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CHAPTER 16 Handle Conflict, Negotiation, and Decision Making

Don't neglect the power of “yes”

LEARNING OBJECTIVES

At the end of this chapter you will be able to:

· Understand what conflict is, why it is occurring and how to manage it.

· Describe methods for effective negotiations.

· List tools that will help you make more effective and less biased decisions.

 

WHAT'S INSIDE?

· Be a Critical Thinker: Dealing with Deception at the Bargaining Table

· Bringing OB to Life: Intuition and US Airway Flight 1549

· Checking Ethics in OB: Is a Two-Tiered Wage System Ever Justified?

· OB in the Office: What to Do When Face-to-Face Negotiations Are Not Possible: Tips for Negotiating via Email

· OB in the Office: Sooner or Later You'll Know How to Negotiate a Better Raise

· Research Insights: Analytical and Intuitive Decisions: When to Trust Your Gut

· Worth Considering or Best Avoided? Labor and Management Sides Disagree. Is a Strike the Answer?

You are at work and you hear your colleagues disagreeing with each other loudly. Their voices can be heard throughout the office, and you notice people popping their heads up to see what's going on. You are in charge of the team, and you know that your organization prides itself on having a collegial culture. What do you do?

For many people, the answer is clear: Conflict is bad—we need to get rid of it. Conflict makes people uncomfortable and harms our ability to work together, so managers need to step in and resolve differences. Is this always true? Couldn't it be that conflict can also play a positive role in the workplace?

In this chapter, we show that conflict can be good when it surfaces important issues that need to be discussed. The key to managing it is knowing how to determine what kind of conflict is occurring and then using it to generate better decisions. This requires developing skills in areas that are becoming increasingly important in today's workplace: conflict, negotiation, and decision making.

16.1 Manage Conflict

LEARNING OBJECTIVES

Understand what conflict is, why it occurs, and how we can manage it more effectively.

· Define what conflict is and why it occurs.

· Understand conflict management strategies.

· Guard against common conflict management pitfalls.

Why Do We Have Conflict?

Conflict  occurs whenever disagreements exist in a social situation over issues of substance, or whenever emotional antagonisms create frictions between individuals or groups. 1  Team leaders and members can spend considerable time dealing with conflicts. Sometimes they are direct participants, and other times they act as mediators or neutral third parties to help resolve conflicts between other people. 2  Because conflict dynamics are inevitable in the workplace, we need to know how to handle them. 3

Functional and Dysfunctional Conflict

Any type of conflict in teams and organizations can be upsetting both to the individuals directly involved and to others affected by its occurrence. As with the opening example, it can be uncomfortable to work on a team where two coworkers are continually hostile toward each other, or where your team is constantly battling over resources. 4  As  Figure 16.1  points out, however, it's important to recognize that conflict can serve a functional or dysfunctional purpose.

Functional conflict , also called constructive conflict, results in benefits to individuals, the team, or the organization. This positive conflict can bring important problems to the surface so they can be addressed. Constructive conflict increases the amount of information used for decision making. This can allow decisions to be more carefully considered—or perhaps even reconsidered—to increase the chances that the right path of action is taken. Constructive conflict can also be used to stimulate creative solutions to complex problems.

Dysfunctional conflict , or destructive conflict, works to the disadvantage of an individual or team. It diverts energies, hurts group cohesion, promotes interpersonal hostilities, and creates an overall negative environment for workers. This type of conflict occurs when two team members are unable to work together because of interpersonal differences (destructive emotional conflict), or when the members of a work unit fail to act because they cannot agree on task goals (destructive substantive conflict). Destructive conflicts can decrease performance and job satisfaction as well as contribute to absenteeism and job turnover. Managers and team leaders should be alert to destructive conflicts and be quick to take action to prevent or eliminate them—or at least minimize any harm done.

Figure 16.1  The two faces of conflict: functional conflict and dysfunctional conflict

Worth Considering or Best Avoided?

Labor and Management Sides Disagree. Is a Strike the Answer?

It's hard to find a person who isn't in favor of good-quality schools. But when it comes time to change schools in search of a better future, teachers, administrators, and school boards sometimes have a hard time reaching agreement.

Take a case in the city of Chicago. In 2012, Mayor Rahm Emmanuel supported changes to lengthen school days, pay teachers on merit based in part on measures of student performance, close some schools, and open new ones. After months of negotiations, teachers were given a 16 percent salary increase over four years. Nonetheless, the teacher's union went on strike over concerns about teacher evaluations, job security, and rules for hiring and firing teachers.

Even after a tentative agreement was reached by negotiators, the strike continued. Karen Lewis, President of the Chicago Teachers Union, told reporters that teachers were “not happy with the agreement. They'd like it to actually be a lot better.” Robert Bruno, a labor law professor at the University of Illinois at Chicago, said, “I'm hard pressed to imagine how they could have done much better.” A parent commented, “What's the point of going on strike if you don't get everything you need out of it?” 5

When the strike was over, more than 350,000 Chicago school kids had missed nine days of school.

Do the Analysis

In contrast to the Chicago school situation, GM and the Canadian Auto Workers Union negotiated a new labor contract without a strike. The union's top negotiator said his workers, “clearly have a bright future,” and GM's negotiator said a new labor deal “will enable significant new product, technology and process investments.” 6  Is striking the answer when labor–management conflict hits the wall? Who wins and who loses when strikes occur? When conflicts occur, does having the threat of a strike on the table make management more willing to listen? What skills and conditions make reaching agreements more likely in high-conflict situations?

Types of Conflict

A first step in conflict management is determining whether the conflict is functional or dysfunctional. We also need to recognize why the conflict is occurring. Most conflict can be sorted into two basic types—substantive and emotional. 7  Each type is common, ever present, and challenging to deal with. Whereas substantive conflict can be functional when it is used to generate new ideas and new ways of thinking that benefit the individuals or the team, emotional conflict is almost always dysfunctional.

Substantive conflict  is a fundamental disagreement over ends or goals to be pursued and the means for their accomplishment. A dispute with one's boss over a plan of action to be followed is an example of substantive conflict. When people work together every day, it is only normal that different viewpoints on a variety of substantive workplace issues will arise. At times, people will disagree over such things as team and organizational goals, the allocation of resources, the distribution of rewards, policies and procedures, and task assignments.

Emotional conflict  involves interpersonal difficulties that arise over feelings of anger, mistrust, dislike, fear, resentment, and the like. It is commonly known as a “clash of personalities.” How many times, for example, have you heard comments such as, “I can't stand working with him,” or “She always rubs me the wrong way,” or “I wouldn't do what he asked if you begged me?” When emotional conflicts creep into work situations, they can drain energies and distract people from task priorities and goals. Yet, they emerge in a wide variety of settings and are common in teams, among coworkers, and in superior–subordinate relationships.

What Conflict Management Strategy Should I Use?

Most conflict management approaches focus on  conflict resolution , an attempt to eliminate the underlying reasons for conflict. 8  But if the conflict is functional we don't want to eliminate  it, we want to stimulate it to generate positive outcomes. The strategy we use needs to take this into consideration. We can choose between two general approaches:

· Reducing differences involves getting everyone involved to adopt new attitudes, behaviors, and approaches toward one another. This conflict management strategy focuses on conflict resolution and is an appropriate strategy for handling dysfunctional conflict. It does this by appealing to higher values and superordinate identity.

· Tolerating differences involves pushing members to value and appreciate differences. This strategy focuses on conflict management rather than conflict resolution. It does this by emphasizing the benefits of having people think in different ways, including heterogeneous backgrounds, beliefs and perspectives. While it can and should be used for dysfunctional conflict, it is particularly appropriate for functional conflict.

Strategies for Handling Dysfunctional Conflict

When dysfunctional conflict goes unresolved, it often leads to future conflicts of the same or related sort.9 Rather than trying to deny the existence of conflict or settle on a temporary resolution, it is always best to deal with dysfunctional conflicts in such ways that they are completely resolved.

