What is Negotiation? Elements of Negotiation

What is NegotiationNegotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute.

It is a dialogue between two or more people or parties intended to reach a beneficial outcome.

This beneficial outcome can be for all of the parties involved, or just for one or some of them.

In another way, negotiation is a process in which two or more parties exchange goods or services and attempt to agree on the exchange rate for them.

It is aimed to resolve points of difference, to gain advantage for an individual or collective, or to craft outcomes to satisfy various interests; It is often conducted by putting forward a position and making small concessions to achieve an agreement.

The degree to which the negotiating parties trust each other to implement the negotiated solution is a major factor in determining whether negotiations are successful. Negotiation is not a zero-sum game; if there is no compromise, the negotiations have failed.

When negotiations are at an impasse it is essential that both the parties acknowledge the difficulties, and agree to work towards a solution at a later date.

Negotiation is an open process for two parties to find an acceptable solution to a complicated conflict.

There are some specific conditions where negotiation will achieve the best results;

  • When the conflict consists of two or more parties or groups.
  • A major conflict of interest exists between both parties.
  • All parties feel that the negotiation will lead to a better outcome.
  • All parties want to work together, instead of having a dysfunctional conflict situation.

Elements of Negotiation

There are many different ways to categorize the essential elements of negotiation.

One view of negotiation involves 3 basic elements:

  • Process,
  • Behavior, and
  • Substance.

The process refers to how the parties negotiate.

The context of the negotiations, the parties to the negotiations, the tactics used by the parties, and the sequence and stages in which all of these play out. Behavior refers to the relationships among these parties, the communication between them and the styles they adopt.

The substance refers to what the parties negotiate over; the agenda, the issues (positions and – more helpfully – interests), the options, and the agreement(s) reached at the end.

Another view of negotiation comprises 4 elements:

  • Strategy,
  • Process,
  • Tools, and
  • Tactics.

The strategy comprises the top level goals – typically including relationship and the final outcome.

Processes and tools include the steps that will be followed and the roles are taken in both preparing for and negotiating with the other parties.

Tactics include more detailed statements and actions and responses to others’ statements and actions.

Some add to this persuasion and influence, asserting that these have become integral to modern day negotiation success, and so should not be omitted.

But according to Members of the Harvard Negotiation Project developed 7 elements of negotiation.

  1. Interests.
  2. Legitimacy.
  3. Relationships.
  4. Alternatives and BATNA.
  5. Options.
  6. Commitments.
  7. Communication.

Contemporary Negotiation Skills

There are now recognized alternative approaches to traditionally recognized distributed and positional bargaining and the hard versus soft strategies in negotiation.

Whetten and Cameron suggest an integrative approach that takes an “expanding the pie” perspective that uses problem-solving techniques to find win-win outcomes.

Based on a collaborative strategy, the integrative strategy, the integrative approach requires the effective negotiator to use skills such as’

  • Establishing superordinate goals,
  • Separating the people from the problem,
  • Focusing on interests, not on positions,
  • Inventing options for mutual gain, and
  • Using objective criteria.

Recent practical guidelines for effective negotiations have grouped the techniques into degrees of risk to the user as follows:

Low – risk Negotiation Techniques

  • Flattery – subtle flattery usually works best, but the standards may differ by age, gender, and cultural factors.
  • Addressing the easy point first — this helps build trust and momentum for the tougher issues.
  • Silence – this can be effective in gaining concessions, but one must be careful not to provoke anger or frustration in opponents.
  • Inflated opening position – this may elicit a counteroffer that shows the opponent’s position or may shift the point of compromise.
  • “Oh, poor me” – this may lead to sympathy but could also bring out the killer instinct in opponents.

High – risk Negotiation Techniques

  • Unexpected temper losses – erupting in anger can break an impasse and get one’s point across, but it can also be viewed as immature or manipulative and lead opponents to harden their position.
  • High – balling – this is used to gain trust by appearing to give in to the opponent’s position, but when overturned by a higher authority, concessions are gained based on the trust.
  • Boulwarism (“take it or leave it”) – named after a former vice president of GE who would make only one offer in labor negotiations, this is a highly aggressive strategy that may also produce anger and frustration in opponents.
  • Waiting until the last moment – after using tactics and knowing that a deadline is near, a reasonable but favorable offer is made, leaving the opponent with little choice but to accept (Adler, Rosen, SUverstein, 1996).

Besides these low – high-risk strategies, there are also a number of other negotiation techniques, such as a two-person team using “good cop – bad cop” (one is tough, followed by one who is kind), and various psychological ploys, such as insisting that meetings be held on one’s home turf, scheduling meetings at inconvenient times, or interrupting meetings with phone calls or side meetings.

There are even guidelines of if, when and how to use alcohol in negotiations.

As the president of Saber Enterprises notes, when the Japanese come over to negotiate, it is assumed that you go out to dinner and have several drinks toast with sake.

Because of globalization and the resulting increase of negotiations between parties of different countries, there is emerging research on the dynamics and strategies of negotiations across cultures.

