Integrative Bargaining - Test Yourself #1

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4. Generate Solutions
	Sometimes the obstacle to integrative problem solving is that the parties are not considering enough options. In such a case, they may need to engage in some creative problem-solving techniques aimed at generating new options. Most of these fit what Lax and Sebenius refer to as "creating value, rather than claiming value." These are as follows:
	Expanding the Pie-- Sometimes one side needs to make more resources available to the other side, so that both can obtain their goals. Sometimes both need to work together to increase the resources available to both of them.
		Example:
		The sales force wanted a pay raise. Management was willing, but simply didn’t have the money to pay them. So they agreed on a commission bonus system. For extra sales, the salespeople would get extra bonus payments. (The pie got bigger!)
		Another Example:
		You work in a warehouse that supplies several local branch stores. You want to go on the delivery route to the stores, but your co-worker claims he should go. You can bargain and/or argue over who gets to go. Or, you can both approach the boss and ask if you can both go together. If the boss agrees, he has just "made the pie bigger" for both of y’all.
	Logrolling—This refers to creating a "package deal" where several issues are considered together, rather than separately. Suppose that there are two issues under negotiation: Issue #1 and Issue #2. Also suppose that Issue #1 is very important to you but Issue #2 is not important to you. Through the process of bargaining, you discover that Issue #2 is very important to the other side but they don’t care about how Issue #1 is settled. If you were to offer them their preferred settlement option for Issue #2 in return for them giving you what you want on Issue #1, then you would each achieve a better outcome than if you settled each issue one-at-a-time. You could "give in" on the issue you don’t care about and in return, the other side could "give in" on the issue that you care a lot about. This may be much better than "splitting each issue down the middle."
		Example:
		Suppose Susan just got promoted and left her office. You and your co-worker, John are debating over who should move into Susan’s vacant office. John is a big bird watcher and he wants the office because of its great view of some nearby woodlands and meadows. You want the office because it has some great "real wood" wooden bookcases – much nicer than the metal bookcases in your office. Instead of viewing this issue as, "Do I get the office or does John get the office?" you can view it as a matter of two separate issues – "view" and "bookcase." You may decide to let John have the "view" if he will let you move the "bookcase" to your existing office.
	Cost-Cutting – Sometimes, agreeing to your offer entails some cost to the other person and if you can find a way to reduce their cost, you can facilitate an agreement.
		Example:
		Suppose John is about to accept your offer regarding Susan’s office. But then he hesitates, "If I agree to that, then I will have a nice office but no bookcase in it. I will have to buy my own bookcase then. Will you give me your old bookcases? And will you help me move my books into my new office?" If you agree to his request, then you have cut his costs.
	Nonspecific Compensation – This is where you "pay off" the other side and they can use the payoff as they see fit.
		Example:
		Suppose that John complains about having no bookcases in Susan’s office if you take her bookcase and you reply, "I’ll give you $80 and then you can go to a used furniture store and buy your own bookcase." The $80 is much less than what Susan’s old bookcase is worth but you know that he can buy something for $80 (or less, and pocket the difference). Or maybe he can get the boss to provide him with something. And he can keep the entire $80.
	Bridging – This is where you search for a novel, creative solution that satisfies both sides. Bridging is most likely when three factors are present:
		First, you are thoroughly prepared so that you have an intimate knowledge of the facts involved in negotiations. Second, you understand how the issues and the facts relate to each other. You can explore some creative and unusual links between issues. Are some problems related? Are some settlement options related? Third, you have a healthy sense of creativity. You are able to "take a step back" from the problem to look for new and creative relationships among the variables. You can invent new settlement options. You can break a single issue into multiple underlying dimensions. You can apply options developed in a different context (e.g., in a different industry) and apply them to satisfy your problem.
		*Example #1:*
		John complains about not having a bookcase in Susan’s office if you take her bookcase and he tells you about a different, bigger office (without a window) that is coming vacant that has a great built-in wooden bookcase. You don’t care whether you have a window or not, but you do want a fancy wooden bookcase. So you decide to go for that option. John gets his office with the window and you move into the other office and get your wooden bookcase.
		In this example, we see that knowledge of how one issue (who gets the newly-vacant office) really is made up of two underlying issues (the bookcase, an office with a window) is valuable. Also, being aware of how other options relate to the problem (the other vacant office that has a bookcase) helps generate a creative solution.
		*Example #2*
		In the above example, perhaps you don’t need a fancy bookcase. Perhaps your desire for Susan’s bookcase is really a need for a BIGGER bookcase. Perhaps if you weeded out your old books and donated them to a library (think, tax deduction), you won’t really need a bigger bookcase. If you took some older books that you seldom use and had the secretary scan them into a CD-ROM you could avoid the need for a bigger bookcase. On the other hand, perhaps you want the bigger, wooden bookcase because you want status. Perhaps there might be another object you could acquire for your office (e.g., a painting or a lamp) that conveys the same status. The point is you are actively considering new and creative options that satisfy your underlying goals. Note that many of these examples could fit more than one category. For example, the last example (bridging) could also be viewed as "expanding the pie." But they are all terms to help you generate integrative, win-win solutions.
	Contingencies – This is where you will invoke a provision of the agreement only if something specific happens. (The word "contingency" means "it depends")
		Example:
		You run a small jazz club which has a cover charge when live groups play. The Off-Keys are a jazz trio that you are trying to book. The group’s manager wants $2000 because he thinks the Off-Keys will "pack the house" but you are only offering $1000 because you don’t think they are that popular. So you agree to a contingency agreement. In this contingency agreement, you agree to pay $1000 if less than 200 people show up for the Off-Keys’ concert. You agree to pay $1500 if 200-300 people show up, and you will pay $2000 if more than 300 people show up. Please notice that this arrangement can be viewed as a variation on "expanding the pie’ (as "the pie" gets bigger, both sides get more) or as a variation on "cost cutting" (to prevent you from "taking a bath" on the concert and to secure the income he feels his client deserves, the manager is now motivated to promote the concert to draw a bigger crowd).

Test Yourself:
	When several issues are combined into a "package deal" it is called:
		expanding the pie
		bridging
		cost-cutting
		nonspecific compensation
		logrolling