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1. Integrative BargainingIntegrative Bargaining

2. Integrative BargainingIntegrative Bargaining
 Defined: “A negotiating process in whichDefined: “A negotiating process in which
the parties involved strive to integrate theirthe parties involved strive to integrate their
interests, as effectively as possible in theinterests, as effectively as possible in the
final agreement”final agreement”
 Based on Mary Parker Follett’s tale of theBased on Mary Parker Follett’s tale of the
orange and two sisters ANDorange and two sisters AND
 1970s labor relations cooperative1970s labor relations cooperative
approach to collective bargainingapproach to collective bargaining
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3. Integrative BargainingIntegrative Bargaining
 Also called:Also called:
 ““Win-Win” (Win-Win” (Getting to YesGetting to Yes by Fisher and Ury)by Fisher and Ury)
 ““Mutual-gains” approachMutual-gains” approach
 ““Expandable pie” approachExpandable pie” approach
 All have in common the integrativeAll have in common the integrative
approach:approach:
 CreateCreate as much value as possible for bothas much value as possible for both
sidessides
 ClaimClaim as much value as possible to meet youras much value as possible to meet your
interestsinterests
4-3

4. Negotiation SkillsNegotiation Skills
 Skill 4.1: Key elements ofSkill 4.1: Key elements of integrativeintegrative
bargainingbargaining
 Skill 4.2: Apply theSkill 4.2: Apply the categorization methodcategorization method
 Skill 4.3: Recognize the first step –Skill 4.3: Recognize the first step – focus onfocus on
the interests of the parties involvedthe interests of the parties involved
 Skill 4.4: PracticeSkill 4.4: Practice active listeningactive listening
 Skill 4.5: Utilize theSkill 4.5: Utilize the packagingpackaging tactictactic
 Skill 4.6: ApplySkill 4.6: Apply interest-based bargaininginterest-based bargaining
(IBB)(IBB)
4-4

5. Differences Between DistributiveDifferences Between Distributive
and Integrative Bargainingand Integrative Bargaining
DistributiveDistributive
1.1. One issue (or one at aOne issue (or one at a
time)time)
2.2. “Win-Lose”“Win-Lose”
3.3. Maximize share of “fixedMaximize share of “fixed
pie”pie”
4.4. One-time relationshipOne-time relationship
5.5. Keep interests hiddenKeep interests hidden
6.6. One expressed positionOne expressed position
for each issuefor each issue
7.7. Keep information hiddenKeep information hidden
IntegrativeIntegrative
1.1. Several issuesSeveral issues
2.2. ““Win-Win”Win-Win”
3.3. ““Expand the pie” byExpand the pie” by
creating and claimingcreating and claiming
valuevalue
4.4. Continuing long-termContinuing long-term
relationshiprelationship
5.5. Share interests with otherShare interests with other
partyparty
6.6. Create many options perCreate many options per
issue to maximize mutualissue to maximize mutual
gainsgains
7.7. Share information,Share information,
explain “why” of issueexplain “why” of issue
4-5

6. Chapter Case: LaborChapter Case: Labor
Contract NegotiationsContract Negotiations
 Ohio Metals Co. (management) and LocalOhio Metals Co. (management) and Local
56 of the Primary Sheet Metal Workers of56 of the Primary Sheet Metal Workers of
America, AFL-CIO’s current three-yearAmerica, AFL-CIO’s current three-year
contract is about to expirecontract is about to expire
 There is a history of a positive labor-There is a history of a positive labor-
management climatemanagement climate
 Management shares financial data for theManagement shares financial data for the
past three years; union shares survey ofpast three years; union shares survey of
members’ interestsmembers’ interests
 At the first meeting both share lists ofAt the first meeting both share lists of
economic and noneconomic issueseconomic and noneconomic issues
4-6

