Business, Legal & Accounting Glossary
Broadly speaking, negotiation is an interaction of influences. Such interactions, for example, include the process of resolving disputes, agreeing upon courses of action, bargaining for individual or collective advantage, or crafting outcomes to satisfy various interests. Negotiation is thus a form of alternative dispute resolution.
Negotiation involves three basic elements: process, behaviour 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. Behaviours 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.
Skilled negotiators may use a variety of tactics ranging from negotiation hypnosis, to a straight forward presentation of demands or setting of preconditions to more deceptive approaches such as cherry-picking. Intimidation and salami tactics may also play a part in swaying the outcome of negotiations.
Negotiation is the one primary method of alternative dispute resolution, typically evidenced by a trained negotiator acting on behalf of a particular organization or position. Compare this to mediation where a disinterested third party listens to each sides’ arguments and attempts to help craft an agreement between the parties. Lastly, arbitration is similar to a legal proceeding, whereby both sides make an argument as to the merits of their “case” and then the arbitrator decides the outcome both parties should follow (non-binding arbitration) or must follow (binding arbitration). The key to Negotiation is information.
Given the above definition, negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce and parenting. See also negotiation theory.
In the advocacy approach, a skilled negotiator usually serves as an advocate for one party to the negotiation and attempts to obtain the most favourable outcomes possible for that party. In this process the negotiator attempts to determine the minimum outcome(s) the other party is (or parties are) willing to accept, then adjusts their demands accordingly. A “successful” negotiation in the advocacy approach is when the negotiator is able to obtain all or most of the outcomes their party desires, but without driving the other party to permanently break off negotiations, unless the best alternative to a negotiated agreement (BATNA) is acceptable.
Traditional negotiating is sometimes called win-lose because of the assumption of a fixed “pie”, that one person’s gain results in another person’s loss. This is only true, however, if only a single issue needs to be resolved, such as a price in a simple sales negotiation. If multiple issues are discussed, differences in the parties’ preferences make win-win negotiation possible. For example, in a labour negotiation, the union might prefer job security over wage gains. If the employers have opposite preferences, a trade is possible that is beneficial to both parties. Such a negotiation is therefore not an adversarial zero-sum game.
During the early part of the twentieth century, academics such as Mary Parker Follett developed ideas suggesting that agreement often can be reached if parties look not at their stated positions but rather at their underlying interests and requirements.
In the 1970s, practitioners and researchers began to develop win-win approaches to negotiation. Win-win is taken from Economic Game Theory, and has been adopted by negotiation North American academics to loosely mean Principled Negotiation. Getting to YES was published by Roger Fisher and William Ury as part of the Harvard negotiation project. The book’s approach, referred to as Principled Negotiation, is also sometimes called mutual gains bargaining. The mutual gains approach has been effectively applied in environmental situations (see Lawrence Susskind and Adil Najam) as well as labour relations where the parties (e.g. management and a labour union) frame the negotiation as “problem-solving”.
There are a tremendous number of other scholars who have contributed to the field of negotiation, including Gerard E. Watzke at Tulane University, Sara Cobb at George Mason University, Len Riskin at the University of Missouri, Howard Raiffa at Harvard, Robert McKersie and Lawrence Susskind at MIT, and Adil Najam and Jeswald Salacuse at The Fletcher School of Law and Diplomacy.
Emotions play an important part in the negotiation process, although it is only in recent years that their effect is being studied. Emotions have the potential to play either a positive or negative role in negotiation. During negotiations, the decision as to whether or not settle, rests in part on emotional factors. Negative emotions can cause intense and even irrational behaviour and can cause conflicts to escalate and negotiations to break down, while positive emotions facilitate reaching an agreement and help to maximize joint gains.
Affect effect: Dispositional Effect affects the various stages of the negotiation process: which strategies are planned to be used, which strategies are actually chosen, the way the other party and its intentions are perceived, the willingness to reach an agreement and the final outcomes. Positive affectivity (PA) and negative affectivity (NA) of one or more of the negotiating sides can lead to very different outcomes.
