SHARMA's BLOG: Negotiation

SHARMA's BLOG: Negotiation: Negotiation Negotiation is a process of conferring, discussing and bargaining with two or more parties with different needs and wants to...

Negotiation

Negotiation

Negotiation is a process of conferring, discussing and bargaining with two or more parties with different needs and wants to reach an agreement. Negotiation is at the heart of selling any product or service, clinching orders for purchasing/procurement and resolving conflicts/disagreements among management and union, nations, communities, and individuals.

Successful negotiators are rated as effective by the parties in dispute, have a track record of significant success and have a low incidence of implementation failures. They have markedly different behavior as they avoid the use of „irritators‟, offer fewer counter proposals, avoiding getting in to „defend- attack spiral‟ and avoid dilution of agreement. They often give advance indication of behavior supporting agreement, give reasons before indicating disagreement, resort to testing understanding by summarizing, seek more information and share own feelings to build trust.

Negotiations must be planned meticulously by spending quality time in preparations, exploring a range of options available, focusing on common grounds, freeing issues from sequencing and scheduling, concentrating on long term issues and setting the maximum, the minimum and the target values for issues under negotiations.

In general, the process of negotiations follows three patterns – firstly, giving ones‟ point of view, secondly, giving ones‟ point of view while simultaneously analyzing others‟ objections and own counters and thirdly, finding and enlarging common grounds of agreement. Skilled negotiators adopt the third pattern.

Researchers have identified four styles of negotiations – factual, intuitive, normative and analytical. Individuals should determine own style of negotiations and enhance their negotiation skills.

Negotiating power is individuals‟ ability to influence others‟ decisions and is dependent upon others‟ perception of ones‟ capability. Negotiating power is not a physical force nor does it advocate starting tough and soften up later. Sources of negotiating power are linked to power of skills, knowledge and good relationships. This negotiating power can also flow from seeking good alternatives to negotiations, finding elegant solutions and remaining legitimate and committed.

Bargaining is integral to the process of negotiation and is more pronounced in individual and collective forms of employee relations. In such situations, there are two extreme positions – pure negotiations or joint problem-solving. Several bargaining models are available but the most popular one has four stages viz. initial positioning, testing positions, giving concessions and arriving at the settlement. Bargaining involves skills of analysis, ability to argue effectively, signal cooperation and an eye for details.

SHARMA's BLOG: NEGOTIATIONS AND BARGAINING

SHARMA's BLOG: NEGOTIATIONS AND BARGAINING: NEGOTIATIONS AND BARGAINING Both individual and collective forms of employee relations depend upon negotiations – they involve bargaining...

NEGOTIATIONS AND BARGAINING

NEGOTIATIONS AND BARGAINING

Both individual and collective forms of employee relations depend upon negotiations – they involve bargaining.

(1) Two Extreme Positions
Such bargaining situations should always be thought in terms of the following diagram with two poles at the extreme points as shown:

 Pure Negotiations
 Joint Problem Solving

(i) Pure Negotiations
When management and union are incompatible, opposed and mutually destructive, it is a lose-lose situation. Important forces are keeping them apart and negotiations tend to be distributive when the size of the cake is known and it is to be shared.

(ii) Joint Problem Solving
This is the other extreme situation. It represents the integrative approach. Such behaviors take place when objectives of both the union and management are compatible, supportive and mutually reinforcing. It is a win-win situation. Although it is rare, efforts should be made to move as near to this situation as possible.
Managers tend to operate between the two polarities. The extent to which a negotiator can move towards the joint problem-solving position depends upon the followings:

 The Issue
 The situation
 The people involved
 The negotiating behaviors displayed

(2) Model for Bargaining
There are several models available for bargaining. However, a popular one by Lyons (1988) has the following four stages:

(i) Initial positioning stage
Two sides set out their bargaining position and typically, both parties seem to be rigid and unwilling to compromise. Heated discussions may be marked with a great deal of hostility at this stage. The gap between two positions may be so great that negotiations may seem doomed to failure.

