Ridgecrest school dispute negotiation simulation

ROY J. LEWICKI

DAVID M. SAUNDERS

BRUCE BARRY

NEGOTIATION Readings, Exercises and Cases

s ix th ed i t ion

sixth edition

LEW ICKI | SAU

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ERS | BARRY NEGOTIATION

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eadings, E xercises and C

ases

Negotiation is a fundamental skill, not only for successful management, but also for successful living. Negotiation: Readings, Exercises and Cases 6e takes an experiential approach to this skill and explores the major concepts and theories of the psychology of bargaining and negotiation, resulting in a text that refl ects the very best and most recent work on negotiation and the related topics of power, infl uence, and confl ict management.

Examples of new readings, exercises, and cases include: Balancing Act: How to Manage Negotiation Tensions Negotiation Ethics Four Strategies for Making Concessions Become a Master Negotiator Culture and Negotiation Investigative Negotiation Seven Strategies for Negotiating Success Ridgecrest School Dispute Bargaining Strategy in Major League Baseball

The authors have carefully organized Negotiation: Readings, Exercises and Cases 6e to coordinate closely with their newly revised text, Negotiation 6e, as well as with the shorter version of the text, Essentials of Negotiation 5e. All three texts in this series can work together to create a comprehensive learning system.

To learn more, please visit www.mhhe.com/lewickinegotiation

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Negotiation

Readings, Exercises and Cases

Sixth Edition

Roy J. Lewicki The Ohio State University

David M. Saunders Queen’s University

Bruce Barry Vanderbilt University

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NEGOTIATION: READINGS, EXERCISES AND CASES, SIXTH EDITION

Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2007, 2003, and 1999. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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Library of Congress Cataloging-in-Publication Data

Negotiation: readings, exercises, and cases / [edited by] Roy J. Lewicki, David M. Saunders, Bruce Barry.—6th ed.

p. cm. ISBN-13: 978-0-07-353031-4 (alk. paper) ISBN-10: 0-07-243255-1 1. Negotiation in business. 2. Negotiation. 3. Negotiation—Case studies. I. Lewicki, Roy J.

II. Saunders, David M. III. Barry, Bruce, 1958– HD58.6.N45 2009 658.4�052—dc22 2009039281

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a Web site does not indicate an endorsement by the authors or McGraw-Hill, and McGraw-Hill does not guarantee the accuracy of the information presented at these sites.

www.mhhe.com

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Dedication

We dedicate this book to all negotiation, mediation, and dispute resolution professionals who try to make the world a more peaceful and prosperous place.

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iv

About the Authors

is the Abramowitz Professor of Business Ethics, and Professor of Management and Hu- man Resources at the Max. M. Fisher College of Business, The Ohio State University. He has authored or edited 32 books, as well as numerous research articles. Professor Lewicki has served as the President of the International Association of Conflict Man- agement, was the founding editor of the Academy of Management Learning and Educa- tion, and received the Academy of Management’s Distinguished Educator Award for his contributions to the field of teaching in negotiation and dispute resolution.

is dean of Queen’s School of Business. Since joining Queen’s in 2003, he has led the in- ternationalization of the school, launched two unique MBA programs and a suite of pre- experience Masters programs, and strengthened Queen’s international network with the addition of top business school partners in Europe, Asia, and South America.

Outside of Queen’s, David is the co-author of several articles on negotiation, con- flict resolution, employee voice, and organizational justice. He sits on the board of the China Europe International Business School (CEIBS) and the European Foundation for Management Development, an international business school association.

is Professor of Management and Sociology at Vanderbilt University. His research on ne- gotiation, influence, power, and justice has appeared in numerous scholarly journals and volumes. Professor Barry is a past President of the International Association for Conflict Management (2002–2003), and a past chair of the Academy of Management Conflict Management Division.

