Skills Workshop: MGT6003

Session 4 – Nature of Workplace Negotiation and Improving Negotiations

1.0 INTRODUCTION
When thinking about workplace negotiations, what normally comes to our minds is a picture of
relatively aggressive opponents holding their files and arguments, determined to get the best for
themselves out of the process. A different and better approach to negotiating is to assume that the
parties’ subsequent relationship remains as important as the details of the deal struck between
parties, i.e. collaborative negotiations.

Negotiation is a relatively common activity in the day to day work of most managers. Similarly,
most people do indulge in some form of negotiation with diverse counterparts throughout the day.
People negotiate to sort out differences with each other or simply to get what they want under the
best conditions for themselves.

For managers, negotiation is an essential component of their duties. People often tend to disagree
in the course of any business and it is the role of managers to find a solution in the interest of the
relationship, for example with a client, a sponsor, a supplier, government officials or other
stakeholders.

Not all people, however, are willing to negotiate. Some people may feel uncomfortable to negotiate
and resort to ways and means to avoid the process. For example, they may prefer using coercion,
manipulation, avoidance or simply may give in. People may choose not to negotiate for a number
of reasons: they may fear losing something important or may think they do not have the abilities to
do so. While it may be true that some people can be better natural negotiators than others, it is also
true that basic negotiation skills can be learnt and developed by acquiring the necessary knowledge,
skills and attitudes.

2.0 WHAT IS NEGOTIATION?

When trying to visualise workplace negotiations, what might immediately come to our minds is the
picture of two teams of “opponents” sitting across a table with supporting documents and
determined to outwit each other. Obviously, quite some negotiations adopt this adversarial attitude
and negotiate competitively, as if to end up with a winner and a loser.

Negotiations can, however, also be run collaboratively and end up in a win-win situation and where
the parties’ relationship has as much importance as the end results of the deal itself.

It is therefore essential to know at the outset when a negotiation really is before embarking on the

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process of learning how to negotiate. This is because negotiation is becoming increasingly

important for managers wishing to get the best possible results in the interactions with business
stakeholders.

To be effective, a negotiation ought to result in a mutually beneficial, sustainable relationship. In

such a deal, the parties maintain the trust in each other and share similar expectations on how the
deal is on paper and how it will work out in practice.

Effective negotiations enable the organisation to generate valuable business results while
preserving relationships. They enable one to:
 Achieve creative solutions to complex problems.
 Develop skills that make subsequent negotiations easier and more successful.
 Prevent interpersonal conflicts from escalating.
 Strike deals what are beneficial to both parties.
 Create and strengthen valuable business relationships.

A lack of negotiation skills can put the negotiator and his/her organisation at a disadvantage. It can
lead to conflicts going out of control and relationships deteriorating beyond repair.
Activity: Give examples of negotiations in the workplace.

3.0 THE REASONS TO ACQUIRE NEGOTIATIONS SKILLS

Inexperienced managers often consider negotiation to be an unpleasant activity in which an agreement

has to be reached at any cost. They make themselves vulnerable by having preconceived ideas. For
example, they may have an established view of what the issues are and perceive that the parties’
perceptions of these issues are directly opposed. For them, the other’s win is our loss.

By preparing, entering and conducting negotiations with such preconceived ideas, inexperienced
managers lock themselves up into a strategy of confrontation beforehand. They are then unable to
overcome obstacles, avoid pitfalls and grasp opportunities during the negotiations.

Furthermore, many managers believe that negotiation requires skills and abilities that they don’t (or
can’t) possess. They may have an erroneous perception that people achieve what they want through
negotiations by being aggressive, dishonest and/or unethetical. While this may be true in certain
circumstances, in business negotiations more subtle tactics and ethical/honest strategies are generally
more successful and sustainable.
Successful negotiations are more often than not conciliatory and parties display effective listening
skills. They normally explain their views without having resort to bullying, often concede that the
other side has a valid point and may be open and flexible enough to change their positions.

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In order to develop basic negotiation skills to become a better negotiator, the following are required
according to Hiltrop. J. M & Udall. S, 2002:
- “Developing interactive skills and the ability to communicate effectively.
- Developing the ability to recognise the specific feelings, values and beliefs that other people
have about proper conduct in negotiations and to adjust one’s attitudes and behaviour to the
issues and personalities involved in the particular case”.

4.0 THE MOST COMMON NEGOTIATION MISTAKES

Even experienced negotiators can make mistakes that make it difficult to progress to an agreement.

Illich. J, 1992 gives a list of mistakes managers are likely to make in negotiations:
1. They may enter negotiations with a preset mental framework, with a general goal to be
obtained upon the final outcome of the negotiation.
2. They may be unaware of the following:
- What power they possess and how to use it effectively.
- Who has final negotiating authority
- Time and location as a negotiation weapon.
- The right time to close the negotiation.
3. They may fail to :
- Advance positions and arguments of substance
- Keep control over factors such as timing and the ordering the issues.
- Let the other side make the first offer.
Activity: Give examples and/or circumstances to illustrate each of the above negotiation mistakes.

