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Definition of Negotiation and its Principal Features

Sarah Ogilvie

According to Rubin and Brown (1975), negotiation refers to a process in which individuals work together to formulate agreements about the issues in dispute. This process assumes that the parties involved are willing to communicate and to generate offers, counter-offers, or both. Agreement occurs if and only if the offers made are accepted by both of the parties (Neale & Northcraft, 1991).

Negotiation involves several key components including two or more parties to a negotiation, their interests, their alternatives, the process and the negotiated outcomes (Neale & Northcraft, 1991). These elements are described in the following discussion.

A party to a negotiation comprises a person or a group of persons (Thompson, 1990). Although the focus of this research is upon two-party or dyadic negotiation, negotiation can occur between any number of individuals representing their own or others' issues. However, usually the greater number of people involved, the more complex the negotiation process becomes and the more difficult it is to reach an agreement (Bazerman, Curhan, Moore & Valley, 2000; Thompson, 2001).

The negotiation process can be characterised by the strategies, tactics and the events that take place in a negotiation. Strategies within a negotiation refer to the approach negotiators select to pursue their objectives. For example, a negotiator may choose to adopt a cooperative bargaining strategy as opposed to a competitive strategy and as such may be more inclined to share information and to make concessionary offers. The more discrete elements of the strategy, such as information sharing, are referred to as tactics (Carnevale & Pruitt, 1992).

On a more micro-level, the process includes the verbal and the non-verbal behaviour that is elicited during the negotiation (Thompson, 1990). The current research is directed at this level. Through an examination of negotiator behaviour, and in particular their communication behaviour, a greater understanding can be obtained about the way negotiators perceive events and reach decisions as the negotiation unfolds. An analysis of behaviour at this level can also offer important insights into the cognitive processes of negotiators that underpin the outcomes that they achieve (Donnellon & Gray, 1989).

At the outset of a negotiation, each party corresponds to its own set of interests or preferences about the way the dispute should be settled (Rubin, 1994). Interests, in negotiation contexts, essentially refer to the underlying needs of the parties (Thompson, 1998). For example, in negotiating a pay-rise, Paul a long-term employee, may want a rise of $5,000 to compensate him for the amount of overtime he has been working. Laura, his employer, however, feels that he should receive a pay rise of only $2,000: a figure she believes is commensurate with the level of organisational commitment he has been displaying. In this scenario, the interests relate to the reasons that each party has for wanting a pay increase to be awarded. The interests differ from the positions held by each of the parties (Brett, Goldberg & Ury, 1990). In this particular case, the positions are the pay-rise amounts requested and offered by the two parties: $5,000 and $2,000 respectively. By focusing on the interests involved as opposed to the positions held, research suggests that more mutually satisfying solutions are possible (Fisher, Ury & Patton, 1991; Ury, Brett & Goldberg, 1993; Lytle, Brett & Shapiro, 1999). Studies have also shown that by focusing on interests rather than positions, there is greater potential for addressing and resolving the underlying reasons for the dispute. In addressing the underlying reasons, further conflict between the two parties isles likely to erupt (Ury et al., 1993). Such a focus can be particularly important when parties need to continue to interact in the future, as in the case of the work colleagues negotiating a pay-rise.

The degree to which the interests of the parties are aligned can facilitate the range and type of outcomes available for resolution (Lewicki, Saunders & Minton, 2001). When the interests of those involved are related to some degree, opportunities for resolution can be more readily identified. However, as negotiation is often perceived as a combative exercise in which individuals attempt to conceal information (Thompson, 1998), it can be difficult to identify the level of alignment between interests within the negotiation context. In effect, the level of discussion can influence the likelihood of particular solutions being reached (Lytle et al., 1999).

When the interests of the parties involved are diametrically opposed, the negotiation is known as a fixed-sum or a distributive negotiation (Thompson, 1990). In these situations, pure conflict between the parties is present. A negotiation that could be described as distributive would be one in which an employee requires that she take two weeks leave during the school holiday period to spend time with her children, and her employer requires that she work during this period. In this instance there is no way for both parties' preferences to be achieved: one party's loss is the other party's gain. For an agreement to be reached, one of the parties would need to concede their interests.

At the other end of the spectrum, pure coordination exists when the interests of the parties are completely compatible (Carnevale & Pruitt, 1992). In discussing their interests, the parties engaged in this type of negotiation come to the realisation that both sets of interests can be met fully. This situation may occur, for example, in a relationship in which one partner wants to eat meals before a certain time so that she can play sport later in the evening, and the other partner, because of metabolic requirements, needs to eat within a certain timeframe after arriving home from work. These interests nonetheless induce a solution that is completely compatible: by eating early in the evening, both parties' needs or interests are met. Pure coordination negotiations, because they involve no real differences in interests, are rarely the subject of investigation (Thompson, 1990).

When interests are neither purely opposed nor purely compatible, the negotiation is termed a variable-sum or an integrative negotiation. This type of negotiation comprises the majority of conflict situations and typically involves more than one issue in contention (Lewicki, et al., 2001). To illustrate the way that interests might be integrative, consider a scenario in which a recently separated husband and wife -- Dan and Julie -- are attempting to divide up their acquisitions. One of the pivotal issues in dispute involves the use of the beachside holiday house. Both parties want to have the house available for their weekend relaxation purposes and do not want to be there together. After some discussion, the couple decides to use the house during alternating weekends. In reaching such an agreement, the parties can be said to be compromising and the solution reached can be viewed as a compromise solution, which typically involves splitting the resource in question evenly.

