Roger Clarke
Principal, Xamax Consultancy Pty Ltd, Canberra
Visiting Fellow, Department of Computer Science, Australian National University
Version of 9 October 1993
© Xamax Consultancy Pty Ltd, 1993
This document is at http://www.anu.edu.au/people/Roger.Clarke/SOS/FundasNeg.html
Definitions
Negotiation is a process involving dealings among persons, which are intended to result in an agreement, and commitment to a course of action.
Negotiation may be:
* between two parties (bilateral); or
* among several parties (multilateral).
Negotiation comprises a series of communications between or among the parties. These may occur in one or more:
* meetings (same-time/same-place communications);
* remote meetings supported by telephone, video-conference or workstations (same-time/different-place communications); and/or
* asynchronous communications supported by recorded voice-messages, fax, letter or email (different-time communications).
Each of the parties who participate in negotiation may be a principal, or an agent for a human principal or for a legal entity such as a corporation.
Negotiation may be straightforward and quick, if the wishes of all parties are satisfied by the first proposal put by one of them.
Where the wishes of all parties are not satisfied by the first proposal, discussions are likely to lead to variations to it, or the creation of counter-proposals. This process will generally be quicker if the parties provide information to one another about their wishes.
In some cases, it is possible for a proposal to be generated which satisfies the needs of all parties. This is commonly referred to as a collaborative process leading to a 'win-win' situation.
In other circumstances, one or more parties may have to accept less than they wished for when they entered the negotiation, i.e. to compromise their objectives in the interests of reaching an agreement. Such an environment involves some degree of competition among the parties.
In some circumstances, the fulfilment of the wishes of one party may be directly detrimental to the fulfilment of the wishes of another party, e.g. in bargaining over the price of goods or services. This is referred to as a 'win-lose' situation (in the language of salesmen), or a 'zero-sum game' (in the context of operations research and game theory).
During negotiations, the parties may reach a 'stand-off', whereby no commonly acceptable point along a single dimension (such as price) can be found, or a 'dead-lock', whereby the parties' demands on one another are mutually unacceptable along several different dimensions.
Pre-Conditions for a Successful Negotiation
* a set of parties who are, or at least may be, capable of satisfying one another's needs
* knowledge by the parties of one another's existence
* interest by the parties in achieving an outcome
* interest by the parties in entering into negotiations
* adequate mutual recognition and respect among the parties
* a basis for communication among the parties, including:
o shared language
o the ability to meet together
o the availability of infrastructure to support communications over time and space
* power of the parties to commit, or arrange the commitment of, the principals
* power of the parties to deliver on the commitment
Major Factors in Negotiation Strategy
Power, i.e. the ability to exercise control
* having options, i.e. not wanting any particular outcome too much
* other parties not having options
* precedent and legitimacy
* expertise and judgement in the area
* confidence / credibility / comfort / persistence
* persuasive capacity
Time
* the urgency for each party to achieve a result
Information
* the wishes of each party
* the urgency for each party to achieve a result
* the cue clusters emanating from each party
* the pattern of concessions behaviour of each party
Conflict Management Approaches
This is what to do when the party gets rough ...
