Module 1 - Journal Article Analysis (Negotiation and Conflict Resolution)

LEARNING OBJECTIVES

1. Learn the five phases of negotiation. 2. Learn negotiation strategies. 3. Avoid common mistakes in negotiations. 4. Learn about third-party negotiations.

A common way that parties deal with conflict is via negotiation. Negotiation is a process

whereby two or more parties work toward an agreement. There are five phases of negotiation,

which are described below.

The Five Phases of Negotiation

Figure 10.8 The Five Phases of Negotiation

Phase 1: Investigation

The first step in negotiation is the investigation, or information gathering stage. This is a

key stage that is often ignored. Surprisingly, the first place to begin is with yourself:

What are your goals for the negotiation? What do you want to achieve? What would you

concede? What would you absolutely not concede? Leigh Steinberg, the most powerful

agent in sports (he was the role model for Tom Cruise’s character in ​Jerry Maguire​),

puts it this way: “You need the clearest possible view of your goals. And you need to be

brutally honest with yourself about your priorities” (Webber, 1998).

During the negotiation, you’ll inevitably be faced with making choices. It’s best to know

what you want, so that in the heat of the moment you’re able to make the best decision.

For example, if you’ll be negotiating for a new job, ask yourself, “What do I value most?

Is it the salary level? Working with coworkers whom I like? Working at a prestigious

company? Working in a certain geographic area? Do I want a company that will groom

me for future positions or do I want to change jobs often in pursuit of new challenges?”

Phase 2: Determine Your BATNA

If you don’t know where you’re going, you will probably end up somewhere else.

Lawrence J. Peter

One important part of the investigation and planning phase is to determine your BATNA,

which is an acronym that stands for the “best alternative to a negotiated agreement.”

Roger Fisher and William Ury coined this phrase in their book ​Getting to Yes:

Negotiating without Giving In​.

Thinking through your BATNA is important to helping you decide whether to accept an

offer you receive during the negotiation. You need to know what your alternatives are. If

you have various alternatives, you can look at the proposed deal more critically. Could

you get a better outcome than the proposed deal? Your BATNA will help you reject an

unfavorable deal. On the other hand, if the deal is better than another outcome you

could get (that is, better than your BATNA), then you should accept it.

Think about it in common sense terms: When you know your opponent is desperate for

a deal, you can demand much more. If it looks like they have a lot of other options

outside the negotiation, you’ll be more likely to make concessions.

As Fisher and Ury said, “The reason you negotiate is to produce something better than

the results you can obtain without negotiating. What are those results? What is that

alternative? What is your BATNA—your Best Alternative To a Negotiated Agreement?

That is the standard against which any proposed agreement should be measured”

(Fisher & Ury, 1981).

The party with the best BATNA has the best negotiating position, so try to improve your

BATNA whenever possible by exploring possible alternatives (Pinkley, 1995).

Going back to the example of your new job negotiation, consider your options to the

offer you receive. If your pay is lower than what you want, what alternatives do you

have? A job with another company? Looking for another job? Going back to school?

While you’re thinking about your BATNA, take some time to think about the other party’s

BATNA. Do they have an employee who could readily replace you?

Once you’ve gotten a clear understanding of your own goals, investigate the person

you’ll be negotiating with. What does that person (or company) want? Put yourself in the

other party’s shoes. What alternatives could they have? For example, in the job

negotiations, the other side wants a good employee at a fair price. That may lead you to

do research on salary levels: What is the pay rate for the position you’re seeking? What

is the culture of the company?

Greenpeace’s goals are to safeguard the environment by getting large companies and

organizations to adopt more environmentally friendly practices such as using fewer

plastic components. Part of the background research Greenpeace engages in involves

uncovering facts. For instance, medical device makers are using harmful PVCs as a

tubing material because PVCs are inexpensive. But are there alternatives to PVCs that

are also cost-effective? Greenpeace’s research found that yes, there are (Layne, 1999).

Knowing this lets Greenpeace counter those arguments and puts Greenpeace in a

stronger position to achieve its goals.

OB TOOLBOX: BATNA BEST PRACTICES

1. Brainstorm a list of alternatives that you might conceivably take if the negotiation doesn’t lead to a favorable outcome for you.

2. Improve on some of the more promising ideas and convert them into actionable alternatives.

3. Identify the most beneficial alternative to be kept in reserve as a fall-back during the negotiation.

4. Remember that your BATNA may evolve over time, so keep revising it to make sure it is still accurate.

5. Don’t reveal your BATNA to the other party. If your BATNA turns out to be worse than what the other party expected, their offer may go down, as PointCast learned in the opening case.

Sources: Adapted from information in Spangler, B. (2003, June). ​Best Alternative to a

Negotiated Agreement (BATNA)​. Retrieved November 12, 2008, from

http://www.beyondintractability.org/essay/batna/​; Conflict Research Consortium,

University of Colorado. (1998). ​Limits to agreement: Better alternatives​. Retrieved

November 12, 2008, from ​http://www.colorado.edu/conflict/pea...blem/batna.htm​;

Venter, D. (2003). ​What is a BATNA​? Retrieved January 14, 2008, from

http://www.negotiationeurope.com/articles/batna.html​.

Phase 3: Presentation

Figure 10.9. All phases of the negotiation process are important. The presentation is the one that normally receives the most attention, but the work done before that point is equally important.. The Bush Center – ​Negotiations​ – CC BY-NC-ND 2.0.

