Introduction

When we think of negotiations, we tend to focus on the hard negotiating skills connected with bargaining. In fact, many professional negotiators will confirm that the most important skill is effective relationship building. If there is trust and understanding between the two parties, the negotiation will be much more successful, as will the long-term business relationship between them. RELATIONSHIP IN NEGOTIATION:

we have described the negotiation process as though it occurred between two parties who had no prior relationship or knowledge of each other, came together to do deal, and had no relationship once the deal was done. This is clearly not the way many actual negotiations unfold. Negotiations occur in a rich and complex social context that has a significant impact on how the process evolves. One major way that context affects negotiation is that people are in relationships that have a past, a present, and future. However, our focus will be on the ways these past and the future relationships impact present negotiations. Furthermore, we know that negotiation is a discussion intended to produce an agreement relationship is the meaning assigned by two or more individuals to their connectedness or coexistence.

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Figure: Relationship between negotiation and real options.

KEY ELEMENTS IN MANAGING NEGOTIATIONS WITHIN RELATIONSHIPS Reputation, trust, and justice are the three elements that become more critical and pronounced when they occur within a relationship negotiation. Thus, we will discuss how the effects of these elements become intensified in negotiations within relationships.

REPUTATION: Your reputation is how other people remember their past experience with you. Reputation is the legacy that negotiators leave behind after a negotiation encounter with another party. A reputation is a perpetual identity, reflective of the combination of salient personal characteristics and accomplishments, demonstrated behavior and intended images preserved over time, as observed directly and/or as reported from secondary source.

TRUST: Many of the scholars who have written about relationships have identified trust as central to any relationship. Daniel McAllister defined the word trust as an individuals belief in and willingness to act on the words, actions and decisions of another.1 There are three things that contribute to the level of trust one negotiator may have for another: the individuals chronic disposition toward trust (i.e. individual differences in personality that make some people more trusting than others); situation factors (e.g., the opportunity for the parties to communicate with each other adequately); and the history of the relationship between the parties.

JUSTICE: The third major issue in relationship is the question of what is fair or just. Again, justice has been a major issue in the organizational sciences; individuals in organizations often debate whether their pay is fair, whether they are being fairly treated, or whether the organization might be maltreating some group of people. Justice can take several forms: and these include,

Distributive justice Procedural justice. Interactional justice. Finally, systemic justice.

RELATIONSHIPS AMONG REPUTATION, TRUST, AND JUSTICE Not only are various forms of justice interrelated, but reputation, trust, and justice all interact in shaping expectations of the others behavior. For example, when one party feels the other has acted fairly in the past or will act fairly in the future, he or she is more likely to trust the other. We would also predict that acting fairly leads to being trusted and also enhances a positive
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reputation. Conversely, when parties are unfairly treated, they often become angry and retaliate against either the injustice itself or those who are seen as having caused it. Unfair treatment is likely to lead to distrust and a bad reputation.6 trust, justice, and reputation are all central to relationship negotiations and feed each other; we cannot understand negotiation within complex relationships without prominently considering how we judge the other (and ourselves) on these dimensions. KEY ELEMENTS OF NEGOTIATION - RELATIONSHIPS Too often, people believe that negotiation is all about doing the deal and nothing else that a negotiation is successfully completed once we have made an agreement, and/or signed a contract to formalize that agreement however, the deal is never done unless we establish and preserve the working relationships needed to perform the agreement. Unfortunately, too many negotiators consider that a signed contract or formal agreement represents the consummation of the deal which cannot be further from the truth the deal is not just the contract - it also extends to the working relationship that embodies and is committed to carrying out the agreed contractual terms. Many people are often tempted to use all means at their disposal (including power, force, deceit etc) to obtain easy, short term gains at a cost to the other party (and long term relationships) this follows the win/lose mindset of positional or distributional bargaining with its focus upon claiming value. It is worth noting however, that you may well encounter the same party again during future negotiations that may involve much higher stakes without a good relationship your chances of success will be limited and much more difficult to achieve. So look to negotiate an agreement that delivers the best outcome while preserving long term relationships. Strong relationships provide the foundation for joint problem solving and mutual gains value creation. They promote better outcomes by expanding the pie before it is divided, while long term relationships reinforce a commitment to the deal and support future deal making. Drawing and building upon the work of Fisher and Brown (1988), it appears that the basis of a good relationship relies upon the following 8 elements: Balancing emotion with reason Good communication Mutual understanding Reliability and Trust Mutual acceptance and acknowledgement Affiliation and Rapport Integrative diversity Power with (side by side), not power over (control)
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Balance emotion with reason: It is important to separate the relationship (people issues) from the substantive problem (concerns) and pursue both independently the long term relationship

