Negotiation

Professor Gavin Kennedy BA, MSc, PhD, FCInstM

NG-A3-engb 1/2015 (1021)

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 Negotiation
The Negotiation Programme is written by Professor Gavin Kennedy BA MSc PhD FCInstM, Managing
Director of Negotiate Ltd and a Professor at Edinburgh Business School, Heriot-Watt University,
Edinburgh, Scotland.
Professor Kennedy taught at the University of Strathclyde Business School for 11 years and was a
Professor in the Department of Accountancy and Finance, Heriot-Watt University, Edinburgh from 1984
8. He ran his first Negotiating Workshop at Brunel University, London in May 1972.
His books on Negotiating include: Managing Negotiations (co-author), 1980 (3rd edition, 1987), Business
Books Ltd; Everything is Negotiable, 1983 (3rd edition, 1997), Arrow Books; Negotiate Anywhere, 1985,
Arrow Books; Superdeal: How to Negotiate Anything, 1986, Hutchinson; The Economist Pocket Negotiator,
1988, (2nd edition, 1997), Profile and the Economist Publications; Kennedys Simulations for Negotiation
Training, 1993 (2nd edition, 1996), Gower; Kennedy on Negotiation, 1997, Gower and The New Negotiating
Edge, 1998, Nicholas Brealey.
His books have been translated into Dutch, German, Swedish, Spanish, Chinese, Japanese and Portuguese.
He is a co-author of the Negotiating Skills Portfolio, 1986, Scotwork, and The Art of Negotiation, a Longmans
Training film, 1983, which is also available in the interactive format. He is also author of the video
packages: Everything is Negotiable, 1987 and Do We Have a Deal?, 1992, both from Gower.
Professor Kennedy is a Fellow of the Chartered Institute of Marketing. The following are some of the
companies he has consulted with: Allied Irish Bank Group; British Petroleum; CWS; IBM; Motorola; Royal
Bank of Scotland; United Distillers.
First Published in Great Britain in 1991.
Gavin Kennedy 1991, 1998, 2001, 2002
The rights of Professor Gavin Kennedy to be identified as Author of this Work has been asserted in
accordance with the Copyright, Designs and Patents Act 1988.
All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise
without the prior written permission of the Publishers. This book may not be lent, resold, hired out or
otherwise disposed of by way of trade in any form of binding or cover other than that in which it is
published, without the prior consent of the Publishers.
For Gavin Alexander
Contents

Preface xi
Acknowledgements xiii
Introduction xiv
Module 1 What is Negotiation? 1/1

Prologue 1/1
1.1 Introduction 1/1
Dialogue 1/3
1.2 Alternative Methods of Making Decisions 1/3
1.3 What is Negotiation? 1/8
1.4 Advising Negotiators 1/11
Epilogue 1/15

Module 2 Distributive Bargaining 2/1

Prologue 2/1
2.1 Introduction 2/1
Dialogue 2/3
2.2 A Simple Diagram of the Buyer/Seller Dilemma 2/3
2.3 The Negotiators Surplus 2/8
Epilogue 2/12

Module 3 Preparation for Negotiation 3/1

Prologue 3/1
3.1 Introduction 3/1
Dialogue 3/4
3.2 What Do We Need to Do First? 3/4
3.3 What Are We Negotiating About? 3/7
3.4 How Important is Each Tradable? 3/11
3.5 What are the Negotiable Ranges for Each Tradable? 3/21
Epilogue 3/23
Review Questions 3/24

Negotiation Edinburgh Business School vii

Contents

Module 4 Debate in Negotiation 4/1

Prologue 4/1
4.1 Introduction 4/1
Dialogue 4/4
4.2 What is Debate? 4/4
4.3 Rackham on Effective Behaviour 4/5
4.4 Types of Debate: Destructive Argument 4/8
4.5 Types of Debate: Constructive Debate 4/15
4.6 How Not to Disagree 4/20
4.7 Signalling 4/28
Epilogue 4/32
Review Questions 4/34

Module 5 A Proposal is Not a Bargain 5/1

Prologue 5/1
5.1 Introduction 5/1
Dialogue 5/3
5.2 What is a Proposal? 5/3
5.3 How to Make Proposals 5/7
5.4 How to Receive a Proposal 5/12
5.5 Summarising Tradables 5/16
Epilogue 5/18
Review Questions 5/20

Module 6 Bargaining for an Agreement 6/1

Prologue 6/1
6.1 Introduction 6/1
Dialogue 6/3
6.2 From Proposals to Bargaining 6/3
6.3 Linked Trading 6/6
6.4 Bargaining to Close the Deal 6/12
6.5 The Agreement 6/15
Epilogue 6/17

Module 7 Styles of Negotiation 7/1

Prologue 7/1
7.1 Introduction 7/1
Dialogue 7/4

viii Edinburgh Business School Negotiation

 Contents

7.2 Trust in Time 7/4

7.3 Negotiators Dilemma 7/8
7.4 Red, Blue and Purple Styles of Negotiation 7/12
7.5 The Difficult Negotiator 7/18
7.6 Making Progress with a Purple style in a Red Negotiation 7/25
Epilogue 7/32

Module 8 Rational Bargaining? 8/1

Prologue 8/1
8.1 Bill and Jack 8/1
Dialogue 8/3
8.2 Nash and the Bargaining Problem 8/3
8.3 The Benefits of Bargaining 8/8
8.4 The Real Bargaining Problem 8/11
8.5 Rationality and Irrationality 8/12
8.6 Deductive Rationality 8/17
8.7 Fisher and Ury on Principled Negotiation 8/18
8.8 Fisher and Urys Prescriptions 8/21
8.9 BATNA 8/30
8.10 The Negotiator as Mediator 8/31
Epilogue 8/33

Module 9 Streetwise Manipulation 9/1

Prologue 9/1
9.1 Fait Accompli 9/1
Dialogue 9/2
9.2 Learning about Ploys 9/2
9.3 Power and Ploys 9/3
9.4 Three Types of Ploy 9/5
9.5 Dominance Ploys 9/7
9.6 Shaping Ploys 9/9
9.7 Closing Ploys 9/15
Epilogue 9/17

Module 10 Personality and Power in Negotiation? 10/1

Prologue 10/1
10.1 A Divorce Negotiation 10/1

Negotiation Edinburgh Business School ix

Contents

10.2 How Important is Personality in Negotiating? 10/2

10.3 The Personality Styles of Negotiators 10/3
10.4 A Trainer on Personalities 10/6
10.5 Power in Negotiation 10/10
Epilogue 10/12

Module 11 Culture and Negotiation 11/1

Prologue 11/1
11.1 A (negotiating) Tale of Two Cities 11/1
Dialogue 11/2
11.2 Cultural Relativism 11/2
11.3 Do People Negotiate in Different Processes? 11/4
11.4 What is Culture? 11/5
11.5 The Cultural Relativists Challenge 11/8
11.6 Chinese Negotiations 11/19
11.7 Unique Negotiations in India? 11/20
Epilogue 11/22
Review Questions 11/24

Module 12 Retrospection 12/1

Appendix 1 Practice Final Examinations A1/1

Practice Final Examination 1 1/2
Practice Final Examination 2 1/6

Appendix 2 Answers to Review Questions A2/1

Module 1 2/1
Module 2 2/2
Module 3 2/3
Module 4 2/5
Module 5 2/6
Module 6 2/8
Module 7 2/9
Module 8 2/10
Module 9 2/11
Module 10 2/12
Module 11 2/14

