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Negotiation Feedback Paper

In: Business and Management

Submitted By maniaa545
Words 1528
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In this negotiation exercise, my partner and I attempted to negotiate the sale of the Bullard Houses, a historic property in the fictional city of Gotham City. My partner had the role of a representative for Downtown, Inc., the current property owners. He was attempting to negotiate a deal to sell the property to a buyer that would revitalize the current property as a luxury residential housing complex. I had the role of a senior partner from Jones & Jones, a leading real estate firm, negotiating the sale on behalf of Absentia, Ltd. Absentia, Inc., which is controlled by the Conrad Milton Hotel Group and wanted to purchase the property to develop a luxury hotel. Under strict instructions from my client, I was not allowed the divulge the intended use of the property. Following a tense 45-­‐minute negotiation, we failed to reach a negotiated settlement. The issue which led to this impasse was the mix of residential and commercial content of the redeveloped property. I was not able to disclose if any of my client’s proposal would include commercial components and this clearly frustrated my partner. Initial Perceptions, Reactions and Feelings My first impression of my negotiating counterpart was that he was extremely well prepared for the negotiation. I believe this preparation led him to ask probing questions that made me feel uncomfortable at times during the negotiation. In addition, my partner did an excellent job expressing his interests, the “underlying concerns, needs, desires or fears” that motivated him to take a particular stance on an issue (Lewicki, 2014) In this case, his client’s preference that the property become a luxury residential development.

This negotiation forced both my partner and I to face an ethical dilemma; the actions or strategies we used could have put the economic benefits of reaching a settlement (i.e., money from the sale of the property) in conflict with our social responsibilities from our clients (Lewicki, 2014). In order to get a deal, one or both of us would need to do something ethically questionable: I would have to outright lie about my client’s commercial intent, both of us would have to violate our client wishes, or my partner would have to violate his client’s preference and accept a deal with no mention of residential or commercial use. To handle this ethical dilemma, we both chose to use different ethical reasoning approaches. I chose to work from a social contract ethics reasoning, where the appropriateness of a tactic is based on the “customs and norms of a particular society or community” (Lewicki, 2014). For example, I chose to not directly disclose to my partner my client’s commercial intentions for the property since it is largely acceptable in the community to deceive by omission (i.e., buyer beware; or in this case, seller beware!). My partner on the other hand used a duty ethics reasoning, where the rightness of an action is determined by one’s obligations to adhere to consistent principles, laws, and social standards (Lewicki, 2015), to approach his ethical dilemma. My partner would not accept a deal that would violate the instructions from his client. A negotiated settlement was not possible as a result of his choice.

Effective Negotiation Tactics The most effective tactic that my partner used during the negotiation was asking probing questions. For example, he began by asking, “What is your client’s intended use for the property?”. My reply was that my client would revitalize the current Bullard Houses, maintaining the current structure with a complete interior renovation. He then asked if the property be used for residential uses, commercial uses, or a mixture of both. I dodged the question and tried to refuse to answer. He continued to probe for an answer by slightly rewording the questions. I was feeling more uncomfortable with every answer and I believe my partner realized this as well. After several more attempts of him asking about my client’s intention for the property, I replied that I was not authorized by my client to disclose if some or any commercial development was part of their redevelopment plan. My partner then stated that he could not accept a settlement without that information. This effectively ended the negotiation. It was clear to both of us that negative bargaining zone existed with respect to the amount of commercial use in the proposed development. While I did not technically disclose my client’s hotel development intentions, my partners probing questions had me indirectly disclose that my client’s plan involved significant commercial usage. This was certainly more information than I planned to reveal in the negotiation and it was key in ensuring that my partner would not accept a bad deal for his client. My partner also utilized several other effective tactics to deal with my deception throughout the exercise. For example, he asked several direct questions that forced me to either other outright lie or back off from my previous statements. For example, my partner asked if my client’s plans were going to require rezoning of the land. While I knew that my client would require the land to be rezoned, I replied that the land was already zoned for mixed residential and commercial uses that this would likely be sufficient. This was technically a lie since I knew my client would need to rezone the property, but I judged this acceptable within social contract ethical reasoning (i.e., a white lie). In addition, my partner also called out my tactic during the negotiation by stating that he had several other offers that outline the proposed mixed residential use and I should be prepared to outline my client’s proposal in the same detail. I believe this was done tactfully. It should be noted that my partner did not simply ignore the tactic or respond in kind, which likely would have escalated conflict during the exercise. Ineffective Negotiation Tactics While I believe that my partner mostly used effective negotiation tactics, there were a few tactics that were ineffective. In my opinion, my partner raised his voice and was noticeable upset with my opening offer of $11 million for the property. I believed this was a reasonable opening offer based on the given information that other similar luxury residential properties had sold for $11.5–$13.5 million. I thought my partner’s reaction started our negotiation with

the wrong tone. I believe my partner’s reaction was the result of a flinch or the endowment effect. A flinch, a hardball tactic, is a purposefully extreme reaction to an opening offer designed to generate a feeling that someone’s counterpart has gone beyond a reasonable level for their opening offer and can cause them to make two consecutive concessions (Lewicki, 2014). The endowment effect is cognitive bias that is a tendency for someone to overvalue something he or she owns, or believe he or she possess (Lewicki, 2014). In addition, my partner may have used some aggressive behaviour during our negotiation exercise by raising his voice while asking me to divulge my client’s intended use of the property. The negotiation felt like an interrogation at times. While I believe the actual questions asked were an effective tactic, I did not feel the tone in which the questions were asked was appropriate. I suspect this tone was a result of my deceptive answers, but it is possible that my partner may have purposely used it as a hardball tactic. In addition, my negotiating counterpart made the mistake to disclose a little too much information voluntarily (i.e., not in response to a question I asked). My partner stated that a member of a Bullard family was running for mayor. This information suggested that even if we were to reach a settlement, a settlement would not be in the best interest of my client since rezoning of the land would not be possible. Conclusions and Advice My partner superbly counteracted my use of deceptive tactics by asking probing and direct questions, and tactfully calling out the deception. However, it was clear that my partner also utilized some ineffective tactics. I would recommend that my partner look out for cognitive biases, such as the endowment effect while negotiating, and avoid the use of hardball tactics, such as the flinch and aggressive behaviour. My partner should also take care not to disclose too much information voluntarily. In addition, I recommend that my partner never quit negotiating. I felt like I may have been negotiating with myself for the last 15 minutes of the exercise. Malhotra & Bazerman (2007) recommend to “continue to investigate even after the deal appears to be lost.” I would also recommend that my partner tries proposing a contingency contact: “If more than X% of the property is commercially developed, than an extra $Y million must be paid.” Another tactic my partner could use to deal with deception is by discussing with his counterpart the deception that he observes and offer to help the change to more honest behaviours.

References Lewicki, R., Saunders, D., Barry, B., & Tasa, K. (2014). Essentials of negotiation (2nd Canadian ed.). Canada: McGraw-­‐Hill Ryerson. Malhotra, D., & Bazerman, M.H. (2007). Investigative Negotiation. Harvard Business Review, 85, 72-­‐78.

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