What is Negotiation?
Negotiation is the interactive social process in which people engage, when they aim to reach an agreement with another party or parties on behalf of themselves.
Negotiation is primarily a common mean of securing one’s expectations from others. It is a form of communication designed to reach an agreement when two or more parties have certain interests that are shared and certain others that are opposed.
– According to Shorter Oxford Dictionary, 1977-
Negotiation: To confer with another for the purpose of arranging some matters by mutual agreement; to discuss a matter with a view to settlement or compromise .
– Ginny Pearsom Bames sayes, Negotiation is a resolution of a disagreement using give and take within the context of a particular relationship. It involves sharing ideas and information and seeking a mutually acceptable outcome .
– The Pepperdine University of USA has developed an explanatory definition of negotiation:
Negotiation is a communication process used to put deals together or resolve conflicts. It is a voluntary, non-binding process in which the parties control the outcome as well as the procedures by which they will make an agreement. Because most parties place very few limitations on the negotiation process, it allows for a wide range of possible solutions maximizing the possibility of joint gains .
– According to Williams, Legal and Settlement 1983, Negotiation is a repetitive process that follows reasonably predictable patterns over time. Yet in legal disputes so much of the attorney’s attention and energy are absorbed by the pre-trial procedure and the approach of the trial, that they fail to recognize the important identifiable patterns and dynamics of the negotiation process
– M Anstey explains core elements of negotiation as follows:
1. A verbal interactive process;
2. Involving two or more parties;
3. Who are seeking to reach agreement;
4. Over a problem or conflict of interest between them; and
5. In which they seek, as per as possible, to preserve their interests, but to adjust their views and positions in the joint effort to achieve an agreement.
Broadly speaking, negotiation is an interaction of influences. Such interactions, for example, include the process of resolving disputes, agreeing upon courses of action, bargaining for individual or collective or crafting outcomes to satisfy various interests. Negotiation is thus a form of alternative dispute resolution (ADR).
Characteristics of Negotiation:
o Negotiation involves two or more parties who need (or think they need) each others involvement achieving a desired outcome. There is a common interest that connects the parties.
o The parties start with different opinions or objectives. It is these differences that prevent agreement.
o The parties are willing to co-operate and communicate to meet their goals.
o The parties can mutually benefit or avoid harm by influencing each other.
o The parties realize that any other procedure will not produce desired outcome.
o The parties think that negotiation is the best way to resolve their differences (or at leas, a possible way)
o They also think that they may be able to persuade the party to modify their original position.
o Even if they do not get their ideal outcome, both retain the hope of an acceptable outcome.
o Each has some influence real or assumed over the others actions. If one party is completely powerless, negotiation will have little point for the other.
o The negotiation process itself involves interaction between people. This interaction might be in person, by telephone, letter etc. or it might use a combination, because it is personal, emotions and attitudes will always be important.
Conditions for Negotiation :
A variety of conditions can affect the success or failure of negotiations. The following conditions make success in negotiations more likely:
Identifiable parties who are willing to participate: The people or groups who have a stake in the outcome must be identifiable and willing to sit down at the bargaining table if productive negotiations are to occur. If a critical party is either absent or is not willing to commit to good faith bargaining, the potential for agreement will decline.
Interdependence: For productive negotiations to occur, the participants must be dependent upon each other to have their needs met or interests satisfied. The participants need either each other’s assistance or restraint from negative action for their interests to be satisfied. If one party can get his/her needs met without the cooperation of the other, there will be little impetus to negotiate.
Readiness to negotiate: People must be ready to negotiate for dialogue to begin. When participants are not psychologically prepared to talk with the other parties, when adequate information is not available, or when a negotiation strategy has not been prepared, people may be reluctant to begin the process.
Means of influence or leverage: For people to reach an agreement over issues about which they disagree, they must have some means to influence the attitudes and/or behavior of other negotiators. Often influence is seen as the power to threaten or inflict pain or undesirable costs, but this is only one way to encourage another to change. Asking thought-provoking questions, providing needed information, seeking the advice of experts, appealing to influential associates of a party, exercising legitimate authority or providing rewards are all means of exerting influence in negotiations.
Agreement on some issues and interests: People must be able to agree upon some common issues and interests for progress to be made in negotiations. Generally, participants will have some issues and interests in common and others that are of concern to only one party. The number and importance of the common issues and interests influence whether negotiations occur and whether they terminate in agreement. Parties must have enough issues and interests in common to commit themselves to a joint decision-making process.
