Disagreements over trivial or important things have always triggered conflicts and resentment between people in all aspects of life. If these things are not solved through dialogue, they bring major divisions that can paralyze the functioning of the society or institution. Family members can disagree on decisions made on business or other matters, parents can disagree on the issues of child care, employees can recent their employer or manager due to work related issues, or a new job recruit who wants to get the best from the deal. All these conflicts, in whatever situation, can be resolved through successful negotiation. In order to manage such conflicts, one requires having excellent convincing powers or negotiation powers to reach a decision that is favorable for all parties (Harvard Business School Press, 2005).
Negotiation goals therefore, are to see all parties come out as winners since it is the ‘losers’ who will retaliate and start another conflict. A triumphant strategy is the one which will ensure that all parties are winners at outcomes and come out as ‘we’ rather than ‘I’ or ‘you’. A negotiation strategy is the overall plan of devising and executing actions that will achieve the desired goals in a negotiation. This entails persuading the other party to give you what you want at your own conditions. It is very important to define the purpose of negotiation before devising a plan. One should ask do I really want a pay raise; do I want to buy a commercial house? Once the purpose is established a strategy is devised and tactics employed to achieve the goal of negotiation. A strategy is broken into phases to make it easier to accomplish. These include: identification of strategic goals; collecting the necessary information, planning for environment (Harvard Business School Press, 2005).
Tactics on the other hand, are the ways of implementing strategy. Examples of tactics are those used by the Allies’ Air Army Corps against the German army in the Second World War in Europe. The Allies were using the strategy of effectively deploying and directing troops, fighter aircraft and ships in drills that will paralyze the enemy. They used the high attitude bombing tactic since the low level was vulnerable to enemy fire and tight aircraft formations that will not allow for singling out of and bombing lone crafts by the enemy. However these tactics should always be ethical and proper, but competitive, though they are just means to an end. Some of the negotiation tactics include issuing ultimatums, biting, shocked or surprised looks and walking away among others. It is important for a negotiator to understand the relationships and differences between negotiation and tactics in order to be successful (Harvard Business School Press, 2005).
In business situations, both in large and small organizations, successful negotiation involves application of effective communication through understanding, listening and convincing tactics. A negotiator should speak clearly and in a concise way in order to convince the other party. Aggressiveness in talking and words may lead to more bitterness while smooth and convincing words will capture the attention of the other parties. US president, Obama is an example of a good orator who convinces people by the way he talks rather than what he says, making him a good negotiator. Listening is another tactic that proves to be very effective in negotiation. Here the negotiator listens carefully and encourages the other party to voice their feelings and concerns. The negotiator maintains eye contact with the other person as he/she talks and says he fully understands. This shows interest in the dialogue and makes sure the other party listens when he talks. Understanding each party’s concerns will lead to a successful negotiation. The negotiator should use body language such as facial expressions, hand gestures and eye contact as well as words to show his/her understanding of the other party’s concerns (Cavusgil, Ghauri & Agarwal, 2002).
As a negotiator it is imperative to master the various negotiation strategies and tactics used in different circumstances in order to gain the desired outcomes. This paper therefore discuses the various aspects of negotiation by outlining the critical elements of negotiations, bargaining strategies, distributive and interest-based also integrative negotiation strategies and the process of reaching an agreement.
Critical elements in negotiation
There are three elements in negotiations. These include time, information and power as outlined by Harvard Business School Press, (2005).
This refers to the period during which negotiation process is going to last. The aspect of time in negotiations follows the Pareto’s law or the 80/20 rule applied in general life and states that “ twenty percent of what you do procedures eighty percent of the results; conversely; eighty percent of what you do produce only twenty percent of the results”( Harvard Business School Press, 2005). What this means for negotiation is that most of the concessions and deals are concluded in the last 20 minutes of available time. An example is that of the employee negotiating for pay raise from his boss during an annual review. For this employee negotiation time started the day he started working for the company yet the raise will be given in that two hour meeting with the boss since all his work and achievements determine the pay raise.
