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Negotiation concepts

Paper outline

Case analysis

III. Negotiation as a process

Evaluating possibilities
Negotiation Opportunities
Make use of power

VII. Finding and using information
VIII. Trade-offs

Making Cost-benefit Analysis
Negotiator’s Attitude

XII. Closure
XIII. Sustaining the commitment
XIV. Conclusion

Negotiation concepts
Negotiation is a process in which two or more parties with attached interests on a matter at stake attempt to reach a common ground of binding behavior that is beneficial to both parties involved (Nieuwmeijer, 1992). Negotiation is appropriate in a situation where a dispute exists between two or more parties, solution that is most appropriate is not predictable and both parties are willing to compromise their positions. There are two types of negotiations: The first one is an integrative negotiation which is characterized by the recognition that the relationship between the parties will have to continue after the dispute. There is a sincere interest from the negotiators in trying to comprehend the interest of the other party and that the other party does not necessarily have to lose for him to win. Secondly, there is distributive negotiation whereby the parties do not intend to live together after the dispute. It mostly arises where there is a dispute over one issue, the resources are scarce and each party strongly needs more and can only get it when the other loses, one or both parties sees the negotiation as competitive and lastly one or both parties are not will to make effort of find if there an alternative approach (Nieuwmeijer, 1992).
Case analysis
There was a dispute between the management of Elegance Florist Company and its employees over pay increase. The employees wanted a one hundred percent increase in salary as well as other bonuses such as medical allowance because working in the flower firms the employees were vulnerable to several infections, house allowance, to cushion them against the ever increasing house rents and lastly overtime bonuses for working past eight hours. On the other hand the management was adamant that calls for salary increase at that moment were unrealistic, they claimed that due to that economic down turn had seriously affected the companies operations by increasing costs and also the global economic crisis had grossly affected the company’s sales as well as profits. As a result they were reluctant to have any talks with the employees and sanctions were slapped on those employees who pushed for the same (Solomon, 1997).
This led to a strike that paralyzed all operations of the company and in reaction to the unfolding events the company asked the workers to get back to work then their grievances will be addressed. However, based on previous unfulfilled promises the employees were reluctant to adhere to their employer’s call. The management then realized that things were running out of hand and hence yielded to the employees’ pressure, therefore they asked them to propose a negotiator to represent them as the management appointed theirs (Solomon, 1997).
I was then proposed to represent the employees in the talks however on our first meeting things didn’t seem optimistic. Because the management representative insisted that before the talks began, the employees had to first resume their duties. This was a tough condition based on previous instances in which the employees were duped in the same way and later nothing materialized yet those who were perceived to be leading the revolt against the management were sacked. Suspecting that the same would happen they would not give in to those demands. However, it was clear that the company was running into losses and it was going to lose key clients and this would eventually affect the employees. Therefore I asked the management to make a commitment of standing by their promise, hence they wrote a wrote a memo to all departments explaining that in the event that they turn on their promise then the strike will resume automatically (Solomon, 1997).
Workers accepted to work and then we resumed our talks however well in to the negotiation process I realized that the other side was not genuinely seeking an agreement, but wanted to buy time in order that the urgent customer order would be completed. I confronted the issue and reminded them of our initial terms of negotiation, as a result the negotiator asked for time to consult the management which I agreed. Later we continued where we presented our offer as workers however the management claimed that our demands were so unrealistic hence they were not ready to go on with the negotiations. It was a fact that the company’s financial condition was feeling the pinch from the bad economy however; it had accumulated a lot of profit in the past from because of the hardworking workers (Solomon, 1997).
We therefore presented to the company our other alternative of going to the industrial court which none of the parties would easily opt for, we also presented to the facts about the ability of the company to meet our demands. After along heated debate each of the sides agreed to compromise on some demands. For instance, the company agreed to in crease salaries although it would be up to eighty percent and the increase would be done in installments of twenty percent after every two months (Solomon, 1997).