(ii) Testing stage
After protracted and fruitless debate, negotiations move to the stage of informal probing. Each party checks out details of the other side‟s demands to identify issues that are:
 Really un-modifiable
 Open to compromise

(iii) Concession stage
Some concessions emerge leading to exchange of tentative proposals.
(iv) Settlement stage
A breakthrough happens and bargaining leads to an agreement that is finally signed and sealed.

(3) Skills required for effective bargaining
Lyons (1988) has identified the following skill sets that can enhance skills for bargaining:

(i) Analysis
Negotiators should have the ability to analyze the situation from own and other sides‟ perspective quickly. Negotiators should be able to think through the complete process from the beginning and decide on:
 Items that can be agreed on a win-win basis
 Items that can be agreed on a win-lose basis
Negotiators must remember that winning a small concession is not worthwhile if it damages the working relationship long term. Win-win deals happen when both sides feel they have gained and are always preferred.

(ii) Effective argument
Effective communication requires a great deal of patience. Good negotiators have to achieve a balance between aggressive and submissive styles of the conversation by being assertive when one conveys one‟s viewpoint while simultaneously listening to the contrarian views. Abusive and petty-mindedness destroy mutual respect. It is necessary to keep communication open however unsuccessful bargaining may be.

(iii) Signals of cooperation
Skilled negotiators are able to sense and seize small signs and clues of compromise, consensus, and cooperation. They use the tit-for-tat principle and return every compromise offered with a concession from their side. Every offer should be conditional to a cooperative response.

(iv) Attention to details
Negotiations should be comprehensive and negotiators should have an eye for details. In bargaining, there is no room for the late withdrawal of an offer made!

SHARMA's BLOG: Sources of enhancing negotiating power

SHARMA's BLOG: Sources of enhancing negotiating power: Sources of enhancing negotiating power Power of devising a good alternative to negotiations In learning how to enhance one‟s negotiati...

Sources of enhancing negotiating power

Sources of enhancing negotiating power

Power of devising a good alternative to negotiations

In learning how to enhance one‟s negotiation skills, we ask individuals to develop „Best Alternative to Negotiated Settlement‟ (BATNA). The idea is to develop the most promising solution/agreement and then improve it to the extent possible. The greater the ability to develop an alternative outside of negotiations, the higher would be the power of that person to secure a favorable negotiated settlement.

Power of elegant solution

In any negotiation, there are several shared and conflicting interests. Although skilled negotiators initiate brainstorming sessions with the team to generate many options to satisfy the legitimate interests of both parties, inventing a good, elegant solution enhances the negotiating power of the negotiators. It enables the negotiators to secure a more favorable outcome.
 Power of legitimacy
The proposed solution should be legitimate as that enhances its acceptability. An outcome is legitimate when:
1. It is fair
2. Law requires it
3. It is consistent with precedent
4. It is the industry practice
5. It is based on sound policy
6. It is legitimate applying some other standards
7. It is legitimate in the eyes of the other side
Such solutions increase the negotiating power of individuals as they become more acceptable.

 Power of commitment

Although planning for commitment is done in advance, commitments are made during the negotiations only. Every commitment involves decision making. Broadly there are two types of commitment:
(a) Affirmative commitments
These are:
 Offers that a party is willing to agree
 Offers that a party is willing to accept under certain conditions, failing agreement
Every offer ties up negotiators‟ hands. Power of positive commitment has the power of invitation to the other party. A skilled negotiator formulates the offer in a manner that would maximize all the above powers of negotiation. It has, therefore, the highest chance of being accepted.
(b) Negative commitments
These are:
 Unwilling to make certain agreements even though they would be better than no agreements
 The threat, failing agreement, to engage in certain negative conduct even though it would be worse than having no agreement
Negative commitment is the most controversial and troublesome element of negotiating power. It is also the last resort of the negotiators. The earlier a negotiator announces a „take-it-or-leave-it‟ position, less likely it would be that he has maximized the cumulative impact of all the elements of negotiation power.

Analysis of the negative commitments suggests

 It is a mistake to attempt to influence the other side by negative commitment at the early stages of negotiation without having made use of other elements of negotiating power.
 If it is made as a last resort, it should be formulated to reinforce and complement other elements of negotiating power and not undercut them. Even then, it should be done in line with the tradition of maintaining a good working relationship and concepts of legitimacy.

