Psychological approach in industrial relations:

Creative bargaining , negotiation techniques

Dr. K. Kuhathasan CEO: Cenlead

To most human resource managers, negotiation implies collective bargaining. To a sales executive, it will be thought of in terms of making a commercial deal.

The procedure and language of formal negotiation vary with the type of negotiation involved. The underlying principles and much of the psychology of the process is the same for all forms of negotiation.

It is also easy for managers to overlook the fact that much of their informal daily activity is, in effect, negotiation. All managers spend much of their time trying to influence and persuade other managers over whom they have no executive authority.

Effective negotiation

* Although some people are better negotiators than others, negotiating skills can be acquired or improved by practice, coaching and training.

* There are three main elements involved in improving one’s negotiating abilities - knowledge, skills and attitudes.

* Effective negotiation demands a knowledge of the principles of the negotiating process, the context of the particular negotiation, and its detailed subject matter.

* The main types of skill involved are analytical, interactive and communicative.

* Negotiations are strongly influenced by underlying attitudes to the process itself, to the issues and personalities involved in the particular case, and by one’s own self-perception and personal needs for recognition and achievement.

The art of negotiating

* Negotiation is the use of knowledge, time and power to influence the behaviour of other people so that you can achieve your goals.

The steps are as follows:

* Define needs: What do you and the parties you represent get from this negotiation?

* Check resources: What resources do you have to help with the negotiation? Who can you use? What are the facts?

* Know limitations: At what stage will you have to hand a negotiation over to someone else? How far is your side prepared to go in conceding to the other side?

* Understand options: List the possible options that could come out of the negotiation. How many of them are possible for your side to accept?

* Formulate goals: Decide what you hope to achieve and the elements of the goal that cannot be compromised.

* Prepare for the encounter: Prepare mentally and physically.

Preparation

For the other party

* Recognize the need: What does he want from the negotiation?

* Understand and define that need: How strongly are those needs likely to be felt?

* Check alternatives: What possible alternatives are there? Has he thought of them all?

* Understand the options: Realize the areas where your opponent cannot afford to compromise and the options that can remain open for him.

* Know the power of choice: Understand that he is able to choose

Achieving a win/win outcome within negotiations usually takes a bit longer in the short-term because more work and effort have to be put into the process. More time must be allocated to explore the different interests and agendas of all the parties involved in the negotiation, and decisions are reached only after all parities have had their needs fully, or at minimum, partially, met.

Steps

* Before embarking on negotiation - there is a need to assess the parties’s relative strengths.

* Strength is the power or influence each can exercise over the final outcome.

* Power and influence may be indirect, affecting factors other than the immediate issues under negotiation.

* It may take four forms:

- Decision - making authority

- The power of influence

- The strength of the actual case

- The determination or persistence of the negotiator.

* Influence may be negative - causing the other party damage: or positive - offering the other party the benefit or advantage.

* The strength of the actual case can include its logical validity and its emotions’ appeal.

How to conduct collaborative negotiation

The collaborative negotiator must show the following traits if he is to succeed:

* Interest in the needs of the counterpart,

* Understanding counterpart’s needs.

* Willingness to be co-operative and compromise.

* Mind focused on settlement not obstacles.

* Mutual gain=win-win

As a collaborative negotiator you will achieve the following gains:

* Opportunities.

* Co-operation leads to trust.

* Preparation leads to understanding.

* Counterpart becomes a partner.

* Mutual problem solving brings settlement.

Stages of collaborative negotiation:

* Analyze the needs of the counterpart.

* Demonstrate a desire for co-operation.

* Emphasize mutual interest.

* Demonstrate understanding of counterpart’s needs.

* Understand the relationship between your counterpart’s needs and one’s own resources and goals.

Power in negotiation

* Bargaining power is measured relative to the counterpart.

* Bargaining power is determined by external economic and political factors.

* It is preferable to negotiate from a powerful position.

* The balance of power in a negotiation is determined by the urgency of each side’s needs and assets.

Six aspects generally need consideration, though some are of more relevance to formal negotiations between teams than to informal discussion between individual managers.

These points are:

* The style or tone of the negotiations

* Whom to involve - the composition of the negotiating teams

* The pace or timing of the negotiation

* The location - ‘their place or ours?

* Seating arrangements and the provision of refreshments

* How the negotiation is to be documented

Effective negotiations

* Negotiations are influenced by their style and pace, by the composition of the negotiating team, and by the arrangements for seating, refreshments and documentation.

* Effective negotiators aim at a collaborative style but are prepared for confrontation.

* A team of three to five is advisable, apart from very informal negotiators.

* Negotiations should be avoided while emotions are running high: but delay for its own sake is normally counter productive.

* Inexperienced negotiators feel more confident on home ground, but for major, formal negotiators, the use of a neutral location may be desirable.

* Seating plans can be used to reinforce either a confrontational or a collaborative mode.

* Providing refreshments is not just a matter of common courtesy: refreshments breaks can be used to make progress in negotiations.

* Some record of the outcome of negotiations, however informal, is desirable to ensure a common understanding of what has been agreed upon.

Use time with care

* Haste makes waste; the best negotiations take time.

