This article is written by Ayushi Mahajan, from Centre For Legal Studies, Gitarattan International Business School (Guru Gobind Singh Indraprastha University). This article talks about the negotiation and its models which is to be known by legal professionals.
Table of Contents
Introduction
Negotiation is a method by which people resolve differences. It is said to be a process by which a compromise is reached, avoiding arguments and controversies. However, the principle of fairness and seeking mutual benefit and maintaining relationships is the key to success. Negotiation is said to be a non-binding process in which the discussions between the parties are intimated without any intervention of the third party with the object of arriving at a certain negotiated settlement of the said dispute. So, negotiation is a process of managing relationships. It is a basic human activity that exists between social animals. As social animals, we negotiate and hence it is an important part of our day to day lives.
Essentials of negotiation
Negotiation is defined as a discussion between individuals to reach an acceptable conclusion for one and all. It is a process where people, instead of fighting amongst themselves, sit together, try to formulate a settlement by evaluating its pros and cons, then figuring out a choice that will be a win-win situation for all.
There are certain essentials of negotiation as follows:
- It is a communication process;
- It resolves conflicts;
- It is a voluntary exercise;
- Parties retain control over the outcome and the procedure;
- It is said to be a non-binding process;
- There is a possibility of achieving the wide-ranging solutions, and of maximising joint gains beneficial to the parties.
Types of negotiation
Distributive negotiation
Distribution negotiations, sometimes called situational or hard bargaining, attempts to distribute the “fixed pie” of some benefits. Distributive negotiations are the negotiations that are going on under zero-sum terms and this means that any profit made by one party is at expense of the other and vice versa. Due to this reason, distributive interactions are sometimes called win-lose because it is believed that one person’s gain is the other person’s loss.
In the distributive approach, it is said that each negotiator fights for the largest possible piece of the pie, so the parties push each other to take a greater and harder line than the ally. Yet the Prospect Theory indicates that people do more harm than gain and are more disinclined or reluctant to take risks about losses, concession-convergence bargaining is likely to be more strident and less productive of an agreement.
Integrative negotiation
Integrated negotiation is also called interest-based, or princely negotiation. It is called a set of techniques that attempt to improve the quality and the probability of interaction by taking the advantage of fact that different parties often value different outcomes differently.
While the sharing negotiation assumes that there is a certain amount of value (a “fixed pie”) between the parties, integrated negotiation efforts (“expand the pie”) to create value during the negotiation would either “compensate for the loss”. With the benefit of one item over another (“trade-offs” or logrolling), or by creating or redefining conflict issues in such a way that both sides benefit (“win-win” negotiations)
Negotiation pie
Total advantages and disadvantages that can be delivered in a conversation is interpreted with the term conversation pie. These values can either increase, shrink or stagnate during the conversation. If the negotiating parties are able to expand the total pie, then the win-win situation is possible assuming that both sides benefit from the expansion of the pie.
In practice, however, this maximization approach is imposed by the so-called small pie bias, namely by a psychological minimization of the size of the interaction pie. Similarly, the possibility of increasing the pie can be underestimated due to the so-called inconsistency bias. Unlike raising the pie, the pie can also shrink during a conversation. Due to (excessive) negotiation costs
Phases of negotiation
Preparation
Before any interaction can take place, it should be decided where and when the meeting will be held to discuss the problem and who will participate in it as well. Setting a finite time scale can also be helpful to prevent disagreements from continuing.
This phase involves ensuring all relevant facts of the situation to clarify its position. This would include knowing the rules of your organization that are offered when the help does not seem appropriate and the basis for such refinancing. Your organization may have good policies for which you can prepare to negotiate. Undertaking preparations before discussing disagreements will help to avoid further conflict and unnecessarily wasting time during the meeting.
Discussion
- During the phase of discussion, the person or members of each party present the case as they see it, i.e. their understanding of the situation.
- The key skills during the phase of discussion include questioning, listening and clarifying.
- Sometimes it is quite helpful to take notes during the phase of discussion, to record all the points needed for further clarification.
- It is very important to listen because when there is disagreement it is easy to make too many of the mistakes and say too much than to listen. Each party should have an equal opportunity to present its case.
Clarifying goals
By discussion, the goals, interests and attitudes of both sides of the disagreement should be clarified. It is helpful to list these factors in the order of priority. Through this explanation, it is often possible to establish or identify some of the common grounds. Clarification is an essential part of the negotiation process. without clarification there could be misunderstandings that could, in turn, cause problems and obstaclesi n reaching a profitable outcome.
