The Importance of Negotiations - Essay Example

Negotiation Bargaining and Conflict Management

Introduction

Conflicts and negotiations are facts of everyday work-life. A conflict is a situation where the interests, goals, needs or values of parties involved interfere with one another. It is a common phenomenon for organization stakeholders to have differing opinions that may result in conflicts involving team members, projects, departments or organization and client. Most of these conflicts are solved through negotiations (Lewicki, Saunders, and Minton, 2011). A negotiation is an interactive communication process that involves discussion between the conflicting parties to (or “intending to”) reaching an agreement where some interests may be shared and some may be opposed (Miles, 2012). Negotiation skills are, therefore, one of the key characteristics of a successful manager. Negotiation skills are essential when one is requesting for a proposal that will improve the performance of his or her organization. Given the importance of negotiations, planning for such negotiations are paramount. The level of preparation and planning depends on the complexity of the situation.

However, one should recognize that negotiations are not all about winning. The realization and understanding that the other party in the negotiation room has significant concerns and issues as well are important (Fisher, Ury, and Patton, 2012). Negotiations should, therefore, be about coming up with the best possible solution to a particular conflict. To achieve the best possible solution to a conflict, the parties to a conflict should realize the need to know how to plan for a negotiation, create a compelling proposal, diagnose barriers and then come up with an effective solution to a project. The aim of this study is to show how the conflict between two organizations can amicably be solved through negotiations. We are going to consider a case study of a conflict between two organizations, Philips, and Crawley, which are production plants of the main company, The Universal Computer.

Case study: Problem Identification and Analysis

The problem at hand is that poor quality has marred the outputs of Philips plant. Philips plant is a production unit of the main company, The Universal Computer Company. The Universal Computer Company has a vertical integration management where parts made in one plant are assembled into components at another plant. These components are in turn assembled into the final product at a different plant. The quality of the final products from The Universal Computer Company, therefore, depends on the interrelationships between its plants. The different plants are therefore interdependent in such a way that the actions of one plant would have an effect on other plants.

Upon examination of the cause of the poor quality in Philips plant, it has been noted that a considerable portion of the problem can be blamed on the poor inputs from another plant, Crawley plant. The manager of Philips feels that the quality problem from Crawley plant is unfairly affecting his plant. Sometimes some inputs from Crawley that were below standard and thus rejected by Philips were large enough to stop temporarily production forcing the company to work overtime rectifying the defects. It is a general feeling in Philips plant that the management of Crawley plant should accept the cost caused by their poor quality parts. However, Crawley plant feels that it is not obliged to be responsible for the cost due to the poor quality of their parts. It argues that below standard parts were bound to get through and expenses occasioned by such situation should be a normal business process of the Philip plant.

Since the two plants are interdependent, their managements should aim at having a holistic view of the whole company as opposed to the sections of the company that they manage. There is a need to cultivate a good working relationship between the plants which are the subsystems of the main organization. The good relations should be maintained as it is the pre-request for the smooth operation of the whole company's performance now and in the future. Therefore, the result of our negotiation should be a uniting factor. This will ensure smooth operations of the plants.

In the daily management of the operations of the facilities, the administration of the two plants will usually be faced with managerial problems for which they must offer amicable solutions to. To move forward in the right steps, an efficient problem-solving technique should be employed to figure out the issues causing conflicts (Miles, 2012). An active problem-solving process will be crucial to the whole organization by turning the conflict situations into an important aspect of the work relations between the different sections of the company. A conflict resolution is thus necessary in enabling the two firms to build a convincing and effective case to support their decisions. In order to come up with a better solution to problems, the two companies need to identify that a problem exists, analyze the problem, generate options of solving the problem, evaluating options, selecting the best solution, implement the recommendations and have a reflection of the successes or failure of the recommendations so as to take necessary corrective measures (Lewicki, Saunders, and Minton, 2011).

Deriving the Best Alternative to a Negotiated Agreement (BATNA)

Since both Crawley plant and Philip plant are subsystems of a single company, the Universal Computer Company, they share a common interest- that of seeing a prosperous Universal Computer company. The two plants are obliged to maintain a good working relationship since they are interdependent. The negotiation should, therefore, be based on this shared interest. The strategy adopted should aim at reaching a mutually beneficial interest based on the common interests of the disputants. However, what is the best step that the complainant, the Philips plant, can take if the other party is unwilling to participate in the negotiations in a way that leads to the achievement of the desired shared interest? Such a situation will result in a case in which the two parties in the negotiation fail to come to an agreement. Philip plant must have the best alternative to a negotiated agreement (BATNA) which will be the course of action that it will take if the negotiations fail and no agreement can be reached. The BATNA will be the gauge against which the negotiation agreement is measured and prohibits a negotiator from accepting an unfavorable deal or one that is not in the best interests of the company (Fisher, Ury, and Patton, 2012). This is achieved by considering better options outside the negotiation. Four steps are necessary for assessing a BATNA in a negotiation:

• Listing of all alternatives available in case the current negotiation ends in an impasse and also establishing the no-deal options.
• Evaluation of the alternatives by examining options and calculating the value of estimating each one.
• Developing the BATNA by choosing the course of action that possesses the highest expected value for the company.
• Calculation of the reservation value by proposing the lowest value that the plant will be willing to accept, below of which the rejection of offer and acceptance of the BATNA will be considered.

It should, however, be noted that the determinants of Philips plant's power in the negotiation is the attractiveness of its BATNA as compared to the proposals made during the discussions. Therefore, the more attractive BATNA is in comparison to the proposals received from the other party to the negotiations, the more power it will have in the talks. Given the direct relationship between negotiating power and a good BATNA, it is imperative for Philip plant to improve its BATNA whenever possible as a way of inventing options for mutual gain.