Index I/1

x Edinburgh Business School Negotiation

Preface
Hardly a word was changed in the many reprintings of the 1991 edition, but for a
year or more I have been conscious of the need to update various pieces of the
material and to expand the text into some important areas of negotiation work that
have been produced over recent years.
Hence, I have taken the opportunity of this new edition to make some changes
to the original text and to add some new materials to the original Module 8 (Alterna-
tive Approaches to Negotiation). This module has now been expanded into three
new modules: Rational Bargaining?, Streetwise manipulation?, and Personality and
Power in Negotiation?
I have also taken this opportunity to review other parts of the original text where
some students have indicated by their attempted answers that some clarification of
certain concepts would be useful. Overall, the MBA examinations results have been
most encouraging, with a few lapses when students have clearly not understood the
question or where they have ignored what they were asked.
For instance, a question that asks the student to identify the main objective of a
negotiator in a case study question prompts answers from a minority of students
who contrive to identify several objectives, rather than one, presumably in the hope
that one of the objectives will qualify as an answer! Or, a case study question is
sometimes answered by five pages of text, all this for a maximum of only eight
marks, with the same students essay questions then squeezed for time and barely
containing enough material to fill a page, thus putting at risk a chance of gaining a
maximum of 20 marks. Clearly, these students exhibit poor examination technique,
not to mention failing to grasp the precepts of marginal analysis in the Economics
text!
Another common error is for a student to rote learn pages of this text and to
hope that, by reproducing them as answers, whatever the question is about, they will
gain a pass. This is easily spotted by an examiner and in practice it does not attract
marks. The text is not suitable for rote learning, nor is this behaviour a short cut to a
pass.
However, the overwhelming majority of students who have taken the MBA ex-
aminations have avoided these errors and have written good to excellent answers
and have thoroughly deserved the pass marks they have been awarded. Those
students who discuss their own negotiating experiences, or their interpretations of
negotiating experiences reported in the media, always do better in their examina-
tions. The examiners are looking for evidence of a students understanding of the
concepts from the text combined with evidence of their correct application to the
real world. Current and personal examples, if they are relevant, of negotiation
activities are a good source for this type of evidence.
Gavin Kennedy
Edinburgh Business School.

Negotiation Edinburgh Business School xi

Acknowledgements
No work of this type could be attempted, let alone completed, by a single person
and I am happy to acknowledge the contributions of several people to the develop-
ment of the Four Phase/Two Styles approach to negotiation outlined in this text. In
particular, John Benson, was instrumental in the discovery and development of the
original 8-Step approach in the early 1970s and has continued over the years to
anchor our approach in the real world of negotiation practice. Among his then
colleagues at Scottish & Newcastle Breweries (S & N), Gordon Stevens (now at
Bass Inns), the late Ken Stuart and Ian Kilgour contributed in guinea pig roles in
testing and revising the 8-Step approach as it applied both to the training of
negotiators and to their own practice in commercial and industrial relations. Peter
Curran, formerly of S & N, made significant contributions to the presentation of the
Preparation phase.
Colin Rose, of Rose & Barton, Victoria, Australia, introduced me to the Red and
Blue styles model of negotiating behaviour, which is now integrated into our own
workshops with his permission. This simple device has been a great success with
managers wrestling with the contradictory competitive and co-operative styles of
negotiation and neatly completes the Four Phase approach.
The material used in this text has come from many sources, some through con-
sultancy work with clients and some through the thousands of men and women
who have attended the workshops over the years. Contact with, and influence by,
the people who conduct negotiations is the key to understanding what negotiation is
about and to improving performance, and I am no less convinced now than I was in
1972, from my experiences at Shell-Haven, that this constant and regular contact
with real-world negotiators has been of fundamental benefit in developing the
concepts presented in this text. Their contribution is gratefully acknowledged and, I
hope, repaid with interest in the relevance they have brought to my work.
Lastly, a word of thanks to the Edinburgh Business School at Heriot-Watt Uni-
versity, which over the years has provided stimulus for my work on negotiation.
Professor Keith Lumsden generously extended my contact with negotiators through
his own extensive work in Scandinavia and the United States. His invitation to write
this text for the Heriot-Watt University MBA open learning programme was much
appreciated, as are the patient efforts of Charles Ritchie to sort out the wheat from
the chaff in the manuscript.
Gavin Kennedy
Edinburgh

Negotiation Edinburgh Business School xiii

Introduction
In the case of negotiation education and training in the UK there is a direct link
between the approach adopted in this text and some autobiographical data about
how the author became interested in the subject.
In 1969, shortly after graduating in economics and while teaching young manag-
ers on the part-time Diploma in Management Studies programme in a polytechnic
near London, I was invited to visit the Shell-Haven Refinery on the Thames Estuary
for a briefing on Shells innovative attempts to secure a productivity deal with
several unions representing the skilled maintenance workforce. These were the years
of the then Labour governments (ultimately futile) laws that allowed pay rises only
for productivity improvements. Managements across the UK at the time were
accumulating experience on how to improve on the minimum standards set by the
governments productivity criteria, and unions were similarly learning how to
maximise their opportunities for pay increases.
The Shell-Haven negotiations had only just restarted after a lapse of many
months because of a procedural dispute between the management and the unions:
briefly, the management had insisted on establishing the extent of the productivity
gains likely to be achieved before committing Shell to a specific increase in pay,
while the unions insisted on knowing what pay increase was likely to be offered
before committing themselves to detailed measures to improve productivity. A
typical deadlock ensued, until a typical formula was found to meet both sides
reservations about buying a pig in a poke.
The briefing was conducted by the refinerys Maintenance Superintendent and,
over the excellent lunch Shell provided, I must have shown my relative ignorance of
the way economic decisions were made in the real world as opposed to how they are
made in theory, for he invited me to leave my classroom as often as I liked and
observe the way real people fought over the price of labour and the quantity of
output in real negotiations.
Two years later the productivity negotiations were concluded, with the manage-
ment achieving some, but by no means all, of the productivity changes they wanted
(the unions adamantly refused to abolish craft distinctions and become refinery
mechanics) and with the unions achieving the largest pay increase in Shells history
at, for them, the high price of the abolition of paid overtime working. Both sides
were happy with the deal, which to my mind is the best definition of a good deal.
Over the two years I had sat through hours of meetings, and not just with the
management. The union negotiators agreed to talk to me about their views on what
was happening and, as mutual trust developed (they realised that I was only an
academic and not a management spy), they revealed more of their perceptions of
what they felt they deserved and what they thought they were likely to achieve.
Likewise, on the management side, I attended meetings, some while they prepared
their next moves and some while they discussed what had gone right or wrong in
previous sessions with the unions. I was also able to attend the negotiating sessions,
where the negotiators were working for real, where their best laid schemes were