Will to settle: For negotiations to succeed, participants have to want to settle. If continuing a conflict is more important than settlement, then negotiations are doomed to failure. Often parties want to keep conflicts going to preserve a relationship (a negative one may be better than no relationship at all), to mobilize public opinion or support in their favor, or because the conflict relationship gives meaning to their life. These factors promote continued division and work against settlement. The negative consequences of not settling must be more significant and greater than those of settling for an agreement to be reached.
Unpredictability of outcome: People negotiate because they need something from another person. They also negotiate because the outcome of not negotiating is unpredictable. For example: If, by going to court, a person has a 50/50 chance of winning, s/he may decide to negotiate rather than take the risk of losing as a result of a judicial decision. Negotiation is more predictable than court because if negotiation is successful, the party will at least win something. Chances for a decisive and one-sided victory need to be unpredictable for parties to enter into negotiations.
A sense of urgency and deadline: Negotiations generally occur when there is pressure or it is urgent to reach a decision. Urgency may be imposed by either external or internal time constraints or by potential negative or positive consequences to a negotiation outcome. External constraints include: court dates, imminent executive or administrative decisions, or predictable changes in the environment. Internal constraints may be artificial deadlines selected by a negotiator to enhance the motivation of another to settle. For negotiations to be successful, the participants must jointly feel a sense of urgency and be aware that they are vulnerable to adverse action or loss of benefits if a timely decision is not reached.
No major psychological barriers to settlement: Strong expressed or unexpressed feelings about another party can sharply affect a person’s psychological readiness to bargain. Psychological barriers to settlement must be lowered if successful negotiations are to occur.
Issues must be negotiable: For successful negotiation to occur, negotiators must believe that there are acceptable settlement options that are possible as a result of participation in the process. If it appears that negotiations will have only win/lose settlement possibilities and that a party’s needs will not be met as a result of participation, parties will be reluctant to enter into dialogue.
Styles of Negotiation:
There are different styles of negotiation. Style of negotiation is also a strategy. In some occasions the style reflects the attitude of the party and an experienced negotiator can guess the result from such a conduct of the party as becomes evident by the style. Negotiation style is reflected in communication skills, interpersonal behavior of negotiators, language, voice tones, choices, listening power, non-verbal gestures and judgment. Generally there are three main styles of negotiation. A brief description is given below:
– Co-operative Style :
In this type of negotiation style, strategies which are typically used include the making of concessions, the sharing of information and the adoption of behaviors which are fair and reasonable. Thus a co-operative negotiator typically explains the reasons for her concessions and proposals and attempts to reconcile the parties’ conflicting interests; her proposals are measured against standards which both parties can agree, such as the legal merits of the case and fairness between the parties.
The advantage of the co-operative style of negotiation is that it tends to produce fewer breakdowns in bargaining with subsequent recourse to litigation, and to produce more favorable outcomes for both parties. This leaves both clients and negotiators in a position where they can ‘do business’ again. However, the co-operative style is subject to certain difficulties in operation where the parties to the negotiation are unequal in wealth or power or where one party will not bargain for joint or mutual gain;
– Competitive Style :
Thus the competitive negotiator makes concessions reluctantly because they may ‘weaken his position’ through position loss or image loss. He tends to make high initial demands, few concessions and have a generally high level of aspiration for his client.
It is often suggested that this style leads practitioners into specific negotiation strategies, for example, never making the first offer, always attempting to conceal the client’s true objectives always being the person who drafts the final offer; and the use of exaggeration, threat and bluff to create high levels of tension and pressure on the opponent. If used effectively these tactics cause the opposition side to lose confidence in there case and reduce their expectations of what can be obtained for there client It is therefore, an essentially manipulative approach, designed to intimidate the opposing side into accepting a negotiator’s demands.
– Problem-solving Style:
A problem solving style to a dispute over access might be based on the assumption that whilst both parents want access to their children for some of the time, neither would, in practice, want access for the whole of the time. On this basis a negotiated settlement advantageous to all parties (including the children) may be effected.
The problem-solving style thus commence with both negotiators trying to ascertain the underlying needs of their clients. This can best be achieved through client interviews in which the lawyer explores with the client how he wants the dispute to be concluded in social, economic, ethical and psychological terms. Focusing on the actual (rather than the assumed) needs of clients leads to solutions often more complex and yet more satisfactory in terms of social justice than those which a court could order, or which could result form competitive negotiation.
The four basic tactics which Fisher and Ury describes as being essential to the process of problem solving negotiation are :
1. Separate the people from the problem; In the other words, separate the interpersonal relationship between the negotiators and their clients from the merits of the problem or conflict
2. Focus on interests not positions; that is, consider the interests of the clients so that is party’s motives, goals and values are filly understood by each side
3. Generate a variety of options; for example, brainstorm to develop new ideas to meet the needs of the parties
4. Insist that the result of the negotiation be based on some objective standard that is, assess proposed outcomes against easily ascertainable standard base on objective criteria.