Such a procedure to the derivation of a BATNA when followed will align focus on the shared interests, rather than the positions of the parties to a conflict. In this way, the problem is defined regarding the parties' underlying interests making it often possible to find a solution that is to the satisfaction of both sides' interests. Since the primary interest is the overall success of the whole organization as opposed to its subsection, it is important for the two companies to share certain fundamental interests or needs. If one side of the partners seem to have a different opinion, then the management of Philips plant should request to know the reason as to why the party holds the differing positions and also consider why it does not hold some other possible position that Philips plant find worthy. The management of Philips plant should be able to explain their interests openly and discuss the interests together with the Crawley plant while focusing on the desired solution, rather than on past events. All through the process the negotiators should remain focused on the shared interests and remain open to different proposals and positions.

However, if all the alternatives available have been exhausted, and no amicable solutions have been reached in the negotiation, it will be unavoidable to call in a neutral third party (Heavrin and Carrell, 2008). This is most likely the senior management. Such an alternative to the current negotiation will result in the development of organizational policies that will be binding to both sides and save the deteriorating corporate relationships.

Negotiation Strategies

As can be observed in the discussions above, a valid agreement fulfills the interests of the negotiators, not their positions (Fisher, Ury, and Patton, 2012). The first issue to consider during a negotiation preparation is the interest of both parties. These interests should not be confused with positions. Interests are the reasons behind views. The shared interests in this negotiation are to ensure a high quality and low costs of the final product of the company. This should serve as a guide to reach the position to be taken by the negotiators. Therefore, any position that is against the established interest is unjustified. It is important to put oneself in the other party's shoes and provide an environment conducive to the other party to consider not opposing the common interest (Heavrin and Carrell, 2008). This will enable the negotiation to start off on the same page and create a foundation for an agreement down the road. A sense of mutual understanding is also developed and thus opening communication lines. Philips plant can make this desired scenario possible through a three-step procedure: (1) an analysis of the situation or problem, the other party's interests and perceptions, and of the existing options, (2) Plan ways of responding to the situation and the other party's interests, and finally, (3) the parties should discuss the problem together and try to find a solution on which they can both agree with (Raines, 2013).

There are two main approaches to this negotiation situation, distributive and integrative strategies (Heavrin and Carrell, 2008). The distributive approach will result when one plant gains while the other loses from the negotiation process. This method is available when the negotiators are not after developing a mutual relationship. In this case, the two partners will strive to keep information to self while trying to retrieve information from the other party and learn what they are willing to give up. The parties thus fail to trust each other and form a belief that the other party takes advantage if they don't take fixed position and insist on it (Raines, 2013). In an integrative tactic, the expected outcome of the negotiation is a feeling of a win from both negotiators. The two sides develop thinking that it is possible to achieve a greater result by sharing ideas. The aim is to build a good relationship that will enable cooperation in the future for the benefits of both plants.

Since both Crawley plant and Philips plant are subsystems of a single company, the Universal Computer Company, and with a shared common interest, are obliged to maintain a good working relationship. The strategy adopted should aim at reaching a mutually beneficial interest based on the shared interests of the disputants. This can only be achieved through an integrative negotiation approach. The strategy will lead to a combination of the interests in such a way that create a common value. The two plants should be ready to make trade-offs and come up with an outcome that is satisfying to both sides (Heavrin and Carrell, 2008).

Negotiation Procedure

A negotiation should be viewed as a unifying factor where different needs and goals from various parties are combined to come up with a mutually acceptable solution to a conflict. An effective negotiation depends on the quality of planning and preparation done to the particular negotiation. Inadequate planning and preparation can handicap a negotiation process (Lewicki, Saunders, and Minton, 2011). The negotiation procedure consists of five vital steps; preparation, discussion, proposal, bargaining, and final agreement.

• Preparation

The first phase in the negotiation process is to ensure all the disputants are ready for the negotiation. This phase involves the choosing of a negotiation team and representatives of the parties to the negotiation. The negotiation team should be skilled in negotiation and have the ability to examine own situation and develop issues that are believed to be the most important. The team will be tasked with the role of determining if there are any reasons to warranty negotiation (Raines, 2013).

• Discussion

This is an opportunity for both parties to meet and set ground rules for the negotiation process. The aim of such rules is to create an environment for mutual trust and understanding. At this stage, the integrative bargaining approach can be proposed, and its principles made; a requirement during the negotiation.

• Proposal

In this phase, both representatives outline options and possible solutions to the issue at hand. It is the opportunity to identify the needs of the other party. The stage, therefore, involves brainstorming to come up with lists of alternative solutions to the problem.

• Bargaining

At this stage, the parties exchange negotiation views of the already tabled proposals to arrive at a single proposal that will support their shared interest. The parties discuss potential compromises in creating an agreement that is acceptable to both sides.

• Final Agreement

The agreement in phase four is just a draft agreement which is not legally binding, but a step towards a final collective bargaining agreement. The final agreement is important as it closes the negotiation stage. Once an agreement has been made at the bargaining stage, there should be an effective joint implementation of the agreement by having it in writing; signing and putting it into effect (Heavrin and Carrell, 2008).

Conclusion

Most Conflicts are normal to organizations and do frequently occur in the daily operational. Negotiation ability is, therefore, one of the key characteristics of a successful manager. Negotiation skills are essential when one is requesting for a proposal that will improve the performance of his or her organization (Fisher, Ury, and Patton, 2012). One should, however, recognize that negotiations are not all about winning. One should realize and understand that the other party in the negotiation room has significant concerns and issues as well. Negotiations should, therefore, be about coming up with the best possible solution to a particular conflict.