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CHAPTER 5: NEGOTIATION MODELS, STRATEGIES, AND TACTICS
LABOR NEWS: UNITED AUTO WORKERS AND FORD, GM, AND CHRYSLER PROVIDE
POSSIBLE NEW DIRECTION FOR U.S. LABOR CONTRACTS
CHAPTER 5: OUTLINE
I. Negotiating Sessions: “At The Table”
A. Exact process they choose to follow depends on their past history together, their
individual skills, and negotiating styles (Figure 5-1)
B. Opening session
2. May use the first session to discuss the “Big Picture” such as deadlines, outside
influences, and general economic conditions.
4. Order of discussion of bargaining items.
C. Ground Rules
1. The “5 Ws”
a. Who speaks for the parties
D. Recognizing Bargaining Tactics
2. Interdependence
4. Packaging
6. Caucusing
8. Compromise
9. Saving face
E. “Tips from the Experts” What are three classic mistakes to be avoided at the negotiations
table?
II. Critical Elements In Negotiations
A. Information
2. BATNA—the most important single piece of information in a negotiation: Best
B. Time
1. Pareto’s Law or the “80/20 rule”—80 percent of what is accomplished occurs as
C. Power
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1. The negotiation process is about power, ego, leverage, and saving face.
3. BATNA does not have to be objectively “better” than the other party’s BATNA
to give one negotiating power if a party believes it is.
5. To increase bargaining power, negotiators need to improve one’s alternatives to a
settlement, or generating new alternatives constantly throughout the negotiation.
III. Ethics in Negotiations
A. Behavioral rules
B. Ethics of purpose
IV. Bargaining Strategies
A. Distributive Bargaining
1. Process when two parties strive to divide a fixed pool of resources, such as
2. Described as
a. “Fixed sum” game and often the limited resource is termed a “fixed pie.”
3. Employs a variety of tactics
a. Making threats
4. Model identified by three components
a. Parties view each other as adversaries.
5. Explained by five key elements
a. Target point.The optimal goal or objective a negotiator sets for an issue,
the target point, is the point at which the negotiator would accept an
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6. Opening offers
a. Set the outer limits of the bargaining or “anchor” the discussion.
7. Bracketing
a. The process of moving toward a middle point between the opening offers
(or brackets).
8. Norms
a. Negotiations are guided by social norms and accepted practices.
b. Common negotiation norms which might influence behavior include:
i Relational norms, “exchange” relationship such as a one-time
car purchase.
ii Fairness norms, a need to maintain an appearance of consistency
and fairness.
• The equality norm, which negotiators often call the “50–
iii. Reciprocity, tendency to respond to the actions of others with
equal or similar actions
iv. Good-faith bargaining
• Active participation with an intention to reach an
agreement
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information
v. Figure 5-5 provides a summary of each norm and the basis upon
which a negotiator will develop and reacts to a proposal.
9. Framing Positions
a. Presenting issues to the other side in a context that is convincing
b. Four types of frames
c. Reframe offers “change the frame around the picture” so it satisfies the
interests of both parties
d. Effective questioning and listening to responses
i Ask why
e. Reframe personal attacks
B. Integrative Bargaining (IB)
1. Cooperative approach to negotiation or conflict resolution in which the parties
2. Described as
a. “Win–win”, “mutual-gains,” or “integrative” approach
3. Integrated negotiator strives to
4. Common differences between distributive and interest-based bargaining
techniques Table 5-3
5. Integrated Negotiation Process, an IBB model that tries to divide the issues into
general groups
6. Principled negotiation from Getting to Yes has four key components
a. Positions v. interests
i A position may be defined as the specific demand which a party
has chosen, while their interest includes the underlying needs,
b. Separate people from issues
i Avoid emotional outbursts or anger.
ii Don’t discuss an issue as a personal basis.
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7. Interest-based Bargaining (IBB) employs problem-solving techniques
a. Joint data collection
b. Brainstorming
c. Joint task forces
d. Methods of developing mutually agreeable outcomes
i Sharing information. Both sides fully share all relevant
information including economic forecasts, financial data,
options. Both parties commit to IBB.
8. IBB bargaining process includes five steps.
a. Bringing the parties together in joint sessions to identify and clarify the
issues to be resolved.
b. Parties caucusing separately to specify their own interests on each issue
and present their list of interests without justification, or criticism of the
other party’s interests.
c. Brainstorming for as many creative options as possible to solve each
issue.
d. Evaluation of all the options developed in step three.
i Is it feasible—can the option actually be implemented.
9. IBB advantages compared to traditional negotiation methods.
a. Improved communications and thus are more likely to fully understand
the underlying interests of the other party.
