Negotiation

Negotiating Effectively!

 

            Negotiating can be difficult for many leaders, especially if they lack an understanding of the fundamentals surrounding negotiation strategy. This lesson will attempt to mitigate this weakness somewhat. It will give a base knowledge of negotiating strategy options, focusing on techniques of win-win negotiation tactics. Being able to navigate in the direction of a win-win solution in any negotiation will allow leaders to obtain concessions that benefit their organization and also salvage the relationship in the process.

            I came across an exercise focusing on techniques that can guide negotiations toward a win-win conclusion. The exercise is attached at the end of this chapter. The exercise begins by giving the participant evaluation tools that can help define the proper negotiation strategy to implement. The course of a negotiation is dependent on how important the outcome of the negotiation is in comparison to the value of the relationship between the two negotiating parties. If the relationship is important, it would not be wise to pursue the outcome with unrelenting vigor and sacrifice the relationship in exchange. The negotiator must decide how important maintaining the relationship is in relation to competing goals of the negotiation. The exercise offers a graph that defines strategies in relation to levels of relationship and outcome importance. If the importance of the negotiation outcome is of utmost importance, and the relationship is not important to keep, the negotiator would use a highly competitive strategy. If the relationship is important to salvage, but the outcome of the negotiation is also important, the negotiator would use a more collaborative approach.  If maintaining the relationship is of utmost importance, and the outcome of the negotiation is negligible, then the negotiator would use a strategy that accommodates the other party.  If the relationship is meaningless and the outcome of the negotiation would also be negligible, then the negotiation would simply be avoided because it would be an unnecessary waste of time.

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            For those of you reviewing this entire website, this chart will look somewhat familiar.  It is nearly identical to the Thomas-Kilmann Conflict Mode Instrument (TKI) which, as mentioned in the conflict lesson, is an adaptation of Blake and Mouton’s Managerial Grid; both are pictured below.

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            In review, the Blake-Moulton Theory of the Managerial Grid shows the differences apparent in task-oriented leaders versus people-oriented leaders.  VandeVliert and Kabanoff discuss how task-oriented leaders will favor their concerns for production over any concerns for people, whereas people-oriented leaders will let their concern for people outweigh concerns for production. Blake and Mouton’s theory points out that managers use a combination of task-oriented and people-oriented approaches depending on their individual style or based on the needs of the situation at hand. As managers weigh these two aspects, the resulting weights of each lead to one of the five styles. The Thomas-Kilmann Conflict Mode Instrument (TKI) adapts Blake and Mouton’s grid, using five conflict management styles; competing, collaborating, avoiding, and accommodating as the four corners, and compromising as the center, in place of Country Club, Team Leader, Impoverished, Produce or Perish, and Middle of the Road.

            This lesson’s exercise discusses the relative importance of relationships versus negotiation outcome in much the same way the Managerial Grid and the TKI compare concern for people with concern for production.  According to Roger Volkema and Thomas Bergmann, “the Thomas-Kilmann Conflict Mode Instrument measures strategic intentions.”[4]  They assert that the negotiator’s conflict style “could be manifested in a first behavior (designed to set the tone for negotiations), a second or fall-back behavior (after an initial attempt at collaboration), or an exaggerated or extreme behavior (designed to gain advantage or change the course of a conflict).”[5] In relation to negotiation tactics, Volkema and Bergmann’s discussion highlights the importance of assessing the value of the relationship in comparison to the value of the outcomes.  This evaluation can give you a base strategy to begin negotiations and a fallback strategy based on the reactions of the other negotiating party.

            Lisa McNary in her article “The Term ‘Win-Win’ in Conflict Management,” discusses the roots of win-win negotiations. She postulates that the “concept of ‘win-win’ fits into three areas: conceptualization, behavior, and interaction.”[6] She defines conceptualization as the defining of the conflict’s stakes and boundaries as well as a projection of outcomes and alternatives.  Once the negotiation strategy is conceptualized, then the negotiator initiates the chosen behavior and reflects upon the opposing party’s interaction. McNary expounds on each category of the TKI, defining them in terms of negotiating strategy.  She defines the Competitive and Accommodating styles as “scenarios that use either domination or appeasement as their primary behaviors, [and states that] both styles are representative of distributive bargaining situations in which the positions of the conflicting parties are mutually exclusive.”[7] She describes the Avoidant style as one that is utilized in situations when there can really be no resolve. The collaborating style, she says, is one that utilizes compromise and “allows for some degree of satisfaction for all parties.”[8] The author then redefines the Collaborative style as an integrative style that “can allow for both parties’ concerns to be met through exploration.”[9] She goes on to say that the integrative style is contingent upon both sides cooperating fully, trusting each other, and sharing information fully.