There were other demand s that were to be long-term such as the bonuses where overtime the company would start paying at the start of the pick period, and the amount to be paid would be agreed upon on our next meeting after evaluating the mid-year results of the company. On the issue of house allowance the company offered a housing plan whereby the employees would be built for houses and they will own them as this is deducted from their pay. This was left pending because it was subject to the salary increase. On medical allowance, the company promised to seek the services of a nearby hospital where the employees and their family members would be treated but the company would only cater for up to a given limit which would be determined after discussions with the hospital (Solomon, 1997).
Negotiation as a process
According to the institute of supply management, negotiation is a process rather than a one time event because there are stages and each stage is important and relevant in ensuring the success of the negotiation to those involved. First, there is preparation for the negotiation, like in our remuneration dispute with the Elegance Florist Company we had to find out our objective of negotiating, find information about our counterpart that was relevant to the negotiation and form a negotiation team, rules to adhere to and appoint the team leader. Secondly, there is conducting the negotiation where you identify tactics to employ in improving our negotiation position and those to avoid. For example in our case we used threats of a resultant strike in event our counter parts went back on their promises to make them be willing to negotiate (Institute of Supply Management, n.d).
The third stage is completing the negotiation which involves preparing and organizing final documents that will help in developing a plan for implementation and a contract. There is also evaluation of the process and the results achieved to ensure follow ups and also improvements in future. For instance in our negotiation with the company, we agree on establishing a committee that would facilitate the implementation of the agreement and that the committee would consist of representatives from both parties. In addition timelines were set for evaluation of the progress and measures to be taken in the event of non-compliance (Institute of Supply Management, n.d).
Evaluating possibilities
Before going into negotiation, it is important that you evaluate all possible outcomes and their consequences. This will help you to determine your irreducible minimum, at what point can you walk out, what amount of amount of pressure can exert on the other side to make concessions. Free Mediation Course, refers to this process as BATNA/WATNA analysis. Best Alternative To Negotiated Agreement (BATNA) refers to the best option that could be achieved in the event that this negotiation does not reach a settlement, if you go to court are confident of winning?, if your counter parts will give into your position, is there a new law that is being made that will favor your side? For example, in the Elegance Florist Company salary dispute we had some advantages in that if we went to the industrial court some of the payments would have been backdated. In addition workers would not have gone back to work as long as the status quo remained and this would affect the company severely (Free Mediation Course, 2008).
Worst Alternative To Negotiated Agreement (WATNA), refers to worst case scenario in the event no settlement is achieved. This involves asking whether the next option will be too costly or too risky, whether your counterparts will win the resultant court case or by whom is the status quo controlled. For our dispute, a court case would be too costly for as that is the legal charges and losing income because court cases in most times take a long time (Free Mediation Course, 2008).
Negotiation Opportunities
Being able to spot possible negotiation opportunities is a skill that is key to the process, because both sides are generally anxious to secure a deal. This can be achieved by focusing on interests’ rather than positions for it gives each side an chance to change their positions without losing what they hold dear to them (Solomon, 1997). For instance, the management of Florists Elegance Company believed that giving in to the employees demands was like losing their power, on the other side the employees saw it as an opportunity to punish their employers who had ignored them for so long, hence each side hardened their positions. To solve this, we identified that it was in the interest of both parties to see the company in operation; therefore we used the common interest to convince both parties to cede their positions. This was to enable them see the company running of which there was mutual benefit (Solomon, 1997).
Make use of power
In order to get to an agreement, it is important that those you are negotiating with have power (Johnson, 1993), because if power is with other parties then the commitments made may not be valid. This is mostly important when putting pressure for the other side to make concessions, because when the power to change positions was not given for this might frustrate the process if the decision is overruled. Therefore it is important to give them time to consult. For instance when we could not go below eighty percent salary increase, the negotiator representing the company asked if he could go and confirm with those he was representing, we allowed him (Johnson, 1993).
