What is Negotiation?
Negotiation is the fundamental form of dispute resolution negotiation is a discussion between two or more disputants who are trying to work out a solution to their problem. To avoid conflicts it may be conducted in advance. For example, A simple Life choice in with our family members-who does which chores, what family activities are planned for when we are negotiating. When we bargain over the price of a product or service, we are negotiating. In order to live or work effectively with others, good negotiation skills are critical. This interpersonal or inter-group process can occur at a personal level, as well as at a corporate or international (diplomatic) level. Negotiations typically take place because the parties wish to create something new that neither could do on his or her own, or to resolve a problem or dispute between them. The parties acknowledge that there is some conflict of interest between them and think they can use some form of influence to get a better deal, rather than simply taking what the other side will voluntarily give them. When Parties negotiate they usually expect give and take because they have interdependent goals and this can interdependence will result in “win-lose situation” or “win-win situation” the type of negotiation vary according to the situation and the way negotiation conducted. Negotiation theorists make several overlapping distinctions about approaches to negotiation according to (Fisher, Ury, and Patton, 1991) distinguish between positional bargaining, which is competitive, and interest-based bargaining or principled negotiation, which is primarily cooperative.
Approaches of Negotiation (Fisher, Ury, and Patton, 1991)
Positional Bargaining
Positional bargaining is a negotiation strategy that involves holding on to a fixed idea, or position, of what you want and arguing for it and it alone, regardless of any underlying interests. For example a small vendor selling fruits $15 but the customer wants the fruit for $10, each side starts with an extreme position, which in this case is a monetary value, and proceeds from there to negotiate and make concessions. Positional bargaining tends to be the first strategy people adopt when entering a negotiation. This is often problematic, because as the negotiation advances, the negotiators become more and more committed to their positions, continually restating and defending them. There are two forms of Positional Negotiation, Hard Negotiation and Soft negotiation.
Hard Negotiation
Hard bargaining involves the negotiation of positions, rather than interests. It is highly competitive, seeing victory as the number one goal. Hard negotiation, according to (Fisher, Ury, and Patton, 1991), see the participants as adversaries, and demand concessions as a condition of the relationship. They distrust the other side and play sneaky games to try to gain the negotiating advantage. For example they will hold firm to their opening position, refusing to make concessions; they may mislead the opponent about their bottom line and demand one-sided gains as the price of an agreement. They will apply tricks and pressure in an effort to win what they see as a contest of will. Hard bargaining, as described by (Fisher, Ury, and Patton, 1991) is very similar to what is called "distributive bargaining" by other theorists--although there are enough differences to warrant a different essay on that topic.
When confronted with a softer opponent, hard negotiation almost always will win. When confronted with another hard negotiator, however, it can result in no agreement, or an agreement which leaves potential mutual benefits "on the table." In other words, such benefits are not discovered or obtained.
Soft Negotiation
Like hard bargaining, soft bargaining involves the negotiation of positions, rather than interests. However, to avoid the common problems associated with bargaining over positions, the negotiators will take a "soft" approach: treating the participants as friends, seeking agreement at almost any cost, and offering concessions easily in the interests of preserving (or creating) a good relationship with the other side. Soft negotiation will trust the other side, and will be open and honest about their bottom line. This leaves them vulnerable to hard negotiation who will act competitively–offering few, if any concessions, concealing their bottom line, even making threats. In a negotiation between a hard negotiation and a soft negotiation, the hard negotiation will almost always emerge with a substantially better deal.
Paring Negotiation Styles
· Each party strives to maximize its share of a fixed pie
· The interests of the parties are not interdependent.
· The future relationship between the parties has low priority to them
· A win for one side equals a loss for the other because each party sees other party as opponent
· The ultimate goal is to win as much as you can, recognizing that your win is the other side's loss
Peer reviews on Positional Based Bargaining/ Negotiation.