* avoid apparent reactions, i.e. don't take it personally (even if it was meant to hurt), maintain your composure and keep your voice at the same level
* avoid statements which directly disagree with the other party's statement
* acknowledge that you have heard the message
* agree with parts of the message that you accept
* seek clarification of the parts of the message that you do not accept
Key Factors which Influence the Course of a Negotiation
* the parties':
o cultural backgrounds (e.g. Asians are less concerned about urgency than European cultures; and the Latin temperament demands visible drama)
o weltanschaungen (e.g. racial or class superiority)
o mindsets (e.g. the capitalist or simple-minded economic rationalist expectation that everyone else maximises their own advantage)
o negotiating styles (e.g. the bullying of Kerry Packer or Bronwyn Bishop versus the sweet reason of Desmond Tutu or Mother Teresa)
* the inherent bargaining power (or 'leverage') which some parties have at the commencement of the negotiation. In particular, it may be more important, or more urgent, for one party to reach an agreement, than for the others. By refusing to compromise, parties with bargaining power may be able to force other parties to accept relatively disadvantageous terms. Common examples include circumstances in which sellers have monopoly power, or buyers monopsony power, even if the power is quite localised or short-term; and where one party has regulatory authority over one or more of the others
* the additional bargaining power which the parties may be able to generate during the course of the negotiations
* advocacy, or persuasiveness of argument, by parties to the negotiation, and by influential persons and organisations external to the negotiation process (e.g. a politician, or an industry association)
* any prior experiences in negotiating among the parties, which may be positive (e.g. knowing when to trust and when to doubt; and being able to read cue clusters) or negative (e.g. having reason to distrust, or seeking revenge)
* subconscious and semi-conscious psychological factors, such as the physical 'presence' or appearance, aggressiveness, confidence, amenability, etc. of the parties to the negotiation
* prior and future relationships among the principals (e.g. established business partners may not fully exploit one another's negotiating weaknesses in in the hope of avoiding similarly predatory behaviour in a subsequent negotiation) and relationships among the agents (who have similar interests, e.g. solicitors in a small country town)
Negotiation Strategies
Always commence collaboratively, in order to avoid missing a simple but advantageous solution, and to build up the other parties' investment in the proceedings
In a win-win situation, continue to use consensus and collaboration
In a win-lose situation, where other parties have the upper hand, look for opportunities to avoid or defer the proceedings, or at least to convince the other parties that you can do without a result for the moment
In a win-lose situation, where you have the upper hand, choose between:
* competition, i.e. exploiting your strengths and their weaknesses
* compromise, i.e. giving up some of your advantage to secure the agreement
* accommodation, i.e. giving up more than is necessary
Which is appropriate depends primarily on the urgency to you of achieving a result, and the anticipated longevity of your relationships with the other parties
Some Key Negotiation Tactics
Clearly distinguish between:
* firm offers
* conditional offers
* hypothetical discussions
Avoid making unilateral concessions
Sustain credibility through consistent behaviour and signals
Record key information which arises during the negotiation
Don't use an Ultimatum until and unless the following Pre-Conditions exist:
* there is strong commitment by the other parties to achieving a result
* it is as pleasantly expressed as possible, i.e. not demeaning but palatable
* it is backed up by legitimacy ('my principal has gone as far as he can go')
* it is expressed as a choice among alternatives ('the pink one or the blue one')
Document the outcomes by way of a Minute, an Agreement, a Contract, or a Memorandum of Understanding among the parties
Characteristics of a Successful Negotiator
Personal Knowledge
* clarity as to the principal's wishes
* a preliminary understanding of the wishes of the other parties
* an understanding of the cultural backgrounds, weltanschaungen, mindsets and negotiating styles of the other parties
Personal Skills
* communications skills, particularly verbal
* an ability to 'read' the other parties' speech and body-signals in meetings, and in remote meetings and asynchronous communications, and to detect and interpret 'cue clusters' (i.e. individual statements and body-signals are convey little information unless they form part of a pattern)
* ability to avoid becoming excited and emotive
* ability to suppress disadvantageous verbal and non-verbal cues, and where appropriate to send misleading cues in order to support a bluff
* ability to cope with conflict and emotion
* self-confidence and self-assertivenss, but without unnecessary aggressiveness
* coolness, robustness and resilience under pressure
* patience and flexibility
* ability to quickly assess the impact of variations and counter-proposals on the principal's interests
* ability to generate variations and counter-proposals
Commencing Position
* bargaining advantages
* no apparent bargaining disadvantages
Navigation
Go to Roger's Home Page.
Go to the contents-page for this segment.
Send an email to Roger
Created: 26 June 1998
Last Amended: 26 June 1998
These community service pages are a joint offering of the Australian National University (which provides the infrastructure), and Roger Clarke (who provides the content).