In order to make maximum use of time, a negotiator should first have patience in the process and maintain calm throughout the process as the deals will be closed at the last minute. Secondly, if it will be advantageous to resolve the negotiations quickly to the negotiator, he should convince the other side on the basis of value added to him or her. An example is that of a government wishing to borrow a loan to finance their current budget, it will be in rush to make a quick deal with a bank. The bank could negotiate on the basis of the advantage the government will get in paying its servants in time to get its desired income. The third important thing for the negotiator to understand is that deadlines can be changed; moved or eliminated therefore he should stay calm when it nears. If the other party realizes deadlines are not an issue and negotiations can continue for another time, they will be more willing to make a concession that will be beneficial to him or her. This aspect is used by property dealers who make the vendors aware that they have all the time to negotiate for the property and in the mean time another more attractive one might came up. The poor vendors will be anxious to make a sale since they have been through a long emotional process of putting the house on sale. Another thing the negotiator will have a competitive edge is in knowing the counterparts deadline. As this nears he /she will be under a lot of stress and is most likely to make a deal that will be desirable to the negotiator. Lastly, sometimes it is better to change deadline and continue with negotiations slowly and patiently in order to get the best results.
This refers to all the necessary data and facts the negotiator requires in the process about the other party. In order to gain from this advantage the negotiator will require to gather the most information he can about the competitor prior to face-face encounter. This is for the reason that during the on-the-table negotiations it is hard to discover the true interests, needs and motivations of the other party. The negotiator should start early to gather the information since when the formal negotiations start people will be unwilling to talk. Gathering of information could be done through talking to people with knowledge on the various aspects of negotiation, undertake an investigation of the facts and statistics of your counterpart, people who had dealt with him/her before and the counterpart himself or herself.
Advance preparation in information gathering will help the negotiator to set clear and realistic goals prior to negotiations, which will give him an edge in the process.
This is the view that the other party has the upper hand in the negotiation. There are various types of power that a negotiator can use to sway the conclusions of a negotiation.
The first type of power is a formal position can come with a measure of power for a negotiator such a finance manger can influence the decision in the finance department. Authority is another type of power that can sway the results of a negotiation. This comes with the rightful position of authority the negotiator has such as the pope in the Catholic Church where they look up to him for guidance in various aspects of life. Knowledge or expertise when used and applied in negotiation gives the negotiator great power, which in return affects the outcome of the process. The character of a person in terms of his trustworthiness gives that person power in a negotiation. This is the reason why renowned and respected business leaders or personalities such as the former UN secretary general, Kofi Annan, are called upon in peace negotiations. Rewards are another kind of power that influences the outcomes of a negotiation. A supervisor will have more say in a discussion than the employees because he can be able to offer raise or other rewards to employees. The power of punishment is also held by some negotiators where they are able to influence negative results for their counterparts. Managers wield this power over their employees as they can be able to reprimand and fire employees. When dealing with a counterpart of the opposite sex, a negotiator can use the power of sex to extract concessions and deals from the other side. A woman can touch casually a man’s hand or arm to make her point which gives her the outcomes she wants.
Behavior style is another power wielded in negotiations and that will influence the outcomes. The trick is for the negotiator to use one that suits the circumstances in order to get most from the process. There four behavior styles that used are:
- Logical, process oriented and systematic
- Task oriented, goal bound and focused
- Supportive, relationship oriented and sensitive to feelings
- A blend of the above three styles
A person who wants to keep a good relationship with his children and partner after divorce will use the supportive, relationship oriented and sensitive to feelings behavior style as it suits his interests well.
No power is in some circumstances power so great to influence the outcomes. In the case of a kidnapper who threatens the hostage with death many times, the hostage can give up all power by telling him to go ahead and make good is threats as he is not afraid of death. At this point the power the kidnappers wielded on his victim is gone and the hostage gains more leverage. Lastly there is the crazy power where the negotiator behaves in an irrational manner. This gives the negotiator tremendous power as the counterpart will be willing to meet his demands if only to save himself the trouble of dealing with him/her.
Bargaining is a process through which parties in a conflicting situation try to reach an accord. This process takes time and the participants have to make offers and counter-offers to each other. The main issues here are the efficiency of meeting each others interests and the distribution of these interests. A bargaining situation on the other hand, describes “a situation in which two or more players have a common interest to cooperate, but have conflicting interest over expertly how to cooperate”( Muthoo, 2000). This means that an exchange situation where individuals are benefiting mutually even though they have divergence interests on the terms of trade. An example is a person who wants to sell a house at $ 50,000 and another one who offers to buy at $60,000. If the transaction is done, the two will come out satisfied with the deal, but they have a common interest in trading but a conflicting interest in price of the house.
