Chapter 1: Introduction

Contents:

Introduction.

People negotiate all the time. Friends negotiate to decide where to have dinner. Children negotiate to which television program to watch. Businesses negotiate to purchase materials and to sell their products. Lawyers negotiate to settle legal claims before they go to court. The police negotiate with terrorists to free hostages. Nations negotiate to open their borders for free trade.

Negotiations occur for one of two reasons:

1)     To create something new that neither party could do on his or her own.

2)     To resolve a problem or dispute between the parties. Because people can negotiate about so many different things, understanding the fundamental processes of negotiation is essential for anyone who works with other people.

Negotiation is a dynamic process of adjustment by which two parties, each with their own objectives, confer together to reach a mutually satisfying agreement on a matter of common interest. This definition contains the essential themes which it is the purpose of this training course aims to develop. The chosen field is that of commercial contracts whether for the sale, or purchase of goods and services or the construction of engineering works.

1.1

 Characteristics of a Negotiation Situation

1. There are two or more parties- that is, two or more individuals, groups, or organizations. Although people can "negotiate' with themselves - as when someone debates whether to spend the afternoon studying, playing tennis, or going to the football game - we will discuss negotiation as an interpersonal or inter-group process.

2. There is a conflict of interest between two or more parties that is, what one wants is not necessarily what the other one wants and the parties must, therefore, search for a way to resolve the conflict.

3. The parties negotiate because they think they can use some form of influence to get a better deal that way than by simply taking what the other side will voluntarily give them or let them have. Negotiation is largely a voluntary process. It is a strategy pursued by choice; seldom are we required to negotiate.

4. The parties, at least for the moment, prefer to search for agreement rather than to fight openly, have one side capitulate, permanently break off contact, or take their dispute to a higher authority to resolve it.

5. When we negotiate, we expect give and take. We expect that both sides will modify or give in somewhat on their opening statements, requests, or demands. Although the parties may at first argue strenuously for what they want, each pushing the other side for concessions, usually both sides will modify their positions and each will move toward the other.

6. Successful negotiation involves the management of intangibles as well as the resolving of tangibles (e.g., the price or the terms of agreement). Intangible factors are the underlying psychological motivations that may directly or indirectly influence the parties during a negotiation.

Some examples of intangibles are:

(a) The need to 'look good' to the people you represent.

(b) The desire to book more business than any other salesperson in your office.

(c) The fear of setting precedent in the negotiations.

What sort of negotiation do you get involved in?

What are the aspects of negotiation that you feel you do well?

What are the aspects you would like to improve?

1.2

The Model

A negotiation is a very complex event. Two people, or two sets of people or even several teams come together to handle a difficult issue about which they know only part of the story. They have different personalities; different pressures on them; different reasons for being there. They may not communicate very well. They may well be suspicious of each other.

At any one time, there will not be just one thing going on in any individual's mind. Many different things will be going on at different levels.

To enable you to bring some order to this highly complex event, you need a framework or a model which you can carry around like a map to see where you are and why, see Figure 1.1.

Figure 1.1: A simple model

At the top of the model is the SUBJECT MATTER of the negotiation. This is what you are negotiating. This could be a deal for the supply of materials, a pay deal, and a legal contract of some sort or whatever.

The subject matter is supported by various elements of the negotiating process-foundations. There is the procedure by which the subject matter is discussed. What order things are discussed in, how much time is taken and so on. There is the CLIMATE in which the negotiation takes places. Is it friendly?

Is it brisk and business - like? Or relaxed and disorganised?

These are the supports to the development of the subject matter.

The subject matter and its supports rest on events spread over time. These are the preparation which takes place before the negotiation, the interactions which take place during the negotiation and the follow up which takes place after the negotiation.

1.3

Time and Energy

Figure 1.2 shows how energy varies with time in a negotiation. It is, of course, very simplified.

When parties meet to negotiate, they are at a high state of readiness. Attention and interest are high.

As the negotiation develops, the energy of the parties tends to die away. Eventually, they reach a stage at which they are tired and losing interest and it becomes counterproductive to carry on.

Just before the perceived end of the negotiation, or at any rate a meeting during the negotiation, the energy levels of the parties rise sharply. The same thing happens in a training session when the trainer says, "and lastly…"

Of course, the curve is not smooth as shown in Figure 1.2. It will ripple up and down as the negotiation proceeds but the overall shape is correct. The two points at which everyone's energy is at a peak are the opening few minutes and the closing few minutes. What happens in these two critical phases is more important than everything else.

Figure 1.2: Energy varies with time

At this stage we are concerned with the opening phase of the negotiation.

1.4

The Climate

We need a climate which is:

Cordial

Cooperative

Brisk

Businesslike

How Does the Climate Become Established?

The very first thing that happens when parties meet to negotiate is that a climate begins to form. This happens when energy is high and the climate is established very quickly. Once established, it will not be changed easily. First impressions last.

What sort of climate do we want? The answer to this has to be the sort of climate which will enable us to explore the issues most effectively and will enable us to reach an agreement to the satisfaction of both parties in a reasonable time.

Bill Scott explores the issue of climate thoroughly in his book, "The Skills of Negotiating". The conclusion he reaches is that we need a climate which is:

·                    CORDIAL

·                    COOPERATIVE

·                    BRISK

·                    BUSINESSLIKE

By "cordial", we mean that it has to be friendly. This does not mean that parties have to go out of their way to like each other. It means they should hold a competent, constructive business discussion and not a spectacular confrontation.

By "cooperative", we mean that the atmosphere should be one of "win-win". Each party should be striving to help the other towards an agreement.