According to the (McClendon, Burke, and Willey, 2010) argued that consideration of all underlying interests in a negotiation process is unnecessary. In fact it may sometimes be counterproductive. This is because of the distinction and relationship between issues and interests. Issues are universal; they are shared between each party in a conflict. Interests, on the other hand, are specific to each party: what the buyer of the rug in the market wants is a bargain, what the seller wants is profit. This relationship is quite simple. On the other hand (Positional Bargaining: Losing Your Nose at the Grindstone, 2003)Positional bargaining is expected by employees as a leadership tool in times of immediate crisis. Positional bargaining continually proves to be an effective short-term solution to a crisis but Positional bargaining will lose its advantages over time. Hence any agreement that is reached through positional based bargaining will "probably reflect a mechanical splitting of the difference between final positions rather than a solution carefully crafted to meet the legitimate interests of the parties. Therefore positional bargaining is often considered a less constructive and less efficient strategy for negotiation than integrative negotiation. Positional bargaining is less likely to result in a win-win outcome and may also result in bad feelings between the parties, possibly arising out of the adversarial, "you vs. me" approach or simply a result of one side not being truly satisfied with their end of the outcome. Positional bargaining is inefficient in terms of the number of decisions that must be made. The more extreme the opening positions are, the longer it will take to reach a compromise or sometimes may end up in conflict in the negotiation.
Interest Based Bargaining
A mutual gain bargaining in contrast is based on the premise that each side has interests. Each side examines its own interests and also becomes educated as to the legitimate interests of the other parties. Together the issues are addressed, having in mind the interests of all of the parties and how they can be best accommodated. Interest based bargaining often takes longer. Because it requires open discussion about real issues, more time is needed for each of the bargaining teams to achieve a level of mutual trust - a crucial element to the process. Only in an atmosphere of mutual trust can the parties honestly discuss their own interests. Neither side can view the process as merely a bargaining technique. If either side attempts to do so, the other side will sooner or later recognize that fact and the mutual trust essential for the process will be destroyed. Although the process is in some ways more time consuming, and in many ways more difficult, the results that can be achieved make the effort worth it, especially if the problems are complex.
Principled negotiation is the name given to the interest-based approach to negotiation in (Fisher, Ury, and Patton, 1991) the book advocates four fundamentals of principled negotiations as following;
1. Separate people from problem
2. Focus on Interest not Position
3. Invent Option for Mutual Gain
4. Insist on Objective Criteria
These principles should be addressed at each stage of negotiation process. The Process begins with the analysis of situation or Problem of other parties interest and perception and the existing option. The next stage is to plan ways of responding to the situation and other parties. Finally, the parties discuss the problem trying to find a solution on which they can agree.
Separate People from the Problem
separating the people from the problem means separating relationship issues from substantive issues, we are all people first there are always substantive and relational issues in negotiation and mediation. People tend to become personally involved with the issues and with their side's positions. And so they will tend to take responses to those issues and positions as personal attacks. Separating the people from the issues allows the parties to address the issues without damaging their relationship. It also helps them to get a clearer view of the substantive problem. The author identified three basic sorts of People Problem, People Perception, Emotions and Communication about the other parties. This plays important role because as people negotiation depends on their perception about the other parties resulting varied emotions and communication during negotiation.
Good agreements focus on the parties' interests, rather than their positions. As Fisher and Ury explain, "Your position is something you have decided upon. Your interests are what caused you to so decide."[p. 42] Defining a problem in terms of positions means that at least one party will "lose" the dispute. When a problem is defined in terms of the parties' underlying interests it is often possible to find a solution which satisfies both parties' interests. Positions may be thought of as one dimensional points in a space of infinite possible solutions. Positions are symbolic representations of a participant's underlying interests.
To find intrest you may ask question such as- what is motivating you here?, what would you try to accomplish, but according to (Mainland and McGaffey, 1983) in negotiation there are multiple, compatable and conflicting intrest. Principles can often be extrapolated from "points of agreement" to resolve other issues. Also note that focusing on interests tends to direct the discussion to the present and future, and away from the difficulties of the past. If we have learned anything about the past, it is that "we can not change it." The past may help us to identify problems needing solution, but, other than that, it does not tend to yield the best solutions for the future.