10. IBB disadvantages may include
a. Use a great deal of time discussing interests and possible options solution
could be reached just as quickly using more traditional methods.
11. Union and Management Negotiators’ Reports on IBB Activities
C. The Categorization Method
1. The Five Steps of The Categorization Method (Figure 5-7)
3. Basic interest-based method
a. Use active listening.
i Listen closely to the other party’s explanation without
interrupting, disputing a fact or belief, or objecting to a
statement.
b. Ask open-ended questions about the level of need, interest, or concern of
the other party.
i Ask why an issue is important.
c. Assert your own needs and explain your interests and positions on issues.
d. Refrain from making personal attacks on the other people or criticizing
their positions.
e. Develop a common list of all issues.
i Compatible—issues with identical or very similar goals and thus
which may be settled in a distributive process.
f. The “trade–off” of issues is the heart of the integrative process.
g. The resolution of the last issue(s), which often is accomplished through
distributive bargaining.
4. Economic Matrix based on Multiple Equivalent Simultaneous Offer
a. Provides other side with multiple offers of approximately equal value
V. Reaching Agreement
A. Point of Crisis
1. “The crunch,” or a point of no return.
decision.
B. The Closing Stage
1. Knowing that an agreement has been reached, the people involved become
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2. Last-minute concessions may be requested, classic “Nickel and Diming” tactic.
a. If a party believes the other side is anxious to settle, they might insist on
the addition of one, small overlooked, item—a “nickel or dime” item
b. How to react
i. Silence. Say nothing, any response may be perceived as a sign of
another approximately equal concession.
C. Tentative Agreement serves three purposes
1. Communication. People often hear what they want to hear, they don’t listen
2. Commitment. Reducing an agreement to writing often causes the parties to
commit themselves to the agreement. Just seeing the terms in “black and white”
3. Contract. Putting the many individual agreements made on issues during
negotiations into one written, signed, and dated document, creates an enforceable
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CHAPTER 5: END CASE DISCUSSION
Case Study 5.1: Good-Faith Negotiations
Decision:
The ALJ found that the company did not violate the National Labor Relations Act by refusing to sign the
tentative agreement. The ALJ believed that the company’s administrator had made it clear to the union
that the tentative agreement had to be approved by the president before it became effective. That step
never took place. So the company was under no duty to sign the CBA.
On the issue of rescinding the wage increase, the ALJ did find that the company violated the National
Labor Relations Act. The judge recognized that the company had made a mistake in implementing the
wage increase and that it had the right to correct the mistake; however, it had to notify the union and
bargain over how the mistake would be corrected.
Questions for Discussion
1. Do you believe that the company was or was not bound to sign the agreement? Explain.
2. Explain why it might be an unfair labor practice for the company to rescind the pay raise without
first meeting with the union.
3. It is not an unfair labor practice for an employer to send negotiators to the bargaining table
without the authority to give final approval to the negotiated terms, but is it a good or a bad idea?
Explain.
Bad: Obviously, in this instance, one would question the president’s commitment to the
negotiation process because she did not participate in the negotiations themselves, was absent
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Case Study 5.2: Selection of Bargaining Team Members
Decision:
The Board found that the Company’s refusal to grant members of the Union’s negotiations committee
unpaid leave to permit them to engage in bargaining during working hours, while refusing the Union’s
request to bargain during nonworking hours, was an unlawful interference with the Union’s selection of
its bargaining representatives. Although an employer is not compelled to yield to a Union’s request for
negotiations outside normal business hours, it cannot at the same time refuse to allow unpaid time off to
Union representatives. The employer is free to accept the Union’s request to bargain during nonworking
hours in order to reduce the amount of unpaid leave and to minimize the effects of the unavailability
during their regular working hours. However, the Company cannot have it both ways.
The Company’s assertion that it has never denied employee-members of the Union’s negotiating
committee time for negotiations is correct. However, that does not address the ramifications of the
Company’s actions for the employees on the Union’s committee. What the Company’s actions amounted
to was a requirement that the employee-members utilize what in essence is their vacation time just to be
able to participate in negotiations. To allow the Company to force the employee-members to utilize their
personal/vacation leave time for negotiations is dictating who will make up the Union’s committee. Some
employees who might otherwise be willing to participate may nonetheless not be willing to surrender
their vacation time to do so.
The Company’s contention it cannot give unpaid leave to the six (or less) employee-members
because it would disrupt their scheduling is unpersuasive. First, this is a workforce of approximately 130
employees. Second, the employee-members come from different work groups or departments thus the
impact, if any, is minimal, and could be avoided all together by bargaining weekend days. Finally, the
Company’s contention it cannot give unpaid leave to employee–members of the Union’s negotiating
committee because it would violate their PDO policy is likewise unpersuasive. First, it does not appear
that the PDO policy contemplates leave for contract negotiations. Second, it appears absences for
negotiations are more in the nature of absences for work-related reasons and thus not applicable to or
governed by the PDO policy.