Roy J. Lewicki

David M. Saunders

Bruce Barry

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People negotiate every day. During an average day, they may negotiate with

• the boss, regarding an unexpected work assignment;

• subordinates, regarding unexpected overtime;

• a supplier, about a problem with raw materials inventory management;

• a banker, over the terms of a business loan;

• a government official, regarding the compliance with environmental regulations;

• a real estate agent, over the lease on a new warehouse;

• his/her spouse, over who will walk the dog;

• his/her child, over who will walk the dog (still an issue after losing the previous negotiation);

• and the dog, once out, as to whether any “business” gets done.

In short, negotiation is a common, everyday activity that most people use to influence others and to achieve personal objectives. In fact, negotiation is not only common, but also essential to living an effective and satisfying life. We all need things—resources, information, cooperation, and support from others. Others have those needs as well, sometimes compatible with ours, sometimes not. Negotiation is a process by which we attempt to influence others to help us achieve our needs while at the same time taking their needs into account. It is a fundamental skill, not only for successful management but also for successful living.

In 1985, Roy Lewicki and Joseph Litterer published the first edition of this book. As they were preparing that volume, it was clear that the basic processes of negotiation had received only selective attention in both the academic and practitioner literature. Scholars of negotiation had generally restricted examination of these processes to basic theory development and laboratory research in social psychology, to a few books writ- ten for managers, and to an examination of negotiation in complex settings such as diplomacy and labor–management relations. Efforts to draw from the broader study of techniques for influence and persuasion, to integrate this work into a broader under- standing of negotiation, or to apply this work to a broad spectrum of conflict and nego- tiation settings were only beginning to occur.

In the past twenty-five years, this world has changed significantly. There are several new practitioner organizations, such as the Society for Professionals in Dispute Resolution and the Association for Conflict Resolution, and academic professional associations such as the Conflict Management Division of the Academy of Management and the Interna- tional Association for Conflict Management that have devoted themselves exclusively to facilitating research and teaching in the fields of negotiation and conflict management. There are several new journals (Negotiation Journal, Negotiation and Conflict Manage- ment Research, International Journal of Conflict Management, International Negotiation) that focus exclusively on research in these fields. Finally, through the generosity of the Hewlett Foundation, there are a number of university centers that have devoted themselves to enhancing the quality of teaching, research, and service in the negotiation and conflict

Preface

v

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management fields. Many schools now have several courses in negotiation and conflict management—in schools of business, law, public policy, psychology, social work, educa- tion, and natural resources. Development has occurred in the practitioner side as well. Books, seminars, and training courses on negotiation and conflict management abound. And, finally, mediation has become an extremely popular process as an alternative to liti- gation for handling divorce, community disputes, and land-use conflicts. In pragmatic terms, all of this development means that as we assembled this sixth edition, we have had a much richer and more diverse pool of resources from which to sample. The net result for the student and instructor is a highly improved book of readings and exercises that contains many new articles, cases, and exercises, which represent the very best and most recent work on negotiation and the related topics of power, influence, and conflict management.

A brief overview of this book is in order. The Readings portion of the book is or- dered into seven sections: (1) Negotiation Fundamentals, (2) Negotiation Subprocesses, (3) Negotiation Contexts, (4) Individual Differences, (5) Negotiation across Cultures, (6) Resolving Differences, and (7) Summary. The next section of the book presents a col- lection of role-play exercises, cases, and self-assessment questionnaires that can be used to teach about negotiation processes and subprocesses. Complete information about the use or adaptation of these materials for several classroom formats is provided in our ac- companying web-based Instructor’s Manual, which faculty members may obtain access by contacting their local McGraw-Hill/Irwin representative, by calling (800) 634-3963 or by visiting the McGraw-Hill Web site at www.mhhe.com/lewickinegotiation

For those readers familiar with the previous edition of this book, the most visible changes in this edition are to the book’s content and organization, as follows:

• The content of this edition is substantially new. About half of the readings are new to this edition, and there are approximately ten new exercises and cases. Almost all exercises and cases have been revised and updated.