You can do this using direct face-to-face conflict management strategies or indirect and more structural strategies. The latter are required when dysfunctional conflict cannot be directly resolved. Think about it. Aren't there times when personalities and emotions prove irreconcilable? In such cases an indirect, or structural, approach to conflict management can often help.

Relational Conflict

Relational conflict  is emotional conflict that comes from incompatibility in identity, ideology, interpersonal style and values.10 We see this in public discourse currently in conflict over political party ideologies and identities and in global contexts in conflicts between ethnic groups. It also occurs in the workplace when employees with different techincal training argue over performance standards or approaches to getting work done.

One strategy for reducing relational conflict is the  ladder of inference , in which members critically analyze why they have a particular ideological belief.11 The ladder of inference works to address identities and ideologies that are part of our cognitive scripts and schema. Another strategy is to reduce perceived differences by developing more inclusive categories through recategorization, decategorization, or cross-categorization. Perhaps the most well-known way of doing this is  superordinate identity .12 For example, instead of “We are Democrats” and “We are Republicans,” superordinate identity is, “We are all Americans.”

Upward referral  uses the chain of command for conflict resolution.13 Problems are moved up from the level of conflicting individuals or teams for more senior managers to address. While this approach can work, it does have limitations. If conflict is severe and recurring, the continual use of upward referral may sustain conflict rather than result in true conflict resolution, much like children running to their parents rather than resolving conflicts themselves.

Status Conflict

Status conflict  occurs when individuals or groups attempt to establish hierarchical differentiation or undermine the authority of others.14 This conflict is inherently political in that it comes from power differences. It can be seen when a low-power person needs the help of a high-power person who does not respond, when people who hold dramatically different values are forced to work together on a task, or when a high-status person is required to interact with and perhaps be dependent on someone of lower status.

Process Conflict

Process conflict  is disagreement in how roles and responsibilities should be assigned.15 It comes from things like arguments over who gets preferred tasks and how much work one party does compared to another. It can also come from task and workflow interdependencies that occur between work units, such as disputes among people and teams who are required to cooperate to meet challenging goals. Process conflict occurs in hospitals, for example, when doctors feel they don't get test results in time to be able to appropriately care for their patient.

Figure 16.2  Structural diff erentiation as a potential source of conflict among functional teams

Process conflict can also come from structural differentiation, when different teams and work units pursue different goals with different time horizons, as shown in Figure 16.2. For example, actual or perceived resource scarcity can also foster destructive conflict. Working relationships are likely to suffer as individuals or teams try to position themselves to gain or retain maximum shares of a limited resource pool. They are also likely to resist having their resources redistributed to others.

There are several effective strategies for handling conflict that is dysfunctional in teams. Figure 16.3 provides a summary of those strategies for conflicts associated with relationships, status, and processes in team coordination.

Strategies for Handling Functional Conflict

Functional conflict, or  task conflict , occurs when people have disagreements about the content and outcomes of tasks being performed.16 It is consistent with substantive conflict as defined earlier. Functional conflict represents disagreements over ideas, procedures, processes or directions that should be used when performing a task. It is critically important in situations of complexity where tasks are ambiguous and uncertain. In these situations, conflicting perspectives are needed because old ways of doing things won't work. Instead, novel and creative solutions to problems are required.

Functional conflict cannot be handled using a reducing differences strategy because eliminating differences gets rid of the diversity needed to address complexity. Instead, you need to capitalize on differences. This is done by what Harvard professor Ronald Heifetz calls  cooking the conflict —creating conditions for people to engage their differences to generate creative tension.17 If the tension is too low, meaning people are not engaging in conflict, then you turn up the heat by injecting tension to pull out the differences. If the tension is too high, meaning conflict is becoming dysfunctional, then you reduce the heat by finding commonality across differences or identifying ways to connect across ideas to move forward.

Figure 16.3  Summary of strategies for handling dysfunctional relationship, status, and process conflicts in teams

Strategies for Handling Dysfunctional Conflict
Type of Conflict	Reduce Differences	Tolerate Differences
Relationship Conflict	· Find common ground · Appeal to higher values, mission, vision · Ladder of inference · Superordinate identity	· Find value in other's identities, beliefs · Upward referral · Perspective taking
Status Conflict	· Negotiate to reduce status differences · Flatten hierarchies and the power structure · Change rules to level status and power · Reduce formalities (e.g., dress code)	· Reinforce and legitimise hierarchy · Highlight value of status differential · Demonstrate benefit of differences in power
Process Conflict	· Distribute responsibilities evenly · Job sharing · Rotate duties and assignment · Appeal to sportsmanship, team expectations	· Clarify distinctiveness of roles · Reinforce areas of specialisation and expertise · Coordinate distance contributions

A key element of managing this in projects is recognizing at which point the conflict is beneficial for task performance and at which point it is detrimental. When it becomes detrimental, you need to reduce the conflict and focus back on how individuals can work together and accomplish the goal.

How Can I Guard against Conflict Management Pitfalls?

As shown in  Figure 16.4 , conflict management strategies can vary in their emphasis on cooperativeness and assertiveness in the interpersonal dynamics of the situation. The key to understanding conflict management approaches is recognizing that not all of them focus on win-win. When some parties lose, the potential for conflict remains and might even escalate. Therefore, you want to try to guard against conflict strategies that pursue lose–lose or win–lose outcomes. 18

Avoid Lose–Lose Strategies

Lose–lose conflict  occurs when nobody fully gets what they want in a conflict situation. The underlying reasons for the conflict remain unaffected, and a similar conflict is likely to occur in the future.

Lose–lose outcomes are likely when the conflict management strategies involve little or no assertiveness. This can occur on a range:

· Avoidance  is when no one acts assertively; everyone pretends the conflict doesn't exist and hopes it will go away.

· Accommodation , or smoothing, is playing down differences and highlighting similarities and areas of agreement; this attempt at peaceful coexistence ignores the real essence of a conflict and often creates frustration and resentment.

· Compromise  occurs when each party shows moderate assertiveness and cooperation and is ultimately willing to give up something of value to the other; because no one gets what they really wanted, the antecedent conditions for future conflicts are established.

Figure 16.4  Five direct conflict management strategies

· occurs when each party shows moderate assertiveness and cooperation and is ultimately willing to give up something of value to the other; because no one gets what they really wanted, the antecedent conditions for future conflicts are established.

Figure 16.4  Five direct conflict management strategies

Minimize Win–Lose Strategies

In  win–lose conflict , one party achieves its desires at the expense and to the exclusion of the other party's desires. This is a high-assertiveness and low-cooperativeness situation. It may result from outright competition in which one party achieves a victory through force, superior skill, or domination. It may also occur as a result of authoritative command, whereby a formal authority such as manager or team leader simply dictates a solution and specifies what is gained and what is lost by whom.

Win–lose strategies fail to address the root causes of the conflict and tend to suppress the desires of at least one of the conflicting parties. As a result, future conflicts over the same issues are likely to occur.

Aim for Win–Win Strategies

Win–win conflict  is achieved by a blend of both high cooperativeness and high assertiveness. 19  Collaboration and problem solving involve recognition by all conflicting parties that something is wrong and needs attention. It stresses gathering and evaluating information in solving disputes and making choices. All relevant issues are raised and openly discussed. Win–win outcomes eliminate the reasons for continuing or resurrecting the conflict because nothing has been avoided or suppressed.

The ultimate test for collaboration and problem solving is whether or not the conflicting parties see that the solution to the conflict achieves each party's goals, is acceptable to both parties, and establishes a process whereby all parties involved see a responsibility to be open and honest about facts and feelings. When success in each of these areas is achieved, the likelihood of true conflict resolution is greatly increased. This process often takes time and consumes lots of energy, however. Each party must be willing to commit.

