Negotiations can fall into one of 2 camps. Distributive negotiations and Integrative negotiations. In this post, we discuss what you need to know about integrative negotiations.
Unlike distributive negotiations where each party tries to negotiate a single item such as the price of an item, integrative negotiation entails several related issues to be negotiated. Integrative negotiations integrate the goals of both parties through creative and collaborative problem-solving. They are used when you desire a long-term relationship with the other party and see a negotiated win-win outcome.
During integrative negotiations, you take the other party’s wants, needs, fears, and concerns into the equation. The “I FORESAW IT” mnemonic is a powerful tool that sums up what integrative negotiators should follow to systematically prepare for an important negotiation. Instead of simply worrying about losing less than the other party, you are looking for a solution in which both parties walk away with what they think is a fair deal. Deal outcomes ideally want to be win-win, but often result in compromise deals where each party’s wants and needs were taken into consideration.
Integrative negotiations require a more developed set of business negotiation skills. The word integrative means to join several parts into a whole. Integration implies cooperation, or a joining of forces, to achieve something together. Integrative negotiations involve a higher degree of trust than distributive or one-off negotiations. Both parties need to walk away feeling they’ve achieved something of value. Integrative negotiations does not mean each party got what they wanted going into the negotiations as often, the resulting agreement is a creative option discovered during the business negotiations process that both parties are happy accepting.
There are many advantages to integrative negotiations where both parties take a cooperative approach. Problem-solving during the negotiation process involves brainstorming creative solutions. Integrative negotiations are focused on the future and preserve long-term relationships.
3 Proven Integrative Negotiation Strategies
To maximize the amount of value you can expect from integrated negotiations, the following three strategies should be followed.
Even if you have to make the opening offer, you should have several alternatives. The “I FORESAW IT” model is an awesome tool to help discover potential alternatives through independent research before your face to face meeting.
The best way to uncover the other party’s hidden interests during negotiations is to ask open-ended questions and listen carefully to their answers. In sales and in negotiations, the person asking the questions is the party that is in control. Therefore, you should ask a lot of questions to get a clear picture of the other party’s interests.
To build rapport and demonstrate empathy, you should reveal your own interests. Many negotiators fail to recognize the differences between distributive and integrative negotiations and adopt distributive negotiation strategies. They feel that exposing their interests give the other party an unfair advantage. Negotiators need to recognize that integrative negotiations are different, since your goal is to have a fair deal and hope to have a long-term relationship with the other party. The goal of integrative negotiations is to have a clear understanding of both parties’ interests so that you can collectively find a creative solution that will make both parties happy
Since integrative negotiation typically entails two or more issues to be negotiated, integrative negotiations combine the aims and goals of all involved parties through creative and collaborative problem-solving.
If your efforts to uncover the other party’s interests fail, try a new tactic. Suppose that you’re a salesperson negotiating with a potential client on behalf of your company.
You ask, “Are you more concerned about the cost or the quality of our services?”
Your client replies, “Both!”
You might then inquire,“Would you like us to assign our most senior developer to your account? Her hourly rate is a bit higher than anyone else’s but she’s one of the best in the field.” The client’s response will reveal whether they’re more concerned about price or quality.
Integrative negotiations almost always means playing the game of ‘What-if?’. To test whether a trade genuinely creates value, put yourself in the place of the other party.
By using open-ended questions to discover the other party’s interest, you can use the information you gathered to share what-if scenarios. For example, if keeping unit prices low was an interest of the other party, you might suggest “Would you be willing to double your order if I offered you a 10% discount?”
If you are still unclear about some of the other party’s priorities you can use the what-if process to offer multiple equivalent offers. For example, before you allow the other party to respond to the 10% discount offer, you add “Instead of the 10% discount, I could offer free shipping and one free year of support. Which sounds better to you?”
The goal of proposing different what-if scenarios is to create incremental increases in value by taking advantage of mutually beneficial tradeoffs.
4 Proven Integrative Negotiation Tactics
Negotiate Multiple Issues
Integrative negotiations, as the name implies, involves negotiating multiple issues at the same time. Both parties want to get value by trading things of lesser value for something of greater value. By negotiating several issues at the same time in a distributive manner, you can concede low-value items from you in exchange for low-value items from the other party that have a higher value for you. For example, an extended warranty may cost you very little but may have greater value to the other party.
To understand each party’s situation, both parties should share as much information as possible. Mutually sharing interests helps both parties understand what is important. You can’t solve a problem without knowing the parameters. Cooperation is essential.
Proposing what-if scenarios allows you to find solutions to each party’s problems. By trading something of lesser value in exchange for something of greater value, you can achieve your goals by integrating your problems into a positive solution.
Build Long-Term Relationships
Long-term relationships are the hallmark of business to business negotiations, and offer greater security and the promise of future success for both parties. Let’s face it- no matter how hard you try, not all negotiations end with each party feeling 100% fulfilled. You may walk away feeling that you got a fair deal but the other party got a little better one, and that is okay. Leaving the bargaining table with a fair deal means that both parties are willing to negotiate future deals. In future deals, you will have the ability to remind the other party about how a past deal had greater value to them and drive greater concessions from them on future deals.
How will you apply your new-found knowledge about integrative negotiations?