Dictionary:

negotiation

  (nĭ-gō'shē-ā'shən)

The act or process of negotiating: successful negotiation of a contract; entered into labor negotiations.

Process of bargaining that precedes an agreement. Successful negotiation generally results in a Contract between the parties. See also Arbitration; Mediation.

The process of bargaining that precedes an agreement. Successful negotiation generally results in a Contract between the parties.
Example: Nelson wishes to purchase a property from Newman. Nelson is willing to pay up to a certain price and desires certain Conditions placed on the sale. Newman will accept anything over a certain price and may be willing to help finance the purchase for a higher price. In negotiation Nelson and Newman attempt to come to an agreement over the price and conditions. When they agree, a sales contract is Executed.

Negotiation is the process of two individuals or groups reaching joint agreement about differing needs or ideas. Oliver (1996) described negotiation as "negotiators jointly searching a multidimensional space and then agreeing to a single point in the space."

Negotiation applies knowledge from the fields of communications, sales, marketing, psychology, sociology, politics, and conflict resolution. Whenever an economic transaction takes place or a dispute is settled, negotiation occurs; for example, when consumers purchase automobiles or businesses negotiate salaries with employees.

Negotiation Styles

Two styles of negotiating, competitive and cooperative, are commonly recognized. No negotiation is purely one type or the other; rather, negotiators typically move back and forth between the two styles based on the situation.

On one end of the negotiation continuum is the competitive style. Competitive negotiation— also called adversarial, noncooperative, distributive bargaining, positional, or hard bargaining— is used to divide limited resources; the assumption is that the pie to be divided is finite.

Competitive strategies assume a "win-lose" situation in which the negotiating parties have opposing interests. Hostile, coercive negotiation tactics are used to force an advantage, and prenegotiation binding agreements are not allowed. Concessions, distorted communication, confrontational tactics, and emotional ploys are used.

Skilled competitive negotiators give away less information while acquiring more information, ask more questions, create strategies to get information, act firm, offer less generous opening offers, are slower to give concessions, use confident body language, and conceal feelings. They are more interested in the bargaining position and bottom line of the other negotiating party, and they prepare for negotiations by developing strategy, planning answers to weak points, and preparing alternate strategies.

A buyer-seller home purchase transaction illustrates competitive negotiating. The buyer gathers information to determine home value, quality, expenses, and title status. The seller gathers information to ensure that the prospective buyer qualifies for the loan. The parties negotiate concessions regarding home repairs, items to remain in the house, closing dates, and price. The negotiations stall as the buyer and seller disagree on a closing date; the seller retaliates by keeping the buyer out of the home for several days after the closing date. As a consequence of the competitive strategies used, the relationship between the buyer and seller suffers; however, the end result (sale and purchase of a home) satisfies both parties.

On the other end of the negotiating style continuum is cooperative negotiating, also called integrative problem solving or soft bargaining. Cooperative-negotiation is based on a win-win mentality and is designed to increase joint gain; the pie to be divided is perceived as expanding. Attributes include reasonable and open communication; an assumption that common interests, benefits, and needs exist; trust building; thorough and accurate exchange of information; exploration of issues presented as problems and solutions; mediated discussion; emphasis on coalition formation; prenegotiation binding agreements; and a search for creative alternative solutions that bring benefits to all players. The risk in cooperative negotiating is vulnerability to a competitive opponent.

Cooperative negotiators require skills in patience; listening; and identification and isolation of cooperative issues, goals, problems, and priorities. Additionally, cooperative negotiators need skills in clarifying similarities and differences in goals and priorities and the ability to trade intelligently, propose many alternatives, and select the best alternative based on quality and mutual acceptability.

Cooperative negotiating might be used, for example, in a hiring situation. An employer contacts a candidate to encourage the candidate to submit his or her credentials for a job opening. Trust is built and common interests are explored as the employer and candidate exchange information about the company and the candidate's qualifications. Creative solutions are explored to accommodate the candidate's and employer's special circumstances, including work at home, flexible scheduling, salary, and benefits. The two parties successfully culminate the negotiations with a signed job contract.

The Negotiation Process

Stages in the negotiation process are (1) orientation and fact finding, (2) resistance, (3) reformulation of strategies, (4) hard bargaining and decision making, (5) agreement, and (6) follow-up (Acuff, 1997). For example, a consumer purchasing an automobile investigates price and performance, then negotiates with an agent regarding price and delivery date. Resistance surfaces as pricing and delivery expectations are negotiated. Strategies are reformulated as the parties deter mine motivation and constraints. Key issues surface as hard bargaining begins. Problems surface, and solutions—such as creative financing or dealer trades—are created to counter pricing and delivery problems. After details are negotiated, the agreement is ratified. After the sale, the agent may follow up with the buyer to build a relationship and set the stage for future purchase and negotiation. The six stages of the process would be approached differently depending on where the negotiators reside on the style continuum.