Collaboration and problem solving aren't always feasible. People may not be willing to come to the table, and strategies used might not be effective. In situations where resolution is possible, however, knowing the right strategy can help.

Know When to Use Alternative Conflict Management Strategies

· Avoidance may be used when an issue is trivial, when more important issues are pressing, or when people need to cool down temporarily and regain perspective.

· Accommodation may be used when issues are more important to others than to yourself or when you want to build credits for use in later disagreements.

· Compromise may be used to arrive at temporary settlements of complex issues or to arrive at expedient solutions when time is limited.

· Authoritative command may be used when quick and decisive action is vital or when unpopular actions must be taken.

· Collaboration and problem solving are used to gain true conflict resolution when time and cost permit.

Study Guide 16.1

Why do we have conflict?

· Conflict appears as a disagreement over issues of substance or emotional antagonisms that create friction between individuals or teams.

· Moderate levels of conflict can be functional for performance, stimulating effort and creativity.

· Too little conflict is dysfunctional when it leads to complacency; too much conflict is dysfunctional when it overwhelms us.

What conflict management strategy should I use?

· Conflict management strategies differ depending on whether the situation involves functional or dysfunctional conflict. Dysfunctional conflict should be eliminated through conflict resolution; functional conflict should be stimulated to generate creative solutions.

· Two broad conflict management strategies are reducing differences and tolerating differences. Reducing differences works for dysfunctional conflict; tolerating conflict works for both functional and dysfunctional conflict.

How can I guard against common conflict management pitfalls?

· Avoid lose–lose conflict, which results from avoidance, accommodation (smoothing), and compromise.

· Minimize win–lose conflict associated with competition and authoritative command.

· Aim for win–win conflict, which is achieved through collaboration and problem solving.

16.2 Learn How to Negotiate

LEARNING OBJECTIVES

Describe methods for effective negotiations.

· Understand why you need to negotiate.

· Know how to use different negotiation strategies.

· Guard against common negotiation pitfalls.

We've all done it. We wish we had negotiated a starting salary or a pay raise. We're kicking ourselves—why didn't we ask for more? If we had, would it have made a difference? Many people avoid negotiation because they think they will be looked upon badly. What they may not realize is that in many cases negotiating effectively is a sign of competence and capability. For some positions, where people are expected to take on leadership or business development responsibilities, you can look bad if you don't negotiate.

In this module, we show you how to be a better negotiator. The trick is being informed and not afraid. When people negotiate effectively, all parties benefit. And although this may sound crazy, negotiating can actually be fun.

Why Should I Negotiate?

Negotiation  is the process of making joint decisions when the parties involved have different preferences. 20  Negotiation applies to a variety of situations, including major issues like job offers and salary agreements, but also everyday job situations like negotiating over job assignments, budgets, departmental resources, policy issues, and directions of new initiatives. It is an essential skill and has special significance in many workplaces today where work is less structured, more collaborative and highly dynamic.

The Need to Negotiate

You and a colleague are starting new jobs after completing your MBA programs. You are both offered a salary of $100,000. You are happy with the salary and accept the position outright, but your colleague negotiates and gets $107,000. You might justify this by saying that it isn't worth risking your reputation or getting your new manager upset over $7,000. But what is the real cost to you? It isn't just the $7,000—it is that amount compounded over a lifetime. If you and your counterpart receive the same pay raises and promotions during your career, after thirty-five years you would have to work eight more years to have the same amount as your colleague. 21

When we don't negotiate or do so well, we lose out on important opportunities and rewards. To negotiate effectively, we need to have bargaining power.  Bargaining power  is the strength of the position we bring to a negotiation situation. 22  When we have high bargaining power, it is easier to negotiate because we have more control over the outcome. Like all power, bargaining power is based on dependencies—the more dependent one party is on the other, the less bargaining power that party has. 23  In the example of the salary negotiation, we have more bargaining power if we have less dependency on the hiring company for a job. The ideal bargaining power situation occurs when we have multiple companies trying to hire us and we can choose the one that fits us best.

Negotiation Goals and Outcomes

In any negotiation, you have to remember that there are two important goals at stake: substance goals and relationship goals. 24   Substance goals  deal with outcomes that relate to the content issues under negotiation. Negotiation over the terms of a contract is one example.  Relationship goals  deal with outcomes that relate to how well people involved in the negotiation and any constituencies they may represent are able to work with one another once the process is concluded. In the new-hire example, the key relationship is with the boss, your coworkers, and the company.

We all know that negotiations don't always end with substance achieved and relationships intact. However, that shouldn't deny the importance of striving for both.  Effective negotiation  occurs when substance issues are resolved and working relationships are maintained or even improved. In practice, think of this as striving to satisfy two criteria for effective negotiation:

· Quality of outcomes. The negotiation results in a quality agreement that is wise and satisfactory to all sides.

· Harmony in relationships. The negotiation is harmonious and fosters rather than inhibits good interpersonal relations.

OB in the Office

What to Do When Face-to-Face Negotiations Are Not Possible: Tips for Negotiating via Email

Negotiations are almost always challenging, and these challenges can be exacerbated when negotiations take place via email instead of face-to-face. Email is now the most used form of corporate communication and it saves both money and time. Research indicates that email negotiations can inhibit the trust and relationship building that are so often at the heart of any resolution. So how can we improve our email negotiations?

First, whenever possible, make sure that email is one forum for negotiating and not the only forum. If face-to-face meetings are not possible, utilize video conferencing options to build rapport. Add telephone and email to follow up on proposals and iron out details.

Make sure your emails are clear and concise and have clear objectives. Read your emails out loud before pressing the send button to make sure they convey the proper tone and avoid innuendo. Choose carefully which parties you copy on the email. It can be tempting to add team members at all levels in the organization, but what may have started out as a targeted communication for one or two people can turn into a stream of consciousness that can go on tangents when so many parties get involved.

Negotiations are all about back-and-forth communication. To encourage that communication make sure to ask specific questions via email and state what your intended goals are. Follow up if you do not receive the answers you are seeking. Make sure there is a back-and-forth discussion rather than a one-sided communication.

Pay specific attention to the subject lines of your emails because those few words are the first impression each party has. They should also be informative and can be changed when you forward a communication to parties new to the negotiation.

When it feels as though the tone of the conversation is losing productivity and efficiency, remember to bring the personal relationship back into play and follow up with a phone call or video conference. Use email as one of a variety of negotiating tools but not the only one.

How Do I Negotiate?

Once we have made the decision to negotiate, we need to know how to do it. This involves understanding the basic negotiating strategies available and the steps in the negotiation process.

Understand Negotiation Strategies

In most negotiations, there are two broad strategies you can use, and they differ markedly in approach and possible outcomes.25 Which one you use can have a major influence on how the negotiation transpires and the outcomes that result.

The first is  distributive negotiation . It focuses on positions staked out or declared by conflicting parties. In distributive negotiation, each party tries to claim certain portions of the available pie whose overall size is considered fixed. Distributive negotiation is analogous to the notion of “my way or the highway.”

The second is  integrative negotiation . Also called principled negotiation, it focuses on the merits of the issues. In integrative negotiation, the parties involved look for mutually agreed-upon ways of distributing the pie, rather than staking claims to certain portions of it. They try to enlarge the available pie. Integrative negotiation is analogous to, “Let's find a way to make this work for both of us.”

OB in the Office

Sooner or Later You'll Need to Know How to Negotiate a Better Raise

During your career, the time will most assuredly come for you to negotiate a pay raise, a new set of responsibilities, or increased benefits. Chances are, you'll find yourself unprepared for the discussion. You may pay a price for that. There's quite a bit of advice for how to negotiate pay raises. A compilation of thoughts and tips follows.

· Prepare, prepare, prepare: Do the research to find out what others make for a similar position inside and outside the organization, including everything from salary to benefits, bonuses, incentives, and job perks. Internet research at sites like LinkedIn and Glassdoor.com can help you fill in a lot of the blanks here.

