with a relationship.

● Use avoidance when an issue is trivial or symptomatic of other issues, when more important issues are pressing, when you perceive no chance of satisfying your concerns, when potential disruption outweighs the benefits of resolution, when people need to cool down and regain perspective, when gathering information supersedes immediate decision, and when others can resolve the conflict more effectively.

● Use accommodation when you find you’re wrong, when you need to learn or show reasonableness, when you should allow a better position to be heard, when issues are more important to others than to yourself, when you want to satisfy others and maintain cooperation, when you can build social credits for later issues, when you are outmatched and losing (to minimize loss), when harmony and stability are especially important, and when employees can develop by learning from mistakes.

● Use compromise when goals are important but not worth the effort of potential disruption of more assertive approaches, when opponents with equal power are committed to mutually exclusive goals, when you seek temporary settlements to complex issues, when you need expedient solutions under time pressure, and as a backup when collaboration or competition is unsuccessful.

● Distributive bargaining can resolve disputes, but it often reduces the satisfaction of one or more negotiators because it is confrontational and focused on the short term. Integrative bargaining, in contrast, tends to provide outcomes that satisfy all parties and build lasting relationships.

● Make sure you set aggressive negotiating goals and try to find creative ways to achieve the objectives of both parties, especially when you value the long-term relationship with the other party. That doesn’t mean sacrificing your self-interest; rather, it means trying to find creative solutions that give both parties what they really want.

Player–Owner Disputes Are Unnecessary

Point

It seems there’s always a major sports league on the verge of a strike. In the past few years, Major League Baseball (MLB), the National Basketball Association (NBA), the National Hockey League (NHL), and the National Football League (NFL) have had major labor disputes. When greed meets greed, guess who loses? Yes, the fans.

A few years ago, an entire NHL season was canceled due to a labor dispute (NHL owners staged a work stoppage or “lockout” that lasted 311 days). The main issue? How to divide the more than $2 billion in revenues generated by the league. The average NHL player earns an annual salary of $1.35 million, and that doesn’t include income from endorsements, appearances, merchandise, and so on. The owners aren’t hurting, either. Most are millionaires many times over. Los Angeles Kings owner Philip Anschutz is reported to have a net worth of $7 billion.

The NFL is a variation on the same theme. During the 2011 lockout, during which the player’s union temporarily disbanded so it could claim it wasn’t a union, the owners and players fought over how to divide $9 billion in revenues. The average player makes $1.9 million a year. The average net worth of an NFL owner is $1.4 billion. And each side squabbles over getting more.

Yes, players get injured. Some lives are permanently damaged. But do you think being a construction worker, farmer, police officer, fisher, or loading-dock worker is a piece of cake?

How often do these groups strike? They earn far less than professional athletes (the average fisher earns 2 percent of the average salary of an NHL player!), but they do work year-round, which is much more dangerous.

Meanwhile, ticket prices for sports events continue to soar. In the past 20 years, major league ticket prices have increased at double the rate of inflation. But what are the owners and players focused on? How to line their pockets even further. Was it any surprise when Minnesota Vikings running back Adrian Peterson, fuming over the dispute, called NFL players “modern day slaves”? (He earns more than $10 million a year.)

Billionaires feuding with millionaires. These are unseemly—and unnecessary—conflicts.

COUNTERPOINT

Sports teams are an easy target. It’s true that most major league players are well rewarded for their exceptional talents and the risks they take. It’s also true that owners who are able to invest in teams are wealthy—investors usually are. But do the resources on each side mean their conflict should just melt away? The reason these disputes happen is that real interests and real money is at stake.

The operation of major league sports is a complex business. The owners and players can be caricatured, but if you delve a bit deeper, you can see that their disputes are fairly natural. Let’s look at hockey. NHL clubs spent 76 percent of their gross revenues on players’ salaries and collectively lost $273 million the year before the lockout. The NHL tried to convince players to accept a wage structure that linked player salaries to league revenues, guaranteeing the clubs “cost certainty.” Understandably, the players’ union resisted, arguing that “cost certainty” was nothing more than another term for a salary cap. They argued in favor of retaining the “market-based” system in which players individually negotiated contracts with teams, and teams had complete control over how much it spent on players.

The NFL lockout hinged on a number of issues that divided the owners and players, including the owners’ desire for an 18- game season (with no increase in player compensation), the way costs are considered in revenue sharing, and pensions for retired players. These aren’t trivial issues, and neither are they entirely different from issues that arise in other labor–management disputes.

Finally, it’s easy to argue that major league sports have an unusual number of labor disputes, but that’s not necessarily accurate. Did you hear about the 2011 Saskatchewan Teachers Federation strike? Sports interest us (which is why there’s so much money involved), and thus we’re more likely to notice major league sports labor disputes, but that doesn’t prove they’re more common.