Basic structure of the negotiating process :
It is important to note that there are some basic structures of negotiation process. These structure increase the ability and skills of negotiator also helps to create successful environment for the effective negotiation. The most essential structure may be described as:
Unless an agenda has been agreed in advance you will agree with the opposing lawyer the practical issues of how the negotiation will be conducted, what the agenda for the discussions will be, recorded and minute
Clarification of the facts:
A possible first is for you, or your opponent, to identify and agree the relevant available facts of the dispute and the law relating to those facts. This could then be followed by your identification of and agreement on, any missing or conflicting facts, or difference in documentation. At this point you cold seek to resolve such difference through further investigation, and through listening to and questioning the order side.
Evaluation and repositioning:
– You will next assess alternative solution in relation to the needs of both parties (co-operative problem solving style) or you will make strong counter proposals to your opponents position (competitive style)
– You will eliminate unworkable proposals (co-operative problem-solving style) or use a variety of negotiating tactics to enhance your position and discredit that of your opponent (confrontational style)
– You will generate new proposals (co-operative problem-solving style) or identify trade-offs and concessions (competitive style)
– You will consider ending the negotiation if the tradeoffs are too high for both parties (co-operative problem-solving style) or if the trade -offs are acceptable to your side although not to the other(competitive style)
Finally you will need to find a way of closing the negotiation. The alternatives at this stage include:
– Adjourning to obtain further information, and instructions from your client
– Adjourning to report a final offer from the other side to your client and seek his instructions
– Reaching a final agreement as authorized by your client
If the outcome is successful and a settlement has been reached, you will need to check your understanding of the settlement with that of your opponent to make certain that you are in agreement. You must next decide how the settlement is going to be made legally enforceable (if it is), and who will draft the terms of any written settlement.
Throughout the whole of the process referred to above, it is helpful from time for the lawyers to review the stage that has been reached in the discussions. This is especially recommended if you appear to have reached a deadlock, or there is an uncomfortable silence. A review gives each side the opportunity to compare their original objective with that has been achieved so far and consider how the negotiation should proceed. This can lead to one or other of the negotiators stating a revised or more innovative position as a potential solution to the problem.
Stages of Negotiation:
Stage 1: Evaluate and Select a Strategy to Guide Problem Solving
o Assess various approaches or procedures–negotiation, facilitation, mediation, arbitration, court, etc.–available for problem solving.
o Select an approach.
Stage 2: Make Contact with Other Party or Parties
o Make initial contact(s) in person, by telephone, or by mail.
o Explain your desire to negotiate and coordinate approaches.
o Build rapport and expand relationship
o Build personal or organization’s credibility.
o Promote commitment to the procedure.
o Educate and obtain input from the parties about the process that is to be used.
Stage 3: Collect and Analyze Background Information
o Collect and analyze relevant data about the people, dynamics and substance involved in the problem.
o Verify accuracy of data.
o Minimize the impact of inaccurate or unavailable data.
o Identify all parties’ substantive, procedural and psychological interests.
Stage 4: Design a Detailed Plan for Negotiation
o Identify strategies and tactics that will enable the parties to move toward agreement.
o Identify tactics to respond to situations peculiar to the specific issues to be negotiated.
Stage 5: Build Trust and Cooperation
o Prepare psychologically to participate in negotiations on substantive issues. Develop a strategy to handle strong emotions.
o Check perceptions and minimize effects of stereotypes.
o Build recognition of the legitimacy of the parties and issues.
o Build trust.
o Clarify communications.
o Stage 6: Beginning the Negotiation Session
o Introduce all parties.
o Exchange statements which demonstrate willingness to listen, share ideas, show openness to reason and demonstrate desire to bargain in good faith.
o Establish guidelines for behavior.
o State mutual expectations for the negotiations.
o Describe history of problem and explain why there is a need for change or agreement.
o Identify interests and/or positions.
Stage 7: Define Issues and Set an Agenda
o Together identify broad topic areas of concern to people.
o Identify specific issues to be discussed.
o Frame issues in a non-judgmental neutral manner.
o Obtain an agreement on issues to be discussed.
o Determine the sequence to discuss issues.
o Take turns describing how you see the situation. Participants should be encouraged to tell their story in enough detail that all people understand the viewpoint presented.
o Use active listening, open-ended questions and focusing questions to gain additional information.