The third phase of negotiation is presentation. In this phase, you assemble the

information you’ve gathered in a way that supports your position. In a job hiring or salary

negotiation situation, for instance, you can present facts that show what you’ve

contributed to the organization in the past (or in a previous position), which in turn

demonstrates your value. Perhaps you created a blog that brought attention to your

company or got donations or funding for a charity. Perhaps you’re a team player who

brings out the best in a group.

Phase 4: Bargaining

During the bargaining phase, each party discusses their goals and seeks to get an

agreement. A natural part of this process is making concessions, namely, giving up one

thing to get something else in return. Making a concession is not a sign of

weakness—parties expect to give up some of their goals. Rather, concessions

demonstrate cooperativeness and help move the negotiation toward its conclusion.

Making concessions is particularly important in tense union-management disputes,

which can get bogged down by old issues. Making a concession shows forward

movement and process, and it allays concerns about rigidity or closed-mindedness.

What would a typical concession be? Concessions are often in the areas of money,

time, resources, responsibilities, or autonomy. When negotiating for the purchase of

products, for example, you might agree to pay a higher price in exchange for getting the

products sooner. Alternatively, you could ask to pay a lower price in exchange for giving

the manufacturer more time or flexibility in when they deliver the product.

One key to the bargaining phase is to ask questions. Don’t simply take a statement

such as “we can’t do that” at face value. Rather, try to find out why the party has that

constraint. Let’s take a look at an example. Say that you’re a retailer and you want to

buy patio furniture from a manufacturer. You want to have the sets in time for spring

sales. During the negotiations, your goal is to get the lowest price with the earliest

delivery date. The manufacturer, of course, wants to get the highest price with the

longest lead time before delivery. As negotiations stall, you evaluate your options to

decide what’s more important: a slightly lower price or a slightly longer delivery date?

You do a quick calculation. The manufacturer has offered to deliver the products by

April 30, but you know that some of your customers make their patio furniture selection

early in the spring, and missing those early sales could cost you $1 million. So, you

suggest that you can accept the April 30 delivery date if the manufacturer will agree to

drop the price by $1 million.

“I appreciate the offer,” the manufacturer replies, “but I can’t accommodate such a large

price cut.” Instead of leaving it at that, you ask, “I’m surprised that a 2-month delivery

would be so costly to you. Tell me more about your manufacturing process so that I can

understand why you can’t manufacture the products in that time frame.”

“​Manufacturing the products in that time frame is not the problem,” the manufacturer

replies, “but getting them ​shipped​ from Asia is what’s expensive for us.”

When you hear that, a light bulb goes off. You know that your firm has favorable

contracts with shipping companies because of the high volume of business the firm

gives them. You make the following counteroffer: “Why don’t we agree that my company

will arrange and pay for the shipper, and you agree to have the products ready to ship

on March 30 for $10.5 million instead of $11 million?” The manufacturer accepts the

offer—the biggest expense and constraint (the shipping) has been lifted. You, in turn,

have saved money as well (Malhotra & Bazerman, 2007).

Phase 5: Closure

Closure is an important part of negotiations. At the close of a negotiation, you and the

other party have either come to an agreement on the terms, or one party has decided

that the final offer is unacceptable and therefore must be walked away from. Most

negotiators assume that if their best offer has been rejected, there’s nothing left to do.

You made your best offer and that’s the best you can do. The savviest of negotiators,

however, see the rejection as an opportunity to learn. “What would it have taken for us

to reach an agreement?”

Recently, a CEO had been in negotiations with a customer. After learning the customer

decided to go with the competition, the CEO decided to inquire as to why negotiations

had fallen through. With nothing left to lose, the CEO placed a call to the prospect’s vice

president and asked why the offer had been rejected, explaining that the answer would

help improve future offerings. Surprisingly, the VP explained the deal was given to the

competitor because, despite charging more, the competitor offered after-sales service

on the product. The CEO was taken by surprise, originally assuming that the VP was

most interested in obtaining the lowest price possible. In order accommodate a very low

price, various extras such as after-sales service had been cut from the offer. Having

learned that the VP was seeking service, not the lowest cost, the CEO said, “Knowing

what I know now, I’m confident that I could have beaten the competitor’s bid. Would you

accept a revised offer?” The VP agreed, and a week later the CEO had a signed

contract (Malhotra & Bazerman, 2007).

Sometimes at the end of negotiations, it’s clear why a deal was not reached. But if

you’re confused about why a deal did not happen, consider making a follow-up call.

Even though you may not win the deal back in the end, you might learn something that’s

useful for future negotiations. What’s more, the other party may be more willing to

disclose the information if they don’t think you’re in a “selling” mode.

Should You Negotiate for a Higher Salary?

Yes! According to a survey conducted by CareerBuilder.com, 58% of hiring managers

say they leave some negotiating room when extending initial job offers. The survey also

found that many of the hiring managers agree to a candidate’s request for a higher

salary. “Salary negotiation has become a growing opportunity in the job acquisition

process,” says Bill Hawkins, president and CEO of The Hawkins Company, a

full-service executive search firm with offices in Los Angeles and Atlanta. “Candidates

who fail to make a counteroffer could forfeit significant income.”

Source: Adapted from information in Reed-Woodard, M. (2007, April). Taking money off

the table. ​Black Enterprise​, ​37​(9), 60–61.