· Document and communicate: Identify and communicate your value. Put forth a set of accomplishments that show how you have saved or made money and created value for an employer or how your skills and attributes will do so for a prospective one.

· Advocate and ask: Be your own best advocate. In salary negotiation, the rule is “Don't ask, don't get.” But don't ask too soon—your boss or interviewer should be the first to bring up salary.

· Stay focused on the goal: The goal is to satisfy your interests to the maximum extent possible. This means everything from getting immediate satisfaction to being better positioned for future satisfaction.

· View the details from the other side: Test your requests against the employer's point of view. Ask if you are being reasonable, convincing, and fair. Think about the other person's perspective: How can the boss explain to higher levels and to your peers a decision to grant your request?

· Don't overreact to bad news: Never quit on the spot if you don't get what you want. Be willing to search for and consider alternative job offers.

Distributive Negotiation

Participants in distributive negotiation usually approach it as a  win–lose episode . Distributive negotiation tends to unfold in one of two directions: a hard battle for dominance or a soft and quick concession. Neither one delivers great results.

· Hard bargaining : Each party holds out to get its own way. Parties seek dominance over the other and try to maximize self-interests, leading to competition. This approach may lead to a win–lose outcome in which one party dominates and gains, or it can lead to an impasse.

· Soft bargaining : One or both parties make concessions just to get things over with. This leads to accommodation, in which one party gives in to the other, or compromise, in which each party gives up something of value in order to reach agreement. In both cases some latent dissatisfaction is likely to remain.

Figure 16.5  illustrates classic two-party distributive negotiation by the example of the graduating senior negotiating a job offer with a recruiter. 26  Look at the situation first from the graduate's perspective. She has told the recruiter that she would like a salary of $60,000; this is her initial offer. However, she also has in mind a minimum reservation point of $50,000—the lowest salary that she will accept for this job. Thus, she communicates a salary request of $60,000 but is willing to accept one as low as $50,000. The situation is somewhat the reverse from the recruiter's perspective. His initial offer to the graduate is $45,000, and his maximum reservation point is $55,000; this is the most he is prepared to pay.

Figure 16.5  The bargaining zone in classic two-party negotiation

The  bargaining zone  is the range between one party's minimum reservation point and the other party's maximum reservation point. In  Figure 16.5 , the bargaining zone is $50,000 to $55,000. This is a positive bargaining zone since the reservation points of the two parties overlap. Whenever a positive bargaining zone exists, bargaining has room to unfold. Had the graduate's minimum reservation point been greater than the recruiter's maximum reservation point (for example, $57,000), no room would have existed for bargaining.

Classic two-party bargaining always involves the delicate task discovering the respective reservation points—one's own and the other's. Progress can then be made toward an agreement that lies somewhere within the bargaining zone.

Checking Ethics in OB

Is a Two-Tier Wage System Ever Justified?

The time is the early 2000s. The industry is the domestic auto industry. The “Big Three”—Chrysler, Ford, and General Motors—are struggling. It is tough to earn a profit because costs, especially legacy pension costs, are high. Competition from foreign carmakers is also increasing. They are building new cost-efficient plants and making huge inroads in the domestic companies' market share.

How did America's big firms respond? They decided to use a two-tier wage system that paid new workers substantially less (up to one-half less) than existing workers doing the same job and put a ceiling on the newer workers' wages, which meant they could never be paid more than $19 an hour. Going along with this system meant saving thousands of jobs, so the industry's labor unions went along. Following the Great Recession that began in 2008, the strategy seemed to have been a wise one, as car sales dropped dramatically. However, discontent grew among the newer workers who knew they could never hope to earn at the level of their coworkers who had been hired before 2007.27 In 2015, the UAW and General Motors negotiated a new contract for workers that included the end of the two-tier system.28

Do the Analysis

Is saving thousands of jobs a sufficient justification for paying workers doing the same job different wages? Do more senior workers deserve to make more money than their less experienced coworkers? Was the negotiation of a two-tier wage system a win-win for automakers and workers in 2007? What are the pros and cons of a two-tier wage system?

Integrative (Principled) Negotiation

The integrative, or principled, approach involves a willingness to negotiate based on the merits of the situation. It is less confrontational than the distributive and permits a broader range of alternatives to be considered in the negotiation process by adopting a  win–win  orientation. The foundations for gaining truly integrative agreements can be described as supportive attitudes, constructive behaviors, and good information. Each party must have a willingness to trust one another, a willingness to share information with the other party, and a willingness to ask concrete questions of the other party. Even though it may take longer, the time, energy, and effort needed to negotiate an integrated agreement can be well worth the investment.

To use an integrative approach, you should keep in mind the following principles:

· Separate people from the problem.

· Don't allow emotional considerations to affect the negotiation.

· Focus on interests rather than positions.

· Avoid premature judgments.

· Keep the identification of alternatives separate from their evaluation.

· Judge possible agreements by set criteria or standards.

Be a Critical Thinker

Dealing with Deception at the Bargaining Table

The NFL draft is a critical and important event for draft-eligible players and teams. The stakes are high, as choices about fit between teams and players could have major implications for the careers of young players, the short-term competitiveness of teams, and return on a team's long-term investment.

In the weeks leading up to the NFL draft, and especially during the three days when the event takes place, conditions are rife for trickery, dishonesty, and misdirection. Team managers and owners participate in elaborate ruses and even outright lies to better position themselves for negotiations with other teams, draft picks, and agents.

Former Dallas Cowboys Coach Bill Brandt told USA Today, “I refer to this time before the draft as ‘National Liars Month' in the NFL.”29 Researchers at Harvard University30 have detailed four ethical challenges to honesty and integrity in the negotiations process.

· Ethical Challenge 1: Human nature is such that we are lured by temptation. The more lucrative the reward, the more likely we are to deceive the other party at the negotiating table. Even when directly asked or challenged to be honest, our focus on the reward or bribe could lead us down the path of deception. During a professional sports draft, the rewards for teams and players could be millions of dollars, so players often exaggerate their credentials, teams misdirect in terms of their intentions, and agents fabricate competing offers.

· Ethical Challenge 2: Although we know that there are no guarantees in life, humans strive for certainty and security. When faced with uncertainty, ethics are often compromised, and we become deceptive. The more uncertainty there is in contract negotiations and the outcome of the draft, the more likely teams and players will mislead each other. Each year, only about 7 percent of eligible players are actually drafted by NFL teams.31 For a player in the NFL draft, there is a great deal of uncertainty regarding which team will want him on the roster, which city he could live in, and even whether he'll be drafted at all. With uncertainty and the stakes so high, there is often a great deal of trickery and deception when seeking offers from coaches and team managers. If teams are not certain about a player's likely success in the league, they are prone to misleading competitors about their intentions.

· Ethical Challenge 3: Power, or lack thereof, can affect how we conduct ourselves in negotiations. Humans are self-preservationists. When we feel powerless, our ethical standards could slip. New athletes entering the NFL have often complained about their lack of power in the draft process and in discussions with team ownership, and as such, regularly seek to restore power and credibility in negotiations.

· Ethical Challenge 4: If the likely victims of our deception are anonymous or impersonal, we are more likely to lie. A group of owners, or a team full of unknown peers, is usually much more impersonal than a well-known colleague such as an agent or coach—people with whom players have established rapport.

Be a Critical Thinker

Check Fairness Should there be a penalty for lying at the negotiating table?

Seek Depth If so, what should the penalty be and how should it be applied?

The integrative approach relies on the concept of  BATNA : the best alternative to a negotiated agreement.32 BATNA is important to integrative negotiation because each party must know what he or she will do if an agreement cannot be reached. They must identify and understand their personal interests in the situation and know what is really important to them in the case at hand. When these issues are clear, the parties can work to understand what the other party values and see how they can bring the two together.