SHARMA's BLOG: Sources of enhancing negotiating power

SHARMA's BLOG: Sources of enhancing negotiating power: Sources of enhancing negotiating power Following should be used as a checklist for enhancing the negotiating power of individuals:  Po...

Sources of enhancing negotiating power

Sources of enhancing negotiating power

Following should be used as a checklist for enhancing the negotiating power of individuals:

 Power of skill
 Power of knowledge
 Power of good relationship
 Power of good alternative to negotiations
 Power of elegant solution
 Power of legitimacy
 Power of commitment

These are detailed below:

(i) Power of skill
As discussed above, skilled negotiators have much advantage in being able to secure a good agreement that has a high degree of implement-ability and stick-ability. These skills can be acquired and persons should have them prior to actual negotiations.
(ii) Power of knowledge
Knowledge may be of general type regarding procedural options, awareness of members‟ style of negotiation and impact of cultural differences if any. A person with a repertoire of examples, precedents, and illustrations can enhance his persuasive power.
Specific knowledge of particular issues under negotiations can make one even more powerful. Followings can strengthen one‟s ability to influence:
1. Knowledge about persons involved in the negotiations
2. Knowledge about the interests involved
3. Knowledge about the facts of the issues
(iii) Power of good relationships
The good working relationship does not imply approval of each other‟ conduct although mutual respect and affection may help. Two important aspects of a good relationship are:
(a) Trust
It comes from building referent power over time through honesty, integrity, and commitment to promises made. Individuals‟ power comes from the perception of others of whether they trust the person involved in negotiations.

SHARMA's BLOG: NEGOTIATING POWER

SHARMA's BLOG: NEGOTIATING POWER: NEGOTIATING POWER Negotiation may be understood as a process of conferring and communicating with two or more parties for the purpose of...

NEGOTIATING POWER

NEGOTIATING POWER

Negotiation may be understood as a process of conferring and communicating with two or more parties for the purpose of influencing their decisions for an agreement. However, the concept of negotiating power is a little difficult to comprehend – it is one‟s ability to influence others‟ decisions and depends upon others‟ perception of one‟s capability and not what he actually has. In essence, negotiation power is all a matter of perception!

(1) Myths about negotiating power
Two popular myths that must be overcome are:
(i) Negotiating power is the physical force
Physical force is considered to be both necessary and sufficient element of negotiating power. It must be understood that the total negotiating power depends upon many factors and enhancing the total power is building up the combined potential of all of them. Effective negotiating power is orchestrating all the factors so as to maximize their cumulative effect.

(ii) Start tough as one can always go soft later
It is also influenced by the concept of physical power and leads to the belief that starting the negotiations with the threat of consequences of non-agreement is preferable. It is true that if other things are equal, a more extreme initial position of either demanding high price or offering a low price, the final outcome is likely to be more favorable. However, opening with a low offer is quite different than opening with the threat of painful consequences if an offer is not accepted because if one is committed to threat at an early stage of negotiations, it can severely damage one‟s negotiating power,

SHARMA's BLOG: NEGOTIATION STYLES

SHARMA's BLOG: NEGOTIATION STYLES: NEGOTIATION STYLES Analytical style These negotiators work on the basic assumption that logically leads to the right conclusions. (i)...

NEGOTIATION STYLES

NEGOTIATION STYLES

Analytical style

These negotiators work on the basic assumption that logically leads to the right conclusions.
(i) Behaviors used

1. Formulate reasons and logic to the case under negotiations
2. Argue in favor of own position and against others‟ position
3. Divide, analyze and break down each situation and its cause and effect
4. Identify relationships of parts
5. Put things in a logical order
6. Weigh the pros and cons thoroughly
7. Make identical statements
8. Use linear reasoning, being inductive in logic
9. Use keywords like because, consequently, in order to, then, therefore, etc
(iii) Guidelines
1. Use logic while arguing
2. Look for causes and effects
3. Analyze options with pros and cons
The standard toolkit of questionnaires is available for determining one‟s style of negotiation and has emerged as a powerful tool for enhancing individuals‟ negotiation skills.