The Australian National University
Visiting Fellow, Faculty of Engineering and Information Technology, Information Sciences Building Room 211
Xamax Consultancy Pty Ltd, ACN: 002 360 456
78 Sidaway St
Chapman ACT 2611 AUSTRALIA
Tel: +61 6 288 6916 Fax: +61 6 288 1472
Principal, Xamax Consultancy Pty Ltd, Canberra
Visiting Fellow, Department of Computer Science, Australian National University
Version of 9 October 1993
© Xamax Consultancy Pty Ltd, 1993
This document is at http://www.anu.edu.au/people/Roger.Clarke/SOS/FundasNeg.html
Definitions
Negotiation is a process involving dealings among persons, which are intended to result in an agreement, and commitment to a course of action.
Negotiation may be:
* between two parties (bilateral); or
* among several parties (multilateral).
Negotiation comprises a series of communications between or among the parties. These may occur in one or more:
* meetings (same-time/same-place communications);
* remote meetings supported by telephone, video-conference or workstations (same-time/different-place communications); and/or
* asynchronous communications supported by recorded voice-messages, fax, letter or email (different-time communications).
Each of the parties who participate in negotiation may be a principal, or an agent for a human principal or for a legal entity such as a corporation.
Negotiation may be straightforward and quick, if the wishes of all parties are satisfied by the first proposal put by one of them.
Where the wishes of all parties are not satisfied by the first proposal, discussions are likely to lead to variations to it, or the creation of counter-proposals. This process will generally be quicker if the parties provide information to one another about their wishes.
In some cases, it is possible for a proposal to be generated which satisfies the needs of all parties. This is commonly referred to as a collaborative process leading to a 'win-win' situation.
In other circumstances, one or more parties may have to accept less than they wished for when they entered the negotiation, i.e. to compromise their objectives in the interests of reaching an agreement. Such an environment involves some degree of competition among the parties.
In some circumstances, the fulfilment of the wishes of one party may be directly detrimental to the fulfilment of the wishes of another party, e.g. in bargaining over the price of goods or services. This is referred to as a 'win-lose' situation (in the language of salesmen), or a 'zero-sum game' (in the context of operations research and game theory).
During negotiations, the parties may reach a 'stand-off', whereby no commonly acceptable point along a single dimension (such as price) can be found, or a 'dead-lock', whereby the parties' demands on one another are mutually unacceptable along several different dimensions.
Pre-Conditions for a Successful Negotiation
* a set of parties who are, or at least may be, capable of satisfying one another's needs
* knowledge by the parties of one another's existence
* interest by the parties in achieving an outcome
* interest by the parties in entering into negotiations
* adequate mutual recognition and respect among the parties
* a basis for communication among the parties, including:
o shared language
o the ability to meet together
o the availability of infrastructure to support communications over time and space
* power of the parties to commit, or arrange the commitment of, the principals
* power of the parties to deliver on the commitment
Major Factors in Negotiation Strategy
Power, i.e. the ability to exercise control
* having options, i.e. not wanting any particular outcome too much
* other parties not having options
* precedent and legitimacy
* expertise and judgement in the area
* confidence / credibility / comfort / persistence
* persuasive capacity
Time
* the urgency for each party to achieve a result
Information
* the wishes of each party
* the urgency for each party to achieve a result
* the cue clusters emanating from each party
* the pattern of concessions behaviour of each party
Conflict Management Approaches
This is what to do when the party gets rough ...