7. Thompson’s PyramidThompson’s Pyramid
ModelModel
 Integrative negotiations is both a process – how toIntegrative negotiations is both a process – how to
bargain, and an outcome – mutual gainbargain, and an outcome – mutual gain
____________________________________________________________________________________________
Level 3: Pareto Optimal – Maximum value for both partiesLevel 3: Pareto Optimal – Maximum value for both parties
Level 2: Superior Agreement – Create additional value for bothLevel 2: Superior Agreement – Create additional value for both
partiesparties
Level 1: Agreement – Exceeds both parties’ reservation points orLevel 1: Agreement – Exceeds both parties’ reservation points or
BATNABATNA
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8. The CategorizationThe Categorization
MethodMethod
Step One: Identify all issuesStep One: Identify all issues
Step Two: Classify each issue asStep Two: Classify each issue as
a. compatiblea. compatible
b. exchangeb. exchange
c. distributivec. distributive
Step Three: Agree on all compatible issuesStep Three: Agree on all compatible issues
Step Four: Trade or exchange issues ofStep Four: Trade or exchange issues of
approximately equal valueapproximately equal value
Step Five: Use distributive bargaining on allStep Five: Use distributive bargaining on all
unresolved issuesunresolved issues
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9. Tactics for Success:Tactics for Success:
Practice Active ListeningPractice Active Listening
 Active Listening = focus on what the otherActive Listening = focus on what the other
person is saying, understanding both theperson is saying, understanding both the
content and emotioncontent and emotion
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10. Practice Tips for ActivePractice Tips for Active
ListeningListening
#1 Maintain eye contact#1 Maintain eye contact
#2 Think only about what they are saying,#2 Think only about what they are saying,
don’t formulate a responsedon’t formulate a response
#3 Take notes and use them to reflect their#3 Take notes and use them to reflect their
thoughts backthoughts back
#4 Pay attention to body language#4 Pay attention to body language
#5 Confirm that you heard and understand#5 Confirm that you heard and understand
by summarizing – ask reflective andby summarizing – ask reflective and
probing questionsprobing questions
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11. The Five Steps of the Categorization
Method of Integrative Bargaining

12. Applying the CategorizationApplying the Categorization
Method to the Chapter CaseMethod to the Chapter Case
 Step 1: Thirteen issues identifiedStep 1: Thirteen issues identified
 Step 2: All issues classifiedStep 2: All issues classified
 Step 3: Agreed on three compatible issues (length ofStep 3: Agreed on three compatible issues (length of
contract [1]; drug testing [5]; no strike/no lockout [8])contract [1]; drug testing [5]; no strike/no lockout [8])
 Step 4: ExchangedStep 4: Exchanged
 Union’s job security [11] for management’s subcontracting [10]Union’s job security [11] for management’s subcontracting [10]
 Union’s pension proposal [2] for management’s shift differential [9]Union’s pension proposal [2] for management’s shift differential [9]
 Union’s clothing allowance [12] for management’s funeral leave [7]Union’s clothing allowance [12] for management’s funeral leave [7]
 Management’s profit sharing [4] for union’s overtime [13]Management’s profit sharing [4] for union’s overtime [13]
 Step 5: Distributive bargaining used to settle wageStep 5: Distributive bargaining used to settle wage
increase [3] and health care insurance [6]increase [3] and health care insurance [6]
4-12

13. Keys to SuccessfulKeys to Successful
Integrative BargainingIntegrative Bargaining
1.1. Willing participationWilling participation: Open: Open
discussions, explore new options anddiscussions, explore new options and
mutual gainsmutual gains
2.2. RelationshipRelationship:: Positive long term isPositive long term is
valuedvalued
3.3. Collaborative atmosphereCollaborative atmosphere: Avoid “fighter: Avoid “fighter
pilot lock-on” over an issue or positionpilot lock-on” over an issue or position
4.4. PackagingPackaging: Combine two or more issues: Combine two or more issues
into one proposal of equal gains for bothinto one proposal of equal gains for both
4-13

