FreepikI like to say that I spend most of my life negotiating and if you consider your own work and life, you just might feel the same. My career has been full of back-and-forth: I sat across tables negotiating agreements for Christie’s for over two decades as Global Managing Director of Strategic Partnerships; I stand on stages around the world as a charity auctioneer, negotiating prices up to maximize fundraising…….Continue reading….
By: Lydia Fenet Source: Fast Company .
Critics:
Negotiation can take a variety of forms in different contexts. These may include conferences between members of the United Nations to establish international norms, meetings between combatants to end a military conflict, meetings between representatives of businesses to bring about a transaction, and conversations between parents about how to manage childcare.
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Mediation is a form of negotiation where a third party helps the conflicting parties negotiate, usually when they are unable to do so by themselves. Mediated negotiation can be contrasted with arbitration, where conflicting parties commit to accepting the decision of a third party. Negotiations in the workplace can impact the entire organization’s performance.
Negotiation theorists generally distinguish between two primary types of negotiation: distributive negotiation and integrative negotiation. The type of negotiation that takes place is dependent on the mindset of the negotiators and the situation of the negotiation. For example, one-off encounters where lasting relationships do not occur are more likely to produce distributive negotiations whereas lasting relationships are more likely to require integrative negotiating. Theorists vary in their labeling and definition of these two fundamental types.
Distributive negotiation, compromise, positional negotiation, or hard-bargaining negotiation attempts to distribute a “fixed pie” of benefits. Distributive negotiation operates under zero-sum conditions, where it is assumed that any gain made by one party will be at the expense of the other. Haggling over prices on an open market, as in the purchase of a car or home, is an example of distributive negotiation.
In a distributive negotiation, each side often adopts an extreme or fixed position that they know will not be accepted, and then seeks to cede as little as possible before reaching a deal. Distributive bargainers conceive of negotiation as a process of distributing a fixed amount of value. A distributive negotiation often involves people who have never had a previous interactive relationship with each other and are unlikely to do so again shortly, although all negotiations usually have some distributive element.
Since prospect theory indicates that people tend to prioritize the minimization of losses over the maximization of gains, this form of negotiation is likely to be more acrimonious and less productive in agreement. ntegrative negotiation is also called interest-based, merit-based, win-win, or principled negotiation. It is a set of techniques that attempts to improve the quality and likelihood of negotiated agreement by taking advantage of the fact that different parties often value various outcomes differently.
While distributive negotiation assumes there is a fixed amount of value (a “fixed pie”) to be divided between the parties, integrative negotiation attempts to create value in the course of the negotiation (“expand the pie”) by either “compensating” the loss of one item with gains from another (“trade-offs” or logrolling), or by constructing or reframing the issues of the conflict in such a way that both parties benefit (“win-win” negotiation).
However, even integrative negotiation is likely to have some distributive elements, especially when the different parties value some items to the same degree or when details are left to be allocated at the end of the negotiation. While concession by at least one party is always necessary for negotiations, research shows that people who concede more quickly are less likely to explore all integrative and mutually beneficial solutions. Therefore, early concession reduces the chance of an integrative negotiation.
Integrative negotiation often involves a higher degree of trust and the formation of a relationship, although INSEAD professor Horacio Falcao has stated that, counter-intuitively, trust is a helpful aid to successful win-win negotiation but not a necessary requirement: he argues that promotion of interdependence is a more effective strategy that development of trust. Integrative negotiation can also involve creative problem-solving in the pursuit of mutual gains.
It sees a good agreement as one that provides optimal gain for both parties, rather than maximum individual gain. Each party seeks to allow the other party sufficient benefit that both will hold to the agreement. Productive negotiation focuses on the underlying interests of both parties rather than their starting positions and approaches negotiation as a shared problem-solving exercise rather than an individualized battle. Adherence to objective and principled criteria is the basis for productive negotiation and agreement.
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Text-based negotiation refers to the process of working up the text of an agreement that all parties are willing to accept and sign. Negotiating parties may begin with a draft text, consider new textual suggestions, and work to find the middle ground among various differing positions. Common examples of text-based negotiation include the redaction of a constitution, law or sentence by a constitutional assembly, legislature or court respectively.
Other more specific examples are United Nations’ negotiation regarding the reform of the UN Security Council and the formation of the international agreement underpinning the Regional Comprehensive Economic Partnership (RCEP) in the Asia-Pacific Region, where the parties involved failed in 2019 to agree on a text which would suit India. Such negotiations are often founded on the principle that “nothing is agreed until everything is agreed”.
For example, this principle, also known as the single undertaking approach, is often used in World Trade Organization negotiations, although some negotiations relax this requirement. The principle formed part of the British negotiating approach for the Brexit deal following the UK’s withdrawal from the European Union. There are many different ways to categorize the essential elements of negotiation. One view of negotiation involves three basic elements: process, behavior, and substance.
The process refers to how the parties negotiate: the context of the negotiations, the parties to the negotiations, the tactics used by the parties, and the sequence and stages in which all of these play out. Behavior refers to the relationships among these parties, the communication between them, and the styles they adopt. The substance refers to what the parties negotiate over: the agenda, the issues (positions and – more helpfully – interests), the options, and the agreement(s) reached at the end.
Another view of negotiation comprises four elements: strategy, process, tools, and tactics. The Strategy comprises top-level goals. Which typically include the relationship and the outcome. Processes and tools include the steps to follow and roles to take in preparing for and negotiating with the other parties. Tactics include more detailed statements and actions and responses to others’ statements and actions. Some add to this persuasion and influence, asserting that these have become integral to modern-day negotiation success, and so should not be omitted.
Strategic approaches to concession-making include consideration of the optimum time to make a concession, making concessions in installments, not all at once, and ensuring that the opponent is aware that a concession has been made, rather than a re-expression of a position already outlined, and aware of the cost incurred in making the concession, especially where the other party is generally less aware of the nature of the business or the product being negotiated.
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