However, in the case of Julie and Dan, more optimal solutions are available. On further discussion Dan recognises that he wants to continue writing his novel in a relaxed setting and so would also like to use the house during the week as well as on some weekends. Similarly, Julie indicates that she wants to take holidays in accordance with the children's school holidays and would therefore benefit from using the house during some weeks of the year. Through this discussion more opportunities are provided for further bargaining and as a result the couple decides that Julie should use the house on most weekends and during some weeks, and that Dan should use the house during the week and on some weekends. Ultimately, both parties secure a greater proportion of their interests. Optimising the solution in this way in part involves compromising, but also involves creating value by increasing the amount of the resource in dispute. Creating value in this way is also known as expanding the pie (Pruitt, 1981). The solution reached in this scenario ultimately represents an integrative solution as both parties have maximised the use of the holiday house according to their preferences.

Extensive exploration of negotiation-related strategies is beyond the scope of this discussion. However, several strategies should briefly be described that (when employed in negotiation settings) , facilitate integrative negotiation solutions. In addition to expanding the pie, negotiators can engage in logrolling. This strategy is applicable when negotiators are able to increase the number of resources available for negotiation. Concessions are then granted on issues that are less important to one party in exchange for concessions on issues that are of greater importance to that party (Lewicki et al., 2001). Negotiators can also create new solutions that fulfil the interests of both parties when these interests are, at least, partly, aligned in a strategy called bridging, which can partly circumvent the need to compromise on outcomes (Fisher & Ury, 1981; (Follett, 1942). A further mechanism used to achieve integrative solutions is called nonspecific compensation (Lewicki et al., 2001). This strategy allows for one party to achieve its objectives in exchange for a payoff that suits the needs of the party whose objectives are not directly met. Similarly, with the strategy of cost-cutting, one party achieves the outcomes it wants in exchange for a reduction of the other party's costs (Lewicki et al., 2001).

When one or other of the parties believes that their circumstances will not be improved by negotiating, they will accordingly choose not to engage in another alternative. The types of outcomes that parties believe will be available to them should they choose not to negotiate are termed alternatives to negotiated agreements (Carnevale & Pruitt, 1992). In preparing to negotiate, research suggests that parties should consider what their best alternative to the negotiated agreement (BATNA) is likely to be (Fisher et al., 1991). Should their BATNA seem more attractive than the outcome offered through the negotiation, parties may best serve their interests by terminating the discussion. On the other hand, if their BATNA is less attractive, and therefore relatively "nothing to lose", they may be encouraged to continue negotiating. Outcomes to a negotiation can range from mutual agreement on all the issues involved to an impasse or stalemate wherein both parties fail to agree on any aspect of the dispute (Thompson, 1990).

After an agreement has been reached, the economic value of the outcomes can be determined by examining how resources have been divided between parties. In negotiations that involve integrative or pure coordination type issues, the economic success or efficiency of the agreement can be measured by comparing the negotiated outcome to a solution that generates the highest utility for both of the parties involved. Solutions that maximise the joint gain -- that is, the benefits to both parties, wherein any improvement to one party's yield would result in a comparable or greater loss to the other party -- are known as Pareto optimal solutions (Thompson, 1990). Pareto optimal solutions are treated as a benchmark in negotiation research when the economic success of negotiated outcomes needs to be determined.

Enhancing economic success through negotiation is obviously vital in the business world. Recent literature also suggests that people place increasing value on the development and maintenance of trusting relationships with other individuals (Maister, Green & Galford, 2000). Accordingly, characterising the success of a negotiation now incorporates not only an analysis of the economic efficiency of outcomes, but also an assessment of whether disputants perceive the outcome to be fair and advantageous for the maintenance of ongoing relationships (Mannix, Tinsley & Bazerman, 1995). Although not the subject of the current research, assessment of relationship-oriented outcomes is bound to become more of a focus in future negotiation research.

In addition to characterising negotiations according to the degree of similarity between the parties' interests, negotiations can also be classified according to the nature of issues in contention. In classifying negotiation according to the nature of issues are two categories are often distinguished: negotiations that largely involve transactional issues and negotiations that involve personal issues (Thompson, 1998).

Personal disputes are typically those in which there are elements of a valued relationship at stake. In these types of disputes, emotions often affect the way that parties discuss issues, and in turn, influence the types of outcomes that are reached (Thompson, 1998). Examples of this form include disputes that occur between people who share a personal relationship, such as partners who are trying to divide labour within a household or settling a divorce. In these types of disputes, parties may present with material issues, but often the relationship between the parties needs to be addressed before the material issues can be resolved.

Transactional negotiations, however, involve more tangible, material matters. Although negotiations can rarely be classified as purely personal or transactional, transactional types of negotiations are likely to take place in more business-oriented settings and to involve more tangible resources. Examples of this form include negotiations that occur in the determination of employment pay and conditions and negotiations that occur at an organisational level (e.g., between government and business representatives). This study focuses on negotiations of a transactional kind.

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