5.0 THE NEGOTIATION PROCESS

Negotiation often follows an informal pattern and can still be successful. However, it is easier to
overcome the common negotiation mistakes mentioned earlier to adopting a formal approach to
negotiations. A stepwise approach can include six distinct phases:
Step 1 Preparing to negotiate
Step 2 Strategy Development
Step 3 Starting off
Step 4 Building understanding
Step 5 Bargaining
Step 6 Closing

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5.1 Preparing to negotiate

Preparation is critical in negotiation, otherwise one party can overwhelm the other at the very start.

OBJECTIVES:
When preparing, negotiators ask themselves a number of questions:
1. What is the minimum you are prepared to accept? How ready are you to take this fall-back
position?
2. What is the maximum you can ask for that is reasonable?
3. What is the maximum you can give away, beyond which limit you won’t go?
4. What is the least you can offer that is reasonable (for the other party)?

BATNA:
The bargaining range can be assessed by measuring “what is the most I can lose in this negotiation. In
the negotiation jargon, this is often called the BATNA – the Best Alternative To No Agreement.
The BATNA is defined by asking the following questions?
How far can I go?
When should I stop negotiating?
What will happen if I stop negotiating?
Do I need the other party to implement my solution?
Do they need me?

Normally, the better your BATNA relative to the other party, the better your bargaining power position.
This mean that you have to assess the other’s BATNA also. To do so you have to establish what the
other party’s claims are and what they are trying to achieve. You also have to consider their facts and
possible arguments and even any hidden agenda.

STRENGTHS AND WEAKNESSES:

Power can take a number of forms, for example superior knowledge of the issues, higher decision-
making authority, better financial resources, more negotiation experience etc.

It should be pointed out, however, that experienced negotiators do not necessarily take full advantage
of their strengths over the other party’s weaknesses. Recognising the “need to live together” gears
both parties towards a win-win than towards a win-lose.

PLAY HOME OR AWAY?

Where to conduct the proceedings is a rather psychological issue which can nevertheless weigh in the
balance. Ilich.J, 1996 shows a preference for your own field; failing that at a neutral location; but
never at their place if you can avoid it.

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5.2 Strategy Development

Strategy critics purport that it is futile to over strategise because the negotiation can take an
unanticipated direction and it is difficult to forecast the different possible scenarios and be prepared for
each of them.

However, some preparation is necessary to avoid surprises.

STYLE OF NEGOTIATION
A number of negotiating styles are available depending on circumstances based on Thomas. K &
Kilmann. R, 1974.
- Collaborating: This approach maintains interpersonal relationships and ensures that both
negotiating parties achieve their personal goals. Collaboration is the best strategy when the
issues are too important to be compromised and commitment is needed to make the solution
work. The objective here is to integrate different points of view and to build and maintain the
relationship.
- Compromising: This strategy is adapted when a win-win solution is not possible. The
objective is to find a mutually acceptable solution which involves a little bit of losing and little
bit of winning on both sides. This is tantamount to a mini-win-mini-lose stance.
Compromising is best when the relationship is important but you cannot afford to
accommodate (and opponents are of equal power).
Parties have to compromise because the other alternative is no solution.
- Accommodating: This approach involves maintaining the interpersonal relationship at all cost,
disregarding the personal goals of the parties involved. The relationship is protected by
avoiding conflict, yielding in and even allowing the other party to win, a lose-win stance.
Accommodation is resorted to when you realise you are wrong and you wish to be perceived as
being reasonable. At the same time, you are accumulating “credits” for later issues.

- Controlling: This is a power oriented strategy where winning is equated with status and
competence. Personal goals are met, even at the cost of severing relationships.
Controlling is resorted to when you are sure that you are right and the other party would take
undue advantage of cooperative behaviour.
Controlling is best when a quick, decisive action has to be taken even if unpopular.
- Avoiding: The “avoider” may diplomatically postpone an issue or simply withdraw from a
position which is perceived as threatening. Personal goals are not met, creating frustration for
all parties involved. It results in a choice between leave or lose-win, the avoider’s stance
could also be a leave-lose one, the other party winning.
Based on the Harvard Business Press (2004) publication entitled “Winning Negotiations that
Preserve Relationships”, the authors purport that it is always possible to negotiate collaboratively in
most situations.

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They argue that collaborative bargaining understands each other’s interests. Rather than arguing
from rigid positions, they craft creative deals that appeal to both parties’ interests. They do so by
envisioning themselves as united with the “other side” against a common challenge or problem
rather than engaged in a bare-knuckled contest in which one party’s gain must be the other’s loss.

5.3 Starting off

This step will set the tone for all that follows. There is sharing of information and the climate for
negotiation is shaped in a very formal negotiation, this step is used to generate the agenda for the next
round of negotiations.

