What is Distributive Negotiation?

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What is distributive negotiation exactly? Anyone who participates in negotiation has dealt with a situation where one party seeks to gain more and more until a good deal is too far away to reach. When the bargaining breaks down, and each person focuses on their own goals, it shifts from integrative bargaining to distributive negotiation. In other instances, the parties seek to negotiate over a fixed resource and work within distributive bargaining from the beginning.

Distributive negotiation can stall the bargaining process and distance the parties from a negotiated agreement. However, it does have its place within the negotiation world and can be a valuable strategy for achieving a deal in the short term.

This article will explain distributive negotiation, discuss strategies for working within it, and summarize its advantages and disadvantages.

Distributive Bargaining Defined

Distributive negotiation is a competitive strategy focusing on dividing the fixed amount of value between the parties involved. It is often a win-lose situation in which one party wins and the other loses. It is frequently compared to a different type of negotiation, integrative bargaining, which results in a win-win solution and focuses on value creation over claiming limited resources.

Integrative negotiation is most frequently desired to bolster the relationship between the two parties, but distributive negotiation results are not always possible. The differences between the two types further outline the difficulty of distributive bargaining.

There are a few characteristics that help to define distributive bargaining further, including:

  • Fixed Resources

The main characteristic of distributive bargaining is that the resources involved are fixed, meaning that both parties will compete for the same amount of money. There is a single pie, and only that pie is divided between the parties. This can be compared to integrative negotiations, where the parties add other ideas and resources to create value.

  • One Issue

Another common characteristic is that distributive negotiation is most frequently focused on only one issue, unlike integrative negotiation, in which the parties often create value by involving other issues that are important to the other party.

  • Unilateral Concessions

Distributive negotiation also involves unilateral concessions, where one party gives up something from the fixed resources and the other only gains from the negotiation strategies. In contrast, integrative negotiation often involves the parties trading concessions to reach a possible agreement.

By comparing integrative negotiations and distributive negotiations and surveying the various characteristics of distributive bargaining, it is clear that distributive negotiation is challenging to work with but not impossible to overcome.

Four Basic Distributive Negotiation Tactics

Succeeding in a distributive negotiation requires a skilled negotiator and a host of negotiation skills to ensure that the involved parties will not fail to reach a consensus. There are some common strategies that either party can use to gain the maximum share allotted to them.

1. Know the Other Party’s BATNA and Reservation Point

One of the best ways a party can excel as a negotiator in a zero-sum negotiation is to understand the other party’s BATNA, which is the best alternative to a negotiated agreement. If they cannot reach a deal, this is the best outcome for the other side. There may be many opportunities outside of this win-lose situation, so they may be difficult to bargain with effectively. However, another person may have a very bad BATNA, meaning they will be more willing to give concessions. Understanding what you are up against at the start of the negotiation can help determine how much you push for your goal.

Knowing the BATNA for the other side can also help drive a deal because it determines the reservation point. The reservation point is where the BATNA becomes better than the deal and can undermine the agreement’s value. This can further define how hard you push.

2. Add Contingencies

Because distributive negotiation is notorious for unilateral concessions, it can be helpful for the process to add contingencies to concessions. This means that you will tell the other person that you are willing to give them more if they are eager to let you claim more in a different area of the negotiation. This can be difficult in negotiations with one issue, but intelligent negotiators can find tactics to add value in the zero-sum game.

3. Actively Listen to the Other Person

People can claim and add value while negotiating by actively listening to what the other person is saying rather than preparing a counteroffer. When listening to the other person, the negotiators can focus on the interests at play and find ways to resolve their disagreements without losing more value.

4. Announce Concessions

When negotiating a deal, there is a tendency to negate or diminish the concessions made. One of the strategies to avoid this happening to you is to announce when you are taking a hit. These tactics ensure that the goals of both parties are realized as they participate.

These tactics exemplify handling a necessary distributive bargaining session and becoming a skilled negotiator.

Advantages and Disadvantages of Distributive Negotiations

As mentioned at the beginning of this article, distributive negotiation is something that most negotiators will try to lead the negotiation away from. However, there are situations where there can be an advantage to this type of bargaining.

Advantages

Some situational advantages of distributive negotiation include:

  • Power Struggles: The advantage of negotiating distributively can be apparent in power struggles. For example, if a single person was going against a team of negotiators from a large company, they may not have the power to protect their assets without working distributively. When a company or person has a large amount of money and power, this can cause an imbalance that does not allow integrative negotiation.
  • Fixed Assets: If the assets are fixed and no other value can be added, the parties may have to offer and counteroffer until they resolve.
  • Time Crunches: When the parties are in a time crunch, it can be near impossible to identify interests. It may be best to split the pie and get a deal quickly in this situation.

These advantages are limited because this type of negotiation is often detrimental to relationships and harms the participants’ overall well-being, especially if they are the ones “losing.”

Disadvantages

Some situational disadvantages of distributive negotiation include:

  • Loss of Interest: When someone is competitive to a detriment, they will often lose the commitment and interest of the other person. Even if they can agree, they may not be able to enforce the deal because no one is interested in the outcome.
  • Loss of Relationship: Similarly, by forcing competition and refusing to allow the other participants to counter your offers, you will alienate friends and not win in the same way you believed you had.

Final Thoughts

While everyone would like to win in a negotiation, doing so by force or competition is likely not the example the parties want to set when working toward relationships and contracts. Finding a way to work together and create value will always help a situation. However, if distributive negotiation is necessary, it is possible to excel and create a winning solution out of a win-lose situation.

To learn more about distributive negotiation and other types of alternative dispute resolution, contact ADR Times!

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Emily Holland
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