Invent Option for Mutual Gain
The four obstrucles identified by (Fisher, Ury, and Patton, 1991) in cretaing mutal gain are as follows
1. Parties may decide prematurely on an option and fail to consider alternatives
2. The parties may be intent on narrowing their options to find the single answer.
3. The parties may define the problem in win-lose terms, assuming that the only options are for one side to win and the other to lose
4. a party may decide that it is up to the other side to come up with a solution to the problem.
Before seeking to reach agreement on solutions for the future, (Fisher, Ury, and Patton, 1991) suggest that multiple solution options be developed prior to evaluation of those options. The typical way of doing this is called brainstorming. In brainstorming, the parties, with or without the mediator's participation, generate many possible solution before deciding which of those best fulfill the parties' joint interests. In developing options, parties look for mutual gains.
Insist on Objective Criteia
When interests are directly opposed, the parties should use objective criteria to resolve their differences. Allowing such differences to spark a battle of wills will destroy relationships, is inefficient, and is not likely to produce wise agreements. Decisions based on reasonable standards makes it easier for the parties to agree and preserve their good relationship. Using objective criteria (standards independent of the will of any party) is where the label "principled negotiation" comes from the solution selection be done according to concepts, standards or principles that the parties believe in and are not under the control of any single party. Fisher and Ury recommend that selections be based upon such objective criteria as precedent, tradition, a course of dealing, outside recommendations, or the flip of a coin.
Peer review on Princplied Negotiation
If “soft“ negotiation is defined as too much focus on the integrative aspect and too less focus on the distributive part of negotiation, one is easily tempted to say that the approach of “Getting to Yes“ is too soft. (James, 1984) makes this point very clear: “...the book’s emphasis upon mutually profitable adjustment, on the “problem solving” aspect of bargaining, is also the book’s weakness. It is a weakness because emphasis of this aspect of bargaining is done to almost total exclusion of the other aspect of bargaining, “distributional bargaining”, where one for me is minus one for you. (Fehr and Schmidt, 1999) also makes the distinction between competitive and cooperative approaches. According to (Fehr and Schmidt, 1999), the most important factors that determine whether an individual will approach a conflict cooperatively or competitively are the nature of the dispute and the goals each side seeks to achieve. Often the two sides' goals are linked together, or interdependent. The parties' interaction will be shaped by whether this interdependence is positive or negative, according to (Fehr and Schmidt, 1999):
· Goals with positive interdependence are tied together in such a way that the chance of one side attaining its' goal is increased by the other side's attaining its goal. Positively interdependent goals normally result in cooperative approaches to negotiation, because any participant can "attain his goal if, and only if, the others with whom he is linked can attain their goals."
· On the other hand, negative interdependence means the chance of one side attaining its goal is decreased by the other's success. Negatively interdependent goals force competitive situations, because the only way for one side to achieve its goals and "win" is for the other side to "lose."
Although (Fisher, Ury, and Patton, 1991) argue that almost any dispute can be resolved with interest-based bargaining (i.e., a cooperative approach), other theorists believe the two approaches should be used together. (McClendon, Burke, and Willey, 2010), for example, argue that negotiations typically involve"creating" and "claiming" value. First, the negotiators work cooperatively to create value (that is, "enlarge the pie,") but then they must use competitive processes to claim value (that is, "divide up the pie").
(Sebenius, 1986) call their approach to the negotiator’s dilemma (which is very similar to the prescriptive advice for negotiators in this article) “conditional openness“. Since openness is just one of many aspects of value creation and since principled negotiation provides a complete concept of value creation, (James, 1984) call this principle negotiation as a “conditional principled negotiation“. Such a strategy integrates all the advantages of principled negotiation without being vulnerable to the mentioned criticism. Principled negotiation as described in “Getting to Yes“ and “Getting Past No“ is actually too soft in terms of the negotiator’s dilemma.