Engage the Negotiation Process

The negotiation process does not begin with negotiation but with the decision to negotiate in a particular way. In most cases, a collaborative rather than adversarial attitude will benefit the negotiation process. It helps achieve the win-win associated with integrative negotiation. As described by Stanford professor Margaret Neale, negotiation is “about finding a solution to your counterpart's problem that makes you better off than you would have been had you not negotiated.”33 This requires that you view negotiation not only relative to your interests, but also to the others' interests. This negotiation process can be summarized in three steps.

· Step 1: Assess

Think about the situation and decide whether negotiating is appropriate. Ask yourself, “If I were to negotiate could I generate a positive outcome?” Then think about the other side: “Could negotiating on this issue benefit them?” Try not to jump too quickly to no. Keep your mind open and be creative in broadly exploring the questions. Have others help you if you find yourself answering no when, in fact, negotiating would be beneficial.

· Step 2: Prepare

If the answers to step 1 are yes, the next step is to prepare. This is one of the most crucial stages in negotiation. If you do this properly, the rest can be easy. The key to sound preparation is getting as much information as possible. You also need to know what your bargaining power is. The good news is that with networks and the internet, information is more readily available than ever. To prepare, talk to people. Find out what they know. Ask about what kinds of resources are available. For example, if you are negotiating a job offer, find salary information and know what the market rate is. Remember that salary is just one element of a hiring package—ask others what typical hiring packages are for people in your field.

· Step 3: Engage

The third step is to engage in the negotiation. Don't be afraid to make the first ask as long as you are okay with that outcome. You can also wait and see what is offered and then use that information to make a counteroffer. For principled negotiation, frame your request relative to how it can be mutually beneficial. In the salary negotiation, express that your hope is to stay in the position for a while and tell them that having the right salary will help ensure your longevity. Think through what you will need to be effective in the position and use that to frame your request. If you are being hired to start a new program in the organization, identify the resources you will need to be successful and make your request in that light.

How Can I Guard against Common Negotiation Pitfalls?

The negotiation process can be complex on ethical and many other grounds. It is subject to volatile interpersonal and team dynamics. As if this isn't enough, all negotiators need to guard against the common negotiation pitfalls listed below.34

Myth of the Fixed Pie

The  myth of the fixed pie  is the tendency to stake out your negotiating position based on the assumption that in order to gain your way, something must be subtracted from the gains of the other party. This is a purely distributive approach to negotiation. The whole concept of integrative negotiation is based on the premise that the pie can sometimes be expanded or used to the maximum advantage of all parties, not just one.

Escalating Commitment

Escalating commitment  occurs when negotiations begin with parties stating extreme demands and then people become committed to them and reluctant to back down. Concerns for protecting one's ego and saving face may lead to the irrational escalation of a conflict. Self-discipline is needed to spot tendencies toward escalation in one's own behavior as well as in the behavior of others.

Overconfidence

Overconfidence  occurs when people believe their positions are the only correct ones. As a result they ignore the other party's negotiating power or needs. In some cases, negotiators completely fail to see merits in the other party's position—merits that an outside observer would be sure to spot. Such overconfidence makes it harder to reach a positive common agreement.

Communication Problems

Communication problems can also cause difficulties during a negotiation. As Roger Fisher and William Ury suggested, “negotiation is the process of communicating back and forth for the purpose of reaching a joint decision.” 35  This process can break down because of a  telling problem —the parties don't really talk to each other, at least not in the sense of making themselves truly understood. It can also be damaged by a  hearing problem —the parties are unable or unwilling to listen well enough to understand what the other is saying. Indeed, positive negotiation is most likely when each party engages in active listening and frequently asks questions to clarify what the other is saying. Each party occasionally needs to stand in the other party's shoes and to view the situation from the other's perspective. 36

Know When to Bring in a Third Party

It would be ideal if everyone involved in a negotiation followed high ethical standards of conduct, but an overemphasis on self-interests can sidetrack this goal. The motivation to behave ethically in negotiations can be put to the test by each party's desire to get more than the other from the negotiation or by a belief that there are insufficient resources to satisfy all parties. After the heat of negotiations dies down, the parties may try to rationalize or explain away questionable ethics as unavoidable, harmless, or justified.

After-the-fact rationalizations can have long-term negative consequences, such as not being able to achieve one's wishes again the next time negotiations take place. At the very least, the unethical party may be the target of revenge tactics by those who were disadvantaged. People who have behaved unethically can become entrapped by such behavior and may be more likely to display it again in the future. In such cases, it may be necessary to bring in a third party. In a process called  alternative dispute resolution , a neutral third party works with persons involved in a negotiation to help them resolve impasses and settle disputes. They are helpful in moving things forward when negotiations come to an impasse or when parties don't trust each other's motives.

There are two primary forms through which dispute resolution is implemented. In  arbitration , such as the salary arbitration now common in professional sports, the neutral third party acts as a judge and has the power to issue a decision that is binding on all parties. This ruling takes place after the arbitrator listens to the positions advanced by the parties involved in a dispute.

In  mediation , the neutral third party tries to engage the parties in a negotiated solution through persuasion and rational argument. This is a common approach in labor–management negotiations, where trained mediators acceptable to both sides are called in to help resolve bargaining impasses. Unlike an arbitrator, the mediator is not able to dictate a solution.

Study Guide 16.2

Why should I negotiate?

· Negotiation is the process of making decisions and reaching agreement in

· situations where participants have different preferences.

· Managers may find themselves involved in various types of negotiation situations, including two-party, group, intergroup, and constituency negotiation.

· Effective negotiation occurs when both substance goals (dealing with outcomes) and relationship goals (dealing with processes) are achieved.

· Ethical problems in negotiation can arise when people become manipulative and dishonest in trying to satisfy their self-interests at any cost.

How do I negotiate?

· The distributive approach to negotiation emphasizes win–lose outcomes; the integrative or principled approach to negotiation emphasizes win–win outcomes.

· In distributive negotiation, the focus of each party is on staking out positions in the attempt to claim desired portions of a fixed pie.

· In integrative negotiation, sometimes called principled negotiation, the focus is on determining the merits of the issues and finding ways to satisfy one another's needs.

· The negotiation process consists of three steps: assess, prepare, and engage. All three steps involve thinking through the situation in a creative manner to identity ways by which all parties involved can come out of the negotiation better off.

How can I guard against common negotiation pitfalls?

· The success of negotiations often depends on avoiding common pitfalls such as the myth of the fixed pie, escalating commitment, overconfidence, and both the telling and hearing problems.

· When negotiations are at an impasse, third-party approaches such as arbitration and mediation offer alternative and structured ways for dispute resolution.

16.3 Be a More Effective Decision Maker

LEARNING OBJECTIVES

List tools that will help you make more effective and less biased decisions.

· Understand the common approaches to decision making.

· Know how to be a better decision maker by recognizing decision traps and avoiding decision biases.

· Guard against common decision-making pitfalls.

We need to make decisions all the time. Our days are full of choice. What school should I go to? What career should I pursue? What job should I take? What city should I live in? How much should I spend on housing? It's no wonder so many people feel overwhelmed when it comes to decision making.

Although decision making is important in our personal lives, most people are not trained in it. In this module, we show how to become a more effective decision maker by avoiding decision traps and guarding against common decision-making pitfalls. This begins with understanding the common approaches to decision making.

What Are Common Approaches to Decision Making?

Decision making  is the process of choosing a course of action for dealing with a problem or an opportunity. 37  The process is usually described in five steps that constitute the ideal or so-called  rational decision model , as shown in  Figure 16.6 . We are all familiar with this model. It begins with defining the problem, generating alternative solutions and analyzing those solutions to choose a preferred course of action. It ends with implementing the solution and analyzing its effectiveness.