• These 7 sections parallel the 7 sections and 20 chapters of the completely revised textbook, Negotiation, 6th edition, by Lewicki, Barry and Saunders, also pub- lished by McGraw-Hill/Irwin. The text and reader can be used together, or sepa- rately. A shorter version of the text, Essentials of Negotiation, 5th edition, by Lewicki, Saunders and Barry, can also be used in conjunction with these readings book (to be published in 2010). We encourage instructors to contact their local McGraw-Hill/Irwin representative for an examination copy (call 800-634-3963, or visit the Web site at www.mhhe.com/lewickinegotiation).

This book could not have been completed without the assistance of numerous people. We especially thank

• The many authors and publishers who granted us permission to use or adapt their work for this book and whom we have recognized in conjunction with specific exercises, cases, or articles.

• The many negotiation instructors and trainers who inspired several of the exercises in this book and who have given us excellent feedback on the previous editions of this book.

vi Preface

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• The staff of McGraw-Hill/Irwin, especially our current editor, Laura Spell, and our previous editors, John Weimeister, Ryan Blankenship, John Biernat, Kurt Strand and Karen Johnson; Jane Beck, Allison Cleland and Trina Hauger, editorial assistants who can solve almost any problem; Project Manager Robin Reed; and Lori Bradshaw, tireless developmental editor who turns our confusing instructions and tedious prose into eminently readable and usable volumes!

• Our families, who continue to provide us with the time, inspiration, opportunities for continued learning about effective negotiation, and the personal support required to finish this project.

Roy J. Lewicki David M. Saunders Bruce Barry

Preface vii

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viii Section Three The Nature of Negotiation

viii

Section 1 Negotiation Fundamentals

1.1 Three Approaches to Resolving Disputes: Interests, Rights, and Power 1

1.2 Selecting a Strategy 14 1.3 Balancing Act: How to Manage Negotiation

Tensions 30 1.4 The Negotiation Checklist 34 1.5 Effective Negotiating Techniques: From

Selecting Strategies to Side-Stepping Impasses and Assumptions 48

1.6 Closing Your Business Negotiations 65 1.7 Defusing the Exploding Offer: The Farpoint

Gambit 72 1.8 Implementing a Collaborative Strategy 80 1.9 Solve Joint Problems to Create and Claim

Value 97 1.10 Even at Megastores, Hagglers Find No Price Is

Set in Stone 112

Section 2 Negotiation Subprocesses

2.1 Negotiating Rationally: The Power and Impact of the Negotiator’s Frame 115

2.2 Managers and Their Not-So Rational Decisions 125

2.3 When Your Thoughts Work Against You 135 2.4 Untapped Power: Emotions in Negotiation 139 2.5 Staying with No 147 2.6 Risks of E-Mail 152 2.7 Where Does Power Come From? 159 2.8 Harnessing the Science of Persuasion 168 2.9 The Six Channels of Persuasion 177 2.10 Negotiating with Liars 183 2.11 Negotiation Ethics 193 2.12 Three Schools of Bargaining Ethics 198 2.13 A Painful Close 204

Section 3 Negotiation Contexts

3.1 Staying in the Game or Changing It: An Analysis of Moves and Turns in Negotiation 211

3.2 The Soft Sell 225 3.3 Bargaining in the Shadow of the Tribe 228 3.4 The Fine Art of Making Concessions 240 3.5 The High Cost of Low Trust 244 3.6 Consequences of Principal and Agent 248 3.7 The Tension between Principals and Agents 256 3.8 When a Contract Isn’t Enough: How to

Be Sure Your Agent Gets You the Best Deal 267

3.9 This Is Not a Game: Top Sports Agents Share Their Negotiating Secrets 272

3.10 The New Boss 277 3.11 Can’t Beat Them? Then Join a

Coalition 291 3.12 Building and Maintaining Coalitions and

Allegiances throughout Negotiations 294 3.13 The Surprising Benefits of Conflict in