There are various conflict and social action tactics used to force parties to the bargaining process. These include loss of community support, embarrassment, and financial loss through strikes, boycotts and go-slows especially in industrial labor among others.
Bargaining portrays the conflict as a non-zero-sum play involving constructive exchanges where both sides will lose some interests and win others. This will require collaborative and cooperative efforts which focus on similar contestant needs and sharing of available resources in order to resolve the conflict (Harvard Business School Press, 2005).
An example of a bargaining strategy
Bargaining strategies in Germany monetary authorities are made in the context of the monetary governance structures, that is, at the European level, EMS and at the international level, G7. These strategies are measured in terms of the independence versus exchange rate continuum. A bargaining strategy for the government therefore will depend on fight for power between Bundesbank and government and their functions in the context of international and European level of governance. In a scenario where the German authorities are required to sacrifice monetary autonomy in exchange for stability of the EMS, they have to develop a bargaining strategy. In this case government may use a hard-line strategy, which shows its adamant on maintaining its monetary autonomy and also show a wish for seeking concessions on the part of the German party from the European counterparts. It may also adopt a compliant strategy, which indicates that the German negotiators are willing to give concessions by sacrificing their monetary autonomy for the sake of EMS exchange stability (Loedel, 1999).
This is a competitive strategy also known as ‘claiming value’ or ‘win-lose’ bargaining. It is used where there are fixed resources which are thought as not enough for everybody and therefore one side will get more than the other one. The negotiators goal is to get more for his/her side at the expense of the counterparts. Some situations can not be resolved by any other method except the ‘zero-sum’ way.
Example of a purely distributive strategy is given by a HR training module provided by a company I was working with, Superior Consulting Services to a fashion company, Sabina Designs. The Sabina HR manager, Treca started negotiations with our manager, Joel to provide this service. As an established and well known business, Treca wanted to keep costs under control as they were planning to launch another design line while Joel knew we were struggling and had no prospects at the moment so wanted to charge as much as possible. The two parties focused on price as the basis for negotiation. Both were adamant into expanding the negotiation into other interests other than price. After a lot of discussion, Treca told the Joel party that her company was considering other potential companies to provide the service. Joel weighed the options and finally accepted the deal though with some resentment. Sabina Designs were very satisfied but Joel was left wondering how he will provide high quality training with such a tight budget (Harvard Business School Press, 2005).
In this strategy the “buyer” strives to get the lowest price possible and the “seller” focuses on getting the highest price possible. A pound more on the buyer’s side is a pound less to the seller’s side and vice versa. This is pure competition to claim the highest value in the negotiation.
Another aspect of this strategy is the complete disregard for relationship and reputation. Both parties are not willing to forego value in deal for a value in the relationship. Example is a person shopping for a house in a new city. He/she is bent on getting the best price for the house without any concern for a longtime relationship with the seller who is a stranger and might remain like that.
In distributive negotiations information is vital. The other party should know very little about your weaknesses and a bit about your negotiation strengths. Example is the property agent who is in negotiation for a property. The agent has superior knowledge about property market in that area, transactions themselves and a little about the circumstances of the vendor. This will give him/her a competitive edge over the vendor (Cavusgil & Ghauri, 1990).
For a negotiator in distributive negotiations the following points will ensure success according to Harvard Business School Press, (2005).
Have control over the “anchor point” or the first offer to negotiation. This first offer sets the bargaining range at least psychologically. Outcomes often have a link to it and therefore should start at the right place. Give information to your opponents wisely. They should not have the slightest idea why you want to make a deal or your circumstances, or interests, or preferences or the walk away value. It is wise though to let them know you have alternatives if you do not close the deal. Thirdly, gather information about your opponents on their circumstances and preferences including their walk away value. This information should be used to make the first offer. Lastly, a negotiator should not be too aggressive or overconfident. This may make the other party walk out on you and lose a chance to make a valuable deal.
Criticism for this strategy is that it is destructive as it allows people to focus more on their differences and therefore for maintaining good relationships the integrative approach is an alternative as it focuses on expanding the pie and more amicable distribution.
