October 2, 2012

Many persons think of bargaining interactions as wholly unstructured endeavors. They spend a few minutes planning their opening positions and establishing their goals. Once they begin to interact with their opponents, they wing. They fail to appreciate how structured such interactions are.

When parties negotiate, they generally go through six definitive stages. During the Preparation Stage they gather the relevant information and determine their bottom line, their aspirations, and their planned opening position. They should also try to estimate the interests of the opposing side. During the Preliminary State they establish rapport with the other side, and the tone for their interaction. If they do this successfully, the parties are likely to behave more cooperatively and achieve more efficient agreements. During the value creating Information Stage they try to ascertain the different items to be exchanged and determine the underlying interests of the parties with respect to those terms. During the value claiming Distributive Stage, the parties divide the surplus they generated during the Information Stage. When they see an agreement on the horizon, they enter the Closing Stage where they seek to achieve definitive terms. Parties that are more anxious to reach accords tend to close more of the remaining gap than their more patient adversaries. Once final agreements are achieved, many individuals conclude their interaction and leave client satisfaction on the bargaining table. They should use the Cooperative Stage to be certain they have maximized the joint returns. They should briefly explore alternative formulations that may enable them to expand the overall pie and simultaneously improve their respective positions.

How can negotiators know what stage they are in, and how can they most effectively use the different stages to accomplish their overall objectives?