McNary then discusses how the terms collaborative and integrative have become synonymous with the term ‘win-win’. She references Covey’s Seven Habits of Highly Effective People and his metamorphosis of the TKI grid. Covey eliminates the Sharing or Compromising Style and replaces the Collaborative or Integrative style with the “win-win” quadrant, pictured below. He also re-labels the other quadrants Lose/Win, Win/Lose, and

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Lose/Lose. McNary goes on to postulate that many “interpretive errors have occurred as a result of the introduction of the term ‘win-win’ in place of the terms ‘Integrative’ and ‘Collaborative.’”[11] Her article goes on to talk over these errors through the discussion of the Wissman Paradox and the Green Conundrum. This discussion is not relevant to this chapter’s thought process as it delves a bit too deep into the subject. The article sufficiently relates the term ‘win-win’ to the terms ‘Collaborative’ and ‘Integrative’ which clearly inserts it into the TKI as well as into Blake and Mouton’s Managerial Grid. The author concludes that “the term ‘win-win’ has become ingrained in our business communication lexicon; [and that] much of the trade literature now details how-to steps for conflict management, primarily urging participants to think ‘win-win’ or act in a ‘win-win’ manner.”[12]

            Savage, Blair, and Sorenson take our discussion much deeper in their article “Consider Both Relationships and Substance When Negotiating Strategically.”  They discuss a company called Dickerson Machinery, its director of services – David Peterson, and four separate negotiations that he will participate in during one work day. Each of these negotiations will require different strategies based on the importance of the relationship versus the needed outcome from the negotiation. The authors postulate that “any one approach to negotiation clearly will not work in all situations. Executives need a framework for determining what strategies are best in different situations. We believe the best strategy depends on desired outcomes.”[13] By assessing the context of the negotiation, one can pinpoint the desired outcomes. This is extremely relevant to our discussion, as our discussion centers around an exercise that is designed specifically to do this type of assessment and lead the negotiator toward a strategy that obtains the desired outcome. Savage, et al. argue that “managers often overlook the impact of the negotiation on their relationship” with the other party, and how “this oversight can hurt a manager's relationship with the other party, thus limiting his or her ability to obtain desired substantive outcomes now or in the future.”[14] They explain how each negotiation should be perceived as a small facet of the overall relationship between the two negotiators and managers should keep their desired relationship in mind when negotiating, tempering their strategy to incorporate the relationship end-goals. The authors discuss different strategies: sharing the pie through collaboration; dividing up a fixed portion of the pie by competing vigorously, attempting to win concessions at the expense of the other party; and compromising at various levels to divide up an indeterminate pie. They theorize that the relative power of the negotiator in comparison to his counterpart in the negotiation is reflective of how much dependence each has on the other. “Individuals assess their power in a relationship and choose whether to compete, accommodate, collaborate or withdraw when negotiating with others. Managers can assess their power relative to the other party by comparing their respective abilities to induce compliance through the control of human and material resources.”[15]  The results of this assessment determine what level of interdependence characterizes their relationship.

            Savage, et al. also look to the level of conflict inherent in the negotiation as a key determinant in negotiation strategy. Is the negotiation hostile or amiable? The answer will guide the manager toward the proper strategy.  Once again, the important question is which is more important: the relationship or the outcome? According to the authors, if the outcome is more important, negotiators will choose one of four strategies: Trusting Collaboration, Firmly Compete, Openly Subordinate, and Active Avoidance. Once again they are arranged in the same manner as Blake and Mouton’s Managerial Grid and the Thomas-Kilmann Conflict Mode Assessment Tool.