* avoid apparent reactions, i.e. don't take it personally (even if it was meant to hurt), maintain your composure and keep your voice at the same level
* avoid statements which directly disagree with the other party's statement
* acknowledge that you have heard the message
* agree with parts of the message that you accept
* seek clarification of the parts of the message that you do not accept
Key Factors which Influence the Course of a Negotiation
* the parties':
o cultural backgrounds (e.g. Asians are less concerned about urgency than European cultures; and the Latin temperament demands visible drama)
o weltanschaungen (e.g. racial or class superiority)
o mindsets (e.g. the capitalist or simple-minded economic rationalist expectation that everyone else maximises their own advantage)
o negotiating styles (e.g. the bullying of Kerry Packer or Bronwyn Bishop versus the sweet reason of Desmond Tutu or Mother Teresa)
* the inherent bargaining power (or 'leverage') which some parties have at the commencement of the negotiation. In particular, it may be more important, or more urgent, for one party to reach an agreement, than for the others. By refusing to compromise, parties with bargaining power may be able to force other parties to accept relatively disadvantageous terms. Common examples include circumstances in which sellers have monopoly power, or buyers monopsony power, even if the power is quite localised or short-term; and where one party has regulatory authority over one or more of the others
* the additional bargaining power which the parties may be able to generate during the course of the negotiations
* advocacy, or persuasiveness of argument, by parties to the negotiation, and by influential persons and organisations external to the negotiation process (e.g. a politician, or an industry association)
* any prior experiences in negotiating among the parties, which may be positive (e.g. knowing when to trust and when to doubt; and being able to read cue clusters) or negative (e.g. having reason to distrust, or seeking revenge)
* subconscious and semi-conscious psychological factors, such as the physical 'presence' or appearance, aggressiveness, confidence, amenability, etc. of the parties to the negotiation
* prior and future relationships among the principals (e.g. established business partners may not fully exploit one another's negotiating weaknesses in in the hope of avoiding similarly predatory behaviour in a subsequent negotiation) and relationships among the agents (who have similar interests, e.g. solicitors in a small country town)
Negotiation Strategies
Always commence collaboratively, in order to avoid missing a simple but advantageous solution, and to build up the other parties' investment in the proceedings
In a win-win situation, continue to use consensus and collaboration
In a win-lose situation, where other parties have the upper hand, look for opportunities to avoid or defer the proceedings, or at least to convince the other parties that you can do without a result for the moment
In a win-lose situation, where you have the upper hand, choose between:
* competition, i.e. exploiting your strengths and their weaknesses
* compromise, i.e. giving up some of your advantage to secure the agreement
* accommodation, i.e. giving up more than is necessary
Which is appropriate depends primarily on the urgency to you of achieving a result, and the anticipated longevity of your relationships with the other parties
Some Key Negotiation Tactics
Clearly distinguish between:
* firm offers
* conditional offers
* hypothetical discussions
Avoid making unilateral concessions
Sustain credibility through consistent behaviour and signals
Record key information which arises during the negotiation
Don't use an Ultimatum until and unless the following Pre-Conditions exist:
* there is strong commitment by the other parties to achieving a result
* it is as pleasantly expressed as possible, i.e. not demeaning but palatable
* it is backed up by legitimacy ('my principal has gone as far as he can go')
* it is expressed as a choice among alternatives ('the pink one or the blue one')
Document the outcomes by way of a Minute, an Agreement, a Contract, or a Memorandum of Understanding among the parties
Characteristics of a Successful Negotiator
Personal Knowledge
* clarity as to the principal's wishes
* a preliminary understanding of the wishes of the other parties
* an understanding of the cultural backgrounds, weltanschaungen, mindsets and negotiating styles of the other parties
Personal Skills
* communications skills, particularly verbal
* an ability to 'read' the other parties' speech and body-signals in meetings, and in remote meetings and asynchronous communications, and to detect and interpret 'cue clusters' (i.e. individual statements and body-signals are convey little information unless they form part of a pattern)
* ability to avoid becoming excited and emotive
* ability to suppress disadvantageous verbal and non-verbal cues, and where appropriate to send misleading cues in order to support a bluff
* ability to cope with conflict and emotion
* self-confidence and self-assertivenss, but without unnecessary aggressiveness
* coolness, robustness and resilience under pressure
* patience and flexibility
* ability to quickly assess the impact of variations and counter-proposals on the principal's interests
* ability to generate variations and counter-proposals
Commencing Position
* bargaining advantages
* no apparent bargaining disadvantages
Navigation
Go to Roger's Home Page.
Go to the contents-page for this segment.
Send an email to Roger
Created: 26 June 1998
Last Amended: 26 June 1998
These community service pages are a joint offering of the Australian National University (which provides the infrastructure), and Roger Clarke (who provides the content).
The Australian National University
Visiting Fellow, Faculty of Engineering and Information Technology, Information Sciences Building Room 211
Xamax Consultancy Pty Ltd, ACN: 002 360 456
78 Sidaway St
Chapman ACT 2611 AUSTRALIA
Tel: +61 6 288 6916 Fax: +61 6 288 1472
Integrantes do Grupo: Rafaela Santiago dos Santos.
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