Negotiation is a process in which groups with conflicting interests meet together to make offers, counteroffers, and concessions to each other in an effort to resolve their differences.
Third-party negotiator is an outsider skilled in handling bargaining and negotiation.
Mediator - a neutral third party who tries to help parties in conflict reconcile their differences. Arbiter - a third party who has the authority to impose a solution to a dispute.
Characteristics of Negotiation An explicit and deliberate event Takes place between the representatives of the parties concerned The process which intends to settle the disputes and differences between parties involved Outcome of negotiation is dependent on the relative power relationship between the parties involved
Importance of Negotiation Dynamic nature of business Interdependence Competition Information age Globalisation
Pre-conditions for Negotiations Two or more parties which have either conflict or disagreement Perceived conflict of needs, positions and interests Interdependence so that the outcome must be satisfying to all parties Agreement must be required to be reached within reasonable time so that it becomes beneficial to both parties The success of negotiation depends on the facts that the issue is negotiable; the negotiators are not only taking but giving also; trust between negotiating parties; fear that failure may lead to crisis
Assumptions in Negotiation It is a process of give and take with no room for threat and coercion People come for negotiation believing that the other group can be persuaded Equal status of the parties during negotiation Fairness in the process of negotiation Negotiation is more beneficial for resolving differences compared to other methods
Planning for negotiation
Three stages of negotiation plan Pre-negotiation planning During negotiation behaviour Post-negotiation understanding
Pre-negotiation Planning It requires consideration of following factors Know yourself Know the adversary Specify your goals and objectives Develop arguments and alternatives Agenda/ procedures
Behaviour during negotiation Opening move Frequency and size of proposal (Negotiation Dance) Influence mechanisms (referent power and expert power)
Post-negotiation understanding Implementation plan Role responsibilities Review teams
Strategies and tactics of negotiation
Distributive versus Integrative Bargaining
Distributive Negotiation Tactics used in distributive negotiation are: Bluffing Delays Snow job (giving long list of issues for discussion) Temper tantrums Limited authority
Staking Out the Bargaining Zone
Bargaining Zone and Negotiation Dance Principles for slicing the pie Assess your Best Alternative to Negotiated Agreement (BATNA) and improve it Determine your reservation point but do not reveal it Reach the other party’s BATNA and estimate their reservation point Set high aspirations but that are realistic Make the first offer if you are prepared Immediately re-anchor if the other party offers first Plan your concessions Pattern of concessions Magnitude of concessions Timing of concessions Use an objective-appearing rationale to support your offers Appeal to norms of fairness
Wise – pie - slicing Qualities to live by while slicing the pie Consistency Simplicity Effectiveness Justifiability Consensus Generalisability
Integrative Negotiation Pitfalls in integrative negotiation No fixed pie, can be expanded to the maximum advantage of all parties Focus may shift from issue to position, ego and face saving Overconfidence in one’s own position may lead to neglecting the need of other people
Beliefs conducive to integrative bargaining Belief in availability of a mutually acceptable solution Belief in cooperation rather than competition Belief that everyone is of equal value and status Belief in the view expressed by others Belief that differences in opinion are helpful Belief in the trustworthiness of the other member Belief that other party can compete but chooses to cooperate
Steps in Integrative Negotiation Process Identify and define the problem Define the problem in the way mutually acceptable to both sides Understand the problems State problem with eye towards practicality and comprehensiveness State the problem as a goal and identify obstacles to attaining the goal De-personalise the problem Bring interests and needs to the surface Separate the problem definition from the search from solutions Generate alternative solutions to the problem Expand the pie Use non-specific compensation Cut the costs for compliance Find a bridge solution Generating alternative solutions Brainstorming
Contd. Evaluate and select alternatives Narrow the range of solution options Evaluate solutions on the basis of quality, standards, and acceptability Agree to the criteria in advance for evaluating options Use sub groups to evaluate complex options
Win-win negotiation is not: Compromise Even split Feeling good Building a relationship
The Negotiation Process
Common mistakes to be avoided Inadequate Preparation Ignoring the give/get principle Use of intimidating behavior. Impatience. Loss of temper. Talking too much, listening too little, and remaining indifferent to body language. Arguing instead of influencing. Ignoring conflict.