Meaning of Negotiation
Meaning of Negotiation
Meaning of Negotiation:
When the parties involved in a conflict want to work toward an amicable resolution, they must
engage in a communication process to decide what kind of a deal would be acceptable to both. In
other words they must negotiate to reach an agreement. Here what is important is that all the
parties concerned must want a solution.
And for this they must put up or encourage proposals, not hold on to whatever grievances they
have or whatever arguments they deem right. Arguments cannot be negotiated, only proposals
can. This demands that emotions be kept under control. Negotiating is a delicate process and a
lot of thinking must go into it, both before it actually gets underway, and while it is going on.
vances they have or whatever arguments they deem right. Arguments cannot be negotiated, only
proposals can. This demands that emotions be kept under control. Negotiating is a delicate
process and a lot of thinking must go into it, both before it actually gets underway, and while it is
going on.
Negotiation is a part of life. People negotiate daily either for individual purposes or for business
purposes. But when negotiating for business purpose, which is a very complicated process, one
needs to have knowledge and skill of handling such negotiations. Negotiations have become one
of the researched topics and a lot of literature can be found on this topic.
Negotiation is the process whereby interested parties resolve disputes; agree upon courses of
action, bargain for individual or collective advantage, and/or attempt to craft outcomes, which
serve their mutual interests. It is usually regarded as a form of alternative dispute resolution.
Negotiations happen in everyday life. Both individuals and business do contain negotiations in
the everyday life and everyday business.
In the real world capital planning, corporate borrowing, annual budgeting, and priority setting,
all tend to require that people from different organizations-or even our own people with a
different point of view-find satisfactory means to reach agreement. Negotiating is also a means
of communication between people who can do it for various personal as well as business reasons.
Different forms of negotiations are political, economical, financial negotiations between nations;
business negotiations like negotiations for mergers and acquisitions, labor negotiations,
consumer negotiations, with government authorities, etc., personal negotiations between people,
salary negotiations with employers, with government, etc.
Meaningless negotiations are waste of time. Most negotiations are repeat performances. We tend
to deal with the same bankers, suppliers, clients, directors, managers, etc., for a long time. It is
important to recognize and give proper weight to the context in which a negotiation is taking
place. If it is within an ongoing relationship, the significance of that relationship must be
considered.
A key to negotiation is knowing the other side’s primary and secondary need and using the latter
as bargaining chips.
For any negotiation to be successful one has to look into the facts like the purpose of negotiation,
persons with whom one is negotiating and the relationship, being unbiased, pursue fairness, best
alternative to the negotiated agreement, making the point very clear, the process and method of
negotiation should be easy without any complications, if necessary consider expert help too.
Another important factor for negotiation will be to listen to the other parties; active listening
helps to understand the negotiating party well and should maintain silence when the other party
is negotiating. The negotiation should end with a solution or agreement between the parties,
which is acceptable for all the parties.
Any clarifications or special conditions have to be agreed upon so that no future conflicts arise
because of the agreement.
Reasons for the failure of negotiation between the parties are mainly due to lack of
communication, co-ordination and interest to solve the problem amongst the parties. Generally
parties won’t compromise and stick to their already formed agenda and they leave no room for
compromise.
Sometimes they negotiate in a wrong way or choose an improper medium for negotiation. In the
traditional negotiation there will be a win-lose situation in which one party gains from the other
party’s loss. But in the modern era we have the win-win negotiations where both parties profit
from the negotiations.
Negotiation has become an art and profession. These days we find professional negotiators and
firms indulging in negotiations and they have developed innovative ways and methods for easy
negotiation and conflict resolution.
Negotiators use different ways and tactics of negotiating like presenting demands, deadlines,
mediation, arbitration, best alternative to a negotiated agreement, collective bargaining,
collective action, conciliation, contract, dispute resolution, expert determination, game theory,
Nash equilibrium, prisoner’s dilemma, etc.
Many organizations, universities and business schools across the world are teaching negotiation
as a subject and also conducting research in this field. We find a lot of literature available on this
topic in different resources.
