Distributional bargaining is the most common concept that most of us traditionally associate with Negotiation. Also referred to as positional, competitive or ‘sum/lose’ bargaining, negotiators often regard resources as being limited to a fixed pie and that their goals must be in opposition if one is to maximise their share at the other party’s expense. Distributional bargaining is about claiming value from the other party. Negotiators in this situation often use all means at their disposal, including threats, persuasion, punishment and deception to influence, force or coerce the other party into accepting their position.
In recent decades we have witnessed the emergence of an alternative approach to negotiation - often referred to as ‘mutual gains’ win/win or integrative bargaining, popularised by Fisher, Ury and Patton in their book ‘Getting to Yes: Negotiating an agreement within giving in’. Rather than being focussed upon fixed resources, mutual gains bargaining takes a joint problem solving approach as a means of creating value and expanding the pie. We will consider the mutual gains approach to negotiation in a separate dedicated blog as part of the following series of Negotiation and Research Categories to be posted on this site – Distributional Bargaining; Mutual Gains Negotiation; Collaborative Negotiation; Negotiation Training and Collaborative Enterprise.
However, positional or distributive bargaining still remains a basic tenet of negotiation theory and practice, as there are occasions where it makes sense to employ this approach, particularly when negotiating simple, one off transactional deals where relationships with the other party is of little importance.
Distributional bargaining also has its place following mutual gains bargaining, for the ‘expanded’ pie still needs to be divided and distributed between the parties involved. By developing our Negotiation knowledge and skills we strengthen our capacity to maximise our gains or slice of the pie.
Perhaps the three most important and sequential determinants to success in distributional bargaining starts with ‘Preparation’ that leads to identifying the Best Alternative To a Negotiated Agreement - BATNA (both yours and theirs) that in turn determines the reservations prices that frame the Zone of Possible Agreement (ZOPA).
By placing a strong focus and effort into identifying the Zone Of Possible Agreement (ZOPA) we manage to determine the true bargaining range. The bargaining range is set by each party’s reservation point. In distributional bargaining, the aim is to arrive at an agreement as close to the other party’s reservation point as possible. If we can influence the other party’s reservation point and strengthen our own, we manage to expand the bargaining range and move the ZOPA closer to our desired outcome.
Negotiators should become familiar with the following basic key elements of distributional bargaining if they aim to strengthen their negotiation power and position. I will expand upon each element in subsequent posts.
• Identify your BATNA and work toward improving it
• Identify the other parties BATNA and strive to weaken it
• Identify your reservation or resistance points (RP) – the highest or lowest you are willing to pay
• Identify the others reservation point (RP) where possible
• Set a high but realistic inspirational point (price etc) – the AP is realistic if it falls within the zone of agreement, hence the importance of identifying the zone.
• If you make the first offer try to avoid anchoring to low – again this emphasises the importance of assessing the ZOPA. Your offer may be quickly accepted and you may later find that you have settled for much less than what the other party was willing to offer, leaving yourself feeling that you have ‘lost’ – this is often referred to as the ‘winners curse’.
• Rely upon fair or objective standards free of emotional will
• Sequence your bargaining offer into incremental steps – do not go in too high or too low – If the initial offer is to high and perhaps outside the zone of agreement the other party may not take you seriously and threaten to walk away from negotiations. Within the estimated ZOPA, give yourself a wider margin or ‘currency’ with which to trade up or down – we then have scope to change positions according to the information we glean during this concession making process.
• Develop cross cultural awareness
• Influence the Negotiation environment and location
• Control the schedule and timing of negotiation
• Maintain and isolate an open communication line free of distracting ‘noise’.
What other factors do you consider important in distributional bargaining?
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Through the development of core negotiation competencies individuals and organisations can expect to increase their bargaining range, decrease costs, increase revenue and maximise their profits – in short, create and add valuetotheir bottom line by becoming better negotiators and with support from SPANS. Adopting the integrative mutual gains and collaborative approach to negotiation, we will demonstrate how negotiators can improve their profits while also satisfying the needs of their partners, preserving long term relationships and improving their economies of scale through collaborative advantage.
SPANS will provide you with the key to negotiation success by helping you to become a more proficient negotiator, assist you to achieve better outcomes from your negotiations and strengthen your relationship network.