The strategy for winning in a distributive negotiation according to Cavusgil, Ghauri & Agarwal, (2002) is as follows
The process involves interchange of the negotiator’s walk away value in the arrangement and the counterparts walk away value. First he should know what he has and what he wants from the deal. This involves outlining his BATNA (Best Alternative To a Negotiated Agreement), goals, interests and resource limitations. Secondly, a negotiator should know their opponent’s BATNA, goals, interests and limitations. Lastly, in the negotiation process he should negotiate agreements or concessions closer to his interests and goals without going beyond his BATNA and resources available to him. This process will give the negotiator a stronger position than the opponent. The negotiator should guard his information from the opponent and get enough out of him.
Interest based negotiations
This is an approach to resolving conflict in which parties cooperate to make more of something by incorporating each others interests in the deal. Here, parties expand the resources and claim them as well.
In the example of Superior Consulting Service and Sabina Designs above, both managers discovered tat they have other interests other than price. Treca discloses to Joel that Sabina designs are interested in community outreach projects. Joel, on the other hand, tells Treca that Superior wants to boost its currents business portfolio and cash flow with high caliber clients and establish educational opportunities to young people through internships.
The two negotiators learn about each others interests and agree to a deal that incorporates their range of interests while at the same time divide the monetary value of their agreement between them. Joel lowers the price he had originally charged and Treca on the other hand raised her original price. She also agreed to allow Joel to list her company as client in the marketing of Superior Consulting Services when she is satisfied with the training services. They went further and agreed for Superior interns to ‘Shadow’ managers and employees of Sabina for a specified period of time in order to learn about the how the training module works. This deal satisfied both parties and by the closing of the deal a positive relationship between the companies had been created. Joel and Treca instead of trying to outwit each other on a fixed “pie” they choose to enlarge it beyond price so that it brought more value to both (Harvard Business School Press, 2005).
This strategy is becoming increasingly adopted as businesses move from wringing vendors in short-term deals to doing a long-term relationship that leaves both satisfied and creates loyalty. This is influenced by the emerging business culture of joint ventures and outsourcing. In such deals positive unexpected benefits to third parties emerge such as internship program in the deal between Superior and Sabina above.
In interest based negations, the negotiator has two tasks: to build as much value as possible for his company and the counterpart and to claim value for the company. This does not mean a win-win situation where both parties get everything they wanted rather it means trade-offs are made to get the most important things while giving up the less important ones. In the example of Superior Consulting Services and Sabina Designs, the former gave up a high charge and the later paid more for the services. However, they got other forms of value in exchange.
In situations where the interests of both parties do not compete, the negotiators can easily fashion a deal that integrates as efficiently as possible their different interests. In such cases, Mark Gordon, a negotiation suggests that parties look for creative ways to accommodate their interests in a range of acceptable outcomes rather than making concessions. The goal should be helping them at little cost to your company to meet their interests and they help you to meet yours at little cost to them. It is not a deal that aims to hurt each other or one of the parties. Parties find that there is more to focus on other than price, delivery date or a single item or variable as Superior and Sabina realized in the example above (Cavusgil, Ghauri & Agarwal, 2002).
Information sharing is key to this strategy unlike in the distributive strategy where ‘cards are played close to the vest’. In this process (Harvard Business School Press, 2005), parties should be encouraged do give significant information about their situation; provide an explanation of the reason for wanting a deal; share their interests and business constraints; explain generally their preferences; make a consideration and share about other resources and abilities that might be of interest to their counterparts and more so be added to the deal; and explore other creative options for meeting the interests of both parties.
Reaching an agreement
This is a process through which two people or conflicting parties candidly exchange information on each others opinions, feelings, needs, wants, interests and preferences on the issue of conflict and cooperate in working out their differences to reach a mutually satisfactory outcome. Alternatives are sought according to their value and practicality rather than on the basis of past practice, personal expediency or ideas brought to the negotiation. A win-win approach to resolving disagreements is very essential for those participating. In order to reach a satisfactory deal, all participants must value the ideas, requests and reasoning of others (Muthoo, 2000).
A recent example of agreement reached successfully is between the US and Japan on Open Skies aviation. This was reached after five rounds of negotiations which started on May of this year. The discussions focused on open skies between the two countries with the outcome that allowed the airlines from both countries to select routes and destinations in accordance to the consumer demands (RTTNews.com).