Approaches to Negotiation:
As with conflict management, negotiation can be handled in different ways. The outcome of a
negotiation depends on the approach.
To be well prepared you must know exactly how much you are willing to concede or
compromise on each factor. You must also have ready all the arguments you may need to justify
your point of view, particularly on those points which you want to win.
Conduct:
Two factors that operate during the actual negotiation are the tactics of negotiation and the
interpersonal behavior that accompanies them. Negotiation tactics hinge on the variables – some
of which are conceded by us and some by the other party.
Variables that are traded are referred to as ‘concessions.’ Negotiation is in fact, the process of
trading concessions. To negotiate skillfully you must have knowledge of all the variables and
their possible use as concessions. As you start the process of negotiation bear in mind four
important principles.
a. Aim High:
It pays off to aim for the best deal you can imagine. You can always trade down. If you start too
low, it is difficult to trade up, particularly at a late stage in the process. In complex negotiations
where there are a large number of variables, it is worthwhile to separate the variables into three
priority categories.
i. The ‘musts’; those that we must get, if the deal is to be accepted by us at all.
ii. The ‘ideals’: what we hope to get, to make the ideal deal;
iii. The ‘loss leaders’: what we are prepared to trade in order to reach a deal.
Negotiations occur frequently within the workplace and may occur between coworkers,
departments or between an employee and employer. Professionals may negotiate contract terms,
project timelines, compensation and more. Negotiations are both common and important, so it’s
helpful to understand the types of negotiations you might encounter as well as how to improve
your negotiation skills.
The skills you’ll need depend on your environment, your intended outcome and the parties
involved. Here are a few key negotiation skills that apply to many situations:
Strategizing: The best negotiators enter a discussion with at least one backup plan, but
often more. Consider all possible outcomes, and be prepared for each of these scenarios.
Types of negotiation
Most negotiation outcomes will fall into one of two categories: Win-Win or Win-Lose. By
understanding the different types of negotiations you may encounter, you can determine the most
relevant skills for your role and work to improve them.
Coworker negotiations: Depending on your job, you may have to negotiate with your
coworkers. Many positions require close teamwork and without strong negotiation skills,
you may face imbalances in work distribution. Negotiation skills allow coworkers to
develop a plan that benefits the whole team. You may also have to negotiate when solving
conflict in the workplace.
Vendor negotiations: Some employees manage external vendors, and their performance
rating may be affected by how they negotiate. Also, the ability to reach an agreement with
service providers can affect your professional relationships and general business success.
6. Exercise confidence
It can be challenging to ask for what you want. However, successful negotiation requires self-
assurance. By exercising confidence in your negotiation, the other parties can be more inclined to
believe in the benefits of your proposal.
9. Practice
One of the best ways to increase your comfort in negotiations is to practice often. Consider
trying a mock negotiation with a trusted friend or colleague.
By considering this information ahead of time, you will be less likely to confront something
unexpected during your negotiation.
Do your research
Before entering a negotiation, evaluate all parties and consider their goals. For example, if you’re
nearing the end of the hiring process, you may be preparing to negotiate salary. The employer
likely wants to hire someone who can complete the required job duties for a competitive salary.
You likely want to offer your experience and knowledge to a company in return for what you
perceive to be fair pay.
It can also be helpful to research the person with whom you are negotiating. Understand the
limitations of the negotiator. Do they have the ability to give you what you want? Sometimes the
person you are negotiating with will be unable to meet your demands. For example, a hiring
manager may have a maximum compensation amount they can offer based on the budget
provided by their department. Understanding these limitations can help you strategize.
The same rule can apply for a longer time period. If a company is considering partnering with a
vendor but they do not yet need their services, the vendor may have a harder time convincing the
company to meet their terms. The company may push harder for discounted rates and more value
because if the vendor does not agree, they still have time to find another solution.
