15.665 Power and Negotiation

Agenda

• Telepro Negotiation Discussion • Federated Science Negotiation Challenge • Negotiation Results • Federated Science Debrief next week

Next week 1. Negotiating Change-4 person

• Pre-exercise increased word limit 700 words

2. Pre-exercise Regular format 3. Clearly identify parts of assignment

• My aspiration is • My BATNA is • My reservation point is • My strengths/sources of power are • My weaknesses are • Emotions: I feel xxx • I can manage my feeling by

Telepro NegotiationDebrief

Riding, Gary and Schroth, Holly, Telepro, Dispute Resolution Research Center, Kellogg School of Management.

This is a dispute between a supervisor and an employee in which a third party, the supervisor's manager, becomes involved. The case can be used to teach mediation in the management context. It also illustrates how power and status differences between parties can be managed in a mediated context. Preparation: 15-20 min. Negotiation: 70 min.

When do you need a third-party?

• Deadlock or impasse • Unproductive tension and hostility • Anger and resentment overwhelm negotiators • Mistrust and suspicion are high

Third-Party Intervention

The goal of third-party intervention is to resolve a dispute.

• Mediators influence process

• Arbitrator determine outcome

What can a third-party do to assist?

• Reduce of tension • Control the number of issues • Enhance communication • Establish common ground • Highlight the desirability of certain decision

criteria • Determine the outcome of a dispute

Third-Party Intervention

• Mediators influence process

• Arbitrator determine outcome

Mediator vs. Arbitrators

Mediators seek to have the parties themselves develop and endorse the agreement.

Arbitrators are most interested in outcomes and have the power to render a binding decision.

Mediator vs. Arbitrators

Mediators influence process Benefits Satisfaction Commitment to agreement

Arbitrator determine outcome Pitfalls Chilling effect (final offer) Dependence Less commitment to settlement (binding)

Mediation Effectiveness

•Identifying issues

•Uncovering underlying interests and concerns

•Setting Agendas

•Packaging, sequencing, and prioritizing agenda items

•Interpreting and shaping proposals

•Making suggestions for possible settlements

Telepro Dispute ResolutionYour Outcomes

Dave’s View of Process Dave 1 Dave2

Identify the issues 8.4 6.8 Reduce Tension Uncover concerns 6.8 7.7Set the agenda Package agenda 6.8 6.8 Shape proposal 7.0 8.7 Make suggestions 7.2 9.0 Make settlement attractive 5.8 7.0

TOTAL 57.4 59.5

Telepro

Satisfaction as Effectiveness

Jeff

Kris

Satisfaction?

Dave 1 Dave2 Process

Outcome

54/80

9/10 8/10

50/80

Process

Outcome

55/80

8/10 6/10

45/80

Satisfaction?

Dave 1 Dave2(med.) (arb.)

Jeff 9/10 Outcome 8/10

Kris 8/10 Outcome 6/10

Satisfaction?

Dave 1 Dave2 (med.) (arb.)

Jeff 54/80 Process 50/80

Kris 55/80 Process 45/80

Relationship Rating Received by Role

Group: Dave 1 Dave2 (med.) (arb.)

Jeff 4.68 4.46

Kris 4.56

Dave 5.20 5.38

Relationship Rating Received by Role

Group: Dave 1 Dave2 (med.) (arb.)

Jeff 4.68 4.46

Kris 4.30 4.82

Dave 5.20 5.38

Perspective Taking Rating Received by Role

Group: Dave 1 Dave2 (med.) (arb.)

Jeff 5.56 3.92

Dave 6.47 5.95

Perspective Taking Rating Received by Role

Group: Dave 1 Dave2 (med.) (arb.)

Jeff 5.56 3.92

Kris 4.23 4.83

Dave 6.47 5.95

Trust Rating Received by Role

Group: Dave 1 Dave2 (med.) (arb.)

Jeff 3.83 4.15

Kris 4.35 4.63

Dave 5.02 5.66

Managers As Third-Parties

Mediation increases satisfaction and commitment.

Mediation can be misperceived as indecision or lack of leadership by subordinates.

Arbitration, Rights, Power

Power The trouble with

•Power -- impact if balance of power shifts

• dissatisfaction

• resentment

• revenge

• non-compliance

Rights

The trouble with Rights

• fairness of standard can be difficult to establish

Rights and Power 1.Power can bring players to the table

• e.g., environmental claims about hazardous waste

2. Only adjudication can authoritatively resolve some issues

•e.g., Supreme Court Cases

Fisher, R., Ury, W, and Patton, B., Getting to Yes: Video Workshop on Negotiation, Harvard Negotiation Project.