Figure 16.6  An example of the rational decision model applied to ethical reasoning

While this process is straightforward, the reality is that in organizations, making the right choices can be complicated. Not every problem requires an immediate response, sometimes emotion and gut reactions count as much as reasoning, and the best decision may actually be the one not made. In fact, the first challenge to overcome in decision making is the decision to decide. Asking and answering the following questions can sometimes help.

· What really matters? Small and less significant problems should not get the same time and attention as bigger ones.

· Might the problem resolve itself? Putting problems in rank order leaves the less significant for last. Surprisingly, many of these less important problems resolve themselves or are solved by others before you get to them.

· Is this my, or our, problem? Many problems can be handled by other people. These should be delegated to people who are best prepared to deal with them. Ideally, they should be delegated to people whose work they most affect.

· Will the time spent make a difference? An effective decision maker recognizes the difference between problems that realistically can be solved and those that simply are not solvable.

Choices at each step in the decision-making process depend on the decision maker and the environment. There are times when it's best to be quick, intuitive, and creative, and times when we should be slow, deliberative, and cautious. Sometimes, it's best to make choices alone; other times, it's best to involve others. These are associated with classical, behavioral, and intuitive models of decision making. 38

Classical Decision Making

The  classical decision-making  model sees the decision maker as rational and fully informed. 39  It assumes a certain environment in which the problem is clearly defined, all possible action alternatives are known, and consequences are clear. This allows decision makers to  optimize  by finding the best solution to the problem. This model fits the five-step decision-making process presented in  Figure 16.6 . It represents an ideal situation of complete information whereby the decision maker moves through the steps one by one in a logical fashion. It nicely lends itself to various forms of quantitative decision analysis as well as to computer-based applications. 40

Figure 16.7  Decision making viewed from the classical and behavioral perspectives

Behavioral Decision Making

As Nobel laureate Herbert Simon noted, the reality is that many, perhaps most, decision situations faced by individuals and teams in organizations don't fit the assumptions of the classical decision-making model. Recognizing this, the premise of the alternative  behavioral decision-making  model is that people act only in terms of their perceptions, which are frequently imperfect.41

Behavioral scientists recognize that human beings have  cognitive limitations —constraints on what we are able to know at any given point in time. These limitations restrict our information-processing capabilities. The result is that information deficiencies and overload compromise the ability of decision makers to operate according to the classical model. Instead, they end up acting with  bounded rationality —incomplete information and time and resource constraints that limit the ability to be rational. The behavioral model recognizes that things are interpreted and made sense of as perceptions, and decision making occurs within the box of a simplified view of a more complex reality. Figure 16.7 illustrates how the ideals in a classical decision model are compromised by cognitive limitations and bounded rationality.

Armed with only partial knowledge about the available action alternatives and their consequences, decision makers in the behavioral model are likely to choose the first alternative that appears satisfactory to them. Herbert Simon calls this the tendency to  satisficing . He states, “Most human decision making, whether individual or organizational, is concerned with the discovery and selection of satisfactory alternatives; only in exceptional cases is it concerned with the discovery and selection of optimal decisions.”42

Systematic and Intuitive Decision Making

Individuals and teams may be described as using both comparatively slow systematic and quick intuitive thinking as they make decisions and try to solve problems.  Systematic decision making  is consistent with the rational model in which a decision is approached in a step-by-step and analytical fashion. You might recognize this style in a team member who tries to break a complex problem into smaller components that can be addressed one by one. Teams engaged in systematic thinking will try to make a plan before taking action and to search for information and proceed with problem solving in a fact-based and logical fashion. Systematic thinking is also known as an analytical approach and is often recommended for better decision making.43

We think of  intuition  as the ability to know or recognize quickly and readily the possibilities of a given situation.44 Individuals and teams using  intuitive decision making  are more flexible and spontaneous in decision making.45 You might observe this pattern in someone who always seems to come up with an imaginative response to a problem, often based on a quick and broad evaluation of the situation. Decision makers in this intuitive mode tend to deal with many aspects of a problem at once, search for the big picture, jump quickly from one issue to another, and act on hunches from experience or on spontaneous ideas. This approach is common under conditions of risk and uncertainty.

Because intuitive thinkers take a flexible and spontaneous approach to decision making, their presence on a team adds potential for creative problem solving and innovation. Does this mean that we should always favor the more intuitive and less systematic approach? Most likely not—teams, like individuals, should use and combine the two approaches to solve complex problems. In other words, there's a place for both systematic and intuitive thinking in management decision making.

Research Insights

Analytical and Intuitive Decisions: When to Trust Your Gut

Traditionally, managers were advised to use analytical rather than intuitive decision-making skills. This is because people believed that intuitive decision making would lead to biased and bad decisions. However, recent research shows that this may be not true. In a paper published by Erik Dane and colleagues, findings show that for experienced decision makers, intuitive heuristics can actually lead to better decision making.46 Why would that be?

The review of the literature suggested that intuition-based decision making works well for experts facing tasks that cannot be broken down into component parts. As the authors note, “Experts are well equipped to capitalize on the potential benefits of intuition because they possess … domain knowledge that foster[s] rapid … accurate” choices. To test this theory, Dane and colleagues conducted a series of lab experiments.

In one of the experiments, the researchers asked students to rate the difficulty of basketball shots. First, they took photos of basketball players taking shots. Then they asked coaches to rate the difficulty of these shots on a scale of one to ten. Following this they gathered the student participants. The students were first separated into two groups. One group had extensive basketball experience (e.g., played three years of high school basketball). The other did not. In the two experience groups, students were asked to develop an analytic model with specific factors (e.g., the closeness of the defender) that would allow them to make judgments about difficulty. The other students were asked to use intuition. They then gave the students a limited amount of time to make the choices. Whom do you think had the higher scores?

Results of the Basketball Experiment
	Intuition Used	Analysis Used
Low Expertise	21.34*	24.89
High Expertise	30.09	26.46
*High score is better

It turns out that the individuals with the highest scores were the students who had played basketball and used intuition. The lowest scores came from the students without basketball expertise who used intuition. The researchers also ran a similar test with fake versus real designer brand handbags. Here, the experts were students who owned several of the real bags versus those who did not. The results were virtually identical.

Do the Research

How much expertise do you think is necessary for intuition to be superior? How do you know if you have it, and how can you get it? Can you think of other important research questions you would want to test to learn more about the role of trusting the gut in decision making?

How Can I Be a Better Decision Maker?

The pathways to good decisions can seem like a minefield of challenging issues and troublesome traps. Whether working individually or as part of a team, being a more effective decision maker requires avoiding decision traps and recognizing decision biases.

Avoid Decision Traps

Judgment, or the use of intellect, is important in all aspects of decision making. When we question the ethics of a decision, for example, we are questioning the judgment of the person making it. Work by Nobel laureate Daniel Kahneman, his colleagues, and many others shows that people are prone to mistakes and biases that often interfere with the quality of decision making. 47  These can work as decision traps.

Many decision traps can be traced back to the use of  heuristics . While heuristics serve a useful purpose by making it easier to deal with uncertainty and the limited information common to problem situations, they can also lead us toward systematic errors that affect the quality, and perhaps the ethical implications, of any decisions made. 48

· The  availability heuristic  involves assessing a current event based on past occurrences that are easily available in one's memory. An example is the product development specialist who decides not to launch a new product because of a recent failure of another launch. In this case, the existence of a past product failure has negatively, and perhaps inappropriately, biased judgment regarding how best to handle the new product.

· The  representativeness heuristic  involves assessing the likelihood that an event will occur based on its similarity to one's stereotypes of similar occurrences. An example is the team leader who selects a new member not because of any special qualities of the person, but because the individual comes from a department known to have produced high performers in the past. In this case, the individual's current place of employment—not job qualifications—is the basis for the selection decision.