Yes, owners are rich and players make a lot of money. We’re the ones who helped them do it, and we shouldn’t fault them for wanting more of what we gave them.

QUESTIONS FOR REVIEW

1 What is conflict?

2 What are the differences among the traditional, interactionist, and managed-conflict views of conflict?

3 What are the steps of the conflict process?

4 What is negotiation?

5 What are the differences between distributive and integrative bargaining?

6 What are the five steps in the negotiation process?

7 How do the individual differences of personality and gender influence negotiations?

8 What are the roles and functions of third-party negotiations?

EXPERIENTIAL EXERCISE A Negotiation Role-Play

This role-play is designed to help you develop your negotiating

skills. The class is to break into pairs. One person

will play the role of Alex, the department supervisor. The

other person will play C. J., Alex’s boss. Both participants

should read “The Situation,” “The Negotiation,” and then

their role only.

The Situation

Alex and C. J. work for Nike in Beaverton, Oregon. Alex supervises a research laboratory. C. J. is the manager of research and development. Alex and C. J. are former college runners who have worked for Nike for more than 6 years. C. J. has been Alex’s boss for 2 years. One of Alex’s employees has greatly impressed Alex. This employee is Lisa Roland. Lisa was hired 11 months ago. She is 24 years old and holds a master’s degree in mechanical engineering.

Her entry-level salary was $57,500 per year. Alex told her that, in accordance with corporation policy, she would receive an initial performance evaluation at 6 months and a comprehensive review after 1 year. Based on her performance record, Lisa was told she could expect a salary adjustment at the time of the 1-year evaluation.

Alex’s evaluation of Lisa after 6 months was very positive. Alex commented on the long hours Lisa was putting in, her cooperative spirit, the fact that others in the lab enjoyed working with her, and that she was making an immediate positive impact on the project assigned to her. Now that Lisa’s first anniversary is coming up, Alex has again reviewed Lisa’s performance. Alex thinks Lisa may be the best new person the R&D group has ever hired.

After only a year, Alex has ranked Lisa as the number-3 performer in a department of 11.Salaries in the department vary greatly. Alex, for instance, has a base salary of $86,000, plus eligibility for a bonus that might add another $7,000 to $12,000 a year. The salary range of the 11 department members is $48,400 to $76,350. The individual with the lowest salary is a recent hire with a bachelor’s degree in physics. The two people whom Alex has rated above Lisa earn base salaries of $69,200 and $76,350. They’re both 27 years old and have been at Nike for 3 and 4 years, respectively. The median salary in Alex’s department is $64,960.

Alex’s Role

You want to give Lisa a big raise. Although she’s young, she has proven to be an excellent addition to the department. You don’t want to lose her. More importantly, she knows in general what other people in the department are earning, and she thinks she’s underpaid. The company typically gives 1-year raises of 5 percent, although 10 percent is not unusual, and 20 to 30 percent increases have been approved on occasion. You’d like to get Lisa as large an increase as C. J. will approve.

C. J.’s Role

All your supervisors typically try to squeeze you for as much money as they can for their people. You understand this because you did the same thing when you were a supervisor, but your boss wants to keep a lid on costs. He wants you to keep raises for recent hires generally in the 5 to 8 percent range. In fact, he’s sent a memo to all managers and supervisors saying this. He also said that managers will be evaluated on their ability to maintain budgetary control. However, your boss is also concerned with equity and paying people what they’re worth. You feel assured that he will support any salary recommendation you make, as long as it can be justified. Your goal, consistent with cost reduction, is to keep salary increases as low as possible.

The Negotiation

Alex has a meeting scheduled with C. J. to discuss Lisa’s performance review and salary adjustment. Take a couple of minutes to think through the facts in this exercise and to prepare a strategy. Then take up to 15 minutes to conduct your negotiation. When your negotiation is complete, the class will compare the various strategies used and pair outcomes.

ETHICAL DILEMMA The Lowball Applicant

Consider this real-life scenario:

A freelance project manager, I was hired to find someone to fill a highly specialized job. When I asked an impressive candidate her pay rate, she named a figure far below the industry standard. I could have rejected her for this lack of sophistication or exploited her low bid. Instead, I coached her to a figure nearly twice her bid yet about 30 percent below my client’s budget. I did not inform my client about the discrepancy, and she was hired at the rate I recommended. Did I do wrong by either party?

Questions

1. In coaching the applicant to request a higher salary, did the project manager work against the interests of the client organization by which he or she is employed? Why or why not?

2. Could the manager have avoided this dilemma by proposing a salary figure that was the industry norm? Would that be in the interests of the client organization?