Negotiation Edinburgh Business School xiv

 Introduction

severely tested and where the outcome of a session had a direct effect on the men
the unions represented and/or on the costs the management were concerned about.
Shortly before the successful conclusion of the Shell-Haven productivity negotia-
tions, in 1972, I had begun teaching economics to undergraduates at Brunel
University in West London. Brunel had recently established a management pro-
gramme, and I volunteered with a colleague, Peter Seglow from the Sociology
Department, to present a seminar on Workplace Negotiations. The first seminar
was run in May 1972 and was attended by 18 managers from a wide cross-section of
business activity. Over five days the participants listened to academics from eco-
nomics and sociology, interspersed with role-playing sessions negotiating cases that
drew upon the relatively limited experience of Seglow and myself of real-world
industrial relations.
The participants of those early seminars appeared to consider that what we were
offering was of some use to them, if only because they sent many of their colleagues
to subsequent seminars. This did not prevent me from being unhappy about how
we were teaching negotiation to practical people, whose needs were different from
those of academic students. The student establishes his competence by how well he
applies his intelligence to his chosen theoretical discipline (including his ability to
refute discredited theories and to solve theoretical problems); the manager establish-
es his competence by how well he applies his intelligence to solving practical
problems. Blatantly mixing the two approaches in our seminar left me uneasy that
we were not doing enough for our participants.
We had no model of how to run a negotiation workshop because there were no
well-established negotiating skills courses running in the UK in 1972 I know,
because we drew a blank when we searched for them (though we did become aware,
in 1973, of the work in behavioural studies of Neil Rackham and John Carlisle of
the Huthwaite Research Group in Sheffield, and later, in 1974, of seminars run by
Dr Gottschalk at the London Business School, which were heavily influenced by a
psychological approach to the problems of negotiation). This raised the interesting
question: if nobody teaches negotiating skills in the UK and yet everybody negoti-
ates, and had been doing so for millenia without the advantage of training in what
they were doing, what justification (apart from enhancing the universitys income)
was there in running a negotiation workshop?
The situation, as ever, was different in the United States. There, a veritable indus-
try of private consultants (among them Messrs Chester Karrass, Henry Calero, Herb
Cohen and Gerard Nierenberg) were successfully marketing various negotiation
improvement courses for managers. Negotiation had also begun to attract academic
attention following the publication of Richard Walton and Robert McKersies A
Behavioural Theory of Labour Negotiations (1965), McGraw-Hill and Thomas Schellings
earlier work, The Strategy of Conflict (1960), Harvard University Press. Both books,
from different perspectives, have since become classics in the field. But nothing like
this level of activity was happening in the UK, though there was a potential demand
for it. Some academic work had been done on the issues raised by current negotia-
tions, mainly labour disputes and international conflicts, but these studies seldom
strayed beyond tackling policy questions, such as why unions opposed redundancies

Negotiation Edinburgh Business School xv

Introduction

or what had happened in a steel strike, and rarely, if ever, asked questions about the
mechanics of negotiation, such as why a negotiator would play this tactic as against
another, or how negotiators signalled their willingness to move.
My doubts throughout 19723 centred on the question: how can we develop
from scratch a workshop to educate and train managers to improve their negotiating
skills? This led to other questions: should I follow my Shell-Haven experience and
devote time and resources to the academic study of real labour negotiations in the
UK, as Walton and McKersie had done in the USA, or should I follow Schelling
and take up the academic study of conflict? Meanwhile, should we confine the
content of our quarterly seminar on negotiation to a purely practical or a purely
theoretical approach?
But a purely practical approach to training is limited to anecdote and the memory
of similar circumstances. Collections of anecdotes that relate how others dealt with
similar or analogous problems could be offered as a training tool but would not be
enough if that were all that was offered. A purely anecdotal approach to practical
problems is limited in three ways: the manager might forget the appropriate anec-
dote to guide him in his current circumstances; he might apply an inappropriate
anecdote to his problem; he might never have covered the appropriate anecdote in
his training and be at a loss as to what to do. What the Shell electricians did to
protect the unskilled components of their work might, or might not, help a manager
negotiating a price reduction with an established supplier, but even if there were
analogies at one level there were bound to be profound differences at another. An
inability to take the profound differences into account, as seen by the busy manager,
compromises the credibility of the anecdote.
Alternatively, a purely theoretical approach in the seminars would suffer immedi-
ately from a fall off in the size of the constituency of potential clients. Practical
people usually recoil from too heavy a dose of abstract reasoning. Assume that your
opponent is rational, says the theorist, and risks being interrupted by the manager
with: How does that help me with the militant leader of an unofficial strike over
alleged insults to his religion?. Plainly it cannot help him without a great deal of
additional work, inclusive of patience on both sides, for which time is often not
available to busy managers.
Theoretical analysis, however, can clarify a complex situation and provide effec-
tive guidance for practical action. There is, of course, no case for believing that
theory is of no use to practical people: the theory of geometry helped people
improve on round mud huts by enabling them to design and build structures from
different regular and stable shapes. But to make any theory useful we must be
selective. Theorists too can learn from practical examples by analysing data on the
patterns and unique relationships of real world negotiations and using them to
improve their crude models of reality. In negotiating skills education and training,
those theoretical models that have practical relevance can help negotiators to clarify,
and improve their understanding of, the patterns and relationships of their practical
experience. An education and training programme, therefore, built round a selective
blend of theory and practice has an important role in helping negotiators to improve
their performance.

xvi Edinburgh Business School Negotiation

 Introduction

From this background, while presenting a series of negotiation skills training

workshops to managers at Scottish & Newcastle Breweries in Edinburgh in 19734,
I took advantage of the opportunity to work with a number of professional negotia-
tors to develop, literally from scratch, an entirely original approach to negotiation
training. Initially, I kept the workshops to the same format we had developed at
Brunel, but gradually I introduced a significant difference. In addition to talks on
aspects of negotiation, supported by anecdotal material from business and industrial
relations and video evaluations of participants negotiating cases from the real world,
I introduced a model of negotiating based on the concept that all negotiations had a
common process. The model divided the negotiating process into the distinct steps
of Preparation, Argument, Signalling, Proposing, Packaging, Bargaining,
Closing and Agreeing. Originally I called it the 8-Step approach, but, through the
accident (!) of having to compress the eight steps for a 30-minute training video, it
became, and has remained, the Four Phases of Negotiation (Prepare, Debate,
Propose, Bargain). In addition, I set out, by experiment, observation, practice and
the contributions of the managers who attended the workshop, to discover the
appropriate behaviours negotiators could use to improve their effectiveness, and
these materials were introduced throughout the series. By 1976, the 8-Step approach
model dominated the entire contents of the workshops for the brewery managers
and proved to be a successful device for integrating theoretical ideas about interac-
tive behaviour (from social psychology, sociology, anthropology and economics)
with information (and some advice) on how negotiators behave in practice. In 1980,
the 8-Step model entered the public domain in a book I co-authored, Managing
Negotiations (Hutchinson Business Books, 3rd edition, 1988), followed in 1983 with
an exposition of the Four Phases version in the video, The Art of Negotiation (Long-
man Training), an interactive version of which appeared in 1988.
With the 8-Step/Four Phase approach and selections from relevant academic
work on negotiation, the blend between theory and practice was achieved, and in
the intervening years this approach, in various guises (and a few disguises!) has
become the dominant teaching method on negotiation skills courses in the UK.
Teaching courses on negotiation are now included in the MBA degrees in many of
the major business schools in the USA and Europe. Myriads of short courses for
managers now include negotiating skills in their offerings, and books and tapes by
the shelf-full have been published since 1980. Where once the notion of a course on
negotiation was not taken seriously by senior academics (the reason that I left the
polytechnic in 1971), it is now almost a sign of academic integrity to have a negotiat-
ing course included in the syllabus. In the USA, negotiation programmes (and their
presenters) have achieved considerable eminence. For example, the Harvard
University Negotiation Project is a pace-setting management programme, diffusing
its graduates and its teaching methods to colleges across the USA (alas there is no
equivalent programme yet in Europe). In short, the activity of negotiation is no
longer a neglected phenomenon, which everybody experiences but few ask ques-
tions about. It is a subject worthy of study in its own right, with worthwhile benefits
to theorists and practitioners alike.
In preparing my contribution to the Edinburgh Business School MBA pro-
gramme, my minds eye sees you, the reader, as someone who has achieved

