This post will discuss some general aspects of negotiation in business.
If the enemy leaves a door open, you must rush in – Sun Tzu (Giles).
Negotiation is a fundamental aspect of business. In fact, people use negotiation techniques naturally in their daily lives, often in combination. Therefore, negotiators should realize they are proficient in the techniques and feel confident while using them. Also, negotiators should be able to recognize what techniques other parties are employing, especially because most negotiators use competitive negotiation strategies.
In a recent study by Wolfe and McGinn, research subjects participated in mock job interview negotiation sessions. Prior to the interview, subjects were provided information about the relative power of the other party. The research results indicated that when negotiating parties perceived that they had equal power they tended to share more information and “integrative” results occurred, results that grew the pie. Dr. McGinn cautions against simply giving up power in negotiations to create equality. But, if you create an authentically equal situation, Dr. McGinn contends that “you’re increasing the likelihood that you and your negotiation partner will create value in the negotiation” (Stark).
Managers engaged in negotiations should consider both relationship and substantive outcomes. While relationship outcomes have been less emphasized in the professional literature, most real-world negotiations are mixed-motive (where both competition and cooperation are incentivized), and negotiators should consider substantive issues but also past, current, and desired future relationships between parties (Savage, Blair, and Sorenson). Indeed, in zero sum cases, a small near- term loss can result in substantial long-term gains or vice versa. Savage, Blair, and Sorenson write, “Each [negotiation] episode, nonetheless, influences future negotiations by changing the manager’s and the other party’s relative power, the level of conflict between them, and their relationship.”
Generally, negotiation strategies will depend upon the manager’s perceived importance of the substantive and relationship outcomes. There are four basic unilateral strategies, meaning the strategies consider only manager’s or organization’s interests. First, trusting collaboration is a strategy founded on the win-win principle. Second, firm competition is a yield to win strategy. Third, open subordination is a win-lose strategy that is openly aggressive, hostile, and often requires high relative power for one of the parties. Finally, managers may simply refuse to negotiate in an active avoidance strategy (Savage, Blair, and Sorenson).
Many negotiation techniques are available in real-world situations. Nierenberg and Calero describe several techniques, such as silence, reversal, and probing, that negotiators can use regardless of overall strategy. Accordingly, efficient negotiators should be able to employ the techniques in different situations as well as be alert when the other parties use the techniques. Also, negotiators should beware making assumptions. Often, assumptions cause negotiation miscommunications and even breakdowns, so eliminate or evaluate assumptions for relevance and accuracy. To minimize the negative impacts of faulty assumptions, negotiators should always rigorously prepare for negotiation sessions and focus on issues rather than emotions.
Sometimes negotiations stagnate and one must have techniques for resolving impasses. Again, a variety of specific techniques are available, including taking a break, changing the subject, and expressing empathy (Nierenberg and Calero). During impasse situations, creativity and clear thought supersede specific negotiating techniques. As a rule, having more issues for negotiation is better than fewer issues, and this is especially true to avoid or break an impasse where a broad range of issues can lead to innovative and satisfactory outcomes.
In an unexpected result of the previously mentioned study, Ms. Wolfe and Dr. McGinn found that gender created some differences in the results. The parameters of the simulated job interviews were easily changed so that both parties knew the other party had good or bad BATNA options. Despite this information, Wolfe and McGinn found “that a man’s perceived power is relatively fixed—their perceptions of what they have in the negotiation varies based on their alternatives, but is less likely to vary based on what they know about the other party” (Stark). Therefore, McGinn says, “men tended to ignore the other party’s alternatives, while the women tended to weight it highly in their perceptions of their relative power” (Stark).
Giles, L., translator (2002) Sun Tzu: The art of war. Dover Publications: New York.
Lewicki, R.J., Barry, B., & Saunders, D.M. (2010) Negotiation: Readings, exercises, and cases. Sixth edition. McGraw Hill: New York.
Nierenberg, G.I. & Calero, H.H. (2010) “Effective negotiating techniques: From selecting strategies to side-stepping impasses and assumptions.” In Negotiation: Readings, exercises, and cases. Sixth edition. McGraw Hill: New York.
Savage, G. T., Blair, J.D., & Sorenson, R.L. “Consider both relationships and substance when negotiating strategically.” The Academy of Management Executive (1987-1989) Vol. 3, No. 1 (Feb., 1989), pp. 37-48.
Stark, M. (2005) What perceived power brings to negotiations. Harvard Business School: Working Knowledge. http://hbswk.hbs.edu/cgi-bin/print/5013.html