The Company’s refusal to allow employees to take unpaid leave and its refusal to meet outside of
the regular workday constitutes a violation of the Act.
Questions for Discussion
1. Do you think that the Company’s insistence on treating the employee-members of the bargaining
team the same as all other employees requesting unpaid time off was just a bargaining tactic?
Explain.
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2. Explain how using the categorization method of integrative bargaining might have helped these
parties in their negotiations.
In the categorization method of integrated bargaining, a party offers an opponent a range of
3. Identify the “positions” and “interests” of both parties on the use of PDO for employee-members
of the bargaining team attending negotiations.
Union: Position—Bargaining team should be allowed to use unpaid personal leave.
Interest—Not to discourage members from being part of the negotiating team.
Position—Negotiate on the weekend or after hours.
Interest—Not to discourage members from being part of the negotiating team.
Company: Position—Bargaining team should take PDO for negotiating sessions.
Interest—It is not to the company’s advantage to treat this different from other
kinds of employee leave. Employees could have justification for any
CHAPTER 5: REVIEW QUESTIONS
1. What are the three key elements to a negotiation situation that should be evaluated before
bargaining begins? Why is each a key to the process?
Information, time, and power. Information is called the heart of the negotiations because it shapes
a person’s perception of what is possible and how to achieve it. Gathering information in
2. How might a negotiator use timing to his or her advantage in a negotiation?
3. Define BATNA. How can one utilize a strong BATNA during negotiations?
Best Alternative To a Negotiated Agreement, that is, one’s “walk–away value.” In any
4. What ethical and unethical tactics in Table 5-1 do you disagree with and why?
Misrepresent factual information to support one’s own position. Besides being unethical, it is also
short-sighted. Eventually the truth will come out and a bad deal because of bad facts will fall
apart.
5. Describe in general the distributive and integrative bargaining approaches. How do these methods
differ?
Distributive bargaining is the process when two parties strive to divide a fixed pool of resources,
such as money, each trying to maximize their share of the distribution. Integrated bargaining is a
6. What are the three values that one should decide before negotiating an economic issue such as
wage rates?
7. List and explain each of the norms a negotiator might use to justify a position. Which do you
believe would be the most useful in negotiations? Why?
Relational norm, in which the parties are engaged in a one time “exchange” relationship such as a
one-time car purchase.
8. Instead of rejecting a proposal, what are three general reframing questions one might use as a
response?
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9. Why do you believe the categorization method of integrative bargaining might help two sides
reach agreement on a new contract more easily than the distributive approach?
Using the five steps of the categorization method of integrative bargaining can help two sides
reach agreement more easily.
• The first step is for the parties to begin by exchanging information and seeking to identify
all of the issues to be negotiated, listing them, and each side explaining their interests on
those issues.
10. Give an example that clearly illustrates the difference between positions and interests? Why is the
difference important to integrative bargaining?
The position the employer took in the “You Be the Arbitrator” case was that the leave time the
employees would use to engage in labor negotiations should be treated the same as is currently
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Chapter 5: YOU BE THE ARBITRATOR!
NEGOTIATIONS
1. As arbitrator, what would be your award and opinion in this arbitration?
2. Explain why the relevant provisions of the CBA as applied to the facts of this case
dictate the award.
3. What actions might the employer and/or the union have taken to avoid this conflict?
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CHAPTER 5: EXERCISES
Exercise 5.1: Plan and Prepare for a Negotiation
Purpose:
This exercise provides first-time or novice negotiators with a template which when they have carefully
completed will prepare them to negotiate in a labor—management, professional, or personal situation.
Task:
Select a “real–world” negotiation situation which involves more than one issue and which you can obtain
complete information needed to complete the template. You can complete individually or in teams. If
necessary to find a situation, you may interview someone in a business or professional position. To
prepare and plan for a negotiation, you should download the template to a Word document, and candidly
answer all of the template questions. Include all questions and answers in your final template.
Negotiation Template
1. Describe the nature of the negotiation situation.
2. What are your major goals for this negotiation? What do you believe are your counterpart’s major
you prepare yourself to handle them?
5. List and describe each key issue you anticipate will be of interest to either or both parties. These
“Key Issues” make or break the settlement. They require the most thought and planning. What are
the likely key issues that one party and/or the other will need to resolve to reach an agreement?