SHARMA's BLOG: NEGOTIATION STYLES

SHARMA's BLOG: NEGOTIATION STYLES: NEGOTIATION STYLES Normative style They operate on the basic assumption that negotiating is bargaining. (i) Behaviors used 1. Assess...

NEGOTIATION STYLES

NEGOTIATION STYLES

Normative style

They operate on the basic assumption that negotiating is bargaining.
(i) Behaviors used
1. Assess, judge and evaluate facts according to their personal values
2. Approve or disapprove, agree or disagree based on own norms of behavior
3. Use loaded words
4. Offer bargains
5. Propose rewards and incentives
6. Appeal to emotions and feelings to reach a fair deal
7. Are demanding, threatening and coercing
8. Use authority, power, and status
9. Correlate with other people
10. Make effective statements
11. Focus on people and their reactions
12. Judge others‟ responses
13. Pay attention to communication and other group processes
14. Use keywords like: wrong, right, good, bad, like, etc
(iii) Guidelines
1. Establish sound relationships
2. Identify partners‟ values and adjust to them
3. Appeal to partners‟ feelings

SHARMA's BLOG: NEGOTIATION STYLES

SHARMA's BLOG: NEGOTIATION STYLES: NEGOTIATION STYLES Intuitive Style These persons work on the basic assumption that imagination can solve any problem, (i) Behaviours ...

NEGOTIATION STYLES

NEGOTIATION STYLES

Intuitive Style

These persons work on the basic assumption that imagination can solve any problem,
(i) Behaviours exhibited

1. Make warm and enthusiastic statements
2. Focus on the entire problem
3. Pin-point the essentials of the problem(s)
4. Make projections into the future
5. Our imaginative and creative in analyzing the situation
6. Go beyond the facts
7. Come up with new ideas all the time
8. Push and withdraw from time to time
9. Put two and two together very quickly
10. Get their facts wrong sometimes
11. Use deductive logic
12. Use keywords like the creative, essential, idea, tomorrow, etc
(ii) Guidelines
1. Focus on the situation as a whole
2. Tap the imagination and creativity of the team
3. Build on the reaction of other persons

SHARMA's BLOG: NEGOTIATION STYLES

SHARMA's BLOG: NEGOTIATION STYLES: NEGOTIATION STYLES Researches have confirmed the following four styles of negotiators:  Factual style  Intuitive style  Normative s...

NEGOTIATION STYLES

NEGOTIATION STYLES

Researches have confirmed the following four styles of negotiators:
 Factual style
 Intuitive style
 Normative style
 Analytical style
Each of these styles is detailed below:
(1) Factual style
Such persons make the basic assumption that facts speak for themselves.
(i) Behaviors exhibited

1. Point out facts in a neutral way
2. Keep track of what has been said
3. Remind people of their statements made earlier
4. Know most of the details of issues discussed
5. Share details with others
6. Relate facts to experience and clarify
7. Are low key in their reactions
8. Look for proof and documents of statements
9. Use keywords like clarify, define, explain, facts, etc
(ii) Guidelines
1. Be precise in presenting facts
2. Refer to what has been carried out
3. Know the dossier complete with details
4. Document what they say

SHARMA's BLOG: Behavior PATTERNS OF SKILLED NEGOTIATORS

SHARMA's BLOG: Behavior PATTERNS OF SKILLED NEGOTIATORS: Behavior PATTERNS OF SKILLED NEGOTIATORS Behaviors that are used frequently These are: (i) Giving an advance indication of behavior ...