Opening negotiations may involve the following:

1. Personal introductions
2. Process issues, for example the reasons for the meeting, who is involved, who talks first etc.
3. The importance of getting the agreement
4. Your party’s views and concerns
5. Obtain the other party’s views and concerns
6. Summarise before adjourning and agree on terms of the next round.
At this stage, there are no discussions. The meeting is usually short and essentially exploratory.

For a human relations, collaborative perspective, the Harvard Business School Press Publication, 2004
collaborative approach proposes the following:
“You walk in, shake hands, sit down, and you smile. From the first, face-to-face contact with the
people on the other side, and indeed, in any conversations that may precede the formal negotiations,
try to establish as good a person to person relationship as possible….. Be polite, respectful, friendly.
Show it by not just listening, but hanging on their every word”

5.4 Building understanding

According to Hiltrop. J. M and Udall. S, 2002, this step can take place in three phases:
1. Getting information
2. Testing arguments and positions
3. Using timing and adjournments

1. To gain information, one has to ask questions. There exist different types of questioning in
order to obtain both quality and quantity of information.
Open questions like, “Could you please describe what you think are….” result in general
information.
Probing questions like, “What do you mean…” elicit more information.
Closed questions like, “Did you receive our proposal?” call for specific factual information.

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Hypothetical questions are of an exploratory nature e.g. “How much would you charge if we
purchased in bulk?”
2. Arguments and positions can be tested by looking for factual errors and omissions, checking
faulty logic, hidden agendas or misleading statistics.
3. Timing and adjournments
Presentations rarely exceed 15 minutes, contributions and comments can last 1-2 minutes and a
negotiation session can last a maximum of two hours. Longer sessions can lead to boredom,
loss of attention, fatigue and unproductive exchanges leading to poor efficiency and
effectiveness. An adjournment is necessary when you (or the other party) need time to consider
the impact of any new or complex information. Any change of attitude of one party that affects
the climate of the negotiation adversely can trigger an adjournment.
Activity: Identify other reasons for adjournments.

5.5 Bargaining
Bargaining is basically about concessions, deadlocks and ultimately agreements.
A concession being a revision of a previously publicly held position, opponents often move as little as
possible away from the original position.
Even then, conceding on a position should be a trade off for something else. One example is to make
conditional offers i.e. attaching conditions to concessions. Good negotiators help the other party to
concede by providing a rationale for same and by valuing the concession (with a praise). In any case,
parties should be firm on basic interests and flexible on positions.

Deadlocks can arise when parties think that by doing so, they can force the other party to make
concessions. They can also arise if both parties are pursuing widely divergent goals. When headed for
an impasse, one should consider submitting differences to a mediator or an arbitrator.
A mediation is a more direct form of help in negotiation. Both parties agree to consider, but are not
necessarily bound to accept a solution suggested by the outsider. An arbitration is a more powerful
form of conciliation. Both parties bind themselves in advance to accept the third party’s solution.

5.6 Closing
Closing the negotiation involves formulating an agreement, ensuring its implementation and taking the
opportunity to review the negotiation experience (in a learning organisation approach).

An agreement is formulated after a final offer is made in a style and a tone that makes it clear to
everybody with conviction. This may involve definition of terms used in the agreement, the different
clauses are scrutinised, dates for implementation agreed as well as reviews if any.

The agreement should normally be in writing, defining roles and responsibilities and time frame for all
those concerned.

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Reviewing the negotiation experience requires a flashback on what actually happened and how
individuals/teams and the organisation reacted or proactively acted upon everything that was seen to
happen. A critical approach is used to assess own efficiency and effectiveness in the negotiation
process with a view to improve next time.

NEGOTIATION SKILLS WORKSHOP

In this Session, participants are required to run a simulation exercise under the guidance of the tutor.
You will be exposed to hypothetical situations and be required to apply concepts learned earlier in the
Unit to develop negotiation skills in the different scenarios proposed. Learning negotiation principles
in a classroom context is not sufficient. To develop negotiation skills, participants need to be exposed
to practical situations e.g. case studies, simulations and role-plays. Systematic peer-assessment will
enable participants to review their performance and broaden their perspectives. Continuous training
and learning and experience eventually hone negotiation skills.

Overcoming an attempt to block a proposal

Find below a tactic used to block a proposal. Analyse the statement and brainstorm on the possible
counter tactics you may use to respond. You should come up with a number of open ended questions
(you have a maximum of thirty minutes to complete the exercise). Your tutor will act as facilitator.

Situation 1: Your proposal sounds good……but it will cost a lot of money.

: Training Plan - MBA for all managers

List of References:
Hiltrop. J. M & Udall. S (2002), “The Essence of Negotiation”, Prentice Hall
Illich. J (1992), “Deal Breakthroughs”, New York: Wiley
Illich. J (1996), “The complete Idiot’s Guide to winning through Negotiations”, Alpha books
Thomas. K & Kilmann. R,(1974), “Conflict Mode Instrument”, New York, XICOM Inc.
RDM – The Results Driven Manager (2004) “Winning Negotiations that Preserve Relationships”,
Harvard University School Press

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