Negotiating Teams 298

Section 4 Individual Differences

4.1 Women Don’t Ask 301 4.2 Become a Master Negotiator 309 4.3 Should You Be a Negotiator? 317

Section 5 Negotiation across Cultures

5.1 Culture and Negotiation 321 5.2 Intercultural Negotiation in International

Business 339 5.3 American Strengths and Weaknesses 358

Contents

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Section 6 Resolving Differences

6.1 Doing Things Collaboratively: Realizing the Advantage or Succumbing to Inertia? 363

6.2 Taking Steps toward “Getting to Yes” at Blue Cross and Blue Shield of Florida 377

6.3 Taking the Stress Out of Stressful Conversations 382

6.4 Renegotiating Existing Agreements: How to Deal with “Life Struggling against Form” 391

6.5 Negotiating with Disordered People 409 6.6 When and How to Use Third-Party Help 417 6.7 Investigative Negotiation 435

Section 7 Summary

7.1 Best Practices in Negotiation 443 7.2 Getting Past Yes: Negotiating as if

Implementation Mattered 453 7.3 Seven Strategies for Negotiating Success:

Some Fancy Footwork for the Salary Pas de Deux 466

7.4 Six Habits of Merely Effective Negotiators 472

Exercises 1. The Subjective Value

Inventory (SVI) 483 2. Pemberton’s Dilemma 486 3. The Commons Dilemma 489 4. The Used Car 490 5. Knight Engines/Excalibur Engine

Parts 492 6. GTechnica—AccelMedia 493 7. Toyonda 494 8. Planning for Negotiations 495 9. The Pakistani Prunes 498

10. Universal Computer Company 499 11. Twin Lakes Mining Company 502 12. City of Tamarack 505

13. Island Cruise 508 14. Salary Negotiations 513 15. Job Offer Negotiation: Joe Tech

and Robust Routers 514 16. The Employee Exit Interview 519 17. Live8 520 18. Ridgecrest School Dispute 521 19. Bestbooks/Paige Turner 528 20. Strategic Moves and Turns 529 21. Elmwood Hospital Dispute 531 22. The Power Game 534 23. Coalition Bargaining 535 24. The Connecticut Valley School 538 25. Bakery–Florist–Grocery 541 26. The New House Negotiation 542 27. The Buena Vista Condo 544 28. Eurotechnologies, Inc. 545 29. Third-Party Conflict Resolution 552 30. AuraCall Inc. 557 31. 500 English Sentences 558 32. Sick Leave 559 33. Alpha–Beta 560 34. Galactica SUV 562 35. Bacchus Winery 563 36. Collecting Nos 564 37. A Team in Trouble 566

Cases 1. Capital Mortgage Insurance

Corporation (A) 567 2. Pacific Oil Company (A) 582 3. Negotiating on Thin Ice: The 2004–2005 NHL

Dispute (A) 610 4. Collective Bargaining at Magic

Carpet Airlines: A Union Perspective (A) 629

5. Bargaining Strategy in Major League Baseball 638

6. Midwestern::Contemporary Art 649 7. 500 English Sentences 656 8. Sick Leave 666

Contents ix

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Questionnaires 1. The Personal Bargaining

Inventory 677 2. The SINS II Scale 680 3. Six Channels of Persuasion

Survey 682 4. The Trust Scale 686 5. Communication Competence

Scale 691 6. The Cultural Intelligence Scale 693

Appendix 1. Negotiating on Thin Ice: The 2004–2005 NHL

Dispute (B) 695

Title Index 699 Name Index 701

x Contents

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Reading 1.1

Three Approaches to Resolving Disputes: Interests, Rights, and Power William L. Ury Jeanne M. Brett Stephen B. Goldberg

It started with a pair of stolen boots. Miners usually leave their work clothes in baskets that they hoist to the ceiling of the bathhouse between work shifts. One night a miner discovered that his boots were gone.1 He couldn’t work without boots. Angry, he went to the shift boss and complained, “Goddammit, someone stole my boots! It ain’t fair! Why should I lose a shift’s pay and the price of a pair of boots because the company can’t protect the property?”