Comparision between Postional Bargaining versus Intrest based Bargaining
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Postional Bargaining
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Intrest Based Bargaining
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Soft
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Hard
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Principle Bargaining
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Negotiation Parties are friends
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Negotiation Parties are adversaries
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Negotioation Parties are problem solvers
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The Negotiator goal is agreement
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The Negotiator goal is victory
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The Negotiator goal is a wise outcome reached efficiently and amicably
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Negotiator Make concessions to cultivate the relationship
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Negotiator Demand concessions as a condition of the relationship
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Principle I:
Separate the people from the problem
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Negotiator behave soft on the people and the problem
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Negotiator behave hard on the problem and the people
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Negotiator behave soft on the people, hard on the problem
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Negotiator Trust in others
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Negotiator Distrust others
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Negotiator Proceed independent of trust
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Change your position easily
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Dig in your position
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Principle II:
Focus on interests, not on positions
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Make offers
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Make threats
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Explore interests
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Accept one-sided losses to reach agreement
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Demand one-sided gains as the price for agreement
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Principle III:
Invent options for mutual gain
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Accept one-sided losses to reach agreement
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Demand one-sided gains as the price for agreement
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Principle III:
Invent options for mutual gain
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Insist on agreement
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Insist on your position
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Principle IV:
Insist on objective criteria
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Source: http://www.storyboardthat.com/articles/business/negotiation/getting-to-yes
Role of Power in Negotiation
No negotiation method can completely overcome differences in power. However, (Fisher, Ury, and Patton, 1991) suggest ways to protect the weaker party against a poor agreement, and to help the weaker party make the most of their assets. Negotiation is a process of communication in which the parties aim to "send a message" to the other side and influence each other. There is also a widespread belief that the best way to start a negotiation is with an extreme position. The idea is that negotiators should let others know they are in charge by taking a hard line, and should then soften their position later if appropriate. Most conceptions of power are founded on (Weber and Parsons, 1997) classic defenition of power as the proballity that a person can carry out his her own despite resitance {reterived from the book review of The Theory of social and economic organization by (Delatour, 1948) and (Sack, 2004)}.
The study of power and its effect is important in the understanding of negotiation process and relationships flowing from it. Every interaction and every social relationship, inside and outside organizations, involves an exercise of power. Accoding to (French, 1959) decribed 5 base of power in his airtcle “ The Base of Social Power” was approach to classify power such as follows: specially they argue that Negotiation partie A’s Power over Negotiating Partie B is determined by following bases
1. Legitimate Power (which is Partie A’s Legitimate right to perscribe behaviour for Parie B)
2. Expert Power (which is A possession of Special Knowladge and expertise on the Trade against other partie)
3. Referent Power (which parie B’s influence with top organisational people in hirechay such as CEO with Negotiating partie A)
4. Coercive Power (This is when one parie owns other partie i.e Negotiating Partie A’s Ability to Punish Negotiating Partie B if Partie B does not comply wishes of Partie A)
5. Reward Power (Negotiatting Partie A’s Ability to provide benefits to Negotiating B)
The Advantage and Disadvantage of The Base of Power
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Type of Power
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Advantages
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Disadvantages
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Legitimate Power
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Power based on “office position” and not the
Person and Has a high impact if opponent recognises and acknowledges the office
holder
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May loose impact if legitimacy is questioned and To be more effective may require additional
power sources
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Expert Power
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No outlay of resources needed and Tied to facts
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Likely to fail if outside area of expertise and must work to maintain Experise
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Referent Power
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Creates a positive climate and Makes the Negotiating Partie more Influenced over other parties
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Likely to fail if outside area or scope of identification with power holder, Sometimes may consider as Illeagal by the organisation.
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Coercive Power
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Direct control over opponents behaviour ruslt of which complaince increases
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Potential for retaliation and may loose impact if the fear decreases.
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Reward Power
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Rapaid action and Direct Controal Over behaviour. A form of encouragement
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Rewards may loose potency and sometimes may considered as bribe
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There is also a widespread belief that the best way to start a negotiation is with an extreme position. The idea is that negotiators should let others know they are in charge by taking a hard line, and should then soften their position later if appropriate.However, this may not be the most effective tactic. According to (Pruitt and Carnevale, 1993) The more extreme the opening positions are, and the smaller the concessions, the more time and effort it often takes to move toward agreement. And as each side tries to use force to make the other change its position, anger and resentment result, putting a heavy strain on the relationship between the parties. Thus, it is a mistake to try to use force or threats before one has exhausted the other elements of negotiating power (Pruitt, 1981). Threatening to impose harsh consequences without having first made a firm and clear offer is actually likely to reduce a negotiator's level of power.