Negotiation Edinburgh Business School xvii

Introduction

competence in some specialism, and who, with ambitions to increase your manage-
rial responsibilities, now wants, or needs, to acquire education in general
management and administration. In order to do so, you need assistance in selecting
from the numerous concepts and techniques of analysis. This modular text on
Negotiation will help you in much the same way that I was helped by the practical
men and women on both sides of the negotiating table at Shell-Haven in 19702
and in Edinburgh in 19734. They showed me what was relevant in what I knew as
an academic and what I needed to know to become competent as a practical
negotiator.
The style of the text is very much as a conversation between myself as the author
and yourself as the reader. It is like the language of a consultant discussing a series
of issues and problems with his client, though of necessity, in our unique circum-
stances, I shall be forced to interpolate what I think you would be asking me if we
were in live contact, and if my statements do not answer your questions or my
questions do not have interesting answers for you, I can only hope that this occurs
on a minority of occasions.
Each Module is structured in the traditional Greek manner into three parts: the
Prologue, introduces the theme of the module and sets the scene for the argument
that follows, usually in the form of a short scenario of a negotiating problem, and
often with an exercise for you to complete; the Dialogue, presents the argument
and the imagined discourse through which we work our way together, by way of
concept and example drawn from the variety of possible negotiating positions and
dealing with the potential difficulties associated with each individual position as they
arise; the Epilogue draws together the threads of the argument and summarises the
whole.
Self-assessment questions are included to test your understanding of the concepts
in the module, and my answers allow you to assess your own responses. All of the
exercises and self-assessment questions are supported by my suggestions as to what
constitutes appropriate answers. You need not agree with my suggestions and you
are perfectly entitled to prefer your own. What you are expected to do, however, is
to refrain from cheating, either by dodging the exercises and my suggestions
altogether or by reading my answers before you attempt your own. Neither cheating
strategy will help you improve your own negotiating performance. You will learn
more by working your way systematically through the problems and by comparing
your answers with mine, and, whatever conclusion you come to, by understanding
why we agree or differ. The exercises are part of the learning process and not just a
way of filling up space!

xviii Edinburgh Business School Negotiation

Module 1

What is Negotiation?
Contents
Prologue .............................................................................................................1/1
1.1 Introduction.............................................................................................1/1
Dialogue ..............................................................................................................1/3
1.2 Alternative Methods of Making Decisions............................................1/3
1.3 What is Negotiation? ..............................................................................1/8
1.4 Advising Negotiators ........................................................................... 1/11
Epilogue ........................................................................................................... 1/15

Prologue

1.1 Introduction
George, Vice-President (Sales) at Phoenix Enterprises, looked forward to
finishing at 5 p.m. and catching the 7 p.m. plane to Bordeaux where he was
to join Lucy, his wife, and their three children on their annual holiday. Three
days earlier, on Friday, Lucy had gone on ahead with the children to the villa
they had rented for three weeks, while George stayed behind to complete a
special assignment given to him on Thursday afternoon by Dan OReilly, his
boss and Chief Executive Officer. Dan had told George to check over their
contract with Pascoe Projects, a client company, regarding their proposed
joint venture to build a business park on the edge of town. The contract
documents were in a total mess, and Dan wanted to have them sorted out
and analysed for Tuesday, when he was due to meet Pascoes Managing
Director and see if he could negotiate amendments to their contract. There
was no way that George could check over a contract of this complexity before
he went on holiday. There were just too many files and background papers,
plus several sets of changed drawings and altered specifications. George
apologised to the children for the unscheduled interruption to their holiday
and promised a skeptical, and somewhat angry, Lucy that he would work all
over the weekend to sort out the problem and would join her on Monday
evening at the latest.
George was by no means happy that Dan had done this to him and con-
sidered it an unsatisfactory situation that work should intrude on his holiday.
It was not as if the problem had arisen from one of his own accounts. It
properly should have been handled by Fred, Vice-President (Contracts), who
was off sick, and who, to cap it all, had been promoted a year ago to Con-

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Module 1 / What is Negotiation?

tracts Manager on the strength of winning the Pascoe account. Because

Pascoe Projects was an important account, George knew that Dans negotia-
tions could not be postponed until Fred returned from sick leave and he
accepted that somebody had to step in and clear up the mess. His pride in
being chosen (once again) to trouble-shoot somebody elses difficult problem
was tempered with his dismay that it would add to his domestic stress (there
had been other occasions when he had been compelled to let his family down
for work-related reasons). He knew he had no convincing answer to Lucys
charges that he paid more attention to Dan than to his family, and he fully
expected that his holiday might be ruined by recriminations arising from
Dans thoughtlessness.
Now imagine yourself in Georges position on Thursday afternoon when the
boss calls on you to work over the first weekend of your annual leave. How do you
feel about that? As annoyed as George? Well, we dont know what George said or
did when he heard Dans instructions; we only know that he worked through the
weekend. If you had been faced with a similar instruction from your boss, how
might you have reacted? What could you do to make yourself happier in this type of
situation both at work and domestically?

Exercise 1A
Write down your answers on a separate sheet of paper, numbering them 1 to
10.

My suggestions follow, in no particular order of priority. George could:

1. Tell Dan that his holiday was contractually sacrosanct and refuse the assignment.
Question: What would this have done to his career prospects?
2. Suggest to Dan that somebody else should undertake the assignment and use
good arguments to support his suggestion (perhaps appealing to Dans sense of
fair play?).
Question: What happens if he fails to persuade Dan to change his mind?
3. Suggest that Dan assign somebody else along with George, with whom George
would work until Friday evening, and thereafter the other person would com-
plete the task over the weekend by himself. (Perhaps he could offer to work
through Thursday night?)
Question: What happens if there is nobody else qualified to undertake the work
after George leaves?
4. Tell Dan that he did not want to break his holiday in this way but that he was
prepared to toss a coin with him to decide whether he should continue with his
holiday plans or start work on the problem.
Question: What happens if Dan has an aversion to a gamble and anyway sees no
reason why he should put himself at a 50 per cent risk of doing without Georges
services?
5. Offer to do the work provided that Dan paid his airfare to Bordeaux on Monday
and extended his holiday by a week in compensation.
Question: What happens if there is no pressure on Dan to negotiate with George?

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6. Ask to see the company President to adjudicate on whether Dans assignment

was a reasonable request just before his holiday.
Question: What influence can George bring to bear on the company President
before he makes his decision?
7. Threaten to resign and sue the company for constructive dismissal.
Question: How credible is the threat and would Dan give in to it? How expensive
is litigation and would he win?
8. Tell Dan he will consider it and let him know when he returns from holiday.
Question: What happens when a decision cannot be postponed?
9. Instruct one of his own subordinates to undertake the assignment.
Question: What happens if the junior refuses the instruction?
10. Undertake the assignment.
Question: What does giving in cost him in a ruined holiday?
This module is about some of the options people can consider when their inter-
ests are in conflict with anothers and how we might approach discussing these
options.
Dialogue

1.2 Alternative Methods of Making Decisions

People make decisions all the time and they use a variety of methods, mostly
without thinking about the differences between the methods, to reach and imple-
ment their decisions. We can illustrate the variety of methods available to people by
considering the suggestions you came up with for George in the Prologue. Almost
certainly you included some, if not all, of the ten in my list (and perhaps a few
others?). Each of my ten suggestions is based on a different method of reaching a
decision, and we can name each type of decision method as follows:

1.2.1 Say No
That is what Americans call making a career decision. To reject outright a proposal
usually means having to live with the consequences, unless the proposer backs off.
If a man puts a gun to your head and says: Sign the contract or I will blow your
brains out you would surely have to have a serious objection to the terms of the
contract if you persisted in refusing and he was serious about his threat. Saying no
and meaning it is appropriate when you cannot endure the offer but you can endure
the consequences.