Even before the negotiation process starts, people in a positive mood have more confidence, and higher tendencies to plan to use a cooperative strategy. During the negotiation, negotiators who are in a positive mood tend to enjoy the interaction more, show less contentious behaviour, use less aggressive tactics and more cooperative strategies. This, in turn, increases the likelihood that parties will reach their instrumental goals, and enhance the ability to find integrative gains. Indeed, compared with negotiators with negative or natural affectivity, negotiators with positive affectivity reached more agreements and tended to honour those agreements more. Those favourable outcomes are due to better decision making processes, such as flexible thinking, creative problem solving, respect for others’ perspectives, willingness to take risks and higher confidence. Post negotiation positive affect has beneficial consequences as well. It increases satisfaction with achieved outcome and influences one’s desire for future interactions. The PA aroused by reaching an agreement facilitates the dyadic relationship, which results in an effective commitment that sets the stage for subsequent interactions.
PA also has its drawbacks: it distorts the perception of self-performance, such that performance is judged to be relatively better than it actually is. Thus, studies involving self-reports on achieved outcomes might be biased.
Negative affect has detrimental effects on various stages in the negotiation process. Although various negative emotions affect negotiation outcomes, by far the most researched is anger. Angry negotiators plan to use more competitive strategies and to cooperate less, even before the negotiation starts. These competitive strategies are related to reduced joint outcomes. During negotiations, anger disrupts the process by reducing the level of trust, clouding parties’ judgment, narrowing parties’ focus of attention and changing their central goal from reaching agreement to retaliating against the other side. Angry negotiators pay less attention to the opponent’s interests and are less accurate in judging their interests, thus achieve lower joint gains. Moreover, because anger makes negotiators more self-centred in their preferences, it increases the likelihood that they will reject profitable offers. Anger doesn’t help in achieving negotiation goals either: it reduces joint gains and does not help to boost personal gains, as angry negotiators don’t succeed in claiming more for themselves. Moreover, negative emotions lead to acceptance of settlements that are not in the positive utility function but rather have a negative utility. However, expression of negative emotions during negotiation can sometimes be beneficial: legitimately expressed anger can be an effective way to show one’s commitment, sincerity, and needs. Moreover, although NA reduces gains in integrative tasks, it is a better strategy then PA in distributive tasks (such as zero-sum).
Research points out that negotiator’s emotions do not necessarily affect the negotiation process. Albarracın et al. (2003) suggested that there are two conditions for emotional effect, both related to the ability (presence of environmental or cognitive disturbances) and the motivation:
According to this model, emotions are expected to affect negotiations only when one is high and the other is low. When both ability and motivation are low the effect will not be identified, and when both are high the effect will be identified but discounted as irrelevant for judgment. A possible implication of this model is, for example, that the positive effects PA has on negotiations (as described above) will be seen only when either motivation or ability is low.
Most studies on emotion in negotiations focus on the effect of the negotiator’s own emotions on the process. However, what the other party feels might be just as important, as group emotions are known to affect processes both at the group and the personal levels. When it comes to negotiations, trust in the other party is a necessary condition for its emotion to affect, and visibility enhances the effect. Emotions contribute to negotiation processes by signalling what one feels and thinks and can thus prevent the other party from engaging in destructive behaviours and to indicate what steps should be taken next: PA signals to keep in the same way, while NA points that mental or behavioural adjustments are needed.
Partner’s emotions can have two basic effects on negotiator’s emotions and behaviour: mimetic/ reciprocal or complimentary. For example, disappointment or sadness might lead to compassion and more cooperation. In a study by Butt et al. (2005) which simulated real multi-phase negotiation, most people reacted to the partner’s emotions in reciprocal, rather than complementary, manner. Specific emotions were found to have different effects on the opponent’s feelings and strategies chosen:
Negotiation is a rather complex interaction. Capturing all its complexity is a very difficult task, let alone isolating and controlling only certain aspects of it. For this reason, most negotiation studies are done under laboratory conditions and focus only on some aspects. Although lab studies have their advantages, they do have major drawbacks when studying emotions:
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This glossary post was last updated: 25th April, 2020 | 0 Views.