Striking a deal

Negotiation is the process of making joint decisions when the parties involved have different preferences. In companies and organizations where more people are being given the opportunity to be involved in decisions affecting them, negotiation is especially significant. Examples are negotiations between management and workers over labour conditions, but also about the introduction of new procedures or changing a production process. As more people get involved, disagreements are likely to arise over diverse matters as salaries, increments, tasks, performance assessments, job assignments, work schedules, work locations and special privileges. The manager’s negotiation skills become increasingly important for dealing with such daily issues.
Managers should be prepared to play a role in at least four negotiation situations:
Two party negotiation. The manager negotiates directly with one other person.
Group negotiation. The manager is part of a team or group whose members are negotiating to arrive at a common decision.
Intergroup negotiation. The manager is part of a group that is negotiating with another group.
Constituency negotiation. The manager is involved in negotiation with other persons, and each individual represents a broad constituency, e.g. management negotiating with the labour union over a collective labour agreement.
Two goals are at stake in any negotiation. Substance goals are concerned with outcomes, relative to the content issues at hand, for instance the level of salaries in a labour agreement. Relationship goals are concerned with outcomes relating to how well people involved in the negotiation are able to work with another once the negotiation process is concluded.
Unfortunately, many negotiations result in a sacrifice of relationships, as parties become preoccupied with substance goals and self interest. In contrast, effective negotiation occurs when substance issues are resolved and working relationships are maintained or even improved.
The parties involved in negotiation may find themselves at an impasse when there are no overlapping interests and they fail to find common points of agreement. Agreement in negotiation can mean different things and the agreement may be for the better or the worse for either of the parties. Effective negotiation results in overlapping interests and joint decisions that are for better of all parties.
Since negotiation involves people with different preferences trying to reach a joint decision, ethical behaviour is often an issue. Managers should strive for high ethical standards even while participating in compelling negotiations where self interests are paramount. The motivation to behave unethically in negotiations is often caused by:
Profit motive – the desire to get more than the other out of the negotiation process.
Sense of competition – the belief that there are not sufficient resources to satisfy everyone’s needs.
Concerns for justice – looking for a “fair” deal only from the narrow perspective of one’s self interests.
When unethical behaviour occurs in negotiation, the parties involved often try to rationalize or explain it away by saying: “It was unavoidable,” It is harmless,” “The results justify the means,” or “It is really quite fair.” Possible short term gains, like feeling good about having gotten away with it this time, may be offset by longer term negative consequences, such as not being able to strike a deal next time. At the very least, the unethical party may be the target of revenge tactics by those who were disadvantaged. Furthermore, once some people have behaved unethically in one situation, they may become entrapped by such behaviour and display it again in the future.
The approach taken to negotiation can have a major influence on its outcomes. Two different approaches may be distinguished: distributive negotiation and integrative negotiation.
In distributive negotiation, each party is trying to get certain portions of the pie and may result satisfactory or unsatisfactory for any of the parties. In integrative negotiation everyone tries to enlarge the pie and seek a win-win outcome. To arrive at a win-win outcome each party must be willing to trust the other. Both parties must also be willing to share information and to ask concrete questions.
The successful negotiator will have the following skills and capabilities:
The ability to separate the people from the problem and not to let emotional considerations affect negotiation.
The ability to focus on interests rather than positions.
The ability to avoid making premature judgements.
The ability to judge possible agreements on an objective set of criteria or standards.
The negotiation process is admittedly complex and it is further characterised by all the possible confusions of sometimes volatile interpersonal and group dynamics. Accordingly, individual negotiators need to guard against some common mistakes, which include thinking that the pie is “only so big”, allowing the conflict to escalate by sticking to demands and being over confident while ignoring the other party’s needs.
Finally, negotiation is a process of communicating back and forth for the purpose of reaching a joint decision. One situation in which this process is often tested to the limits is that in which negotiations cross cultural boundaries. In such cases, the parties involved must make special efforts to communicate effectively with one another to achieve negotiation success.

Source: Managing Organizational Behavior – Schermerhorn/Hunt/Osborn