Getting What You Want - It’s All About Negotiation

1. Introduction

When most veterinarians think about negotiation, they think of bargaining with a salesman over the price of a new digital radiology unit. In truth, negotiations take place continually in life: between business owners and employees, veterinarians and horse owners, and parents and children. Anytime a decision requires input from more than one person, negotiation is involved. Because these types of decisions are very common, developing skill in negotiation is an essential element of effective communication.

Negotiation is defined as a process during which two or more parties attempt to resolve their differing interests. There are several characteristics common to all negotiations, whether they are between warring countries or simply between a parent and child¹ :

1. Negotiation occurs between two or more parties.
2. The parties have a conflict of needs, desires, or interests that need resolution.
3. Parties negotiate by choice, voluntarily, because they feel they can gain a better outcome than by simply accepting what the opposing party is offering.
4. Negotiations require both parties to move from their opening positions in order to reach an agreement.
5. The parties prefer to negotiate rather than fight, sever a relationship, have one dominate and the other capitulate, or take their dispute to a higher authority for resolution. In addition, when there are no rules or laws to guide resolution, or when parties choose to bypass those rules, negotiations will often occur.
6. Successful negotiation manages tangibles as well as intangibles.

2. Types of Negotiation

Some negotiations are zero-sum or distributive and some are mutual-gains or integrative. Distributive bargaining occurs when the goals of one party are in direct conflict with the goals of the other. This type of bargaining is essentially a competition over who will get more of a limited resource. Integrative negotiation is a collaborative cooperative activity that aims to allow the needs of all parties to be met.²

Distributive

Generally, distributive bargaining is centered on haggling about a price and is competitive; both parties’ interests are in direct conflict. There is a fixed resource (often money) and both parties are seeking to maximize their gain. Because these negotiations result in a winner and a loser, using distributive tactics should be reserved for situations where a single simple deal is being made and a future relationship with the other party is not important, or an integrative negotiation has progressed to the point of each side “claiming value.” An equine veterinarian purchasing a used truck from a car salesman would do well to use distributive bargaining techniques.

In distributive bargaining, each party has in mind a target point: their optimal goal of the point at which negotiations will conclude. They also have a resistance point, beyond which they will break off negotiations and walk away. The opening offer will serve as an anchor for the negotiation and is very important because all moves will take place around this initial stake in the ground. If opening offers (whether from seller or buyer) are too far from the target point, it is possible that no negotiation will even occur. For instance, if the used truck salesman states that the truck’s price is $35,000 but the target point of the prospective buyer is $15,000, it is quite unlikely that a negotiation will occur; the buyer will assume she cannot afford the vehicle.

The spread between the buyer’s and seller’s resistance points is known as the bargaining range, because any offer outside of this range will be immediately rejected by the other party. If the truck salesman’s lowest acceptable price (his resistance point) for the used truck is $20,000, he will summarily dismiss an offer of $15,000. Through the process of making offers and counteroffers: each party begins to reveal their resistance point. Consider a seller with an opening price of $30,000, a target of $25,000, and a resistance point of $20,000 bargaining with a buyer with a target of $17,500 and a resistance point of $22,500. One can see that the bargaining range is between $20,000 and $22,500. Within a few minutes of conversation, both parties will understand the others’ position better and a deal may be made that satisfies both parties. A positive bargaining range occurs when the buyer’s resistance point is above the seller’s. In the case of a negative bargaining range, the seller has a minimum price higher than the maximum the buyer is willing to pay. Either the negotiation will end or the parties will re-evaluate their resistance points. Or the buyer will pursue an alternative.

The best alternative to a negotiated agreement (BATNA) is a critical concept for all negotiators. Alternatives are important because they give negotiators the power to walk away from a deal that is not attractive. Knowing the best alternative to an agreement before entering into a negotiation is critical to making good decisions. Because of their awareness of their true “bottom line,” negotiators with a firm understanding of their BATNA have power and confidence and, generally, are more successful in achieving their goals.³ If the veterinarian has identified another used truck at another dealership with an asking price of $22,500 (her BATNA) she will be much more likely to press the salesman for a sale price on the subject truck closer to her target and less likely to agree to a price close to her resistance point.

The basic strategies in distributive bargaining are to push for a price very close to the seller’s resistance point by making extreme offers and small concessions and/or convince the seller to reconsider his resistance point by influencing his beliefs about the value of what he is selling. Because during negotiations concessions are essential, opening offers should be sufficiently distant from the resistance point to allow room for an exchange of offers. Research shows that parties are more satisfied with agreements if there is a series of concessions rather than if their first offer is accepted, perhaps because they feel they could have done better.⁴ When making concessions, one can determine when a counterpart’s resistance point is being reached as successive concessions become smaller.

Although a few people approach all discussions as though they were distributive bargaining sessions, reserving this approach for those situations that are truly one-time transactional agreements with no relationship components is the most rewarding approach.

Integrative

The goals of the negotiating parties in integrative negotiation are not mutually exclusive: this is win-win bargaining. In this type of negotiation, there is a focus on what is found in common rather than on differences, on interests rather than positions, on meeting the needs of all parties, on an exchange of information between sides, and on an enlargement of the pie through innovative ideas. In order to be a successful integrative negotiator one must build trust through honesty and integrity, have a positive outlook that sees abundance rather than scarcity, recognizes that others’ interests have equal validity as yours, be able to see the big picture, and have strong listening skills.⁵

By facilitating a reciprocal flow of information, both sides gain understanding of the needs and concerns of their counterparts, leading to less extreme resistance points. Identification of the others’ true objectives and desired outcomes can lead to recognition of commonalities and areas of alignment. This makes searching for solutions that meet both sides’ goals more successful and satisfying. By generating multiple alternatives, innovative solutions may arise that increase overall value.

As an example, an associate may want to pursue acupuncture training but the tuition and time away needed exceed her contractual continuing education budget and allotted days off. An active dialogue is needed, focusing on understanding the costs, benefits, goals, and threats of this desire. By defining all of the parameters of this “problem” collectively, both the associate’s and the practice’s needs and priorities can be accurately identified. [...]