1.2.2 Persuasion
All selling skills are based on persuasion. If you have ever attended a sales training
course you will recognise the role of persuasion in the advice to sellers to sell the
sizzle, not the steak. This approach can persuade someone to say yes because their
imagination is more likely to be fired by the image of a sizzle than the unadorned
image of a steak. The advice to sell benefits, not features, is another example of the
talented use of persuasion skills. Persuasion is usually the first method we choose

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when we want something. When persuasion works it is a fine method, but when it
does not work it often leads to tension and conflict: I tried to be reasonable and
explained why Dan should choose somebody else, but he was not interested in my
views, only in his own, which shows I was right to call him a rotten swine of a boss
and he proved this by sacking me.

1.2.3 Problem-Solve
This is not as universally applicable a method as its proponents claim (in fact, no
single decision method is a panacea for all conflict situations). Problem-solving
methods require a high degree of trust between the decision-makers, who also have
to agree that they share the problem. If either of these conditions is absent, prob-
lem-solving breaks down when individuals hold back just in case their candour is
ambushed by your denial that you share their problem.

1.2.4 Chance
This is not as silly as it sounds. Some large decisions are made by the toss of a coin.
For example, in a choice between two otherwise identical projects for which there
are funds for only one, tossing a coin might save a lot of acrimonious argument or
indecisive dithering. If you are indifferent between two events (going to the football
match or watching television) you have a 50 per cent chance of enjoying either event
if you decide between them by tossing a coin. Kerry Packer, the Australian busi-
nessman, chose between his lower price and David Frosts higher price for the
Australian television rights to Frosts interview with ex-President Nixon by tossing a
coin. The interesting feature of Packers decision is that he allowed Frost to call
heads or tails over the telephone line separating Frost in California from Packer in
New South Wales, and he announced that Frost had won the toss! Whether Packer
actually tossed a coin or not is an interesting speculation; if he did toss the coin and
Frosts call won, this makes Packer a very honest man; if he tossed and Frosts call
lost, or if he did not toss a coin at all, this makes Packer a very generous man.

1.2.5 Negotiate
This is a widely used option where conditions for it exist. These conditions normally
include the mutual dependence of each decision-maker on the other. If the boss
needs your consent for you to do something he wants and to which you cannot
unilaterally say no, nor can he make you do it, it may be possible to negotiate
something that meets both your own and your bosss concerns. This usually
involves you getting something, tangible or intangible, in return for your consent.
But if you have nothing to trade he does not need anything you have, including
your consent, nor does he have anything in his gift that would persuade you to
consent then negotiation is unlikely to be appropriate.

1.2.6 Arbitrate
When decision-makers cannot find a basis for agreeing, and provided they can at
least agree on who is to be the arbitrator and that his decisions will be accepted, they

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can choose arbitration. The building and construction industry uses formal arbitra-
tion procedures to settle the many disputes that arise over increases in costs and
variations in specifications after the contract price has been agreed. It is also used in
commercial disputes between countries (for example, through the International
Chambers of Commerce system, known as INCO terms) and has a role in several
industrial relations systems (for example, in the Federal Arbitration Award system
used in Australia). Though widely used, arbitration is also abused, particularly when
the parties reject the arbiters award, or when one of them demands arbitration
merely as a device to improve the other partys last offer by letting the arbiter split
the difference. This abuse has been overcome by the Pendulum Arbitration system
which requires the arbiter to choose one or other of the partys claims, rather than
award some compromise between them. The problem for George is how to appeal
over Dans head without compromising his own relationship with the company.
Dans boss might take a dim view of managers who do not work above and
beyond the call of duty and he might take just as dim a view of Dan for failing to
manage his own people; the former inhibits George from going over his bosss head
and the latter inhibits Dan from letting him. George also has the risk that the
arbiters decision would be the same as Dans.

1.2.7 Coercion
Threats lie on a continuum from a gentle reminder that you have an option through
to a declared intention to use violent intimidation to get your own way. Various
degrees of coercion are common in many conflict situations, for example: a union
reminding the employer that its members voted unanimously for tougher action in
support of their demand (adding: Only our authority is holding them back, so give
us something to put to them to defuse the crisis); or a banker warning that any
repetition of issuing cheques without proper overdraft facilities will result in their
bouncing; or a government warning a neighbouring country that unless it acts to
stop terrorists getting onto flights it will ban all flights from that country. Of course,
using coercion to achieve desirable decisions risks retaliation (We will not be
pushed around or blackmailed).

1.2.8 Postpone
This is a relatively common practice. Countless organisations attempt to resolve
internal disputes and isolate the traumas of disagreement by forming working
parties or subcommittees, which effectively postpone the decision long enough to
secure agreement, or long enough for the parties to forget how passionately they felt
about it when it was first raised. But where time is of the essence the shipment has
to leave by 4 p.m. to catch the last flight to Oman postponement may not be an
option. Indeed, in some situations, an attempt to postpone a decision could be
interpreted as a form of coercion, or simply as an underhand refusal to agree.

1.2.9 Instruct
This is the appropriate choice when the person instructed is obliged and certain to
carry out the instruction. Managers do not normally expect subordinates to question

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their instructions when their instructions are within the terms of their relationship.
Telling the chauffeur to drive to a downtown restaurant at lunchtime ought not to
provoke a conflict if that is what the chauffeur is paid to do and lunchtime is within
his working hours. (It might provoke conflict if we are instructing him to drive into
downtown Kabul!) The efficacy of instruction rests entirely on the probability of the
instruction being obeyed. If it is unlikely to be obeyed we need their consent we
must switch to another method. For example, instructing children to go to bed is
not always successful and parents often resort to other methods persuasion,
negotiation or coercion to overcome a challenge to their authority.

1.2.10 Give In
This is what we do when we accept an instruction. Giving in is not as weak an
option as it sometimes seems (or as it is presented by people who perceive them-
selves to be tough guys). I regularly give in when the odds are overwhelming (the
man with the gun means business) or the costs of doing otherwise are excessive (to
argue will take up more time than I have to spare on resisting doing what I am told).
Every time you buy an item at the sellers asking price, you are giving in, and it
makes sense to do so if you cannot abide the alternative of doing without the item.
Supermarkets do not normally negotiate on the prices of their groceries, and if they
were to do so it would extend by hours the arduous chore of weekly shopping, with
people waiting in checkout queues while those ahead of them completed their
haggling over the prices of their trolley loads of shopping. Faced with this conse-
quence most people who shop regularly would give in, and find a competing store
that arranged its pricing system to minimise the time they had to spend waiting to
go home.

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Exercise 1B
Now go back to your own list of the options you decided were open to
George. How would you classify each of your suggestions according to those in
Table 1.1?

Table 1.1 Ten alternative decision methods

Corresponding number
Number Method in your list
1 Say No
2 Persuasion
3 Problem solve
4 Chance
5 Negotiate
6 Arbitrate
7 Coercion
8 Postpone
9 Instruct
10 Give in
Others not listed above

For each entry you made, decide what type of decision it is and note its number
alongside the corresponding entry in the table.
Your list almost certainly will have been written in a different order to mine
(which does not matter because the order is irrelevant) and you may also have
duplicated one or two of your suggestions by giving different examples of the same
decision method. This too does not matter too much as long as you can identify the
method. The importance of this exercise is for you to recognise that there are at
least ten methods of making decisions potentially available to you in conflict
situations.
Each of them emphasises a different approach, each has strengths and weakness-
es, and each has different consequences. In your daily interactions you switch
between these alternatives to suit the circumstances as you see them. As an adult
you have considerable experience of choosing between these methods and of
recognising which method is being used by somebody else on you. Not that you and
the people you deal with always get it right! For example, you might attempt to
instruct somebody and in consequence have your ears assaulted with the noise of
their outrage at your insult, or you could arrive at the meeting willing to listen to
reason but react angrily at their unnecessary attempts to coerce you into submission.
Observation shows that people are adept at choosing different approaches to
conflict but it also shows that their choices are not always appropriate to the
circumstances. They are not confined to using one form of decision-making in
particular circumstances when switching to another might move things forward. A