“Hard luck!” the shift boss responded. “The company isn’t responsible for personal property left on company premises. Read the mine regulations!”

The miner grumbled to himself, “I’ll show them! If I can’t work this shift, neither will anyone else!” He convinced a few buddies to walk out with him and, in union solidarity, all the others followed.

The superintendent of the mine told us later that he had replaced stolen boots for miners and that the shift boss should have done the same. “If the shift boss had said to the miner, ‘I’ll buy you a new pair and loan you some meanwhile,’ we wouldn’t have had a strike.” The superintendent believed that his way of resolving the dispute was bet- ter than the shift boss’s or the miner’s. Was he right and, if so, why? In what ways are some dispute resolution procedures better than others?

In this reading, we discuss three ways to resolve a dispute: reconciling the interests of the parties, determining who is right, and determining who is more powerful. We analyze the costs of disputing in terms of transaction costs, satisfaction with outcomes, effect on the relationship, and recurrence of disputes. We argue that, in general, recon- ciling interests costs less and yields more satisfactory results than determining who is right, which in turn costs less and satisfies more than determining who is more power- ful. The goal of dispute systems design, therefore, is a system in which most disputes are resolved by reconciling interests.

1

Negotiation Fundamentals

SECTION 1

Source: “Three Approaches to Resolving Disputes: Interests, Rights, and Power,” from Getting Disputes Resolved, by William L. Ury, Jeanne M. Brett, and Stephen B. Goldberg, 1988, pp. 3–19. New York: Jossey-Bass, Inc., a subsidiary of John Wiley & Sons, Inc. Used with permission.

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Three Ways to Resolve Disputes

The Boots Dispute Dissected

A dispute begins when one person (or organization) makes a claim or demand on an- other who rejects it.2 The claim may arise from a perceived injury or from a need or aspiration.3 When the miner complained to the shift boss about the stolen boots, he was making a claim that the company should take responsibility and remedy his perceived injury. The shift boss’s rejection of the claim turned it into a dispute. To resolve a dis- pute means to turn opposed positions—the claim and its rejection—into a single out- come.4 The resolution of the boots dispute might have been a negotiated agreement, an arbitrator’s ruling, or a decision by the miner to drop his claim or by the company to grant it.

In a dispute, people have certain interests at stake. Moreover, certain relevant stan- dards or rights exist as guideposts toward a fair outcome. In addition, a certain balance of power exists between the parties. Interests, rights, and power then are three basic elements of any dispute. In resolving a dispute, the parties may choose to focus their attention on one or more of these basic factors. They may seek to (1) reconcile their underlying interests, (2) determine who is right, and/or (3) determine who is more powerful.

When he pressed his claim that the company should do something about his stolen boots, the miner focused on rights—“Why should I lose a shift’s pay and the price of a pair of boots because the company can’t protect the property?” When the shift boss responded by referring to mine regulations, he followed the miner’s lead and continued to focus on who was right. The miner, frustrated in his attempt to win what he saw as justice, provoked a walkout—changing the focus to power. “I’ll show them!” In other words, he would show the company how much power he and his fellow coal miners had—how dependent the company was on them for the production of coal.

The mine superintendent thought the focus should have been on interests. The miner had an interest in boots and a shift’s pay, and the company had an interest in the miner working his assigned shift. Although rights were involved (there was a question of fairness) and power was involved (the miner had the power to cause a strike), the su- perintendent’s emphasis was on each side’s interests. He would have approached the stolen boots situation as a joint problem that the company could help solve.