Relationship in negotiation

should not be motivated by or dependent upon reaching a particular agreement if this was so, we would be more likely to damage rather than preserve relationships. The use of objective criteria and fair standards can effectively counter and balance emotional claims. Ensure our emotions (bias, fear, greed etc) do not cloud reason when we negotiate and undermine our interactions and future relationship (Fisher and Brown: 1988). Negative emotions have the capacity to distract you from the substantive problems to derail negotiations and damage long term relationships. In contrast, Positive Emotions can strengthen relationships (Fisher & Shapiro: 2005). RELATIONSHIPS Communication and Mutual Understanding: Listen actively and more than you talk through listening we get to know the other party, their ways of knowing, values, interests, fears, aspirations etc. With this knowledge we can prepare to tailor our communication and negotiations so that we can. Speak a language that both you and the other party understands. When we actively listen, we engage the other party, assuring them that they are being heard, acknowledged and valued it also allows you to paraphrase and reframe comments you hear in more positive terms that you feed back to the other party. Active listening reduces defensiveness and promotes cooperation. Relationships provide the necessary associations and connections through which we communicate and negotiate.(Lewicki, Saunders & Minton:1997), without strong interpersonal relationships we are less effective in our negotiations. Similarly, effective communication strengthens our relationships which in turn strengthens our communication and mutual understanding. Mutual acceptance and acknowledgement: Fisher and Brown advise us not to rely upon partisan perceptions in the knowledge that people see things differently. Good working relationships acknowledge and appreciate (accept) that we all see the world through a different lens We must first seek to understand how the other party views the world differently (their way of knowing) if we hope to be understood ourselves. Reliability and Trust: Trust is an element where you leave yourself vulnerable to another party in the belief that they can be relied upon to be benevolent, not take advantage of you and reciprocate by giving back to fulfill your expectations (Olekalns M. et al:2002) trust is relied upon as a predictor of future behavior . If parties cannot rely upon the other party to reciprocate, they have little trust, and relationships become derailed and mired by suspicion. Trust provides the lubricant to smooth communication, improve coordination and interpersonal relationships. The stronger our interdependence the stronger the trust will be. Interestingly, reliability underpins trust it provides a degree of certainty in future events or promises based upon past experience. To build reliability and trust you should say what you mean, and mean what you say to do not offer false promises or set out to deceive remember,

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if you deceive another party to obtain a short term result, you are likely to face your next encounter together as strong adversaries, where trust is absent and so is the motivation to work together. Contingent contracts or bets- i.e. penalties or rewards/incentives agreed upon as a guarantee to offset the level of risk associated with a future, promised event eventuating is a clear example of reinforcing trust in a relationship. Affiliation and Rapport: Affiliation provides a sense of connectedness with others it reduces the emotional distance that separates us and leads to disagreement, so that we feel closer and more comfortable working together side by side to solve problems and create value during negotiations. Work at finding and discussing the links and reasons that bring you together (Fisher & Shapiro: 2005). Integrative Diversity: While strong relationships rely upon the development of a sense of affinity and affiliation (Fisher & Shapiro: 2005), this does not necessarily mean that we must all have shared values, think alike, minimize differences and agree easily. It is through diversity (resources, perspectives, knowledge, competencies etc) that we create value we need to develop relationships that value and deal with differences and diversity (Fisher & Brown: 1988). Power With: A concept proposed by the pioneer of integrative bargaining, Mary Parker Follett. Again, people rely too often upon using their power over others to influence or get what they want this power over approach is self limiting ( a finite individual resource) and produces limited outcomes (the fixed pie mentality) in contrast the development and exercise of power with presents both the opportunity to create more value and to effectively block seemingly more powerful singular sources of power. Strong relationships (including relationship networks) increase your negotiating power. Examples of power with include the development of supportive and/or blocking coalitions, collaborative networks, joint mutual gains problem solving approaches to negotiation etc we can satisfy our interests far better by pooling our diverse but complementary perspectives, knowledge, skills, expertise and resources than what we could possibly achieve alone. Sometimes the relationship is worth much more than a certain agreed outcome, either as intrinsic value ( the pleasure the relationship provides) or instrumental value (the benefits it promises) (Lewicki, Saunders & Minton:1997). Strong long term relationships also support the accumulative deal effect associated with repeat negotiations/business that outweigh one off deals. Accordingly, relationship interests often mean more than a singular deal. Forging Negotiation Relationships It is so important to forge trust in your negotiations to create a solid and durable partnership. Every business can often be judged by the extent in how it values its relationships. The truth is that every business does have a relationship with numerous groups and individuals. We have