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sales sequence could begin with persuasion (selling benefits, not features, and
answering the buyers objections). The sales pitch could confine itself to persuasion
if persuasion were sufficient to win the order. It could as easily move into negotia-
tion when buyer and seller discuss the terms under which the buyers decision, in
principle, to buy is matched to the sellers willingness to sell. It could also slip into a
gentle form of coercion, as when a seller warns a buyer, even though he does not
need steel for the moment, that unless he places an order immediately for the
special steel he requires he will miss the current production run at the rolling mill
and he will have to wait another three months before his order can be placed (and
for good measure, he will face a price increase as well). Those skilled in persuasion
are not immune to slipping into some degrees of coercion. For example, many an
attempt by credit control to collect money from debtors begins with gentle persua-
sion and ends in ungentle litigation.
Hence some situations involve switching in and out of several alternative meth-
ods sequentially in a short space of time. This is important to negotiators because it
helps if they can recognise which method is being used at a particular moment. For
just as each method is appropriate in some circumstances and not in others, so
some methods are not appropriate when they operate against each other. For
example, if you rely stubbornly on persuasion to win over a meeting to your point
of view, and your opponent switches into credible threats to intimidate the meeting
into compliance with his wishes, you might find the meeting slipping away from its
inclination to support you. Alternatively, you could decide to give in to a specific
request from the other negotiator, only to find that this act of goodwill did not lead
to a solution. Instead of reciprocating your offer to give in with some movement on
his part, he might take your giving in as a sign of your weakness and promptly
demand more! From similar mismatches of decision methods more than one
negotiation has collapsed.

1.3 What is Negotiation?

Negotiation is only one of the ten forms of decision-making listed in Table 1.1. As
with all the alternatives it is neither superior nor inferior to any other of the others.
Negotiation, like its alternatives, is appropriate in some circumstances but not in
others. What are those circumstances?
First, a few paraphrases of the thoughts of Adam Smith, author of The Wealth of
Nations (1776). Smith remarked that nobody had ever seen two dogs negotiate over
a bone. Dogs, and other animals, fight for the resources of food, mates and territo-
ry, and having gained them, usually have to fight to hold on to what they get. If you
have ever seen seagulls swooping over each other to get at some bread tossed onto
the water by a small child, you will have noted how they chase the lucky one to get
the bread first, apparently in the hope that, by forcing him to twist and turn to avoid
collision, he will drop the morsel and give them a chance to snatch it away. Be clear
I am not moralising about this. Nature is neutral and trifling with it is dangerous.
Smith noted that mankind had developed alternative methods for allocating
resources to those used by animals. At least this was true, he believed, of the
civilised nations Smith reserved a long contempt for barbarians who decided on

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the allocation of resources by methods akin to wild animals (the Genghis Khan
school of wealth creation?).
It was the human capacity to truck, barter and trade that made civilization pos-
sible, and when people voluntarily exchange things they have for things they want,
they create wealth. That is how most of us in urban industrialized economies get
what we want we sell our labour services to employers, who use our services to
produce the output which, in aggregate, accounts for most of the things we all want.
We use our earnings from employment to buy what we want from those who own
what has been produced.
Decisions are often made by some form of negotiation between the various
parties to these exchanges. When we sell our labour services we must agree the
terms under which we do so, both the terms of the wage we can expect to get and
what the manager expects us to do for his money. Neither the employee nor the
employer can achieve anything much without the other. True, you can decide not to
work for a particular employer if his offer is too low, and he could decide not to
employ you if your demand is too high, but in the aggregate across all employers
and all employees, output can only be produced if enough employers and employees
agree on the specific terms for working together. Of necessity, because each party
depends on the consent of the other neither can dictate the wage rate the other
prefers the terms of employment are set by negotiation and are changed by
negotiation.
Producers earn their income by selling their output to customers, and if they
continue to produce output for which there are no customers at the prices they set
unilaterally, ultimately they will be ruined. It is similarly ruinous for customers who
cannot obtain output at the prices they are willing or able to pay: ultimately they will
starve to death. Both producers and their customers, therefore, depend upon each
other: for producers there is no income without customers, and for customers there
is no consumption without producers. The terms under which customers acquire
from producers the things they want food, clothing, music centres and jacuzzis
are decided either by take-it-or-leave-it prices set according to the producers
marketing judgement, or directly by some form of negotiation with the customer.
Customers negotiate passively when they shop around and actively when they ask
for a better deal than the one on offer.
Most producers sell their output to other producers and prices are set for them
mainly by negotiation. For example, electricity is sold to manufacturers to run their
machines and large consumers are invited to negotiate bulk discounts on the
standard tariff; car manufacturers who expect to negotiate price and performance
standards for CAD-CAM computers they buy from companies that buy company
cars, also expect to negotiate fleet purchase deals for their cars; meanwhile packag-
ing machinery manufacturers negotiate the purchase of packaging for their spare
parts service with companies that buy packaging machinery. And so it goes on
between producers throughout the economy.
For every transaction there is a buyer and a seller. Some buy whatever the price,
others only buy at specific prices. Most buyers and sellers buy some things without

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questioning the terms, some things they buy grudgingly, and for some things they
haggle and make the seller work for every penny of his price.
For a few people, willfully determined not to be dependent on anybody else and,
therefore, as determined not to trade anything with anybody, their future, whatever
else it might bring (such as spiritual peace?), includes a high probability of an
extremely low standard of living. Provided they adjust their expectations, and
therefore their wants, downwards, they could enjoy a state of affluence, albeit at
near zero wants. For others, more the victims than the perpetrators of their circum-
stances, who have absolutely nothing at all to trade, their lives are blighted to
degrees beyond the consciousness of most of us. You will never be so poor,
materially or in spirit, than you will be if you have nothing, absolutely nothing, to
trade for your wants. If, however, you do have something to trade but not on a
specific occasion to a specific person, or on their offered terms, you can keep your
property (including your labour services) to yourself and leave him to go about his
business while you trade with somebody else.
In the main people do not plunder their neighbours for their wants, because the
state ensures, through the rule of law, the peaceful enjoyment of your own property.
(In Smiths day they had the draconian punishments of hanging or transportation
for what today are regarded as relatively trivial transgressions of the public peace.)
The state, as its first duty, protects you from the depredations of your neighbours,
whether they live next door or across the border.
Negotiation has developed as the process through which the activity of trading
and exchanging tangible or intangible things between people is conducted. Its
underlying principle is expressed in the statement: Give me some of what I want
and I will give you some of what you want. It differs from instruction and coercion,
precisely in the way that it employs the principle of voluntary exchange between two
parties who cannot, for whatever reason, either take what they want, or get what
they want, unless they accommodate in some way to the wishes and desires of each
other.
The basis for negotiation in an economy is replicated in the affairs of govern-
ments and international agencies. No society has restrained its state to an absolutely
minimal role. All states do a great deal more than merely ensure that the people can
enjoy their property and freely enter into agreements to acquire their wants. A
substantial proportion of the economy is directly managed by or for the government
(in the UK the proportion is over 40 per cent of Gross Domestic Product, with a
lower proportion in some other capitalist economies and a much larger proportion
in some previously socialist economies). The government and its agencies negotiate
to buy and sell labour services (the civil service, the armed forces, the judiciary, etc.)
and output (the public infrastructure, medicines, school pencils, etc.) on much the
same basis as private producers do in the market economy.
Governments also make political decisions through processes that include nego-
tiation: two cabinet ministers might negotiate over a problem of overlapping
jurisdiction between their departments; the parliamentary whips might negotiate
with a maverick backbench MP before a crucial vote of confidence; two leaders
might negotiate a basis for collaboration between their parties; and so on. On the