Basic strategies, both cooperative and competitive, that can be applied in the negotiation process are the following:

• Use simple language.
• Ask many questions.
• Observe and practice nonverbal behavior.
• Build solid relationships.
• Maintain personal integrity.
• Be patient.
• Conserve concessions.
• Be aware of the power of time, information, saying no, and walking away.
• Pay attention to who the real decision maker is, how negotiators are rewarded, and information sources.
• Listen actively.
• Educate the other party.
• Concentrate on the issues.
• Control the written contract.
• Be creative.
• Appeal to personal motivations and negotiating styles.
• Pay attention to power tactics.
• Be wary of such unethical tactics as raising phony issues; extorting; planting information; and making phony demands, unilateral assumptions, or deliberate mistakes.

The following summarize strategies that might be used in various stages of negotiations:

Initial Stages

• Plan thoroughly.
• Identify and prioritize issues.
• Establish a settlement range.
• Focus on long-term goals and consequences.
• Focus on mutual principles and concerns.
• Be aware that "no" can be the opening position and the first offer is often above expectations.
• Be aware of the reluctant buyer or seller ploy.

Middle Stages

• Revise strategies.
• Consider many options.
• Increase power by getting the other side to commit first.
• Add credibility by getting agreements in writing.
• Be wary of splitting the difference.
• To handle an impasse, offer to set it aside momentarily.
• To handle a stalemate, alter one of the negotiating points.
• To handle a deadlock, bring in a third party.
• When asked for a concession, ask for a tradeoff.
• Be wary if the other party uses a "higher authority" as a rationale for not meeting negotiating points.
• Be aware of the "vise" tactic ("you'll have to do better than that").

Ending Stages

• Counter the other party's asking for more concessions at the end by addressing all details and communicating the fairness of the deal in closure.
• Counter a persistent negotiator by withdrawing an offer.
• Do not expect the other party to follow through on verbal promises.
• Congratulate the other side.

International Negotiating

In international negotiations, obstacles arise when negotiating teams possess conflicting perspectives, tactics, and negotiating styles. Negotiators often assume that shared beliefs exist when, in reality, they do not. Examples are different uses of time; individualism versus collectivism; different degrees of role orderliness and conformity; and communication patterns, that differ widely worldwide. These cultural factors affect the pace of negotiations; negotiating strategies; degree of emphasis on personal relationships; emotional aspects; decision making; and contractual and administrative elements (Acuff, 1997). The goal of the negotiator should be to "look legitimately to the other side by their standards" (Fisher, 1984).

Collective Bargaining

Collective bargaining frequently requires a third party to help the parties reach an acceptable solution. In these situations, such strategies as mediation, arbitration, and conflict resolution are used.

Summary

Negotiation is the process of two individuals or groups reaching joint agreement about differing needs or ideas. Two styles of negotiating, competitive and cooperative, are commonly recognized, with most negotiators moving back and forth between the two styles based on the situation. A number of strategies were discussed that negotiators might use in negotiation stages. The effectiveness of various strategies can vary based on cultural differences.

Bibliography

A cuff, Frank L. (1997). How to Negotiate Anything with Anyone Anywhere Around the World. New York: American Management Association.

Fisher, Roger, and Ury, William, with Bruce Patton. (1991). Getting to Yes: Negotiating Agreement Without Giving In, 2nd ed. Boston: Houghton Mifflin.

Oliver, Jim R. (1996). "A Machine Learning Approach to Automated Negotiation and Prospects for Electronic Commerce." http://opim.wharton.upenn.edu/-oliver27/papers/jmis.ps. July 31, 1996.

[Article by: DONNA L. MCALISTER-KIZZIER]

noun

The act or process of dealing with another to reach an agreement: parley, talk (often used in plural). See words.

A method of dispute resolution where either the parties themselves or the representatives of each party attempt to settle conflicts without resort to the courts; an impartial third party is not involved. Compare arbitration; mediation.

Quotes:

"Negotiating in the classic diplomatic sense assumes parties more anxious to agree than to disagree." - Dean Acheson

"The one sure way to conciliate a tiger is to allow oneself to be devoured." - Konrad Adenauer

"The fellow who says he'll meet you halfway usually thinks he's standing on the dividing line." - Orlando A. Battista

"When a man says that he approves something in principal, it means he hasn't the slightest intention of putting it in practice." - Otto Von Bismarck

"Grant graciously what you cannot refuse safely and conciliate those you cannot conquer." - Charles Caleb Colton

"Most people I ask little from. I try to give them much, and expect nothing in return and I do very well in the bargain." - Francois FeNelon

See more famous quotes about Negotiation

Common misspelling(s) of negotiation

• negociation
• negotation