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...