Stage 8: Uncover Hidden Interests
o Probe each issue either one at a time or together to identify interests, needs and concerns of the principal participants in the dispute.
o Define and elaborate interests so that all participants understand the needs of others as well as their own.
Stage 9: Generate Options for Settlement
o Develop awareness about the need for options from which to select or create the final settlement.
o Review needs of parties which relate to the issue.
o Generate criteria or objective standards that can guide settlement discussions.
o Look for agreements in principle.
o Consider breaking issue into smaller, more manageable issues and generating solutions for sub-issues.
o Generate options either individually or through joint discussions.
o Use one or more of the following procedures:
o Expand the pie so that benefits are increased for all parties.
o Alternate satisfaction so that each party has his/her interests satisfied but at different times.
o Trade items that are valued differently by parties.
o Look for integrative or win/win options.
o Use trial and error generation of multiple solutions.
o Try silent generation in which each individual develops privately a list of options and then presents his/her ideas to other negotiators.
o Use a caucus to develop options.
o Conduct position/counter position option generation.
o Separate generation of possible solutions from evaluation.
Stage 10: Assess Options for Settlement
o Review the interests of the parties.
o Assess how interests can be met by available options.
o Assess the costs and benefits of selecting options.
Stage 11: Final Bargaining
o Final problem solving occurs when:
o One of the alternatives is selected.
o Incremental concessions are made and parties move closer together.
o Alternatives are combined or tailored into a superior solution.
o Package settlements are developed.
o Parties establish a procedural means to reach a substantive agreement.
Stage 12: Achieving Formal Settlement
o Agreement may be a written memorandum of understanding or a legal contract.
o Identify “what ifs” and conduct problem solving to overcome blocks.
o Establish an evaluation and monitoring procedure.
o Formalize the settlement and create enforcement and commitment mechanisms.
o Judicial review
Influencing factors of Negotiation :
There are some influencing factors or elements of negotiation which are essential and plays vital role in making effective negotiation. A short description is given below:
– Negotiator: Negotiation process is influenced by various factors. The first such factor is the skill and ability of negotiator, his character and credibility. Another ability, which is a major factor in negotiation, is that the negotiator should keep control over the process. A negotiator should review the progress of the negotiation process; time and again endeavor to build bridges between the parties. He or She should try to create a positive attitude towards agreement. A great deal of skill and experience are necessary to control the entire process of negotiation, which can be gained by keen observation of strategies adopted by other parties, past experience and studying the best negotiation processes in the contemporary world.
– Parties: Parties are a major influence on the negotiation process. The parties, their interests and the way they react and respond decide the process. Parties to a dispute have their own mindset when they come to a negotiation table.
– Selection of the team: The team of negotiation should be selected basing on case and circumstances, so that each member contributes towards achieving the goal with productive working.
– Place of negotiation: Sometimes the place of negotiation matters. Unfamiliar surroundings may cause stress to the opposite party in comparison to a familiar place.
– Layout of the room: The layout of the room has an influence on the conduct of the negotiation to some extent. Ideally the layout should be chosen taking into consideration the circumstance in which the parties operate. For example, if the negotiation in with regard to any industrial dispute, negotiators should ensure that the distance between the parties is not too much. The seating arrangements should be such so as to encourage a relaxed mood. The design of layout should reflect attitudes and perceptions and issues being discussed in negotiation.
– Psychology in negotiating: Psychology of the negotiators, as well as the parties plays an important role in the activity of negotiation. The people involved in the process work with different attitudes, approaches and activities. According to Maslows’ ‘Need Hierarchy Theory’, behavior of people is influenced by their needs. People’s needs are classified by him into:
1. Physical and survival needs;
2. Security and safety needs;
3. Social needs;
4. Ego needs;
5. Self realization needs.
Effective Negotiation Skills :
The key to effective negotiation is clear communication. Communication involves three important skills: Speaking, Listening and understanding. You can’t have one skill work without the others–for example, you can’t have good understanding without good listening and speaking. Negotiation is most effective when people are able to clearly identify and discuss their sources of disagreement and misunderstanding.
Negotiation begins with a clear, concise explanation of the problem as each person sees it. Facts and feelings are presented in a rational manner from the individual’s perspective, using “I” statements. Communication between people will go more smoothly when statements such as “I become very upset when you “are used rather than more aggressive statements such as “You make me mad when you,” which blames the other person and puts him or her in a defensive position. Shared concerns rather than individual issues remain the focus of discussion throughout negotiation. The negotiation process will be most effective when people take time to think through what they will say. When possible, plan ahead to meet at a time and place convenient to everyone. A quiet, neutral spot where there are few distractions or interruptions is perfect for open discussion.
