There are two opposite types or schools of negotiation: Integrative and Distributive. This article introduces the important differences between each negotiating type, and gives advice on which one may be right for your negotiation.
Like it or not, everybody is a negotiator. We use negotiation techniques almost every day. We negotiated when we were kids trading sports cards or toys. We still do it today when we negotiate with the boss for a salary raise, or to buy bigger toys like autos and the latest gimmicks. It doesn’t stop there either because we also use negotiation in our personal lives. We all have some combination of family, friends, significant other, or kids. At some level, we negotiate with them all the time without even knowing it.
Many people don’t like to negotiate because they view it as a hassle. Even though we might consciously think we’re avoiding the blatant negotiation process, we end up doing it without realising that’s exactly what’s happening. So we may as well learn how to do it well, and decide which of the 2 negotiation types to use.
Removing the veil, we find there are two relatively distinct types of negotiation. The two types are known as distributive negotiations, and integrative negotiations.The Negotiation Experts’ Sales course and Purchasing Negotiation course teach both methods, as both are essential to negotiate successfully in business.
Distributive Negotiations – the Fixed Pie
The term distributive means; there is a giving out; or the scattering of things. By its mere nature, there is a limit or finite amount in the thing being distributed or divided amongst the people involved. Hence, this type of negotiation is often referred to as ‘The Fixed Pie’. There is only so much to go around, but the proportion to be distributed is limited but also variable. How many times has somebody shouted out, ‘Who wants the last piece of pizza?’ Everyone looks at each other, then the pizza slice, and two or more hands rush to grab it.
In the real world of negotiations, two parties face off with the goal of getting as much as possible. The seller wants to go after the best price they can obtain, while the buyer wants to pay the lowest price to achieve the best bargain. It’s really just good old plain haggling, which is not all that much different from playing a tug of war.
A distributive negotiation usually involves negotiators who start from never having had a previous relationship, nor are they likely to do continue post negotiation with a longer term relationship in the future. Simple everyday examples, would be when we’re buying or selling a car or a house. Purchasing products or services are simple business examples where distributive negotiation bargaining is often employed. Remember, even friends or business acquaintances can drive a hard bargain just as well as any stranger.
Secondly, when we are dealing with someone unknown to us, and it’s a one time only occurrence, we really have no particular interest in forming a relationship with them, except for the purpose of the deal itself. We are generally less concerned with how they perceive us, or how they might regard our reputation. Ours and their interests are usually self serving.
Distributive Bargaining Basics
- Play your cards close to your chest – Give little or no information to the other side. The less they know about our interests as to why we want to make the purchase, our preferences, or the point at which we’d decline to deal, the better our position. Expressing eagerness or need, reveals a weakness which could be exploited to our disadvantage.
- The opposite is equally true – Try to pry as much information from the other side. Any additional information that we uncover can be used as leverage to negotiate a better deal.
- The only thing you should ever tell – The only information we should ever reveal are those alternative options, such as other sellers, which shows we are prepared to walk from the negotiation whenever it suits us.
- Let them make the first offer – Whatever is used as the first offer will generally act as a negotiation anchor upon which the rest of the negotiation will revolve. Try to get the other side to set the stage from which to start.
- Be realistic – Being too greedy or too stingy will likely result in no agreement, so keep it real.
Integrative Negotiations – Everybody Wins Something (usually)
It’s true that integrative negotiations require a more developed set of business negotiation skills. For this reason, we typically start our negotiation training courses with simple distributive bargaining role plays, and then build up to more complex team based integrative negotiation role plays.
The word integrative means to join several parts into a whole. Conceptually, this implies some cooperation, or a joining of forces to achieve something together. Usually involves a higher degree of trust and a forming of a relationship. Both parties want to walk away feeling they’ve achieved something which has value by getting what each wants. Ideally, it is a twofold process.
In the real world of business, the results often tilt in favour of one party over the other because, it’s unlikely that both parties will come to the table at even strength, when they begin the talks.
Nonetheless, there are many advantages to be gained by both parties, when they take a cooperative approach to skilful mutual problem solving. The process generally involves some form or combination of making value for value concessions, in conjunction with creative problem solving. Generally, this form of negotiation is looking down the road, to them forming a long term relationship to create mutual gain. It is often described as the win-win scenario.
Integrative Negotiation Basics
- Multiple Issues – Integrative negotiations usually entails a multitude of issues to be negotiated, unlike distributive negotiations which generally revolve around the price, or a single issue. In integrative negotiations, each side wants to get something of value while trading something which has a lesser value.
- Sharing – To fully understand each other’s situation, both parties must realistically share as much information as they can to understand the other’s interests. You can’t solve a problem without knowing the parameters. Cooperation is essential.
- Problem Solving – Find solutions to each other’s problems. If you can offer something of lesser value which gives your counterpart something which they need, and this results in you realising your objective, then you have integrated your problems into a positive solution.
- Bridge Building – More and more businesses are engaging in long term relationships. Relationships offer greater security.
We use the two types of negotiation described above all the time. Occasionally, these two different forms of negotiation even overlap. By understanding their nature, we will be better prepared when faced with different situations. By learning more, we can improve both our interpersonal and professional relationships and skills, through an increased awareness of the negotiation process utilised in our everyday lives.