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international front, governments negotiate on all manner of issues. In fact there is

evidence that international negotiations between governments are on the increase.
Over 50000 international agreements between governments have been negotiated in
the 20th century so far. These are increasing at the rate of over 1000 a year (up
from 550 a year in the later 1940s). Nobody knows exactly how many international
agreements there are. Some agreements between governments remain secret and are
only revealed when there is a change in regime (the secret protocols agreed between
the Soviet Union and Germany in 1939, for example); others are either of a minor
nature and attract no attention, or they are informal, as between two governments
who agree to support each other in an international forum on a single issue (as
France and Germany have done regularly in the European Union).
The pre-Second World War League of Nations published 205 volumes of Trea-
ties before its demise, and the United Nations series ran to 1000 volumes by 1987.
With about 250 international organisations operating around the world, and the
pressure to extend their powers, because of environmental concerns for example,
and pressure to set up new ones (such as within the European Union to centralise
banking), we can expect the number of negotiated agreements to keep rising
throughout the next century.
Negotiations do not always end in an agreement. Those making a decision by
negotiation usually have the option of choosing some other solution, of saying no,
of walking away, of minding their own business. If their consent is required for an
agreement to be reached and if they cannot agree, then no agreement is made. They
cannot be forced to agree, for if one of them can force the other to agree, it would
not be a negotiation (and anyway, why would a person negotiate with somebody else
who has no choice but to obey his instructions or to furnish him with what he
wants?).
Any two dogs fighting over a bone are in conflict over a scarce resource. They
have no means of finding a basis for co-operation. Humans can co-operate when
they are in conflict by negotiating an agreement. They can also go to war (the two
dogs solution) if they cannot find a way to co-operate, or if their attempts at co-
operation result in deadlock. Negotiating, then, is about finding out if there are
terms for co-operation that are acceptable to both parties.

1.4 Advising Negotiators

Dan OReilly, the Chief Executive Officer of Phoenix Enterprises, called the
meeting to order and asked George, his Vice-President (Sales), to discuss
negotiations with Pascoe projects by filling everybody in on where the
contract stood at the moment. George moved to the overhead projector and
flashed up slides detailing some of the terms of the original contract negoti-
ated by Fred, Vice-President (Contracts), who, fortunately for him, was still
off on sick leave.
I will begin with my conclusions and support them by describing what
appeared to have happened at a series of meetings between ourselves and
Pascoe held some six months ago, began George. I see two problems with

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this contract, he continued. First, it locks us into a deal which is conditional

on Pascoe achieving planning permission but does not set a termination date
for them to get the necessary planning consents through, and second, we do
not get paid for our land or our share of the development profits, unless and
until Pascoe builds the business park and secures tenants for it, he conclud-
ed.
The news did not get any better throughout his presentation as he minute-
ly dissected the Pascoe contracts and cross-referenced them to the
correspondence and copies of minutes of meetings he drew from a box
beside him. George did not comment on what he found, he laid no blame
and made no suggestions. He stuck to the facts as he had found them.
OK, George, Dan intervened, thats the situation as it stands and it is
worse than I thought it was. What I want to know is what can I do about it
when I meet Pascoes people tomorrow. We have 12 million riding on this
deal and whatever, or whoever, screwed up this contract, I need advice from
all of you as to what I should do before I meet the President of Phoenix in an
hours time. He is none too pleased, I can tell you. So lets go to it. Rodney,
what do you think?
Rodney, Vice-President (Administration), was sitting at the end of the
boardroom table and generally regarded himself as Dans number two (a
pretence that annoyed George). As usual, he jumped in with what he thought
Dan wanted to hear: Well, I think we should brazen it out with Pascoe and
tell them that unless they quit stalling on acquiring planning permission,
well call the deal off. What have we to lose if they call our bluff?
Everything, said George. It took me four days to check over the con-
tracts and the minutes of Freds negotiations, plus his correspondence, to
discover what was wrong. If Pascoe has not yet discovered that they have us
over a barrel, taking Rodneys line will sure as hell make them smell a rat and
put somebody onto doing what I did. No. Its best not to arouse their suspi-
cions. They are more likely to come to a sensible change in the contract that
way.
The meeting rumbled on with everybody having their say. Some of Freds
team from contracts disputed Georges descriptions of what Fred had
actually agreed to and reported on their conversations with Pascoes people
in support of their claims. These quibbles did not move George and he stuck
by what was actually written down, knowing that alleged nuances of meaning
not backed by documentary proof would not impress the courts if they were
sued for breach of contract. Rodney continued to press for a tough line at the
negotiations and claimed that he knew Pascoe would crumble if they were
pushed hard enough, as they had done when they ran over budget on the
Riverview project.
George finally proposed a more subtle ploy. He suggested that what was
needed was a written confirmation, no matter how tentative, from Pascoe
that the contract implied a termination date for planning permission. Dan
could use this to pull out of the contract if Pascoe failed to deliver the

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necessary permissions by the implied date. Dan wanted to know exactly how
he could get them to confirm a date to which they had never agreed.
It wont be easy, answered George. For a start it must be done almost as
an afterthought. Ask them, at some point, how the planning permission is
coming on and, if they are vague and do not offer a date, ask them when they
think it will be passed. They are bound to say something that can be con-
strued as a date, even if they talk of something vague like three to six
months. Note whatever they say and later ask them to send to you the usual
note of the meetings discussions. Also, begin to refer in all our correspond-
ence to the date they give as the start date of the project. This gives you what
you want.
I like that, said Dan. Very good. Ill put it to the President right away,
and saying so he got up and moved towards the door, adding, George, come
to my office in half an hour and Ill fill you in on what Ive agreed with the
President, and by the way, stand by to come with me tomorrow to Pascoes.
Before George could answer, Dan had left the room, leaving George thinking
about what he was going to say to Dan about staying on another day and
about the taxi waiting downstairs to take him to the airport and his holiday.

Exercise 1C
From what you have read in this module you should be able to make several
suggestions as to what George could say to Dan when they meet in half an
hour. List them quickly on a separate sheet of paper before reading on.
What would be useful now is for you to re-examine the above scenario and see if
you can identify the different approaches to the Pascoe problem taken by Dan,
Rodney, Freds team and George.
The most basic of the approaches was used initially by George at the invitation of
Dan to report on where Phoenix stood in respect of the contract. George was
invited to describe the negotiations that had taken place using examples from the
contract and other supporting documentation. Description is about what actually
happened in a specific negotiation. To give an account of what each negotiator said
to the other during the negotiations between the Chinese and British governments
on the return of Hong Kong to China in 1997 would be pure description. This is
exactly what George was asked to do in respect of the Pascoe negotiations.
In principle, description is neutral and does not go beyond stating what hap-
pened, but in practice it is often controversial. Freds colleagues, for example,
disagreed with Georges account of what happened, presumably, and almost
inevitably, taking it as a criticism of themselves.
Description does not preclude analysis. We could, for example, count the num-
ber of occasions in which one negotiator interrupted the other (just as we might
count the number of penalties awarded by the referee in a hockey match). Analysis
can be highly sophisticated and yet remain descriptive.
A descriptive approach to negotiation is a rich source of evidence about what real
negotiators actually do and how they actually interact. Minutes and transcripts of