Types of Negotiators

Three basic kinds of negotiators have been identified by researchers involved in The Harvard Negotiation Project.

These types of negotiators are;

  1. Soft Bargainers,
  2. Hard Bargainers, and
  3. Principled Bargainers.

Soft Bargainers

  • These people see negotiation as too close to competition, so they choose a gentle style of bargaining.
  • The offers they make are not in their best interests, they yield to others’ demands, avoid confrontation, and they maintain good relations with fellow negotiators.
  • Their perception of others is one of friendship, and their goal is agreement. They do not separate the people from the problem but are -soft on both.
  • They avoid contests of wills and will insist on the agreement, offering solutions and easily trusting others and changing their opinions.

Hard Bargainers

  • These people use contentious strategies to influence, utilizing phrases such as “this is my final offer” and “take it or leave it.”
  • They make threats, are distrustful of others, insist on their position, and apply pressure to negotiate.
  • They see others as adversaries and their ultimate goal is a victory. Additionally, they will search for one single answer and insist you agree on it.
  • They do not separate the people from the problem (as with soft bargainers), but they are hard on both the people involved and the problem.

Principled Bargainers

  • Individuals who bargain this way Seek integrative solutions and do so by sidestepping commitment to specific positions.
  • They focus on the problem rather than the intentions, motives, and needs of the people involved.
  • They separate the people from the problem, explore interests, avoid bottom lines, and reach results based on standards (which are independent of personal will).
  • They base their choices on objective criteria rather than power, pressure, self-interest, or an arbitrary decisional procedure. These criteria may be drawn from moral standards, principles of fairness, professional standards, tradition, and so on.

Researchers from The Harvard Negotiation Project recommend that negotiators explore a number of alternatives to the problems they are facing in order to come to the best overall conclusion/solution, but this is often not the case.

The Role of Personality Traits in Negotiation

Can you predict an opponent’s negotiating tactics if you know something about his or her personality?

It’s tempting to answer Yes to this question.

For instance, you might assume that high-risk takers would be more aggressive bargainers who make fewer concessions. Surprisingly, the evidence doesn’t support this intuition.

Overall assessments of the personality- negotiation relationship finds that personality traits have no significant direct effect on either the bargaining process or the negotiation outcomes. This conclusion is important.

It suggests that you should concentrate on the issues and the situational factors in each bargaining episode and not on your opponent’s personality.

Gender Differences in Negotiation

Do men and women negotiate differently?

And does gender affect negotiation outcomes?

The answer to the first question appears to be No

The answer to the second is a qualified yes (Walters, Stuhlmacher & Meyer, 1999). A popular stereotype held by many is that women are more cooperative and pleasant in negotiations than are men. The evidence doesn’t support this belief.

However, men have been found to negotiate better outcomes than women, although the difference is quite small. It’s been postulated that this difference might be due to men and women placing divergent values on outcomes.

“It is possible that a few hundred dollars more in salary or the comer office is less important to women than forming and maintaining an interpersonal relationship.”

The belief that women are “nicer” than men in negotiations is probably due to confusing gender and the lack of power typically held by women in most large organizations. The research indicates that low-power managers, regardless of gender attempt to placate their opponents and to use softly persuasive tactics rather than direct confrontation and threats.

In situations which women and men have similar power bases, there shouldn’t be any significant differences in their negotiation styles.

The evidence suggests that women’s attitudes toward negotiation and toward themselves as negotiators appear to be quite different from men’s.

Managerial women demonstrate less confidence in anticipation of negotiating and are less satisfied with their performance after the process is complete, even when their performance and the outcomes they achieve are similar to those for men.

This latter conclusion suggests that women may unduly penalize themselves by failing to engage in negotiations when such action would be in their best interests.

Cultural Differences in Negotiations

Although there appears to be no significant direct relationship between an individual’s personality and negotiation style, the cultural background does seem to be relevant.

Negotiating styles clearly vary across national.

The French like conflict. They frequently gain recognition and develop their reputations by thinking and acting against others. As a result, the French tend to take a long time in negotiating agreements and they aren’t overly concerned about whether their opponents like or dislike them.

The Chinese also draw out negotiations but that’s because they believe negotiations never end. Just when you think you’ve pinned down every detail and reached a final solution with a Chinese executive, that executive might smile and start the process all over again.

Like the Japanese, the Chinese negotiate to develop a relationship and a commitment to work together rather than to tie up every loose end.

Americans are known around the world for their impatience and their desire to be liked.

The cultural context of the negotiation significantly influences the amount and type of preparation for bargaining, the relative emphasis on task versus interpersonal relationships, the tactics used, and even where the negotiation should be conducted.

Third – Party Negotiations

To this point, we’ve discussed bargaining in terms of direct negotiations. Occasionally, however, individuals or group representatives reach a stalemate and are unable to resolve their differences through direct negotiations. In such cases, they may turn to a third party to help them find a solution. There are four basic third-party roles: mediator, arbitrator, conciliator, and consultant.