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Graduate Paper 1

Graduate Paper: Categorization Method

Graduate Paper 2 The categorization method is a type of integrative bargaining in which each issue to be negotiated is categorized into possible outcomes. Each possible outcome is then given a point value based on its importance. In this way, through integrative bargaining in which

both parties communicate and try to maximize the total benefits, each party is more likely to be able to obtain the items that are of greatest importance while sacrificing items which are of generally less importance (Carrell & Heavrin, 2008, p. 88). The categorization method can be a particularly successful bargaining tool but only within an integrative bargaining situation. factors (Carrell & Heavrin, 2008, p. 87). 1. First, the negotiation must consist of several issues. take and between the issues. 2. Second, a win-win technique should be used, or what Ball (1999) described as a positive sum game which builds momentum for finding efficient outcomes. The goal is not to win the negotiation but for both parties to leave the negotiation as winners. 3. Third, both parties should use the expanded-pie strategy which looks for both parties to work together to try and provide as much profit or gain for the other while also obtaining the most possible for oneself. 4. Fourth, this negotiation is between two parties that hope to have a long-term, positive relationship and thus mutual success is in the best interests of both parties. 5. Fifth, both parties share interests or values with each other. This strengthens the value of obtaining a positive negotiated outcome for both parties. Communication should be positive, supportive, and of shared interests and values in order to develop the strongest bonds between both parties (Jacobs, 1995). This allows for give and Integrative bargaining is characterized by seven

Graduate Paper 3 6. Sixth, integrative bargaining includes many possible options. This allows for much greater flexibility and packaging. Often, the end result is a final negotiated agreement that maximizes profit for both parties. 7. Seventh, this negotiation style stresses the importance of communication and sharing information and will likely be a continued aspect of a working relationship. Active listening, asking questions, expressing ones interests and

understanding the interests of the other party enable both parties to maximize profit and find the best negotiated agreement (McNaugton, 2007). The categorization method, while encompassing the seven factors of integrative bargaining, is a process of negotiation that includes five specific steps. Following these five

steps will lead to the final agreement of all the issues to be negotiated. The five steps of the categorization method are as follows: 1. First, both parties discuss the issues that will be negotiated, communicating each sides interests and concerns about the issues. This communication is informative and without preconditions and provides each party an opportunity to explore the interest of the other party (Stepp, 1998). One should be careful to

utilize nonverbal communication that is open and non-confrontational so that both parties feel equally empowered to share their interests and concerns (Agunis, 1998.) 2. Second, through the process of step one, develop a list of all the issues that were discussed and categorize them as either compatible (issues in which both parties have similar interests); exchange (issues in which interests are not shared but which are of similar value and might be traded); distributive (issues which are not compatible and not likely to be traded).

Graduate Paper 4 3. Third, consider the compatible issues and come to a final agreement. This should be easy as both parties share similar interests. 4. Fourth, consider the exchange issues and find trades that can be made of approximately equal values, including packaging issues together. Ideally, each

party can gain issues of greater personal value while trading away issues of less personal value. 5. Fifth, consider the remaining issues, and use distributive bargaining to come to a final agreement on these issues. Utilizing the categorization method in an integrative bargaining situation can enable both parties to work collaboratively and best enable maximum gain for each side. An application of the categorization method below comes from a current, personal example. am currently employed in South Korea and have been seeking work in Australia. I have I

recently been granted a second interview for an HR Recruiting position for National Oilwell Varco (NOV). Adkins (2004, n.p.) insisted that the best negotiators are those that plan in

advance and prepare for all possibilities. Therefore, I have developed what I estimate to be the negotiation issues, my personal point values, my estimation of NOVs point values, and possible outcomes using the categorization method.

NOV HR Recruiting Position, Estimated Issues and Point Values Issue Possible Outcome My PV 1. Annual salary $75,000 AUD 40 $70,000 AUD 35 $65,000 AUD 30 $60,000 AUD 25 $55,000 AUD 20 2. 457 VISA status 457 VISA status for family 30 457 VISA status for self 10 None 0 3. Relocation support Full relocation reimbursement 8

NOV PV 5 10 20 30 40 5 5 0 0

Graduate Paper 5 $12,000 AUD $6,000 AUD None NOV luxury apartments NOV standard housing Affordable housing subsidy None Company car, plus petrol Own car, reimbursed / km Use own car Immediately One week Two weeks One month Two months Brisbane, AU Sydney, AU Perth, AU Busan, SK Unlimited as required 15-20 10-14 5-9 0-4 South Korea East Asia (Japan/South Korea) North America National (Australia) 6 3 0 15 10 5 0 8 4 0 0 1 2 6 4 12 10 5 2 0 4 5 6 4 10 5 10 2 2 3 4 0 10 5 20 4 3 10 2 4 12 10 2 5 15 10 15 15 12 9 5 2 15 10 5 0

4. Housing

5. Auto plan

6. Start date

7. Office location

8. Travel days/month

9. Recruiting primary territory / responsibility

Utilizing the five steps of the categorization method, these negotiable issues would be discussed in full with both NOV and myself sharing our interests and concerns regarding each issue. Through active listening and best understanding the other s position, a negotiated agreement should be able to reach by finding compatible issues, tradable issues, and issues to resolve using distributive bargaining. This scenario for categorization method

might likely occur between two individuals NOVs HR representative and myself. However, Thompson (1996, n.p.) researched that when teams participate in integrative negotiation processes, more creative solutions are likely. In this categorization method,

Graduate Paper 6 small teams might be able to find ideal trade issues, although in this scenario the possible trade issues were quite obvious. COMPATIBLE ISSUES Recruiting primary territory / responsibility = South Korea 457 VISA provided for family

TRADABLE ISSUES We will package issues together to make and equal trade between the issues of Housing, Auto plan, and Office location. I will accept the Sydney location,

standard NOV housing, and standard NOV automobile. Together, these three issues are almost exactly equal. I will trade full relocation reimbursement for $12,000 reimbursement, and I will start work in one month. DISTRIBUTIVE ISSUES We will use distributive bargaining to negotiate an annual salary of $62,000 AUD We will use distributive bargaining to negotiate travel days per month at 10, with understanding that some months might require more days which will then reduce travel days in other months. Through the categorization method, both NOV and I were able to maximize the issues that were of most importance to us, while sacrificing through trading away issues that were of less value. This process is particularly effective because both parties take responsibility for the negotiations and finding equitable ways to deal with issues and each other s interests (Quinn, 1997).

Graduate Paper 7 References Agunis, H. A. (1998). Effects of nonverbal behavior on perceptions of power bases. Journal of Social Psychology, 138(4), 455. Adkins, B. (2004). Negotiating is hard so work at it. Fort Worth Business Press, 17(49), 47. Ball, S. (1999). Pareto optimality in negotiation: A classroom exercise for achieving active learning. Journal of Education for Business, 74(6), 341. Carrell, M. R., Heavrin, C. (2008). Negotiation Essentials. Upper Saddle River, NJ: Pearson Prentice Hall. Jacobs, D. (1995). The red flags of persuasion. ETC: A Review of General Semantics, 52(4), 375 McNaugton, D. (2007). Learning to listen: teaching an active listening strategy to preservice education professionals. Topics In Early Childhood Special Education, 27(4), 223. Quinn, S. (1997). Interest-based negotiation: A case study. Public Personnel Management, 26(4), 529. Stepp, J. M. (1998). Interest-based negotiation: An engine-driving change. Journal For Quality & Participation, 21(5), 36. Thompson, L. E. (1996). Team negotiation: An examination of integrative and distributive bargaining. Journal of Personality & Social Psychology, 70(1), 66.