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negotiations and the personal accounts and memoirs of negotiators (suitably

sanitised to eliminate personal bias) provide much of the evidence used by the other
approaches. Before we can prescribe, or predict, a minimum amount of description
is normally required.
When we move from description to prescription we move from describing what
actually happens to what, in our view, ought to happen. When Dan stated his needs:
I need advice from all of you as to what I should do before I meet the President of
Phoenix in an hours time, his use of words tells us he was asking for prescriptive
advice from the meeting. Of course, the views he will get as to what ought to
happen are usually subjective and they often depend entirely on the interests of the
advisor. Note how Rodneys views were coloured by his perceptions of his relation-
ship with Dan and what he believed Dan wanted to hear.
Prescription can be based on objective analysis or opinion. Perhaps what the
advisor recommends is feasible. If, from many observations of negotiators at work,
we note that those negotiators who do not allow others to state their views without
constant and irritating interruption usually have great difficulty in reaching agree-
ment, we could prescribe the advice that if you want to reach agreement it is better
not to interrupt in this manner. Our prescription is about what you ought to do
avoid interruption if you want to achieve an agreement. In my view it is generally
feasible for negotiators to adopt such prescriptive advice about interrupting. It does
not follow, however, that all individuals accept and implement this prescription.
Your experience of the other party could lead you to reject the prescription. Perhaps
by interrupting these particular negotiators you will produce positive results, or,
perhaps being a congenital interrupter of every negotiator you deal with, you are
immune to contrary advice!
A question as to why an advisor feels that something ought to happen will indi-
cate whether his belief is based on his personal prejudices or whether it is founded
on any credible evidence or experience. Is his prescription based on hidden assump-
tions about human behaviour in general (People are basically motivated by fear), or
similar assumptions about an individual negotiator in particular (Tomski only
submits to brute strength)?
Prescription is closely related to prediction. For example, when Rodney contin-
ued to press for a tough line (prescription), he claimed that he knew Pascoe would
crumble if they were pushed hard enough (prediction). Rodney claimed he had
evidence for his prediction (the Riverview project), but not all prediction is based on
hard evidence (and not all hard evidence stands up to the test of relevance). For
example, if we assume that all human beings are rational and seek to maximise
something called their welfare, we might predict that faced with a choice between a
definite gain in their welfare an increase in pay, say and a definite larger loss of
income if they reject the offer and go on strike, they will accept the offer to avoid
the loss. Our prediction (They wont strike) leads to our prescription for the
employer: You ought to stand firm on your offer. If we get it wrong and the
employees take the loss and strike, those who acted on our advice, with hindsight,
will wish that they had subjected our prediction and its assumptions to closer
scrutiny. This neatly illustrates how a prediction about the likely result of taking the

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wrong advice becomes a prescription, particularly for negotiating situations: You

ought to scrutinise the basis of the advice you receive before you act upon it.
Description, prescription and prediction are different, yet overlapping approach-
es and, by recognising which is being used in discussions about negotiation, we can
assess the relative credibility of contributions to the pool of advice.

Exercise 1D
Assess each statement below and write down whether you believe it to be true or false
before checking with the answers in Appendix 2.

1 Prescriptive advice can always be followed.

2 Description is always biased.

3 Prediction cannot be tested.

4 Description is compatible with analysis.

5 Prediction is also prescriptive.

6 Prescription is always subjective.

Epilogue
Some people think of a skilled negotiator as someone who can bluff and double
bluff his way to whatever he wants. He is a schemer, a manipulator of others and
hardly to be trusted. Ice-cold blood runs through his veins and he has a heart made
of stone. In politics, his name would be Machiavelli; in personal relations, Casanova.
None of these images concur with our view of negotiation or of how effective
negotiators approach their work. Everybody negotiates, sometimes for momentous
issues but mostly for trivial everyday things. We bring the same range of personality
traits (and blood temperatures!) to our negotiations as we do to the other parts of
our lives. If by nature you are a schemer then no doubt you will continue to scheme
when you negotiate, but most people you negotiate with will not be schemers,
though they may suffer from other afflictions to their personality. Negotiation is
one among several options you have when you are attempting to make a decision
with another person. You should think of negotiation simply as a decision process
and not as a mysterious set of behaviours best left to those skilled in office politics
or jungle fighting. You can become competent in negotiation without compromis-
ing your sense of ethical conduct.
We negotiate because our decisions affect others and their decisions affect us.
Individuals do not wish to leave decisions that affect them to the whim and fancy,
not to mention material benefit, of somebody else. In feudal times everything was
arranged by order of the monarch and enforced by his barons, and people knew
their place (and were violently reminded if momentarily they forgot it). Church and

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State laid down their path through life from birth to death. Order prevailed and
stability reigned at the price of personal liberty.
The liberal democracies have since inherited much of the earth, or at least the
richest part of it (yes, there is a connection!), and with their liberalism has come the
demand to have ones interests accounted for in the decisions others take. This
occurs in every family, every community and every area of activity from school to
corporation. Where people insist that their consent be obtained before a decision is
taken, the conflicting notions of what the decision is about must be reconciled. In
politics we call it democracy, in economics the free market, in justice the rule of law;
in all its varying manifestations the most common process used to achieve voluntary
consent is what we call negotiation.
Negotiation has a long history, perhaps even a pre-history, as the early humans
found forms of co-operation that signalled the beginning of an ever widening
difference between them and the animals outside their caves, who knew of no
alternative to fighting for what they wanted. But long as its history is, negotiation
has only recently come into its own as an appropriate method with a potential for
use in almost every sphere of human contact. It is no accident that the number of
international agreements is growing each year, that commercial contracts are
negotiated by the million (the UK Ministry of Defence alone negotiates over 40000
contracts a year with 10000 contractors), that the new professions of mediators,
conciliators, arbiters and consultant negotiators are growing in numbers across the
USA (with Europe a little way behind), that more and more legal firms are turning
to negotiating settlements rather than merely litigating their claims, and that there is
a growing interest in the theory and practice of negotiation. The age of negotiation
coincides with the spread of pluralistic democracy and growing international
economic and political integration.
Because people are freer, they will not accept arbitrary instructions to the degree
they did only a generation or two ago. Employees reject the heavy hand of mis-
placed managerial or union power as much as they reject the blind obedience their
parents and grandparents conceded to authority in all its guises. Consumers look for
better deals, again with the USA in the lead. Whereas over 90 per cent of consumers
in the UK accept fixed prices for the goods they buy, and retailers oblige by only
running so-called bargain sales for a few weeks of the year, less than 20 per cent of
US consumers, and less than 40 per cent of Australians, accept the fixed nature of
prices. The consequence is that in the USA and Australia retailers vie with each
other for the consumers dollar in what can only be described as a permanent 52-
week sale. The spread of discount stores in Europe is one sign that the consumers
quest for a better deal than the one he is offered is beginning to take off.
To call this the age of negotiation risks underestimating the importance of other
methods of decision-making that have also expanded in the second half of this
century. For example, persuasion has enjoyed a substantial boost in the form of
multi-billion pound sales and marketing activities. The buyer is wooed and not just
over price. The take-it-or-leave-it indifference of the local monopolist (state or
private) has succumbed to the competitive option afforded by the globalization of
markets. Total quality programmes that settle for nothing less than zero defects in

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output shipped to customers are a common corporate culture. Marketing techniques

have dug deep into human psychology to find ways to persuade the buyer to want
what the seller is offering. Persuasion through the, sometimes questionable, tech-
niques of public relations management has enjoyed a boom and is now an essential
component of corporate and political success, and of damage limitation when things
go wrong, as in environmental disasters, political peccadilloes, and legal embarrass-
ments.
The swing has been away from people giving in to coercive methods and the
acceptance of dictatorial instructions towards persuasion, problem-solving, media-
tion, arbitration and negotiation, which have in common varying degrees of
voluntary consent. The spread of negotiation, therefore, should be seen in this
broader context.

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