Approaches
Bargaining Orientation:
This approach is based on the premise that one person can win only at the expense of the other –
that any victory by one party must be matched by the other’s loss. That is why this is also called
the win-lose approach.
1. Although this approach is marked by competitiveness and may create ill will, this is
sometimes the best approach when the other party is determined to take advantage of you or
when your interests truly conflict with those of the other party and compromising is not a
satisfactory option. Win-Lose refers to a distributive negotiation where one negotiator’s gain
the other negotiator’s loss. Both negotiators are typically competing to take away or claim
the most value from their negotiation. Also called the ‘fixed-pie’ scenario, in that there is
only a limited amount to be distributed.
One party wins, whereas the other loses. Unless measures are taken, in a business
environment this will often result in a permanently damaged relationship.
Although the win-lose negotiation is not the most well-known form of negotiation, it is
easily the most common. With the win-lose negotiation model, individuals will often take
on an impossible position in negotiations, such as placing too many demands on the other
party, resulting in a bitter dispute.
In this situation, both parties will try to win without taking into account the outcome for
the other. Both parties may have entered into negotiations with a desired goal and a
certain point at which they will give up in mind.
The win-lose negotiation model is used in negotiations where something is shared or exchanged.
Distributive negotiations often feature a scenario in which two or more parties try to share or
exchange a fixed number of resources. Parties will enter negotiations with either the same or
different interests. These negotiations will then end up with a winner and loser. The winner gets
whatever he/she claimed or more, and the loser gets less or nothing.
The goal is therefore for one party to win as much as possible. Distributive negotiations or the
win-lose negotiation models are also widely used in daily life, especially when selling products
that do not have a fixed price. In the Western world, this is often limited to a local market, but
in New Delhi for example a large number of products has no fixed priced, allowing plenty of
room for negotiation.
Lose-Lose Orientation:
This is adopted when one negotiating partner feels his own interests are threatened and reacts by
doing all he can to ensure that the outcome of the negotiation does not serve the other party’s
interests either. In effect, everybody ends up being a loser.
Lose-lose outcomes occur when negotiating partners ignore one another’s needs or when the
need to hurt each other outweighs the need to find some kind of an acceptable solution.
Compromise:
A lose-lose situation is hardly a desirable outcome. To avoid this, sometimes people
compromise. Both parties give up a part of what they had originally sought, and settle for
something less than that. A compromise is the best way out when it is impossible for both parties
to convince each other or when even the partial attainment of one party’s goals depends’ on the
satisfaction of the other.
Compromise is a good option when disputed resources are limited. For instance, if two managers
each need a full-time secretary, but budget restrictions make this impossible; they may have to
compromise by sharing one secretary.
Win-Win Orientation:
When the needs of the negotiating parties a 45.1 looks at some of the aspects of this approach.
The win -win approach is superior to other problem-solving styles, because everyone ends up
feeling satisfied. However, such a solution is only possible when the needs of the parties
involved do not conflict.
Collaboration involves an attempt to work with the other person to find a win-win solution to the
problem at hand - the one that most satisfies the concerns of both parties. The win-win approach
sees conflict resolution as an opportunity to come to a mutually beneficial result. It includes
identifying your opponent’s underlying concerns and finding an alternative which meets each
party's concerns.
This approach works well when the following five steps are followed:
a. Determine the Needs of Both Parties:
If both parties can identify what issues are important to the other, they would find it easier to
work toward a mutually acceptable solution.
The answers to these questions will help you to better handle the issues that come up during the
actual negotiation. How the other party sees you is important too. He is likely to respect you
more if he perceives you as being professional, confident and as having the requisite authority to
negotiate
Conduct:
Two factors that operate during the actual negotiation are the tactics of negotiation and the
interpersonal behavior that accompanies them. Negotiation tactics hinge on the variables – some
of which are conceded by us and some by the other party.
