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Introduction to Negotiation

Roman Sheremeta, Ph.D.

Professor, Weatherhead School of Management

Case Western Reserve University

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Negotiation

  • “In business, you don't get what you deserve, you get what you negotiate.”

Chester L. Karrass (founder of Effective Negotiating)

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Negotiation is Important

  • Dynamic nature of business:
    • The average person changes jobs 10-15 times (with an average of 11 job changes) during his or her career.

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  • Interdependence:
    • Each business heavily depends on others (IBM – Microsoft, Amazon – UPS).

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  • Economic forces:
    • Unemployment rate in 2011 was 9%, in 2020 it was 15% .

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  • Globalization:
    • Managers need to develop negotiation skills that take into account culture and nationality.

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Q&A

  • Who likes to negotiate and why?

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  • Who doesn’t like to negotiate and why?

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Definition

  • What is a negotiation?
    • Negotiation is an interpersonal decision-making process, necessary whenever we cannot achieve our objectives single-handedly.

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People are Ineffective Negotiators

  • Research shows that people do not negotiate well:
    • Less than 4% of managers reach win-win outcomes.
    • 20% reach lose-lose outcomes.
    • Even on issues for which people are in perfect agreement, they fail to realize it 50% of the time.

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  • Why?
    • 1) Lack of practice (exercises).
    • 2) Lack of knowledge (negotiation strategies).
    • 3) Systematic mistakes (biases).

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Negotiation Biases

  • Cognitive biases are mental errors caused by our simplified information processing strategies:
    • Overconfidence.
    • Agreement bias.
    • Anchoring bias.
    • Incompatibility bias.
    • Fixed-pie bias.
    • Confirmation bias.
    • Self-serving bias.
    • Availability heuristic.
    • In-group bias.
    • Exaggeration of conflict bias.

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Overconfidence

  • Overconfidence:
    • Placing more confidence in yourself than evidence might support.
    • Example: Two-thirds of MBA students rank their abilities relative to other students as above average.
    • Example: 93% of the U.S. drivers say they are above average.

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  • Rationality behind overconfidence:
    • Dunning-Kruger effect: people of low ability suffer from illusory superiority.
    • High self-evaluation.

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  • Potential solutions:
    • Feedback.
    • Training.

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Overconfidence

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Overconfidence

  • Daniel Kahneman: The Trouble with Confidence

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Negotiation Myths

  • Myth 1: Negotiations are fixed-sum.

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  • Myth 2: You need to be either tough or soft.

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  • Myth 3: Good negotiators are born.

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  • Myth 4: Life experience is a great teacher.

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  • Myth 5: Good negotiators take risks.

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  • Myth 6: Good negotiators rely on intuition.

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Learning Objectives

  • (1) Learn strategies for successful negotiation.

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  • (2) Learn essential concepts and common biases in negotiations.

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  • (3) Improve your ability to negotiate successfully.

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Negotiation Topics

  • Economics of Negotiation:
    • Distributive Negotiations
    • Integrative Negotiations

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  • Psychology of Negotiation:
    • Negotiation Styles
    • Negotiation Ethics
    • Gender and Status
    • Culture

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  • Complex Negotiations:
    • Multi-Issue Negotiations
    • Multi-Party Negotiations

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Conflict Resolution Topics

  • Conflict Resolution:
    • Social Dilemmas and Conflict Resolution
    • Conflict Resolution based on Interests, Rights and Power

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Thank you!

Roman Sheremeta, Ph.D.

Professor, Weatherhead School of Management

Case Western Reserve University

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References

  • Thompson, L. (2004). The Mind and Heart of the Negotiator. New Jersey: Prentice Hall. (Chapter 1)

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