Interests

The trouble with Interests

•Individual must be willing to come to the table

The benefit of Interests

•Can help uncover hidden problems

•Identify trade-offs /win-win solution

•Higher satisfaction with solution

5 Cures for Negotiation Breakdowns

(Thompson, L., 2001 & Lewicki, R.J., 1999 & 2001)

1. Reduce Tension •Acknowledge Other’s feelings •Separate Parties •reciprocal de-escalation (a mutual good faith gesture)

2. Improve communication •Role reversal •Perspective Taking

3. Controlling Issues •reduce the number of parties and substantive issues •state principles •fractionate big issues (unbundle) •depersonalize

5 Cures for Negotiation Breakdowns (Thompson, L., 2001 & Lewicki, R.J., 1999 & 2001)

4. Establish Commonalities • super ordinate goals • common enemies • agree on rules and procedures • provide integrative frameworks

5. Make preferred option more desirable •framing a “yes able” proposal •de-emphasize demands and threats •sweeten the offer •use objective criteria

Disputes Take A ways

1. Disputes involve a claim and its rejection

2. Disputes can be resolved through the use of interests, rights or power.

3. Interest-based solutions are most effective in terms of transaction costs, satisfaction with outcomes, relationship effects and recurrence

Assisted Negotiation Take A ways

Third-party involvement represents the failure of the negotiation process.

Third parties can • provide breathing space

•Re-establish communication

•Refocus on substantive issues

•Repair strained relationships

• recommend time limits

•Salvage sunk costs of stalled negotiations

•Increase level of negotiator satisfaction

Federated ScienceNegotiation Challenge

1. You have 20 minutes to prepare the case on your own.

2. You will have 10 minutes to plan further with a peer

3. You will have exactly 40 minutes to negotiate. 4. You will have 10 minutes to fill out the post

negotiation paperwork and white board. 5. We will go over outcomes. Debrief next week.

Mannix, E., Federated Science Fund, 1997, Dispute Resolution Research Center, Kellogg School of Management.

Coalitions (Thompson, L., 2001)

--Unite people for a single purpose

Your coalition partners will vary in their agreement With your objectives and in their trust in you.

First Define your Objectives!

Federated Science: The Core Solution

(Thompson, L., 2001)

Step 1. Solve system of equations

Step 2. Calculate the amount you are short

Step 3. Reduce each parties share by 1/3 of amt. short

The Core Solution -equal reduction

(Thompson, L., 2001)

Step 1. Solve system of equationsStockman= $260,000Turbo= $180,000United= $120,000

Step 2. Calculate the amount you are short and divide by number of parties. $560,000-$480,000=$80,000 $80,000/3=$26,666.67 Step 3. Reduce each parties share equally. Stockman= $233,333.3 Turbo= $153,333.3 United= $93,333.3

The Core Solution with a Twist -equitable reduction

Step 1. Solve system of equationsStockman= $260,000Turbo= $180,000United= $120,000

Step 2. Calculate the amount you are short and $560,000-$480,000=$80,000

Step 3. Reduce each parties share proportionally. Stockman= $260,000 – (80,000*.464)=222,880 Turbo= $180,000– (80,000*.322)=154,240 United= $120,000– (80,000*.212)=102,880

The Shapley Model--determine value added

Joining Order Stockman Value added

Turbo Value added

United Value added

STU 0 440 40

SUT 0 380

TUS 300 0

TSU 0 40 UST 100 0

UTS 300 0 Total/6 1300/6 940/6 640/6

Average

Shapley, L. S.1977.

The Shapley Model --determine value added

Joining Order Stockman Value added

Turbo Value added

United Value added

STU 0 440 40

SUT 0 100 380

TUS 300 0 180

TSU 440 0 40 UST 380 100 0

UTS 180 300 0 Total/6 1300/6 940/6 640/6

Average 216,667 156,667 106,667

Shapley, L. S.1977.

Raiffa’s Hybrid Model --the mean of the Shapley and core models

Raiffa, H. (1982)

Stockman

Turbo

United

Core Shapley Hybrid

216,667

156,667

106,667

233,333

153,333

93, 333

225,000

155,000

100,000

Next week: Coalition Politics --Unite people for a single purpose

Your coalition partners will vary in their agreement With your objectives and in their trust in you.

Coalition partners may be 1. Allies or Bedfellows 2. Opponents or adversaries 3. Fence sitters