3. If you were in the project manager’s situation, would you have handled this negotiation differently? If so, how so?

CASE INCIDENT 1 Choosing Your Battles

While much of this chapter has discussed methods for achieving harmonious relationships and getting out of conflicts, it’s also important to remember there are situations in which too little conflict can be a problem. As we noted, in creative problem-solving teams, some level of task conflict early in the process of formulating a solution can be an important stimulus to innovation.

However, the conditions must be right for productive conflict. In particular, individuals must feel psychologically safe in bringing up issues for discussion. If people fear that what they say is going to be held against them, they may be reluctant to speak up or rock the boat. Experts suggest that effective conflicts have three key characteristics: they should (1) speak to what is possible, (2) be compelling, and (3) involve uncertainty.

So how should a manager “pick a fight?” First, ensure that the stakes are sufficient to actually warrant a disruption. Second, focus on the future, and on how to resolve the conflict rather than on whom to blame. Third, tie the conflict to fundamental values. Rather than concentrating on winning or losing, encourage both parties to see how successfully exploring and resolving the conflict will lead to optimal outcomes for all. If managed successfully, some degree of open disagreement can be an important way for companies to manage simmering and potentially destructive conflicts.

Do these principles work in real organizations? The answer is yes. Dropping its old ways of handling scheduling and logistics created a great deal of conflict at Burlington Northern Santa Fe railroad, but applying these principles to managing the conflict helped the railroad adopt a more sophisticated system and recover its competitive position in the transportation industry. Doug Conant, CEO of Campbell Soup, increased functional conflicts in his organization by emphasizing a higher purpose to the organization’s efforts rather than focusing on whose side was winning a conflict. Thus, a dysfunctional conflict environment changed dramatically and the organization was able to move from one of the world’s worst-performing food companies to one that was recognized as a top performer by both the Dow Jones Sustainability Index and Fortune 500 data on employee morale.

Questions

1. How would you ensure sufficient discussion of contentious issues in a work group? How can managers bring unspoken conflicts into the open without making them worse?

2. How can negotiators utilize conflict management strategies to their advantage so that differences in interests lead not to dysfunctional conflicts but rather to positive integrative solutions?

3. Can you think of situations in your own life in which silence has worsened a conflict between parties? What might have been done differently to ensure that open communication facilitated collaboration instead?

CASE INCIDENT 2 Mediation: Master Solution to Employment Disputes?

We typically think of mediation as the province of marital counselors and labor strife. More organizations use mediation to resolve conflicts than you might think. In fact, in the United States, Canada, Great Britain, Ireland, and India, mediation is growing rapidly as a means to settle employment disputes. We introduced mediation in this chapter; let’s look at some examples when it has succeeded and when it has failed.

Mediation has often succeeded:

● Many states have experimented with mediation as an alternative to traditional trials to resolve legal disputes. The state of Maryland found in a pilot program that 58 percent of appellate cases could be resolved through mediation and that mediation was both cheaper and faster than a traditional courtroom resolution.

● The Equal Employment Opportunity Commission (EEOC), the federal agency that oversees employment discrimination complaints in the United States, uses mediation extensively. Safeway, the third-largest U.S. supermarket chain, uses the EEOC to mediate numerous employment disputes. Says Donna Gwin, Safeway’s Director of Human Resources, “Through mediation, we have had the opportunity to proactively resolve issues and avoid potential charges in the future. We have seen the number of charges filed with EEOC against us actually decline. We believe that our participating in mediation and listening to employees’ concerns has contributed to that decline.”

However, mediation doesn’t always work:

● In 2008, the Screen Actors Guild (SAG) and the Alliance of Motion Picture and Television Producers (AMPTP), representing some 350 studios and production companies, engaged in prolonged negotiations over a new labor agreement. The negotiations failed, and the parties agreed to mediation. However, mediation also failed, and in response SAG asked its members to approve a strike authorization.

● When David Kuchinsky, the former driver for New York Knicks center Eddy Curry, sued Curry for sexual harassment, discrimination, and failure to pay $93,000 in wages and reimbursements, the parties agreed to mediation. However, after the sides failed to reach a settlement during mediation, Kuchinsky reinstated his lawsuit, and Curry filed a $50,000 countersuit.

Questions

1. Drawing from these examples, what factors do you think differentiate occasions when mediation was successful and when it failed?

2. One successful mediator, Boston’s Paul Finn, argues that if the disputing parties are seeking justice, “It’s best to go somewhere else.” Why do you think he says that?

3. Do you think a mediator should find out why the parties want what they want? Why or why not?

4. The EEOC reports that whereas 85 percent of employees agree to mediate their charges, employers agree to mediate only 30 percent of the time. Why do you think this disparity exists?