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suppliers, customers, employees, labour and union representatives, to name a few. Whether we realize it or not, we interact with these groups and individuals through our relationship with them. Relationships matter and we must understand the reason why they are so important to our business. In the past couple of decades, we have seen businesses evolve and change in how they conduct business. Internal changes have seen the dispersal of power, filtered down to the lower levels of management and employees, by giving them more responsibility and authority. Similarly, we have also seen an evolutionary change in the interaction between businesses and how they have developed relationships, to achieve more cohesive and durable partnerships. We are moving away from fighting over the available bits of scrap, and more often we are looking to expand our meal, by creating both cooperative ventures and developing more creative business solutions. In other words, our negotiations have moved from competitive negotiations, to creating greater value, by forming relationships that focus more on creative negotiations. There are 3 reasons for this change in behavior; 1) Taking future considerations into account Many companies realize that if we concentrate too heavily on the amount of value we can get today, we may lose opportunities from transactions of greater value, later on down the road. 2) Give some - get some in return Todays businesses recognize that by giving something to our negotiating counterpart in a transaction, we can expect getting back something of greater potential value in return. 3) Creating trust moves us further ahead By developing relationships that are founded on a basis of trust, we do not need to spend resources on time and money in perpetually monitoring our partner, to ensure the terms of the contract are fulfilled. How we conduct our negotiations also relates to how we will treat our partnership. If a potential partner places little value on an ongoing relationship, while we perceive our interaction as a long-term partnership, then the negotiators involved in discussing terms, will also view their negotiations from completely different perspectives. The negotiator who does not place any emphasis on a relationship, will be negotiating from a distributive perspective, or grabbing as much as they can. They will try to gain as much as possible from the distribution of available resources. The negotiator who desires to form a longterm relationship, will be seeking to add value that is beneficial to both sides. It is important to understand how we will frame our approach to negotiations. There are two prime questions that we need to ask ourselves, before we begin our negotiation. 1) Will we interact again in the future?
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Obviously, if we are conducting a onetime negotiation, and do not expect to interact with our counterpart in the future, we might want to consider taking the distributive negotiation or bargaining approach, to gain as much value as we can. 2) What will we gain through a long-term partnership? If we believe we will interact over the long term, then we need to adjust our focus and think along the lines, of what value we might receive from the prospective partner, through an ongoing relationship. Value of Forging Strong Relationships When two parties intend forging a relationship, they will likely interact more positively and engage in beneficial communication. They will share and exchange information about their respective goals that leads to an improvement, in their mutual understanding of each other's business perspectives. The collaborating parties are more likely to expand the scope of their discussions even further. This open venue of communication, will enable them to create more valuable agreement options, and as a result, this will enhance and improve their mutual trust and cooperation. When two parties approach the negotiations from the perspective of forming relationships, they do so by building the level of trust through an open line of communication. Generally, the agreement reached will likely offer both parties a partnership that presents more possibilities, in creating mutual value that enhances the partnership agreement.

Long-term relationships and negotiation:

After the deal is done We spend most of our time at negotiation process, but after we done our new deal we must give some thought to putting the deal into practice. In many cases, the agreement we have reached is the first part in a long-term relationship between our organization and the other party. The goal now is to maintain a positive and productive relationship. Here are a few steps to take. These are: Maintain open and clear communication. Make sure the communication is going both ways. Further, to ensure that there are no misunderstandings, we may want to have a face-to-face meeting, whether in person or on a video-conference call. Establish and maintain mutual respect. In order for organizations to do business with each other, there must be respect. Maintain trust by being reliable. Deliver on the terms of agreement. Be upfront when things are not going as planned. Indicate and maintain commitment to a long term relationship. Both party should be committed to a long term relationship. (and make it a win-win for both sides).
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Summary

It is clear that the mutual creation of a relationship between two negotiating parties, offers a broader range of partnership possibilities and at a more productive level. The opposite would occur, when one or both of the parties is less interested in forging a relationship and seeks to simply gain as much value as possible. It is vital that we fully understand each other's perspective, to know which role each is adopting in the negotiation.

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