Variables that are traded are referred to as ‘concessions.’ Negotiation is in fact, the process of
trading concessions. To negotiate skillfully you must have knowledge of all the variables and
their possible use as concessions. As you start the process of negotiation bear in mind four
important principles.
a. Aim High:
It pays off to aim for the best deal you can imagine. You can always trade down. If you start too
low, it is difficult to trade up, particularly at a late stage in the process. In complex negotiations
where there are a large number of variables, it is worthwhile to separate the variables into three
priority categories.
i. The ‘musts’; those that we must get, if the deal is to be accepted by us at all.
ii. The ‘ideals’: what we hope to get, to make the ideal deal;
iii. The ‘loss leaders’: what we are prepared to trade in order to reach a deal.
When the negotiation starts the two parties are at opposite ends of the scale. However, by the
time the negotiation closes, they are expected to settle on something they can both relate to as a
‘good deal.’ This is the point of balance which is usually a range of solutions around the middle
point of the scale, as illustrated in Figure 4.1.
Both parties usually recognize that the two extreme points from which they start their initial
stance – are unrealistic. Negotiation can thus be represented as the to and fro process that moves
up and down the line and dictates where things finally settle.
Sometimes the first round of negotiation only serves to induce both parties to shift to a more
reasonable initial stance. As negotiation is essentially a communication process, its success, to a
great extent, will depend on how well the two parties can build what are called bridges of
rapport.’ These bridges help them to see each other’s point of view and to relate to each other.
ii. Identify your priorities, your needs, and your top and bottom line beforehand.
vi. Listen actively and keep an open mind rather than deal from a position of ‘entrenched
antagonism.’
vii. Remember the likeability factor (like likes like). If the opposing side likes you, you stand a
much better chance of achieving your goals within reason. However, don’t make that your
primary goal.
viii. Keep your emotions in check; ignore, rather than respond to personal attacks.
ix. Show respect for the other person’s views: don’t browbeat, denigrate, or insult the opposing
team.
xi. Encourage the other party to look at the issue from your perspective.
xii. Look out for positive signals of cooperation from the other side and build on these.
xiii. State the areas where agreement has been reached and list the issues that are still being
negotiated.
Overall, success in negotiation comes largely from good listening skills, the ability to
communicate persuasively and good interpersonal skills. Negotiations will not produce the
desired effect unless those involved consciously address both the solid facts and the human
dimension.
Communication can be described as an exchange of what we might call “messages,” and it has
been found that such “messages” have both a factual and an interpersonal dimension. It is the
interpersonal dimension that governs the factual one in human communication.
Now that we’ve considered some of the aspects of negotiation, let us look at an actual
negotiation. This will give you some idea of the strategies adopted by successful negotiators.
Negotiating with problem people
Do you deal with aggressive, intimidating, or controlling people at work or in your
personal life? On the surface, these individuals can come across as domineering,
confrontational, demanding, hostile, or even abusive. However, with astute approach and
intelligent communication, you may turn aggression into cooperation, and condescension
into respect.
1. Meet in Private if Possible
When it's safe and possible to do so, negotiate with difficult people in private where they may be
more flexible. In most (but not all) cases, avoid disagreements with them in front of others,
where they’re more likely to be inflexible (out of their need to be in control, compete and win).
The exception is if the difficult individual is hostile and/or abusive, then strong intervention with
witnesses may be needed.
Whenever possible, meet with difficult individuals at a neutral location (i.e. conference room
instead of their office, coffee shop instead of their home), to help reduce their sense of home
court dominance when speaking with you on their own turf.
Many difficult people respect those with strength, and listen more to those who communicate
with assertiveness.
Let the difficult person know that you yourself are in control. If there is an issue, don’t go to the
difficult person just to discuss the problem. Go with solutions in mind. Many difficult individuals
work most positively with those who present themselves from a position of strength. They’re
more willing to communicate and work with those who take the initiative, and lend their
cooperation to those who show they can help themselves.
The ability to identify and assert consequence(s) is one of the most important skills you can use
to "stand down" a difficult person. Effectively articulated, consequence gives pause to the
challenging individual, and compels him or her to shift from obstruction to cooperation.