How to exert Power in Negotiation?
The ability to exert of power depends upon various factors as foolowing:-
1.Having a good Alternative to the Negotation
Holding a good argument alternative to the negotation eventually contributes to the negotatiors power. To a negotiator, this wise old proverb illustrates that if you bring only a single proposal to the table, you may likely end up with a rotten deal, or no deal at all. You need to have an alternative plan waiting in the wings. This is where BATNA come to the picture, Author (Fisher, Ury, and Patton, 1991) coined this term referes to best alternative agreement. A negotiator with very strong alternative dosent need to satisfactory outcome from a negoation he might choos his alternative rather. When parties have many options other than negotiation, they have more leverage in making demands. Therefore, parties should develop a strong understanding of their alternatives before participating in negotiations. (McClendon, Burke, and Willey, 2010) Making one's BATNA as strong as possible, and then making that BATNA known to one's opponent, can strengthen one's negotiating position.
Let’s Illustrate BATNA using example, you are the buyer and you are in urgent need of the product, your supplier sense your urgency and quotes a higher price because he has the upper hand. Now the same situation you go prepared before arraigning the meeting, you set up talks with 2 suppliers who are ready and able to handle your needs. When you meet the first supplier with your alternative solution you will witness the first supplier losses his monopoly perception on your need and tries finishing deal more amenable way. When you have a strong alternative solution to a lousy proposal, you have leverage to build a more potent proposal. If not, then you can turn to your best alternative solution.
2.Maintaining and developing own network and allaince
This is the most crucial part of exerting power in negoation because this some time this may considerd as domination. Having a strong alliance and Netwrok helps to process the work quickly, in addition to this other parties are bound to make a deal with as this might give some leavarage in selling your product or procesing the work from you, hence you can claim value. The parties who maintain own network and allaince may not necassirly whish for satisfactory outcome. For example, In india manufacturing deer leather shoe is not permitted to every one and the source of raw materials are throughly tested and checked before starting the manufacturing due which lead time is more for such shoes, if a maunfacturer has his own network and alliance he can produce in shorter lead time and gaining the adantage to hold strong foot in negotation.
3.Holding Information about other negotatiors
A skilled negotator is who knows about the revelant facts, intrest and motives about the other negotiator to better influence the decisions of others. This is possible only thru effective and active listining to the other parties and to emphathize on the negotiation by properly communicating are cruicial in negotiating effective agreement. The key to ace in holding information about other negotiators is in awarness to their negotating styles and understanding the cultural difference can prove to be huge advantage to create trust and first step to relationship. A good relationship are carterized by trust and the ability to communicate effectively and easily increases the level of power in negotiation. A best way to gain trust is to be trustworthy, and a negotiator who understands the point of view from which the other party is operating is more likely to communicate persuasively, with minimal misunderstanding.
Implication to the Managers
After understanding what is negotiation?, and its varied approaches of negotiation, its time for managers to implement negotiations. Without adequate planning those engaged in negotiations are likely to repeat common mistakes and negotiate poorly. if the parties are to reach a stable agreement, specific events must take place before the parties ever come to the table and Planning is the most immportant element of negotiation in dispute resolution process it assist managers to understand the following;-
· The nature of the present conflict situation
· Produces more clarity to goals and objectives to achive
· Emphaisis to the key issues which bocks the goal and cause of the present conflict situation
· More greatly appriciate the fundamental predectiblity of the negotiation process to a greater degree to other negotiator objectives and needs
· Understanding other negotitor personality, negotiating styles and intrests impact your own strategy
Based on the (Donaldson,1996) and (Coulson, 1987) we have created a checklist for negotiations and negotiations process for the managers to practice.
Negotiation Process
All managers will focus to make the agreement, no matter how ever talk about the calming value in negotiation. In reality there will be mixture of creating value with cooperation and calming value with competitive behaviour will be there something like give and take policy.