Listening is an active process of concentrating all of one’s attention on the other person. Encouraging the other person to share thoughts and feelings, giving feedback on what has been heard, and maintaining eye contact are skills that show you are interested in understanding what he or she has to say. It is always helpful to simply ask, “I understood you to say Am I correct in this?” or “I hear you saying that you are that how you feel?” Active listening assures the other person that he or she is heard, accepted and respected. The ability to listen actively supports open, ongoing negotiation. Thinking ahead or anticipating the course of the discussion is distractions that interfere with listening. Poor attention and listening can lead to misunderstandings, inappropriate solutions and continuing conflict.
Before two sides can look for solutions; a common understanding must be reached. If two people do not understand each other’s problems and concerns, then the process of negotiation will either be broken off or will end with solutions that do not work. Active listening encourages understanding. It is important to pay close attention to what someone says as well as to how he or she behaves. Body language, including facial expressions, hand gestures and degree of eye contact, can provide clues about the other person’s thoughts and feelings. Observations, however, are shaped as much by the observer as by the person being observed. It is good practice never to assume to understand the other person without first asking, “Did I hear you correctly?” or “I have noticed that you appear” or “I sense you are under strain. Do you want to talk about this?” and “I’d like to hear from you about how you are feeling” are all good examples of statements that encourage communication and better understanding between people.
Best Negotiation Tips :
Generally negotiation depends on the ability, skill, technique and knowledge of negotiator. The tips of the negotiation are varies from negotiator to negotiator. Some best negotiation tips with example are given below:
– Be willing to negotiate in the first place:
Some people are too shy to talk about money. Others think it’s rude or demeaning. And in many cases they’re right. However, when it comes to doing a deal – and we all have to sometimes – being unwilling to engage in “money-talk” can be a very expensive business. There are a lot of experienced negotiators out there. If you’re buying a house or a car, or taking a new job, you can be sure you’ll have to deal with such a person. If they can see you’re timid about the whole business, many will take advantage of that fact. You also shouldn’t be shy about turning something that may not immediately appear to be a negotiation into one. If I’m buying a few expensive things from the same store, I’ll often ask them to throw something in for free or reduce the price. Just because there’s no sign saying you can do that, doesn’t mean you can’t. Often, simply by asking for something extra I’ll get a better deal
– Don’t get emotionally involved:
One big mistake many amateur negotiators make is to become too emotionally attached to winning. They shout, threaten and demand to get their way. This is all counter-productive. Most deals are only possible if both people feel they’re getting something out of it. If the person across the table feels attacked, or doesn’t like you, they probably won’t back down. Many people hate bullies, and will be more willing to walk away from a transaction if it involves one. Keep calm, patient and friendly, even if the other person starts losing their cool. Make sure you leave any pride or ego at the door. You are more likely to do well that way.
– Don’t get suckered by the “rules” trick:
When someone sends me a contract to sign, if there’s something on there I don’t like, I’ll cross it out. I’m also happy to write things I want added in if I think they should be there. Sometimes, the other party will come back to me and say “You’re not allowed to make changes to our contracts like that”. Oh really? Since I’m the one signing the thing, I’ll make any changes I want, thank you very much. There’s no law that says they’re the only one allowed to add things to a contract. If they’re not happy with my changes, let me know and we can work it out, but don’t simply tell me I don’t have permission. This highlights a common tactic used by experienced negotiators such as real estate agents, employment agents, car salespeople and the like. They know many people are sticklers about following rules. So they’ll make up official sounding pronouncements and insist that “this is the way it’s done” or “you’re not allowed to do that”. If someone starts trying to box you in by adding rules to the deal, ask them to provide proof that such rules really exist.
– Never be the first person to name a figure:
This is an expensive lesson to have to learn, but a good one. I do a lot of contract work, and one of the first questions I’m usually asked is “What’s your hourly rate?” This is a high pressure question, and I often found myself blurting out a figure that was lower than what I really wanted. These days, I’ve learned the importance of getting the other person to say a number first. Now, I respond to that question by asking “What’s the budget for this contract?” Often, I’m surprised to discover they’re offering me a better deal than I thought they were.
– Ask for more than you expect to get:
Once the other person’s given their figure, even if it’s much better than you expected, say something like “I think you’ll have to do better than that”. Don’t be arrogant or aggressive. Just say it calmly. When they enquire about your expectations, ask for more than you expect to get. Few people will walk away from a deal once it’s commenced, and you can let the other person feel as if they’re winning by lowering your “unrealistic expectations” a bit at a time.
– Just giving the impression that you’re willing to walk away can do wonders for getting a better deal. Always play the reluctant buyer or seller.