However, the same can be used as a tactic to stall the process. In another instance the other side might use their power to buy their counterparts (negotiating team) or even sidestep them or their leader. Any negotiating side that faces these challenges should rally support of the people they represent and advice them that such a move will minimize their chances of reaching a settlement. For instance, the company had insisted on having one negotiator for each side which was a tactic so that they would bribe him in to betraying the employees. When I discovered that I insisted on having a team of at least three for each side (Solomon, 1997).
Finding and using information
Astute negotiators can be at an advantaged position over their counter parts if the latter either lack information or have wrong perception on the information they have (Johnson, 1993). Each side of the negotiators is always wondering what the others are up to, capable of or willing to give up to get what they need. The party that possesses the most detailed and precise information will be able to make near accurate estimates. This translates in to power because they will able to establish where to start the process of negotiation, the point past which the other side can go before walking out of the negotiation hence ensuring you set the limit that you can push him. In addition, having information on objective standards also is an advantage in that one will be able to make comparisons hence justifying your demands. These include: professional standards, market value, industry performance and the company’s financial records. For example when the management refused to negotiate on salary increase on claims that the economy was performing poorly, we were able to use the financial records to prove its ability to meet the employees’ demands, for there was profit accumulated over the years that was more than enough (Johnson, 1993).
            Mostly negotiators tend to think of what they want from the other party in exchange of what they want to give away, however they tend to forget that the other side might demand for something significant in exchange for what you do not value much. Therefore it is important that the find out his elegant negotiables, which are those things he does not value very highly yet the other party finds them attractive. Hence you can give them away easily and they also have those things you value yet they can give them away easily. Still when looking for things to trade, ensure you focus on those that you deal with or are within your reach. Some questions to consider on same issue of trade-offs: what is the color, quality, quantity of the item, if it is money, who will pay, to whom it will be paid and at what amounts and intervals. If it performing an activity, who will do it, when and for how long (Johnson, 1993).
Making Cost-benefit Analysis
Cost can be divided in to various aspects which will apply to the dispute before hand. First, there is cost of accessories whereby each decision reached at has costs associated to it whether direct or indirect. For instance there are implementation costs as well costs associated with adjusting to the new set up as a result of the agreement reached (Johnson, 1993). This is important because one side of the negotiation can make an offer that seems so great yet with keen examination it might turn out to be a burden to the supposed would be beneficiaries. For example, when the company offered to pay for the workers medical allowances as long as they treated in a particular hospital we turned down the offer because the hospital was less equipped to handle serious conditions and in fact it only catered for out-patients. This meant that incase of in-patient where ones condition is serious the company won’t pay yet these cost so high than the out-patients (Johnson, 1993).
Secondly, cost can be looked as what you give up to get what you settled for, these can be privileges, other benefits, having to work more hours including holidays, strict conditions/ rules (Johnson, 1993). This is a crucial decision during negotiation because one has to evaluate if what he is to get is worth giving up a given privilege or benefit that is currently enjoyed. For instance in our case we forfeited a temporary and small benefit of getting house allowance and opted for a permanent one whereby each employee would personally own a house. Although employees would continue to bear the load of paying rent alone they were assured of a greater value in future (Johnson, 1993).
Lastly, there is cost of negotiating time which is taken in to consideration to help in evaluating the effectiveness and efficiency of time spent based on the results achieved or expected. Also it can be important in determining issues to prioritize in the negotiation and the ones to postpone to a later date. In addition, it still used to determine whether the other side is using delaying tactics by evaluating what has been achieved compared to time spent and the weight of the matter at hand. For example when we began our negotiation with the management, we realized that much time had been spent arguing with their negotiator was just killing time by presenting irrational offers (Johnson, 1993).
            This refers to the lowest point beyond which one cannot yield no matter the pressure exerted by the other side of the negotiation. It is not appropriate to reveal it too early because it can spoil the process of negotiation and dampen bargaining spirit, therefore if you have a bottom-line number it is important that you guard until way in to the negotiation process. However, the most important rule concerning bottom-line is that when asked about it you tell the truth, otherwise if you give a false one only to change later, you will no only lose your credibility but also bargaining power. If you are not ready when asked, politely put it across to them and say you will later after evaluating the progress of the process (Free Media Course, 2008). For example in our case, we had agreed amongst ourselves before the negotiation that it would be seventy percent increase in salary. However, when we were asked we asked for more time to evaluate the situation and later we settled on eighty percent.