Negotiation Checklist
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Checklists
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What is other parties needs and objectives
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What is motives behind the needs and Objectives
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List down the issue/ difference
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Plan Your Negotiations and Frame your position and needs
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Prioritize the goals
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Look for Possible Trade off Points using Best alternative
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Look for other parties alternatives
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Evaluate your Power from the 5 base of power to create and claim value in Negotiation
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Have a clear Pre-established deadline or resistance point beyond which you will not go
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If necessary take third parties help
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Conclusion
The aim of this essay was to describe Negotiation, Approaches of Negotiation and Role of power in Negotiation, in brief. As managers who are negotiation will able to get to know about various approaches in negotiation and what academic scholars view about the particular approach. The comparative study of negotiation approaches gives clear idea about the calibre of approach against other approaches this allows managers to decide, to choose the appropriate approach for their negotiation.
Even though a lot of scholars, academician and negotiation pundits insist that creating value in negotiation is a conflicts free negotiation process as everybody are happy. But in reality its not followed, as the paper said earlier even though the negation is conducted cooperatively creating the value by sharing the pie, a manager has to claim his share of the pie. Power place huge role in negotiation 5 different power source helps the managers to evaluate other parties and judge their power position this is great information supports manager to plan for negotiation and 3 main points suggested on how to deploy the power in negotiation. Finally negotiation checklist for the managers is small basic tool to check all factors to be a successful negotiator.
Reference
Axelrod, R M (1984) The Evolution of Cooperation, Basic Books, New York.
Bochenek, M P (1999) Negotiating and Influencing Skills: The Art of Creating and Claiming Value (Book). International Journal of Conflict Management, 10(2), 191-4.
Billig, M (1975) The Resolution of Conflict: Constructive and Destructive Processes (Book). European Journal of Social Psychology, 5(3), 409-14.
Breslin, J W, Rubin, J Z and Program on Negotiation at Harvard Law School. (1999) Negotiation Theory and Practice, Program on Negotiation at Harvard Law School, Cambridge, Mass.
DeMarr, B J and De Janasz, S C (2013) Negotiation and Dispute Resolution, Prentice Hall, Boston.
Dean Pruitt, "Strategic Choice in Negotiation," in Negotiation Theory and Practice, eds. J. William Breslin and Jeffery Z. Rubin, (Cambridge: The Program on Negotiation at Harvard Law School, 1991), pp.27-46.
Donaldson, M. “Negotiations for Dummies”. New York, NY: Hungry Minds, Inc., 1996.
Weber, M and Parsons, T (1997) The Theory of Social and Economic Organization, Free Press, New York.
Paul Wehr, "Self-Limiting Conflict: The Gandhian Style," chap. in Conflict Regulation, (Boulder, Colorado: Westview Press, 1979) pp. 55-68.
"Principled Negotiation at Camp David" as described in Getting to Yes, Roger Fisher and William Ury. New York: Penguin Books, 1981.
William Ury, "Overcoming Barriers to Principled Negotiation" in Getting Past No.Bantam: 1990.
Wesley Helms (2003, March 30). Positional Bargaining: Losing Your Nose at the Grindstone. Retrieved January 15th, 2014, from Harvard Business Review: http://www.hbr.com/en/communities/labor_relations/positional-bargaining-losing-your-nose-at-the-grin_eaczhpk8.html
Wall, J A, Jr and Blum, M W (1991) Negotiations. Journal of Management, 17(2), 273.
Websites
http://www.ted.com/talks/william_ury.html - video
http://www.blaney.com/sites/default/files/Interest-Based-Bargaining.pdf
http://www.ifld.de/Education/Material/Negotiation%20Essay.pdf
http://www.youtube.com/watch?v=e1NHqPDzqoU
http://www.storyboardthat.com/articles/business/negotiation/getting-to-yes
http://www.pon.harvard.edu/daily/negotiation-skills-daily/types-of-power-in-negotiation/
https://msbfile03.usc.edu/digitalmeasures/kimpeter/intellcont/Power%20dynamics%20in%20negotiation%20(AMR,%202005)-1.pdf
http://www.beyondintractability.org/essay/negotiation
http://www.beyondintractability.org/essay/empathic-listening
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