You see a used car advertised for sale online that looks great. You go see the car. It’s perfect, and you want it. The owner tells you the asking price. You don’t want to pay that much. The two of you negotiate. The negotiating strategy you’re engaging in is called distributive bargaining. Its identifying feature is that it operates under zero-sum conditions—that is, any gain I make is at your expense, and vice versa (see Chapter 13). Every dollar you can get the seller to cut from the car’s price is a dollar you save, and every dollar the seller can get from you comes at your expense. The essence of distributive bargaining is negotiating over who gets what share of a fixed pie. By fixed pie, we mean a set amount of goods or services to be divvied up. When the pie is fixed, or the parties believe it is, they tend to bargain distributively.

The essence of distributive bargaining is depicted in Exhibit 14-5. Parties A and B represent two negotiators. Each has a target point that defines what he or she would like to achieve. Each also has a resistance point, which marks the lowest acceptable outcome—the point beyond which the party would break off negotiations rather than accept a less favorable settlement. The area between these two points makes up each party’s aspiration range. As long as there is some overlap between A’s and B’s aspiration ranges, there exists a settlement range in which each one’s aspirations can be met.

When you are engaged in distributive bargaining, one of the best things you can do is make the first offer and make it an aggressive one. Making the first offer shows power; individuals in power are much more likely to make initial offers, speak first at meetings, and thereby gain the advantage. Another reason this is a good strategy is the anchoring bias, mentioned in Chapter 6. People tend to fixate on initial information. Once that anchoring point has been set, they fail to adequately adjust it based on subsequent information. A savvy negotiator sets an anchor with the initial offer, and scores of negotiation studies show that such anchors greatly favor the person who sets them.30

Jake was a Chicago luxury boutique owned by Jim Wetzel and Lance Lawson. In the early days of the business, Wetzel and Lawson moved millions of dollars of merchandise from many up-and-coming designers. They developed such a good rapport that many designers would send allotments to Jake without requiring advance payment. When the economy soured in 2008, Jake had trouble selling inventory, and designers were not being paid for what they had shipped to the store. Despite the fact that many designers were willing to work with the store on a delayed payment plan, Wetzel and Lawson stopped returning their calls. Lamented one designer, Doo-Ri Chung, “You kind of feel this familiarity with people who supported you for so long. When they have cash-flow issues, you want to make sure you are there for them as well.”31 Chung’s attitude shows the promise of integrative bargaining. In contrast to distributive bargaining, integrative bargaining assumes that one or more of the possible settlements can create a win–win solution. Of course, as the Jake example shows, both parties must be engaged for integrative bargaining to work.

In terms of intraorganizational behavior, integrative bargaining is preferable to distributive bargaining because the former builds long-term relationships. Integrative bargaining bonds negotiators and allows them to leave the bargaining table feeling they have achieved a victory. Distributive bargaining, however, leaves one party a loser. It tends to build animosity and deepen divisions when people have to work together on an ongoing basis. Research shows that over repeated bargaining episodes, a losing party who feels positively about the negotiation outcome is much more likely to bargain cooperatively in subsequent negotiations.

Why, then, don’t we see more integrative bargaining in organizations? The answer lies in the conditions necessary for it to succeed. These include opposing parties who are open with information and candid about concerns, are sensitive to the other’s needs and trust, and maintain flexibility. Because these conditions seldom exist in organizations, negotiations often take a win-at-any-cost dynamic.

Compromise and accommodation may be your worst enemy in negotiating a win–win agreement. Both reduce the pressure to bargain integratively. After all, if you or your opponent caves in easily, no one needs to be creative to reach a settlement. Consider a classic example in which two siblings are arguing over who gets an orange. Unknown to them, one sibling wants the orange to drink the juice, whereas the other wants the orange peel to bake a cake. If one capitulates and gives the other the orange, they will not be forced to explore their reasons for wanting the orange, and thus they will never find the win–win solution: They could each have the orange because they want different parts.