In the case of a couple who wants to separate or divorce the process of reaching an agreement can be done in several ways according to Divorce Law Scotland.com
A couple can result to the option of reaching an agreement on their own without assistance from the outside. This is possible to couple who are still in communication. Secondly, couple can also result to the option of engaging a solicitor to negotiate on their behalf. This could be family lawyers who are sensitive to the trauma and difficulties of breakdown of families. This is however not very effective as solicitors are adversarial in approach and the communication through them worsens the situation. They also have to be paid from the same resources being disputed over. The couples can also result to a neutral mediator, who helps them to come to a mutual agreement amicably. The mediator helps the couple in discussions and negotiations but for implementing the decisions arrived at, a solicitor is required. The next option available to the disputing couples is the collaborative law. This involves negotiations in a collaborative way between specially trained solicitors who handles matters on behalf of their clients. The face-to-face negotiations are done by both partners and their clients out of court. Lastly, partners can use the court procedure to arrive at an agreement. This is an expensive, long and frustrating procedure. In addition it destroys any hope of a collaborative process and surrenders the decision making to other people or person and therefore should be avoided entirely. It is however left for the couple to decide which method they want to reach an agreement with.
In all spheres of life, disagreements arise between people which result to conflicts and resentment. If these things are not solved through dialogue, they bring major divisions that can paralyze the functioning of the society or institution be it a family, business, country or even between countries among others. Negotiation therefore becomes very important and its main goal is to see the parties emerge as winners with the mentality of “we” instead of “I” and “you”. A negotiation strategy is required in order to fashion the tactics of achieving the goal of negotiations. Tactics on the other hand, are the ways of implementing strategy. However these tactics should always be ethical and proper, but competitive, examples include tactics include issuing ultimatums, biting, shocked or surprised looks and walking away among others.
It is however important for a negotiator to understand he critical elements of negotiation. Time refers to the period during which negotiation process is going to last. The aspect of time in negotiations follows the Pareto’s law or the 80/20 rule applied in general life and concludes by stating that agreements are concluded in the last 20% of time available for negotiation.
Information refers to all the necessary data and facts the negotiator requires in the process about the other party and finally power which is the view that the other party has the upper hand in the negotiation. There are various types of power that a negotiator can use to sway the conclusions such as position, no power and expertise among others.
Bargaining is a process through which parties in a conflicting situation try to reach an accord. This process takes time and the participants have to make offers and counter-offers to each other. A bargaining situation refers to a situation where conflicting parties have common interest but different views on how to cooperate in the exchange. There are two types of bargaining strategies described in this paper: distributive negotiations and interest-based negotiations. Distributive strategy is used in competitive situations where there are fixed resources, which are thought as not enough for everybody and therefore one side will get more than the other one. The resources in this strategy are seen as fixed such as water resources or money and therefore a gain on one side is interpreted as a loss on the other. This strategy encourages each side to competitively bargain for a larger share of the cake than the other. The side which looses feels bitter creating more resentment and need for retaliation, which leads to more conflict. Interest based negotiations strategy involves resolving conflicts through cooperation of the parties. The resource is expanded by incorporating each others interests in the deal. This leaves both parties satisfied with the agreement even if all their interests were not met. In today’s business world this strategy is increasingly being used as an alternative to distributive strategy as a result of outsourcing and joint ventures. This strategy also ensures long-term relationships as opposed to short-term relationships.
After the negotiations have been done, an agreement is reached. This a process through which two people or conflicting parties candidly exchange information on each others opinions, feelings, needs, wants, interests and preferences on the issue of conflict and cooperate in working out their differences to reach a mutually satisfactory outcome. There are various alternative of reaching an agreement depending on the issue at hand.
Cavusgil, S. T., & Ghauri, P. N.( 1990). Doing business in developing countries: Entry and negotiation strategies. Routledge.
Cavusgil, S. T., Ghauri, P. N. & Agarwal, M. R. (2002). Doing business in emerging markets: Entry and Negotiation Strategies. Sage Publications Inc. Chapter 7.
Havard Business School Press. Ed. (2005). The essentials of negotiation. Harvard business literacy for HR professionals’ series. Harvard Business Press.
Loedel, P. H. (1999). Deutsche mark politics: Germany in the European monetary system. Lynne Rienner Publishers.
Muthoo, Abhinay. (2000). A non-technical introduction to Bargaining Theory. World Economics Online, Vol. 1. Issue no 2, P. 145-166.
Divorce Law Scotland.com. Ways of reaching an agreement. Web.
RTTNews.com. US, Japan Reach an Agreement on Open-Skies Aviation. RTT News Online. Web.