· The  anchoring and adjustment heuristic  involves assessing an event by taking an initial value from historical precedent or an outside source and then incrementally adjusting this value to make a current assessment. An example is the executive who makes salary increase recommendations for key personnel by simply adjusting their current base salaries by a percentage. In this case, the existing base salary becomes an “anchor” that limits subsequent salary increases. This anchor may be inappropriate, such as in the case of an individual whose market value has become substantially higher than what is reflected by the base salary plus increment approach.

Recognize Decision Biases

In addition to decision traps, decision makers are also prone to decision biases. One bias is  confirmation error , whereby the decision maker seeks confirmation for what is already thought to be true and neglects opportunities to acknowledge or find disconfirming information. A form of selective perception, this bias involves seeking only information and cues in a situation that supports a preexisting opinion.

A second bias is the  hindsight trap  where the decision maker overestimates the degree to which he or she could have predicted an event that has already taken place. One risk of hindsight is that it may foster feelings of inadequacy or insecurity in dealing with future decision situations.

A third bias is the  framing error . It occurs when managers and teams evaluate and resolve a problem in the context in which they perceive it—either positive or negative. Suppose research shows that a new product has a 40 percent market share. What does this really mean to the marketing team? A negative frame views the product as deficient because it is missing 60 percent of the market. Discussion and problem solving within this frame would likely focus on: “What are we doing wrong?” If the marketing team uses a positive frame and considers a 40 percent share as a success, the conversation might be: “How can we do even better?” We are constantly exposed to framing in the world of politics—the word used to describe it is spin.

How Can I Guard against Common Decision-Making Pitfalls?

Even if you manage to avoid decision traps and biases, there are still other pitfalls you can fall into. You can find yourself escalating commitment to a bad decision, simply because you already have so much invested in it. Or you can make the mistake of using the wrong decision style for a group, which could lead to the wrong decision or others who are unhappy with the decision process.

Watch for Escalating Commitment

After the process of making a decision is completed and implementation begins, it can be hard for decision makers to change their minds and admit they made a mistake even when things are clearly not going well. The time and effort expended on a decision is conceptually similar to a company's sunk financial cost in a new investment. Instead of backing off, the tendency is to press on to victory. This is called  escalating commitment —continuing and renewing efforts on a previously chosen course of action, even though it is not working. 49  The tendency toward escalating commitment is reflected in the popular adage, “If at first you don't succeed, try, try again.”

Escalating commitments are a form of decision entrapment that leads people to do things that the facts of a situation do not justify. This is one of the most difficult aspects of decision making to convey to executives because so many of them rose to their positions by turning losing courses of action into winning ones. 50  Managers should be proactive in spotting failures and more open to reversing decisions or dropping plans that are not working. This is easier said than done.

The tendency to escalate commitments often outweighs the willingness to disengage from them. Decision makers may rationalize negative feedback as a temporary condition, protect their egos by not admitting that the original decision was a mistake, or characterize any negative results as a learning experience that can be overcome with added future effort.

Perhaps you have experienced an inability to call it quits or been on teams with similar reluctance. It's hard to admit to a mistake, especially when a lot of thought and energy went into the decision in the first place; it can be even harder when one's ego and reputation are tied up with the decision. By way of advice, researchers suggest the following ways to avoid getting trapped in escalating commitments.

· Set advance limits on your involvement and commitment to a particular course of action; stick with these limits.

· Make your own decisions; don't follow the lead of others because they are also prone to escalation.

· Carefully determine just why you are continuing a course of action; if there are insufficient reasons to continue, don't.

· Remind yourself of the costs of a course of action; consider saving these costs as a reason to discontinue.

Know Whom to Involve

In practice, good organizational decisions are made by individuals acting alone, by individuals consulting with others, and by people working together in teams. 51  In true contingency fashion, no one option is always superior to the others: who participates and how decisions are to be made should reflect the issues at hand. 52

When  individual decisions , also called authority decisions, are made, the manager or team leader uses information gathered and decides what to do without involving others. This decision method assumes that the decision maker is an expert on the problem at hand. In  consultative decisions , by contrast, inputs are gathered from other persons and the decision maker uses this information to arrive at a final choice. Team members work together to make the final choice by consensus or unanimity and, it is hoped, without resorting to a vote.

Victor Vroom and his colleagues identify different ways in which individual, consultative, and team decisions are made. 53  They want decision makers to understand the differences and be able to make good, informed choices among them in real situations. There are two forms of the authority decision to recognize and understand. In one, the authority figure makes the decision alone, using information available at that time. In another, the authority figure obtains information from team members and then makes a decision on behalf of the group. There are also two forms of the consultative decision. In one, the team leader shares the problem with team members individually, gets their ideas and suggestions, and then makes a decision. In another, the team leader shares the problem with team members as a group, collectively obtains their ideas and suggestions and then makes a decision. In the team or consensus decision, the leader shares the problem with team members as a group, engages them in lots of sharing and discussion, and then seeks consensus to arrive at a final decision.

When choosing among the decision options, consultative and team decisions are recommended when the leader lacks sufficient expertise and information to solve the problem alone, the problem is unclear and help is needed to clarify the situation, acceptance of the decision and commitment by others are necessary for implementation, and adequate time is available to allow for true participation. Consultative decisions are also preferred as pathways for talent development and engagement. Authority decisions work best when team leaders have the expertise needed to solve the problem, they are confident and capable of acting alone, others are likely to accept and implement the decision they make, and little or no time is available for discussion. Realistically speaking, if problems must be resolved immediately, the authority decision may be the only option.

Bringing OB to Life

Intuition and US Airways Flight 1549

On the afternoon of January 15, 2009, television news anchors broke in with news about a plane that had crashed in the Hudson River. The immediate reaction was “Oh no, not another tragic plane crash!” But it turned out this time would be different. This was largely due to the pilot, Chesley “Sully” Sullenberger, whose experience and quick thinking allowed him to successfully crash land US Airways Flight 1549 into the Hudson River, saving the lives of everyone on board.

In an interview with Greta van Susteren of Fox News, Sullenberger was asked to recount what happened. Van Susteren commented, “It probably took about twenty seconds to explain; you had to make that decision like [snaps her fingers] that.” Sullenberger responded, “It was sort of an instinctive move based upon my experience and my initial read of the situation.”

What Sullenberger describes is intuitive decision making. It is precisely why pilots spend considerable time in flight simulators. The goal is to develop the experience necessary for dealing with problems that may only occur once, if ever, in a career. While systematic decision making works in normal operating mode, in times of crisis, what is needed is intuitive decision making. Intuition allows someone to quickly size up a situation and act out of instinct. That is exactly what Sullenberger did that allowed him to save hundreds of lives.

Know How to Make Decisions in Crises

A unique situation is decision making during a crisis. One of the mistakes people make in these situations is turning to a knee-jerk reaction. This occurs because our brain is wired to focus on self-protection, which may cause us to focus on the safety for ourselves and not for others. We also tend to operate based on emotion and not logic. In crisis situations, adrenaline kicks in and switches off the logical part of the brain, which reduces our ability to make a quality decision.

What can help with decision making under crisis is training and preparation. In a crisis we go through three stages of reacting: (1) stalling, (2) deciding what to do, and (3) acting. Training on these three stages can increase decision quality. By preparing for a crisis, you can reduce the stall time because individuals have some idea of what to expect as far as how their body will react. For example, we know that when individuals are in crisis, they experience paralysis or panic. Their heart rates go up, they have difficulty breathing, they may get hot or stressed, and vision may even be impaired—all leading to poor decision quality. In these situations, it is best to take a breath, let the initial response pass, and then try to act when thinking is clearer. Take a minute if you have it, try to assess the situation, and then decide what to do in a slightly cooler environment.

Study Guide 16.3

What are the different approaches to decision making?

· In the classical decision model, optimum decisions identifying the absolute best choice are made after analyzing with full information all possible alternatives and their consequences.

· In the behavioral decision model, satisficing decisions that choose the first acceptable alternative are made with limited information and bounded rationality.