Reconciling Interests

Interests are needs, desires, concerns, fears—the things one cares about or wants. They underlie people’s positions—the tangible items they say they want. A husband and wife quarrel about whether to spend money for a new car. The husband’s underlying interest may not be the money or the car but the desire to impress his friends; the wife’s interest may be transportation. The director of sales for an electronics company gets into a dis- pute with the director of manufacturing over the number of TV models to produce. The director of sales wants to produce more models. Her interest is in selling TV sets; more models mean more choice for consumers and hence increased sales. The director of

2 Section One Negotiation Fundamentals

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manufacturing wants to produce fewer models. His interest is in decreasing manufac- turing costs; more models mean higher costs.

Reconciling such interests is not easy. It involves probing for deep-seated con- cerns, devising creative solutions, and making trade-offs and concessions where inter- ests are opposed.5 The most common procedure for doing this is negotiation, the act of back-and-forth communication intended to reach agreement. (A procedure is a pattern of interactive behavior directed toward resolving a dispute.) Another interests-based procedure is mediation, in which a third party assists the disputants in reaching agreement.

By no means do all negotiations (or mediations) focus on reconciling interests. Some negotiations focus on determining who is right, such as when two lawyers argue about whose case has the greater merit. Other negotiations focus on determining who is more powerful, such as when quarreling neighbors or nations exchange threats and counterthreats. Often negotiations involve a mix of all three—some attempts to satisfy interests, some discussion of rights, and some references to relative power. Negotiations that focus primarily on interests we call “interests-based,” in contrast to “rights-based” and “power-based” negotiations. Another term for interests-based nego- tiation is problem-solving negotiation, so called because it involves treating a dispute as a mutual problem to be solved by the parties.

Before disputants can effectively begin the process of reconciling interests, they may need to vent their emotions. Rarely are emotions absent from disputes. Emotions often generate disputes, and disputes, in turn, often generate emotions. Frustration un- derlay the miner’s initial outburst to the shift boss; anger at the shift boss’s response spurred him to provoke the strike.

Expressing underlying emotions can be instrumental in negotiating a resolution. Particularly in interpersonal disputes, hostility may diminish significantly if the ag- grieved party vents her anger, resentment, and frustration in front of the blamed party, and the blamed party acknowledges the validity of such emotions or, going one step fur- ther, offers an apology.6 With hostility reduced, resolving the dispute on the basis of interests becomes easier. Expressions of emotion have a special place in certain kinds of interests-based negotiation and mediation.

Determining Who Is Right

Another way to resolve disputes is to rely on some independent standard with perceived legitimacy or fairness to determine who is right. As a shorthand for such independent standards, we use the term rights. Some rights are formalized in law or contract. Other rights are socially accepted standards of behavior, such as reciprocity, precedent, equal- ity, and seniority.7 In the boots dispute, for example, while the miner had no contractual right to new boots, he felt that standards of fairness called for the company to replace personal property stolen from its premises.

Rights are rarely clear. There are often different—and sometimes contradictory— standards that apply. Reaching agreement on rights, where the outcome will determine who gets what, can often be exceedingly difficult, frequently leading the parties to turn to a third party to determine who is right. The prototypical rights procedure is

Three Approaches to Resolving Disputes: Interests, Rights, and Power 3

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adjudication, in which disputants present evidence and arguments to a neutral third party who has the power to hand down a binding decision. (In mediation, by contrast, the third party does not have the power to decide the dispute.) Public adjudication is provided by courts and administrative agencies. Private adjudication is provided by arbitrators.8

Determining Who Is More Powerful

A third way to resolve a dispute is on the basis of power. We define power, somewhat narrowly, as the ability to coerce someone to do something he would not otherwise do. Exercising power typically means imposing costs on the other side or threatening to do so. In striking, the miners exercised power by imposing economic costs on the company. The exercise of power takes two common forms: acts of aggression, such as sabotage or physical attack, and withholding the benefits that derive from a relationship, as when employees withhold their labor in a strike.