Broadly speaking, there are two main types of negotiations: distributive and integrative. Knowing which type you are engaging in can help you know what sort of tactics to employ. Here we outline their primary characteristics.
Distributive negotiation is characterised by its win/lose outcome: someone will gain, while someone else will lose. It is effectively a zero-sum scenario, in which each disputant’s gain or loss is exactly balanced by the losses or gains of the other disputants. It is sometimes referred to as “fixed pie” bargaining. The focus is on individual gain and each party is trying to claim the maximum value for themselves. Rarely are there shared interests between the parties.
Indicia of a distributive negotiation scenario
- Single issue: There is only one primary issue to be negotiated, usually price.
- Opposing interests: The negotiating parties’ interests are entirely (or almost entirely) in opposition with each other.
- Minimal relationship: The parties do not have a substantial existing relationship with one another, and are unlikely to have one in the near future. This allows for a more adversarial bargaining style as there is less concern about having to maintain a working relationship.
Tactics for distributive negotiations
- Preparation is crucial for all kinds of negotiation scenarios, but it is particularly important in distributive negotiations. This is due to the adversarial nature of the interaction which requires you to being entirely across how your interests are best served prior to beginning the negotiation. By contrast, because of its collaborative nature, integrative negotiation allows parties to continue developing their focus throughout the process.
- Employ competing and compromising bargaining styles, rather than accommodating. However, as pointed out by Harvard Law School’s Program on Negotiation, if you find that all parties are “stuck making concessions and demands on a single issue … try to identify issues that your counterpart cares deeply about that you value less. Then propose making a concession on that issue in exchange for a concession from her on an issue you value highly.”
Integrative negotiation (which is sometimes also called “interest-based bargaining,” or “win-win bargaining”) refers to scenarios in which the disputants are looking to come to a mutually beneficial agreement that takes into account each parties’ multiple interests. Unlike distributive bargaining, there is no “fixed pie” and it is not a zero-sum game. Instead the parties work collaboratively to create new sources of value; in other words, they work to increase the size of the pie, rather than to divide it up.
With integrative negotiation, there is greater scope for all parties to walk away satisfied.
Indicia of an integrative negotiation scenario
- Multiple issues: There are numerous issues to be negotiated, for example: salary, start date, benefits, job title etc.
- Shared interests: There is some or considerable overlap between the negotiating parties’ interests. This allows the parties to make trade-offs and concessions across the range of issues.
- Ongoing relationship: The parties have had substantial contact before the negotiation, or are likely to need to maintain a relationship post the negotiation. This encourages more collaborative and cooperative bargaining styles because of the need to maintain each parties’ reputations with one another.
Tactics for integrative negotiations
- There is more opportunity to think creatively with integrative bargaining: consider making multiple equivalent offers simultaneously (MESOs). If none of them are satisfactory to your counterpart(s), ask them which of the suggestions they preferred the most (or disliked the least) and use that as a guide for your new round of offers.
- Focus on using collaborative and accommodating bargaining styles, rather than compromising or competing.