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            They expound on each quadrant as follows:

Trustingly collaborative strategies generally are easiest to use and most effective when the manager's organization and the other party are interdependent and mutually supportive. If managers are more concerned with establishing a positive relationship with another party than obtaining substantive outcomes, they should openly subordinate. An openly subordinate strategy is a yield-win strategy that usually provides desired substantive outcomes to the other party but rarely to the manager. If substantive interests are important but the relationship is not, the manager should consider firmly competing. This situation often occurs when managers have little trust for the other party or the relationship is not good to begin with. Managers should consider actively avoiding negotiation if neither the relationship nor the substantive outcomes are important to them or the organization. Simply refusing to negotiate is the most direct and active form of avoidance. [17]

The authors delve even deeper into their argument pointing out that there are differing levels of each strategy which manifest themselves based upon the perceived stance the opponent has taken. An alternate type of each style is reviewed based upon how much the other negotiator values the relationship in comparison to the outcome. Principled Collaboration is the modified collaborative strategy that is appropriate when the other negotiator is not open after the principle negotiator starts with an open strategy. Focused Subordination is when the negotiator tries to discover the key needs of the other party and make concessions for them in a way that achieves gains for the company while also building the relationship. Soft Competition is employed by a negotiator when the other party is powerful and has the principle negotiator at a disadvantage. There are two avoidance contingencies; Passive Avoidance is utilized when the negotiator wants to maintain the relationship but is not concerned with outcome or relational gains; this is accomplished by delegating the negotiation.  Responsive Avoidance is appropriate when the negotiator is indifferent about any outcome and does not view the relationship as important.  

Savage, et al. lay this out nicely using the following table:

 

          

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They conclude that negotiations will be more effective when negotiators take the time to determine which is more important to them – outcomes or relationships – and which is more important to their opponent. Knowledge of these variables will guide the negotiator in the direction of the correct strategy.

            The attached exercise lays out questions that help the negotiator determine the levels of relationship and outcome importance. Once a leader answers these questions, he/she can decide whether a ‘win-win’ strategy is best to use. The exercise discusses how a ‘win-win’ strategy is an integrative solution, one in which “one person doesn’t gain at the other’s expense.”[19] The exercise then breaks down the negotiation process into three areas: Problem Identification, Solution Generation, and Solution Selection. The problem identification stage determines the levels of outcome and relationship importance perceived in the initial discussions of the negotiation. The solution generation stage is characterized by a search for viable alternatives “that reframe the problem so as to create win-win solutions out of what might have first appeared to be win-lose.”[20] In the solution selection stage all viable options are weighed and the best solution is chosen. If negotiators “can find a way for each side to win, you have accomplished a great feat and reduced the contrariness of the negotiation process.”[21]  [22]

 


[1] “Negotiation Skills.” Bite-Sized Training. Mind Tools Club, n.d. Web 30 Oct 2011. 5. <http://www.mindtools.com/community/Bite-SizedTraining/BiteSizedTraining-Negotiation.pdf>

[2] “Blake Mouton Managerial Grid, Balancing Task- and People-Oriented Leadership” Mind Tools. Mind Tools Club, n.d. Web 12 Oct 2011. < http://www.mindtools.com/pages/article/newLDR_73.htm>.

[3] Van de Vliert, Evert, and Boris Kabanoff. “Toward Theory-Based Measurements of Conflict Management,” Academy of Management Journal. 33/1. (1990): 200.

[4] Volkema, Roger J., and Thomas Bergmann. “Conflict Styles as Indicators of Behavioral Patterns in Interpersonal Conflicts.” Journal of Social Psychology. 135/1. (1995): 6.

[5] Ibid. 7.

[6] McNary, Lisa D. “The Term ‘Win-Win’ in Conflict Management: A Classic Case of Misuse and Overuse.” The Journal of Business Communication. 40/2. (2003): 145.

[7] Ibid. 145.

[8] Ibid. 145.

[9] Ibid. 146.

[10] Ibid. 149.

[11] Ibid. 150.

[12] Ibid. 156.

[13] Savage, Grant, John Blair, and Ritch Sorenson. “Consider  Both Relationships and Substance When Negotiating Strategically.” The Academy of Management Executive. 3/1. (1989): 38.

 

[14] Ibid. 38.

[15] Ibid. 39.

[16] Ibid. 40.

[17] Ibid. 41.

[18] Ibid. 42.

[19] “Negotiation Skills.” Bite-Sized Training. Mind Tools Club, n.d. Web 30 Oct 2011. 7. <http://www.mindtools.com/community/Bite-SizedTraining/BiteSizedTraining-Negotiation.pdf>

[20] Ibid. 12.

[21] Ibid. 19.

[22] Ibid 1-19.

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Robert Pannell,
Dec 18, 2011, 8:19 PM
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Robert Pannell,
Dec 18, 2011, 8:22 PM
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Dec 18, 2011, 8:24 PM
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