Negotiations, based on how they are conducted—competitively or cooperatively—can be divided into two different types: distributive negotiation and integrative negotiation.

■Distributive Negotiation

Distributive negotiation or distributive bargaining, also called positional bargaining, claiming value bargaining, zero-sum bargaining, or win-lose bargaining, is a competitive approach that is used when there is a fixed “pie”—a finite limit to a resource—and negotiators have to decide who gets how much of that pie. The negotiators assume that there is not enough to go around, and they can not “expand the pie”, so the more one side gets, the less the other side gets.

◆ Preparation

◇Prepare yourself to walk away to get your needs met elsewhere.

◇Develop a strong Best Alternative to a Negotiated Agreement (BATNA) and keep it to yourself.

◇Research their BATNA and their intangible needs (such as getting the deal done, making the customer happy, being fair, beating the competition, saving face, preserving reputation and setting a precedent). What matters to them?

◆ Opening Offers

◇Listen carefully and ask many questions before making any proposal.

◇Make the first offer if you have done your homework and have a good idea what the transaction is worth.

◇Wait for a response after making an offer.

◇Be quick to counter-offer.

◆ Exchanging Information and Arguments

◇Base your discussion on “objective” standards, principles, rationals, norms of fairness.

◇Beware of giving information that lowers your leverage—the ability to help or harm the other party—just to seem “nice” or signal that you trust them. They may not notice your signal or interpret it as you intended. Leverage given away is tough to regain.

◆ Concessions and Decisions

◇Make sure you receive something of similar value for each concession you offer.

◇Start with small concessions; give larger, more generous concessions towards the end.

◇Focus on your goal; do not let your fears, anger, weariness, or ego derail you.

◇Do not agree to split the difference unless it meets your interests.

◇Help the other party save face, achieve what you need without humiliating others.

■Integrative Negotiation

Integrative negotiation or integrative bargaining, also called “interest-based bargaining”, “win-win bargaining”, is an approach in which parties collaborate to look for a solution that maximizes joint gain and allows everyone to walk away feeling like they have won something. The basic idea is that both sides can achieve their objectives.

This approach focuses on developing mutually beneficial agreements based on the interests of the negotiators. Interests include the needs, desires, concerns, and fears important to each side. They are the underlying reasons why people become involved in a conflict.

To apply integrative bargaining to negotiation, the first step is to identify each side’s interests. A key approach to determining interests is asking “Why?” Why does the other side want that? The bottom line is you need to figure out why people feel the way they do, and why they are demanding. Be sure to make it clear that you are asking these questions so you can understand their interests (needs, hopes, fears, or desires) better, not because you are challenging them or trying to figure out how to beat them.

Next, you might ask yourself how the other side perceives your demands. What stands in the way of their agreeing with you? Do you know their underlying interests? Do you know your own underlying interests?

If you can figure out their interests as well as your own, you will be much more likely to find a solution that benefits both sides.

After interests are identified, the parties need to work together cooperatively to try to figure out the best ways to meet those interests. Often by “brainstorming”—listing all the options the participants can think of without criticizing or dismissing anything initially, parties can come up with creative new ideas for meeting interests and needs that have not occurred to anyone before. The goal is a win-win outcome, giving each side as much of their interests as possible so that they see the outcome as a win.

Distributive bargaining and integrative bargaining are not mutually exclusive negotiation approaches. Even in cooperative negotiations, distributive bargaining will come into play. Integrative bargaining is a good way to make the pie as large as it can possibly be, but ultimately the parties must distribute the value that was created through negotiation.