Chapter 1 - Negotiations In The Contemporary Workplace
Negotiation is a means of resolving differences and conflict between individuals and organizations when they wish to work together to achieve an outcome, but disagree on the outcome they wish to achieve or the means by which they will cooperate to achieve it. When productive, negotiations ensure that the outcome is reasonable and acceptable to all parties.
Negotiation is most common where there is a lack of formal authority and one party does not have the ability to threaten or bribe the other into letting them have their way. It is also desirable in situations when one party does have significant power, to ensure that due considerations has been given to the outcomes and interests of all stakeholders as well as to ensure parties involved are amenable not only to the resolution of the current dispute, but to continuing to work together in future. It is generally a mark of poor leadership and poor character for an individual to rely on formal authority to compel the obedience of others.
It's also noted that negotiation is important in any social setting. When a group of friends discusses where to go for lunch, or a family plans a vacation, some bargaining and compromising occurs, and ideally everyone is satisfied with the final decision.
As this is an AMA course, the primary focus is on the business setting: negotiations that take place among employees in a business setting, as well as negotiations between a business and outside organizations (vendors, customers, regulators, and the like). Some business negotiations are lengthy and formal, others happen rather quickly and are in an informal manner.
In generally, when people get together and agree to a common course of action, some negotiation has taken place - as it is possible though extremely rare that they are in complete agreement from the onset.
The Importance Of Negotiating Skills
Recent evolution in the structure of organizations, away from a hierarchy of command and control and to a flatter structure in which there is greater employee empowerment, have made negotiations more commonplace and more important than before. Where employees have greater discretion on how to accomplish their objectives, they must be proactive in garnering support from others in the organization, and work on teams where they have no formal authority over their peers. Even managers who have formal authority are more apt to inform their subordinates of a goal, then leave them to determine how to accomplish it.
Empowered employees find greater satisfaction in having the latitude to accomplish their jobs, but this means they must interact with other employees who are similarly empowered, and are not compelled to cooperate with them. Since these people seldom have formal authority over their fellow employees, they must persuade and bargain with others to accomplish their goals, while at the same time helping their fellow employees to accomplish their own. It is also a common practice to assemble a group of employees with a diverse set of knowledge and skills to work together to achieve a common outcome - and while the outcome may be given, there will be negotiation about how to best accomplish it.
The frequency with which negotiation occurs in the workplace, formally and informally, make it a career-enhancing skill at every level of the organization, not merely for managers and executives, though individuals in those roles are frequently involved in more formal negotiation and are less frequently involved in supporting the work of others. Managers must also serve as mentors to employees, building their negotiation skills so that delegated tasks can be successfully completed, rather than having to intervene in every negotiation regarding a subordinate's work.
(EN: The author provides a quick self-assessment quiz to help the reader assess their present skills an attitudes in negotiation. I'll not copy the entire quiz here. The nature of questions involve an individual's approach to communication, listening, considering the interests of others, comfort in social interaction, etc.)
The Negotiating Process
The word "process" seems overly formal, but it simply reflects that the behaviors we do tend to follow certain patterns, even if it is not our intention to do so. We repeat actions that were successful in the past, avoid ones that were not successful, and end up falling into a regular routine. A "process" merely formalizes this routine so that it can be better understood, consistently practiced, and carefully adjusted to improve the results. The task of negotiation is likewise a set of behaviors that falls into a routine that can be considered as a process, and it can be improved as one.
In general, the negotiation process has four basic steps:
- Preparation. The negotiator considers what he wishes to achieve and gathers information to prepare to make his case to others, with the expectation they may object.
- Preparation. The negotiator seeks to identify the parties whose cooperation he requires and engage them in a discussion.
- Engagement. The negotiator presents his case and seeks to build consensus and overcome objections, using various tactics to obtain cooperation
- Resolution. The negotiation process ends at some for or agreement among the parties, which may include a decision to disagree and walk away. The resolution may be verbal or written depending on the formality of the negotiation.
- Evaluation. A good negotiator reflects on each negotiation, to attempt to understand what tactics worked well and which did not, as a means to improve success in future negotiations.
This is admittedly a broad view, and some of these steps can be quite intense and involve many discussions and recursive attempts. The author grants that negotiation is never entirely linear - in particular, it is not uncommon for engagement to resume when one party was under the mistaken assumption that an issue had been resolved.
A Case Example
The author provides a narrative in which a negotiation must take place between a client and a Web developer who has agreed to build an ecommerce site for them. The key points are:
- The client suddenly realizes he left out a feature he wants from the initial agreement
- The developer understands the need, and indicates the additional time and cost
- The client is under pressure and doesn't want to invest the additional time and money
- The developer offers to help control budget and time by removing some other features to get the one the client now wants
- The client insists he does not want to give up any of the features
- The developer points out that his demands are unreasonable - the time and money for the added feature have to come from somewhere
- The client comes to see the logic of this
- The developer recommends specific items that can be dropped, base on their being low-value "nice to have" features rather than critical ones, but cannot cut enough to cover the added cost of the new feature
- The developer then considers the value they place on getting the future business of the client and negotiates internally to see if the firm can afford to devote more resources and take a loss for the sake of the client's future business
- The developer then presents a proposal that will mitigate the cost - which includes losing some features, but slightly increasing the time and cost.
- The client then had to negotiate with the executive who was putting pressure on him to accept the solution - including letting go of some features and eating more time and cost.
The author drops off there: he does not indicate whether the negotiation was successfully resolved by this outcome, or what steps had to be taken to formalize the change to the original agreement.