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What Is Integrative Negotiation?
Before we look at the disadvantages of integrative negotiation, first we must understand what it means. If you ever bought or sold a home, you’ve probably used some integrative techniques to get what you want. Integrative negotiation essentially means parties negotiate and everyone wins something.
A home seller may want $80,000 for a home, but it needs to be painted both inside and out. The home buyer may offer $70,000 and pay for the painting once the purchase process is complete. In a case like this, the seller will still get a market value price for the home and not be forced to spend money on painting prior to selling—a win-win for both sides.
On the other hand, a seller may counter and say they will have the interior and exterior of the home painted if the buyer pays the asking price of $80,000, meaning the buyer gets a freshly painted home and the seller gets the price they wanted.
This is a sample of integrative negotiation, but in project management, it often doesn’t work as desired.
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Let’s go back to our client who wants it all, but doesn’t want to pay the required fees your company charges to oversee and manage the project. You could agree to the client’s terms, however, in the long run, you’re losing money so the only winner here is the client.
Because integrative negotiation requires a win-win situation in the end, giving up something and gaining nothing is a great disadvantage to this negotiation technique. Clients who want it all need to understand the reasoning behind your charges—so you need to convince them what they are spending is worth it so you both win; or offer a small discount that won’t affect your profits.
If we look at another example of two vendors fighting for your acceptance as the project supplier, one vendor may offer a lower price with an average product where the other offers a higher price with a guaranteed product. If you try and use integrative negotiation techniques here, you may pick the lower priced vendor, but the quality of the product could harm the project, meaning you don’t win but the vendor wins.
In this vendor example, you may choose the lower priced vendor only if they agree to improve the product quality they deliver meaning they land the contract (win) and you get the lower price (win).
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Tips for Negotiating
With the disadvantage of integrative negotiations, what can you do to ensure if this type of negotiation process is utilized that it will be a win-win situation for both sides?
Compromise – This type of negotiation does require some compromise from both sides, not just one side, so have an idea ahead of time on what you’re willing to give up or counteroffer.
Be Realistic – When it’s time to negotiate be realistic about offers and counteroffers. If you do lose a small profit margin, isn’t it worth it rather than the company losing the project and the client going somewhere else? A successful project outcome with a lower profit margin could also mean referrals from a happy client.
Standing Firm – Make a list of what you absolutely won’t give up such as quality control or phases in the project the client may think unneeded. If your company bases its goals on quality that certainly isn’t something you can give up. If your company insists on using the Agile Management Methodology, you shouldn’t give that up either if you know this methodology will work best.
Team Negotiating – With integrative negotiation you may experience team members that disagree and the project halts. Here, you must listen to both sides, be a facilitator and make compromises both team members can live with.
With integrative negotiation comes some disadvantages, however, often it works better than distributive negotiation where long battles could end up with your company losing the project or teams not working together. Because the distributive outcome usually finds a winner and a loser—this type of negotiation may be hard to tackle and build relationships on, once the negotiations is complete, making integrative negotiation your best choice even with the disadvantages that come with this technique.
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