Behavior PATTERNS OF SKILLED NEGOTIATORS

Behavior PATTERNS OF SKILLED NEGOTIATORS

Behaviors that are used frequently

These are:

(i) Giving an advance indication of behavior supporting agreement
Skilled negotiators tend to label their behavior before setting it out especially if there is no disagreement involved whereas average negotiators tend to be abrupt. For example, prefacing a question by saying, „Can I ask a question ………‟. Labeling behavior beforehand has some advantages:

 It draws the attention of listeners to the issue stated and would lead to a response from the other party.
 It slows down the negotiations as parties take time to gather their thoughts from the previous statements made before they can respond.
 It adds a certain formality which keeps the negotiations at a national level.
 It reduces ambiguity and leads to clearer communications

(ii) Giving reasons before indicating disagreement
There is a marked difference between skilled negotiators and average negotiators when it comes to expressing disagreement:
An average negotiator would say that „I disagree with that because ………‟ whereas a skilled negotiator is more likely, to begin with, the reasons and explanations before making the statement of disagreement. This is illustrated below:
Average Negotiators
Statement of Disagreement followed by Reasons and Explanations
Skilled Negotiators
Reasons and Explanations before Statement of Disagreement

(iii) Testing understanding and summarizing
Testing understanding is a behavior used by negotiators to check and establish whether the previous statement has been understood by the other party. Summarizing is making a compact statement of points discussed previously. Both the behaviors are useful as they sort out the misunderstanding and reduce misconceptions. Skilled negotiators tend to use them twice as more frequently than average negotiators because of the following reasons:
 Concern for clarity and prevention of misunderstanding
 A measure of reflection of the other party‟s response
 A concern for stack-ability and implement-ability of agreement

(iv) Seeking more information
Skilled negotiators seek more information than the average negotiators. Their justifications are:
 Need to obtain the necessary information to use it for bargaining
 Using the strategy of asking questions as they:
1. Give control over discussions
2. Are more acceptable alternatives to disagreements
3. Keep the other party active, leaving little time to think
4. Give time to negotiators to collect own thoughts

(v) Sharing feelings
Skilled negotiators tend to play their cards very close to their chest and are often able to keep their feelings to themselves. It is almost impossible to measure these feelings in any research. However, an indirect indicator is available as they tend to give „internal information‟ more often than the average negotiators. Giving internal information amounts to sharing with others as to what is transpiring in their mind. Such revelations may or may not be genuine. Giving internal information has also been used instead of disagreeing behavior.
Psychologists are of the opinion that expressing feelings helps build trust.

SHARMA's BLOG: Behavior PATTERNS OF SKILLED NEGOTIATORS

SHARMA's BLOG: Behavior PATTERNS OF SKILLED NEGOTIATORS: Behavior PATTERNS OF SKILLED NEGOTIATORS Skilled negotiators have a markedly different pattern of behavior than the average negotiators. ...

Behavior PATTERNS OF SKILLED NEGOTIATORS

Behavior PATTERNS OF SKILLED NEGOTIATORS

Skilled negotiators have a markedly different pattern of behavior than the average negotiators. Based on research carried out on face-to-face negotiations, it has been found that the following behaviors were used by skilled negotiators more frequently:

(1) Behaviors that are avoided

These are:
(i) Using irritators
Negotiators tend to use certain words/phrases that do not add any value to the process of persuasion that moves parties closer to an agreement. For instance,
 Using the prefix of „generous offer‟ to own proposal
 Using „fair‟ or ‟reasonable‟ for own offers
Although it is rather difficult to avoid saying favorable things about ourselves, these should be treated as „irritators‟ as they tend to offend the other party. Skilled negotiators use these irritators about 2 times per hour compared to 11 times by average negotiators in the face-to-face negotiations.

(ii) Making counter proposals
During negotiations, it happens frequently that the moment one party puts forward a proposal the other party follows it up immediately with a counter-proposal. Skilled negotiators make such counterproposals less often – only about 2 times against 3 times per session made by average negotiators. A disadvantage of making counter proposals are:
 Introducing new and additional options leads to complicating and clouding the clarity of negotiations
 Giving counter-proposals when the other party is pre-occupied with own proposal, are not received well
 The other party usually perceives counter-proposals as a way of blocking or conveying their disagreement

(iii) Avoiding „Defend / Attack Spiral‟
Negotiations often happen for resolving conflicts. When negotiators use emotional or value-loaded behavior to attack the other party or to defend own proposal, the process goes into a spiral and the line between defend / attack blurs. One party may perceive it as a legitimate defense while the other may deem it as an unwarranted attack. Skilled negotiators use it about 2 times per hour against the average negotiators‟ 6 times in face-to-face negotiations.