· In the intuitive model, decision makers deal with many aspects of a problem at once, jump quickly from one issue to another, and act on hunches from experience or on spontaneous ideas.

What are common decision traps and biases?

· Common decision traps include the use of judgmental heuristics. Such heuristics include availability decisions based on recent events, representativeness decisions based on similar events, and anchoring and adjustment decisions based on historical precedents.

· Common decision biases include confirmation error, seeking information to justify a decision already made; the hindsight trap, overestimating the extent to which current events could have been predicted; and framing error, or viewing a problem in a limited context.

How can I guard against common decision-making pitfalls?

· Individuals and teams must know who should be involved in making decisions, making use of individual, consultative, and team decisions as needed to best fit the problems and opportunities being faced.

· Individuals and teams must be able to counteract tendencies toward escalating commitment to previously chosen courses of action that are not working; they must know when to quit and abandon a course of action.

· Understand how to make decisions under crisis.

Self-Test Chapter 16

Multiple Choice

1. A/an ____________ conflict occurs in the form of a fundamental disagreement over ends or goals and the means for accomplishment.

1. a. relationship

2. b. emotional

3. c. substantive

4. d. procedural

2. __________ is particularly appropriate for functional conflict.

1. a. Tolerating differences

2. b. Reducing differences

3. c. Avoidance

4. d. Win-lose

3. __________ conflict involves interpersonal difficulties that arise over feelings of anger, mistrust, dislike, fear, resentment, and similar.

1. a. Emotional

2. b. Substantive

3. c. Relational

4. d. Status

4. The indirect conflict management approach that uses the chain of command for conflict resolution is known as ___________.

1. a. upward referral

2. b. avoidance

3. c. smoothing

4. d. appeal to common goals

5. A lose–lose conflict is likely when the conflict management approach is one of ____________.

1. a. collaborator

2. b. altering scripts

3. c. accommodation

4. d. problem solving

6. Which approach to conflict management can be best described as both highly cooperative and highly assertive?

1. a. competition

2. b. compromise

3. c. accommodation

4. d. collaboration

7. Both ____________ goals should be considered in any negotiation.

1. a. performance and evaluation

2. b. task and substance

3. c. substance and relationship

4. d. task and performance

8. In _____________ one or both parties make concessions just to get things over with.

1. a. hard bargaining

2. b. the bargaining zone

3. c. soft bargaining

4. d. bargaining power

9. When a person approaches a negotiation with the assumption that in order for him to gain his way, the other party must lose or give up something, the ____________ negotiation pitfall is being exhibited.

1. a. myth of the fixed pie

2. b. escalating commitment

3. c. overconfidence

4. d. hearing problem

10. A team leader who makes a decision not to launch a new product because the last new product launch failed is falling prey to the ____________ heuristic.

1. a. anchoring

2. b. availability

3. c. adjustment

4. d. representativeness

11. A ________ occurs when managers and teams evaluate and resolve a problem in the context in which they perceive it.

1. a. confirmation error

2. b. framing error

3. c. hindsight trap

4. d. escalating commitment

12. The _________ decision model views decision makers as acting in a world of complete certainty while the ____________ decision model views decision makers as acting only in terms of what they perceive about a given situation.

1. a. classical; systemic

2. b. classical; behavioral

3. c. behavioral; systemic

4. d. behavioral; classical

13. The rational decision model is a ______ step model of decision making, beginning with defining the problem and ending with implementation and evaluation.

1. a. three-

2. b. four-

3. c. five-

4. d. six-

14. The ____________ bases a decision on incremental adjustments to an initial value determined by historical precedent or some reference point.

1. a. representativeness heuristic

2. b. anchoring and adjustment heuristic

3. c. confirmation trap

4. d. hindsight trap

15. The ____________ is the tendency to focus on what is already thought to be true and not to search for disconfirming information.

1. a. representativeness heuristic

2. b. anchoring and adjustment heuristic

3. c. confirmation trap

4. d. hindsight trap

Short Response

16. List and discuss the different types of conflict faced in organizations.

17. Under what conditions might a manager use avoidance or accommodation?

18. What are heuristics, and how can they affect individual decision making?

19. What is escalating commitment, and why is it important to recognize it in decision making?

Applications Essay

20. Discuss the common pitfalls you would expect to encounter in negotiating your salary for your first job, and explain how you would best try to deal with them.

CHAPTER

16

Handle

Conflict,

Negotiation,

and

Decision

Making

Don't neglect the power of “yes”

LEARNING OBJECTIVES

At the end of this chapter you will be able to:

·

Understand

what conflict is, why it is occurring and how to manage it.

·

Describe

methods for

effective negotiations.

·

List

tools that will help you make more effective and less biased decisions.

WHAT'S INSIDE

?

·

Be a Critical Thinker: Dealing with Deception at the Bargaining Table

·

Bringing OB to Life: Intuition and US Airway Flight 1549

·

Checking Et

hics in OB: Is a Two

-

Tiered Wage System Ever Justified?

·

OB in the Office: What to Do When Face

-

to

-

Face Negotiations

Are Not Possible: Tips

for Negotiating via Email

·

OB in the Office: Sooner or Later You'll Know How to Negotiate a Better Raise

·

Research Insi

ghts: Analytical and Intuitive Decisions: When to Trust Your Gut

·

Worth Considering or Best Avoided? Labor and Manage

ment Sides Disagree. Is a Strike

the Answer?

You are at work and you hear your colleagues disagreeing with each other

loudly. Their voices c

an be heard throughout the office, and you notice people

popping their heads up to see what's going on. You are in c

harge of the team,

and you know that your organization prides itself on having a collegial culture.

What do you do?

For many people, the ans

wer is clear: Conflict is bad

—

we need to get rid of it.

Conflict makes people uncomfortable and harms our ability to

work together,

so managers need to step in and resolve differences. Is this always true?

Couldn't it be that conflict can also play a posit

ive role in the workplace?

In this chapter, we show that conflict can be good when it surfaces important

issues that

need to be discussed. The key to managing it is knowing how to

determine what kind of conflict is occurring and then using it to generate b

etter

decisions. This requires developing skills in areas that are becoming

increasingly important in today's workpl

ace: conflict, negotiation, and decision

making.

CHAPTER 16

Handle Conflict, Negotiation, and Decision Making

Don't neglect the power of “yes”

LEARNING OBJECTIVES

At the end of this chapter you will be able to:

 Understand what conflict is, why it is occurring and how to manage it.

 Describe methods for effective negotiations.

 List tools that will help you make more effective and less biased decisions.

WHAT'S INSIDE?

 Be a Critical Thinker: Dealing with Deception at the Bargaining Table

 Bringing OB to Life: Intuition and US Airway Flight 1549

 Checking Ethics in OB: Is a Two-Tiered Wage System Ever Justified?

 OB in the Office: What to Do When Face-to-Face Negotiations Are Not Possible: Tips

for Negotiating via Email

 OB in the Office: Sooner or Later You'll Know How to Negotiate a Better Raise

 Research Insights: Analytical and Intuitive Decisions: When to Trust Your Gut

 Worth Considering or Best Avoided? Labor and Management Sides Disagree. Is a Strike

the Answer?

You are at work and you hear your colleagues disagreeing with each other

loudly. Their voices can be heard throughout the office, and you notice people

popping their heads up to see what's going on. You are in charge of the team,

and you know that your organization prides itself on having a collegial culture.

What do you do?

For many people, the answer is clear: Conflict is bad—we need to get rid of it.

Conflict makes people uncomfortable and harms our ability to work together,

so managers need to step in and resolve differences. Is this always true?

Couldn't it be that conflict can also play a positive role in the workplace?

In this chapter, we show that conflict can be good when it surfaces important

issues that need to be discussed. The key to managing it is knowing how to

determine what kind of conflict is occurring and then using it to generate better

decisions. This requires developing skills in areas that are becoming

increasingly important in today's workplace: conflict, negotiation, and decision

making.