* Be prepared; negotiate before the crisis.

* Urgency may force concessions.

* Spent time on it; avoid marathon sessions.

Use questions

Ask them even if you know the answers.

* Ask for help.

* Listen.

* Question what is negotiable; don’t be disheartened by ‘company policy’

Personalize the negotiation

* Promote bonds of respect and trust

* Consider people and other factors

* Make personal contact, relax and smile

* Relate to the organization.

Spent time

* Allow time for frequent recesses.

* Keep the bargaining at a deliberate pace.

* Use recesses to calm or do further research.

* Maintain self-control at all times.

Beware of unspoken needs

* Your counterpart may have a hidden agenda.

* Watch body langauge.

* Stay awake.

* Meet your counterpart’s needs.

* Personal and social needs can often be met at minimum expense.

There are four types of behaviour when we deal with others during negotiations:

* Assertive

* Aggressive

* Passive

* Manipulative

Listening

Listen by:

* Facing the speaker

* Maintaining eye contact

* Maintaining an open posture

* Leaning in the direction of the speaker

* Staying relatively relaxed

* Avoid fidgeting

* Using smiles and other prompts.

Listening

Listen to what is being said:

* Listen to the central theme rather than the details

* Hold on to judgement

* Think ahead

* Analyze and evaluate

* Don’t interrupt

Listen to how it is said:

Interpret the tone of voice

* Evaluate non-verbal signs

Listen to what is said:

* Ask questions to ensure that you get the full story

* Ask yourself why issues are not being aired

Aggression

Aggression is a symptom of anxiety and frustration. It is the by-product of someone who has failed in a task or feels insecure. Don’t confuse it with assertion.

The technique

* Take a deep breath.

* Speak calmly and evenly on a middle pitch.

* Keep your temper.

* Do not respond to aggression.

* Call for the facts and check your understanding of them.

* Say ‘I’m sorry this is causing you a problem, but I can only help if you let me’ (empathetic assertion).

* Encourage your counterpart to speak about his feeling of aggression. (The more he speaks, the less aggressive he becomes.)

* Be assertive and point out the consequences politely.

Vagueness

Negotiating with a vague counterpart is very difficult. He will be confined for a long time and say very little. You must be patient at all times and try to steer him back to the point.

The technique

Maintain patience.

* Write down all facts as you hear them.

* Use the facts to get your counterpart back to the point

* Keep a smile in your voice

* Be businesslike.

* Keep to the point

* Keep your temper

* Don’t be abrupt.

* Summarise regularly

Unfriendly

Some people are not particularly fond of people in general. They are not likely to be very friendly when negotiating. Others confuse being business like with being unfriendly. An apparent unfriendly attitude may be a symptom of anxiety or frustration. Either way, do not take it personally; it is not intended personally.

The technique

* Smile as you speak.

* Don’t take anything personally.

* Keep your voice and be pleasant.

* Deal appropriately personal remarks.

* Go by facts

* Once the negotiations are over the matter ends

Remember

* The purpose of negotiators is to reach an agreement, not to score points in argument.

* Effective negotiators are good listeners: they ask more questions than statements.

* Humour, or good manners, can be used to reduce tension and help create a bond between the parties.

* It is important to look for verbal and non-verbal clues or signals of the other party’s changes of mood or approach.

* There should be a concentration on issues or outcomes of common interest, rather than on the original differences.

Final stages

* The final offer and agreement needs to be timed to coincide with constructive discussion - not during a combative phase.

* It is important to achieve credibility for any statement about an offer being final - the tone and style of such a statement may be as important as its substance.

* Devices can be used to break a deadlock in reaching agreement - such as promises of future negotiations on a related topic, or making the introduction of a new condition subject to be reviewed later.

* Before finalizing an agreement, check that all aspects have been agreed upon, particularly dates for implementation, review or completion and definitions of terms.

* Unresolved issues should not be ‘fudged’ by producing vague or ambiguous words to achieve apparent agreement.

Final tips

* An agreement is not successful until it has been effectively implemented.

* It is often helpful to include an implementation program as an integral part of a negotiated agreement.

* An implementation program defines what has to be done, when and by whom.

* Promote some agreements, implementation may be best effected by a joint team.

* Such action should be based on defining who needs to know what, how and by whom this information should be given, by what methods and to time - scales.

Choose compromise when

* The issues are relatively simple and clear cut

* There isn’t much time to reach a solution or you want to achieve a resolution as quickly as possible

* It would be better to secure a temporary agreement quickly, and then deal with the more serious or underlying issues later.

* You and the other party or parties to the negotiation aren’t that concerned about the goals or outcome of conflict.

* You have been unable to resolve the matter by collaboration.

Use collaboration when

* The issues are fairly complex and require a detailed discussion to work out a solution acceptable to both parties.

* Both parties are willing to spend the time needed to deal with the underlying needs and concerns

* Both parties feel that their concerns are very important and don’t want to compromise on them

* Both parties are willing to be open-minded and approach the negotiation in a spirit of good faith, which includes being willing to listen and understand the other party’s concerns

* Both parties want to achieve a permanent agreement rather than a quick but temporary solution and are willing to deal the issue now.