Negotiator’s Attitude
            The negotiator’s attitude is so important in the negotiation process for if used positively, it can create a conducive environment for negotiation and also keep away wrong perceptions hence promoting honesty. Here are some specific attitudes and conducts that a negotiator can adopt to promote clear perception: First, always want to hear what the other side has to say by seeking out their key points and supporting facts. Secondly, strive to have a warm relationship with your counterparts for this helps to prevent negative mind-sets from developing unnecessarily or too early. Thirdly, work to resolve the conflict and not to continue it by seeking opportunities for negotiation and also commit yourselves to seek to find solutions. Lastly, respect your counterparts as speakers for their reason, by treating them as a treasured resource that contributes to a rational observation (Johnson, 1993). For example, during the initial stages of our negotiations the management side could be irrational and used personal attacks to scuttle the process. However our side kept calm and was objective and sought positive ending which made our adversaries to change as their tactics were not working.
Never rush to end the process as the other side may read mischief hence back away. When coming to the end it is important that you go through the agreement in summary stating the requirements of both sides according to your understanding. This helps the other side to give his consent whether he agrees with your observation as the true analysis of the agreement. In case of objections it’s important to handle them at that point common and body language can be a clear indicator of satisfaction from the other side. It is important to seek common understanding because both parties’ cooperation will be needed in implementing the agreement. Putting the agreement in writing is mandatory for it to be binding and for future references, this can be a formal contract or otherwise depending on weight of matter at hand and the value of the trade-offs (Changing Minds, n.d.).
Signing of the contract is the last stage and it is irreversible because it is a legal commitment. Therefore, both parties should be completely sure that of what they are getting in to when taking this step, it is important to consult your lawyer and the people you are representing so that they know the exact contents of the agreement that will bind them. For example, when we were through with negotiation we read through the agreement to clarify on the issue that we had agreed on and those that were left for future sessions (Changing Minds, n.d.).
Sustaining the commitment
Most negotiations are characterized by pressure from each side in an effort to make the other party cede their ground or close the deal, therefore apart from the excitement of sealing the deal most parties always come to the realization later that the deal is less attractive than it previously appeared. In addition most agreements have a futuristic implementation approach whereby parties will be required to give or do something in future and most cases the delay in honoring the promises is rather longer. Instead of allowing commitment to wane, it is important to have set up mechanisms of sustaining it during the negotiations. For instance having penalties and measures to be implemented against parties who default on their promises and still, assigning specific timelines to given activities provides definite method of evaluating the progress. For example in our case we agreed that the company will start building the servant quarters in the beginning of the following financial year which were to be completed after eighteen months, followed by immediate occupation (Changing minds, n.d.).
As a negotiator it is important to keep the promises you made during negotiation, for doing otherwise might lead to betrayal effects and affects commitment of the other party. However, situations might not go as expected hence you find that the agreement is not worth keeping as initially agreed, Instead of pulling out without communication it is important to approach the other party for renegotiation For instance, if the company finds out that employees medical bills are too high, then it can seek renegotiation to set a limit on how much an individual can spend in a year (Changing minds, n.d.).
In an ideal situation all parties in a negotiation should focus on a win-win situation whereby they both feel positive about the outcome once the process is concluded, however if one party has to give more then he should negotiate for a compensation. In some cases the negotiators might be forced to renegotiate after an agreement has been reached due to new developments and in others the process might take longer time than expected. As a result parties might be tempted to conclude the process without attaining an agreement that is adequate and acceptable to all parties. This points out that although there are common things across the board, negotiations are different and hence it is important to choose what is working in your situation. Therefore what is required of a negotiator is to be able to understand the situation at hand and handle it appropriately.

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