14. Labor Contract Negotiations
Through Integrative Bargaining

15. Tactics for Success:Tactics for Success:
Use Questions to Advance NegotiationsUse Questions to Advance Negotiations
1.1. Open-endedOpen-ended  “What type of clientele would“What type of clientele would
this advance course attract?”this advance course attract?”
2.2. Open-ended with explanationOpen-ended with explanation  “The basic“The basic
course targets entry-level employees. Whatcourse targets entry-level employees. What
type of clientele would this advance coursetype of clientele would this advance course
attract?”attract?”
3.3. Moving from debate to dialogueMoving from debate to dialogue  “What“What
profit margin do you need for the advancedprofit margin do you need for the advanced
course to be successful?”course to be successful?”
4.4. Broad-based, clarificationBroad-based, clarification  “You’re clearly“You’re clearly
concerned about taking on additional risks, soconcerned about taking on additional risks, so
what exactly do you see as the risk to you inwhat exactly do you see as the risk to you in
offering the advanced course?”offering the advanced course?”
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16. Tactics for SuccessTactics for Success
(cont.)(cont.)
5.5. CircularCircular  “How do you conduct a marketing“How do you conduct a marketing
campaign?” “What is the difference between acampaign?” “What is the difference between a
basic and advanced course?”basic and advanced course?”
6.6. LeadingLeading  “Can you see that my firm is taking“Can you see that my firm is taking
all the risks in this proposal?”all the risks in this proposal?”
7.7. LoadedLoaded  “Are you saying these unfair“Are you saying these unfair
payment terms are the only ones you willpayment terms are the only ones you will
accept?”accept?”
8.8. Underlying concernsUnderlying concerns  “What type of“What type of
payment arrangement would reward you for thepayment arrangement would reward you for the
risk and provide your firm an adequate profit?”risk and provide your firm an adequate profit?”
9.9. Seeking creative solutionsSeeking creative solutions  “Why is it“Why is it
4-16

17. Limitations of theLimitations of the
Categorization MethodCategorization Method
1.1. Parties believe they use “win-win,” but inParties believe they use “win-win,” but in
reality use distributive method on eachreality use distributive method on each
issueissue
2.2. Imbalance of power causes one party toImbalance of power causes one party to
use “win-lose”use “win-lose”
3.3. Overconfidence in knowledge of otherOverconfidence in knowledge of other
party and failure to actively listenparty and failure to actively listen
4-17

18. Traps to Avoid:Traps to Avoid:
How to Respond to a LoadedHow to Respond to a Loaded
QuestionQuestion
““Are you telling me thoseAre you telling me those unfair termsunfair terms are the only onesare the only ones
you will accept?”you will accept?”
Possible responses: (don’t respond in anger, insteadPossible responses: (don’t respond in anger, instead
evaluate the emotions)evaluate the emotions)
1.1. Silence: followed by returning to the prior issueSilence: followed by returning to the prior issue
2.2. Humor: “I have other demands you will like evenHumor: “I have other demands you will like even
less!”less!”
3.3. Take a break: “We need to go outside for some freshTake a break: “We need to go outside for some fresh
air”air”
4.4. Call it what it is: “I consider that a loaded question,Call it what it is: “I consider that a loaded question,
are these the only terms I will accept…?”are these the only terms I will accept…?”
4-18

19. Interest-Based BargainingInterest-Based Bargaining
(IBB)(IBB)
 Increasing in popularity, butIncreasing in popularity, but
subject of debate: Is IBB a criticalsubject of debate: Is IBB a critical
negotiation improvement or a new label fornegotiation improvement or a new label for
“integrative bargaining” (“principled“integrative bargaining” (“principled
negotiation” fromnegotiation” from Getting to YesGetting to Yes)?)?
 2004 study: IBB effective, but negotiators2004 study: IBB effective, but negotiators
also return to distributive bargaining onalso return to distributive bargaining on
tough issuestough issues
4-19

20. Principles of IBBPrinciples of IBB
 Negotiators view the process as one ofNegotiators view the process as one of
problem solvingproblem solving
 IBB steps (according to FMCS)IBB steps (according to FMCS)
1.1. Sharing of informationSharing of information
2.2. Willingness to forgo power or leverageWillingness to forgo power or leverage
3.3. Brainstorming to create optionsBrainstorming to create options
4.4. Focusing on issues, not personalitiesFocusing on issues, not personalities
5.5. Leaving past issues behindLeaving past issues behind
6.6. Expressing interests, not positionsExpressing interests, not positions
7.7. Both parties, committing to IBBBoth parties, committing to IBB
4-20

21. Advantages andAdvantages and
Disadvantages of IBBDisadvantages of IBB
 AdvantagesAdvantages
 Focus is on underlying interestsFocus is on underlying interests
 Brainstorming leads to more options, betterBrainstorming leads to more options, better
solutionssolutions
 Parties seek out new options rather than defendParties seek out new options rather than defend
portionsportions
 DisadvantagesDisadvantages
 May waste time seeking more optionsMay waste time seeking more options
 Proposed options may not be realisticProposed options may not be realistic
 Standards agreed to may be vague and subjectiveStandards agreed to may be vague and subjective
4-21

22. Union and Management Negotiators’ Reports on IBB
Activities