(iv) Avoiding dilution of argument
Laypersons seem to think that more reasons or justifications offered to support an issue, better are the chances of their acceptance by the other party. In reality, the opposite is true because more arguments lead to more dilution because the opposite party would use the weakest justification to hit back. Thus the weakest argument dilutes the stronger ones and becomes the common denominator of the process in hand. Skilled negotiators use them less often.

SHARMA's BLOG: SUCCESSFUL NEGOTIATOR

SHARMA's BLOG: SUCCESSFUL NEGOTIATOR: SUCCESSFUL NEGOTIATOR There has been considerable debate and discussions on the traits of successful negotiators. Research on the subjec...

SUCCESSFUL NEGOTIATOR

SUCCESSFUL NEGOTIATOR

There has been considerable debate and discussions on the traits of successful negotiators. Research on the subject has evolved broad consensus on the following criteria for determining skilled negotiators:

(1) Rated as effective by the parties.
This precondition for identifying candidates for further study enables to prevent picking a person from a single frame of mind.

(2) Have a track record of significant success
The central criterion for choosing effective negotiators is their track record over time to ensure an element of consistency so as to avoid any conclusions based on short term studies where agreements might have been secured through tricks or deception.

(3) Have a low incidence of implementation failures
The purpose of negotiations is not only to reach agreements but also to make them work during implementation. Track record of successful implementation is a pre-requisite for identifying skilled negotiators.

SHARMA's BLOG: NEGOTIATION

SHARMA's BLOG: NEGOTIATION: NEGOTIATION Negotiation may be defined as a process of conferring, discussing or bargaining among two or more parties with different nee...

NEGOTIATION

NEGOTIATION

Negotiation may be defined as a process of conferring, discussing or bargaining among two or more parties with different needs and wants to reach an agreement in business or diplomacy. It is intended to settle and conclude a deal that enables people to succeed, surmount difficulties and accomplishing objectives.

Negotiations have become an important and integral part of any business/diplomacy. It is the core process for selling any product, service or an idea; it is the heart of clinching orders for purchasing and procurement work and it is resorted to by management team to either jointly solve disputes, disagreements or to bargain new wage and salary structure with the representative union.
Although conducting negotiations among business partners is fairly regular, always remember the famous advice of John F Kennedy, the late President of the USA:
„Do not ever fear to negotiate but never negotiate out of fear‟.

SHARMA's BLOG: TYPES OF RESUME

SHARMA's BLOG: TYPES OF RESUME: TYPES OF RESUME It is an acronym that follows the spelling of „resume‟.  Result-centric document containing relevant and critical inf...

TYPES OF RESUME

TYPES OF RESUME

It is an acronym that follows the spelling of „resume‟.

 Result-centric document containing relevant and critical information to prove that the applicant has suitable credentials for the job
 An enlightening tool to readers that portrays the essence of the applicant – who, what, when, where, why and how (5W‟s and IH) of the individual.
 Shares information about the person and simultaneously, selling his value and worth to the recruiting firm
 The uniqueness of one's‟ personality, the inimitable „you‟ captured in print
 Meaningful marketing tool available to secure a call for an interview
 Evoke a positive response from a prospective employer

There are broadly three types of the resume:

 Functional resume
 Chronological resume
 Combination resume

These have been described as below:
(1) Functional resume
The focus of a functional resume is on work experience and highlights skills that have been acquired through education and experience. It draws the attention of the reader to skill sets that are specific to the requirements of the new job.

(2) Chronological resume
A chronological resume enumerates working experience in the reverse order starting with the most recent job first and then going back to the previous job(s). This approach builds credibility with the reader through work experience and highlights the growth of the applicant over time. The reader can then easily judge the suitability of the candidate for the new job.
This format is popular in the USA and is picking up in India too.

(3) Combination resume
As the name implies, it balances the above two approaches and adopts the middle path. Here, the functional list of skills is stated first in a forward manner followed by a chronological listing of work experience with different employers in the reverse order.
In India, much of the time, combination resume has become more popular.