Keywords

Negotiation; Win/Win; negotiation phases; bargaining

Phase 1: Preparation

As with claims or legal proceedings, negotiations will have a greater chance of succeeding if the arguments are backed by good documentation. The preparation phase consists largely of collecting and collating these documents and distilling them into a concise set of data suitable for discussion. These data could be technical data, test results, and commercial forecasts, and could include precedents of previous discussions. There is really no limit as to what this back-up documentation should be, but the very act of reading these data and condensing them into a few pages will give the negotiator a clear picture of what the issues are.

Phase 2: Planning

It is pointless even considering a negotiating process if there is no intention to compromise. The degree of compromise and the limits of concessions that can be accepted have to be established in this phase. There is usually a threshold, below (or above), that must be respected, and the upper and lower limits in terms of time, delivery, money, and payment arrangements as well as the different levels of compromise for each area must be established in advance. There must be a clear appreciation of what concessions can be accepted and at what stage one must either concede or walk away.

Generally the party that has the most to gain from a negotiated settlement is automatically in the weaker position. In addition factors such as financial strength, future business relationships, possible publicity (good or bad), time pressures, and legal restraints must all be taken into consideration.

The location of the negotiations must be given some consideration as it may be necessary to call in advisers or experts at some stage. There is some psychological advantage in having the negotiation on one’s home ground and for this reason the other party may insist on a neutral venue such as a hotel or conference centre.

Phase 3: Introductions

Negotiations are carried out by people and the establishment of a good relationship and rapport can be very beneficial. A knowledge of the other party’s cultural background and business norms can help to put the other side at ease, especially where social rituals are important to them. Past co-operative ventures should be mentioned, and a discussion of common acquaintances, alliances, and interests all help to break the ice and tend to put all parties at their ease. A quick overview of the common goals as well as the differences may enable the parties to focus on the important issues, which can then be categorized for the subsequent stages.

Phase 4: Opening Proposal

One of the parties must make an initial offer that sets out their case and requirements. The wording of this opening would give some indication of the flexibility as an inducement to reaching a mutually acceptable settlement. Often the requirements of the opening gambit are inflated to increase the negotiation margin, but the other party will probably adopt the same tactics. It is at this opening stage that the other party’s body language such as hand gestures, posture, eye movements, and facial expressions can give clues as to the acceptance or non-acceptance of particular suggestions or offers. The common identification of important points will help to lead the discussion into the next phase.

Phase 5: Bargaining

The purpose of bargaining is to reach an agreement that lies somewhere between the initial extreme positions taken by the parties. Both parties may employ well-known tactics such as veiled threats, artificial explosions of anger or outrage, threats of walking out, or other devices, but this is all part of the process. Often a concession on one aspect can be balanced by an enhancement on another. For example, a supplier may reduce his price to the level required by the buyer, provided his production (and hence his delivery) period can be increased by a few weeks or months. The buyer has to decide which aspect takes priority: money or time.

Concessions should always be traded for a gain in another area, which may not be necessarily in the same units or terms. For example, a reduction in price can be balanced by an increase in the number of units ordered or a later delivery. There should always be a number of issues on the table for discussion, so that quid pro quo deals can be struck between them.

Phase 6: Agreement

Negotiations are only successful if they end with an agreement. If both parties walk away without an agreement, one or other (or possibly both) of the negotiators have not done their job and the case will probably end up in adjudication, arbitration, or litigation. Concessions, which are not just given away, should not be regarded as a sign of weakness, but a realization that the other party has a valid point of view that merits some consideration. Both parties should be satisfied enough to wish to continue working or trading together and both are probably aware that there is always the risk that the legal costs of an action can exceed the amount in dispute. This realization often concentrates the mind to agree on a settlement. It may even be prudent, if there is no great time pressure, to leave the door open for a further discussion at a later date or allow the future discussions to take place at a higher level of management.

Phase 7: Finalizing

When an agreement has been reached, the deal has to be formalized by a written statement setting out the terms of the agreement. This must be signed by both parties attending the negotiations. In some cases the agreement reached will be subject to ratification by senior management, but if the settlement is reasonable, such confirmation is usually given without

question. It is a fact that the further a person is removed from the ‘coal face’ of the dispute, the more likely he or she is to ratify a settlement.

It must be pointed out that negotiations involving labour disputes are best carried out by specialist negotiators with experience in industrial relations and national agreements, local working practices, and labour laws. The procedures for such negotiations, which often end up with applications to conciliation boards or tribunals, are outside the scope of this book.

However, differences of opinion can sometimes be reconciled by resorting to mediation involving the help of an independent third party.

When an agreement between the parties appears to be impossible, but neither party relishes the idea of potentially expensive and drawn-out arbitration or litigation, a practical next step would be for both parties to consider resorting to the relatively inexpensive and quick process of mediation. If this procedure fails, there is still the option of adjudication. Both these dispute resolution procedures are described more fully in Chapter 42.