By "brisk", we mean that the discussion should move at a measured pace along agreed lines and not flounder in aimless chat.

By "businesslike", we simply mean businesslike! Professional!

Experience in a range of negotiations has shown that a climate with these entire attributes stands the best chance of producing a satisfactory outcome.

1.4.1 How Does the Climate Become Established?

The climate develops very quickly and comes from verbal and non verbal behaviour. The climate is determined by what people say, what they do and how they look.

Getting the right climate is so important that you should spend time specifically on achieving it. The preliminaries to negotiation can be the most important part. They can set the stage for successes or failure. You should be prepared to spend about 5% of the likely time for the whole negotiation just on establishing the climate. For example, if you anticipate the negotiation taking an hour, be prepared to spend three or four minutes on achieving the climate before you even MENTION business. For a long negotiation taking several days, spend an evening having dinner with the other party before starting. Bear in mind, too, that each party has come to the negotiation from a different immediate experience. One may be flustered and angry after a difficult trip. The other may have just been informed of a crisis in his or her department and may be wishing the negotiation had not been planned for this particular time. They will need time to get on to the same wavelength and focus on the subject in hand.

One of the prime influences on climate is appearance. It is vital that both parties dress in a way which seems appropriate to the other. There is no right and wrong way to dress for a negotiation. Just an appropriate way. In a business negotiation in Britain, a smart, well groomed appearance (suit for men, smart outfit for women) is often appropriate. In Scandinavia, a blazer and slacks. In an overtly creative industry like advertising, open necked shirts and corduroy trousers may be appropriate. The important thing is to appear in a way which shows respect and concern for the other party to the negotiation.

When you meet for the first time in a negotiation, concentrate first on the pace and cordial atmosphere. Convey an enthusiastic and positive image. Be positive in greeting the other party. Stand up if you are sitting. We suggest the first few moments of the meeting should be spent standing. Talk about neutral topics, such as the journey you have just had, the view from the room or some conversation piece in the room.

Now we come to a critical moment in the negotiation. The bridging from conversation to serious discussion. It is important that this be done smoothly and in such a way as to maintain the momentum and cordial atmosphere. It is absolutely essential that you have a ROUTINE. By this we mean a standard line of development which enables you to switch into the negotiation proper. Without this, there will be an awkward hiatus once the parties run out of small talk. This could destroy the climate and force you to start all over again. We suggest you say something like, "Could we start by agreeing on procedure?" This is hardly likely to lead to an argument and it opens the way to the first agreement of many as the negotiation proceeds towards eventual overall agreement. Do phrase the opening as a question. The other party may have an alternative procedure in mind and if you start by saying. "I would like to start by agreeing the procedure", the other party may say, "Well, I would rather start by…" and you are immediately at odds. And do allow a brief pause before opening to see if the other party intends to open first.

A few moments spent at this stage will add the cooperative and businesslike dimensions to the cordial and brisk climate already established.

1.5

Procedure

Agree on:

Purpose

Plan

A key theme which runs throughout this programme is to agree wherever possible. The final agreement which results from a successful negotiation is reached through a series of subsidiary agreements.

In agreeing procedure, you should aim to agree on:

· Purpose

· Plan

· Pace

First and most importantly, agree why you are there. This is the purpose of your meeting. If one party thinks the purpose is to reach a final agreement and the other thinks it is to hold a preliminary discussion, or if one thinks it is to have a technical discussion and the other thinks it is to hold commercial discussions, the parties will not reach a satisfactory outcome.

Start by agreeing the purpose of the meeting. In nine cases out of ten, you will reach agreement at once. Once you have agreement, restate it and, if possible, write it down somewhere easily visible. Now you have already started to cooperate and agree!

Incidentally, if you do not agree at once, do not argue whatever you do. Negotiate an agreement on purpose using all the tactics and principles taught later this program.

Now move on to the plan-the agenda. Again, the object here is to AGREE. Even if you have agreed in writing in advance on an agenda, get it into the open again and see if you all still agree on it.

A good way to agree an agenda is to list all the things YOU would like to see discussed. Then listen while the other party or parties list their needs. Then agree an agenda which incorporates all the points you agree on. If you differ about some points, you will have to AGREE either to leave them until another occasion or AGREE to incorporate them. Do not DISAGREE on whether to discuss them.

Now we come to pace-how long should we spend? State how long you think the negotiation should take and listen to everyone else's opinion. Agree on a likely time. If you have a problem with time, you may have to reconsider your purpose and plan. For example, if it transpires that one party has 40 minutes available for the negotiation and the other has all day you may need to agree a more modest plan and purpose for the shorter time. As well as agreeing the overall time for the negotiation, agree in outline the time to be devoted to each part of it. You will need to review this regularly as the negotiation progresses. If it becomes obvious that the original plan in not going to be completed in the time, stand back from the subject matter and agree with your other party a new plan.

1.6

Geography

1.6 Geography

The actual layout of the negotiating area is important.

Figure 1.3 shows a possible arrangement. Two teams facing each other across a battlefield of teak!

Figure 1.3: Possible arrangement

Figure 1.4 is worse. The defenders sit with their backs to the wall while the invaders get the sun in their eyes!

Figure 1.4: Worse setting

The geography can be collaborative or antagonistic. For many years, now, managers have been advised not to sit behind a desk while interviewing or appraising. The same applies while negotiating. Think about the geography and see if you can arrange something collaborative. Again, there is no right and wrong way to sit. Only appropriate ways.

Figures 1.5, 1.6 and 1.7 are layouts you might consider trying….

Figure 1.5: Possible way of setting

Figure 1.6: Other way of layout of setting

Figure 1.7: Round table possible setting