Negotiating towards a win-win outcome
This phase focuses on what is called the ‘win-win’ outcome, where both parties feel that their respective points have been taken into consideration, and have achieved something positive out of the negotiation process. A win-win result is usually said to be the best result. Although this may not alwayst be possible, through interaction, it should be the ultimate goal.
Agreement
Once the views and interests of both parties are considered, the agreement can be achieved. It is essential for everyone involved to have an open mind to achieve an acceptable solution to a discussion. Any agreement needs to be fully clarified so that both parties are aware of what has been decided.
Implementing a course of action
By agreement, a course of action is to be implemented to carry through the decision.
Models of negotiation
A good negotiator will always be knowing the best and worst alternatives for the process of negotiation or the settlement he is striving to achieve. The Best Alternative to Negotiated Arrangement (BATNA) and the Worst Alternative to Negotiated Arrangement (WATNA) are two significant points that a negotiator is supposed to find out and discuss at every level of the discussion. Even in cases where he does not discuss, he must at least be aware of it. Such an understanding will guide him properly to steer through the difficulties. BATNA and WATNA are the best methods for evaluating the same outcome.
Win-lose or lose-win
The win-lose or lose-win situation is also called a zero-sum game. An example of a zero-sum situation could be a game of chess. In chess, there is one loser and one winner. Adding one positive to one negative result in zero. The feeling of the loss is not good because the person who loses has to walk away without having met his wants and needs. Usually, a win-lose situation results in the loser not willing to negotiate with the winner in the future.
Lose-lose model
In a lose-lose situation, it is said that neither party achieves their wants or needs. Stark gave a common example of a lose-lose negotiation situation which is a labour strike in which management and labour unions cannot come to any satisfactory agreement. Almost always in a labour strike, everybody loses. The employees lose, the company loses and most tragically, the customer loses.
Win-win model
What the negotiator wanted after a talk does not mean that he won and the other participant lost. There is likely to be a win-win situation where both sides win, which is the ideal outcome for almost all negotiations. Good negotiators find a balance between the objectives of each party to create a win-win outcome.
No outcome
The fourth possible outcome of an interaction is a ‘no result’ meaning that no party can win or lose. In this situation negotiators cannot come to terms that are suitable for both parties and the best thing to do is to just walk away and try to find someone else to agree with. Some people see the outcome of no result as a win-win or defeat. A winning result in such situations occurs when both parties find another person to deal with while in the losing situation both parties waste their precious time in negotiations and still try to find another dealer. In any conversation, there is a limit to how much sacrifice must be made. In some cases, it may make sense to walk away. Before entering the negotiating table, the negotiator must state the point of him or her walking away. This will help the person not to miss out on a bad deal.
RADPAC model of negotiation
This RADPAC model of negotiation is said to be a widely used model of negotiation.
Each alphabet of this model represents something like:
R – Rapport
A – Analysis
D – Debate
P – Propose
A – Agreement
C – Close
Rapport
As the name suggests, it refers to the relationship between the parties which are involved in the conversation. The parties involved in the conversation should ideally be comfortable with each other and share a good rapport within themselves.
Analysis
One side should understand the other side very well. It is important that individuals understand each other’s needs and interests. The shopkeeper must understand the needs and pockets of the customer, and in the same way, the customer should not ignore the profits of the shopkeeper. People should listen to each other carefully.
Debate
Anything can be achieved with discussion. This round involves discussing issues between the parties involved. The advantages and disadvantages of an idea are evaluated in this round. People argue among themselves and try to explain each other. One should not lose his temper in this period but should remain calm and composed.
Propose
Everyone proposes their best idea in this round and tries their best to come up with the best possible idea for reaching a point of acceptable conclusion by all.
Agreement
Individuals come to the conclusion at this stage and agree to the best possible option.
Close
The conversation is over and the people return satisfied.
Conclusion
Negotiation is an interaction between two or more people or parties that aim to reach a beneficial outcome in one or more issues involving a conflict. Negotiation is called an entity that compromises to agree on matters of mutual interest, customizing their individual utilities. This beneficial outcome can be for all parties involved, or only for one or a few of them. Negotiators are required to understand the process of negotiation and other negotiators as well in order to close the deal, avoid conflict, establish relationships with other parties and reap the benefits.
Its purpose is to obtain points for an individual or collective, or to formulate results to meet different interests, solving points of difference. It is often conducted by making concessions to advance a position and obtain an agreement. Negotiating parties rely on each other to implement a negotiation solution: a major factor for determining whether negotiation is successful or not.
References
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