6. Analyze each key issue and identify your interests, the interests of your counterpart, and then
7. For each key issue, decide at least one option that is affordable, fair, workable, and mutually
beneficial to both parties.
8. What objective criteria or standard can be suggested to resolve each key issue?
10. Provide a candid analysis of the RBL = Relative Bargaining Leverage of the two parties for each
of the three critical elements: Timing, information, power both for the negotiation situation.
11. How might you change each of the three critical elements: timing (speed up or delay, use a
deadline), information (collect additional information), and power (strengthen the other parties
14. How will you open the negotiation in a manner which will establish rapport with the other party?
15. Prepare your opening statement. Include a description of what you see as the “big picture” of the
negotiations, any ground rules you wish to propose (consider the five Ws), and how you think the
Exercise 5.2: Develop Your Own Negotiating Skills
Purpose:
To enable students to develop their own negotiating skills that can be used in real-life situations.
Task:
Make a copy of this list of 10 tactics and carry it with you for one week. As you encounter a potential
negotiation situation, refer to the list and try a tactic. Record a description of the situation, the tactic
selected, and the outcome. After the week is over, your instructor will lead a class discussion of the
exercise and collect the records of the incidents.
Everyone is a negotiator. However, most people do not think of themselves as negotiators, and
unfortunately do not often recognize a negotiation situation when confronted with one. Thus, the outcome
1. Power and leverage. Every negotiation is a power struggle, and the side that is perceived
(real or not) to have the power advantage has leverage over the other side. But leverage
2. Ego. Ego is often the core of a dispute and is a driving force during many negotiations: It
is “my proposal,” “I am the parent,” “You are a jerk.” Everyone wants to win, and no one
likes to lose. But in negotiations, the person with the smallest ego wins. A good
3. Being right. In negotiations, what is “right” is whatever is agreed on. There is no exact
right, fair, or honest price except the one that is negotiated. The right price for a used car
1
Adapted from “Planning, Preparation and Analysis Process for Negotiations”, unpublished manuscript by Louis Manchise,
4. Facts. You need to be prepared with as much relevant, persuasive information as
possible. Facts alone may not determine the exact outcome, but they certainly influence
it. Today there is an enormous amount of information available on the Internet on the
5. BATNA and principles. Always, always know your principles—exactly what you must
get on a deal and what cannot be compromised. What will cause you to walk away from
the negotiations? The point at which you will walk away is your BATNA—Best
6. Don’t debate the “shape of the table.” At the end of the Vietnam War, the parties at the
Paris Peace Talks argued for months over the shape of the negotiating table. Today when
negotiators waste time debating the place, time, length of sessions, and so on, it is said
that they are debating the “shape of the table.” In reality, they are delaying the
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7. List issues and classify as compatible, exchange, distributive. A good first step is for
both parties to list all the issues to be decided on and their positions on each. Do not
assume that you have opposing goals on all issues. Instead, together classify each as (1)
compatible—your goals are similar or almost identical, so that a “common ground” can
be found quickly and the issue resolved; (2) exchange—you can easily exchange one
Issue
Type
Settlement
1. Annual travel budget
Exchange
Applicant traded her goal to receive a signing
bonus (#3).
Compatible
A corner office was acceptable to both.
travel budget (#1).
4. Travel days per month
Distributive
A key issue. Both agreed to a 12-day/month
maximum.
5. Moving expenses
Exchange
Applicant traded her goal for the enhanced benefit
plan.
territory of the six available.
other seven made it easier for both to accept a
middle ground.
plan for no moving expenses (#5).
11. Repeat back/empathize. As a means of making progress and setting a positive tone, use
the classic tactic of repeating back the point made by the other side (not agreeing to it)
and emphasizing that you understand their point of view and concerns. At the same time,
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you should never accuse the other side of a negative motive or misrepresenting the
facts—that tactic will only raise their emotions, possibly to the point of not agreeing to
any reasonable proposal.
Example:Two co-owners of a piece of property are trying to settle a deal in
9. Use “what–ifs.” Negotiators often like to float an outrageous proposal to test the water—
called “what–ifs.” A what-if does not need to be logical. It may be used to find an outer
limit by the other party and cause them to think from a new starting point. On rare
occasions, a “lowball” what–if might get you a great deal.
Example:Anne is looking for a retirement home in her old neighborhood and
loves one of the houses she went through in December. But it is listed at
10. Ask, “Can you do any better?” It costs nothing to ask—it is simple and direct and often
gets a positive response because the other party is prepared to give a little more. Also, the
“better” is not limited to price. Terms, color, delivery date, and warranties can be
included in the deal. Remember that hotels, airlines, retail shops, restaurants, banks, and
car dealers, to list a few, all have different rates but almost never start with their best one.