Management of Industrial Relations

Negotiation – Meaning and Types of Negotiation

Negotiation is a process of bargaining in which two parties, each of whom have something that the other wants, try to reach an agreement, on mutually accepted terms. It is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is usually regarded as a form of alternative dispute resolution.

Types of Negotiation

(1) Distributive Negotiations – Distributive negotiation is also known as “zero-sum”, “claiming value”, or “win-lose” bargaining. It proceeds on the basis that what one side wins, the other side loses. It is essentially competitive and assumes a zero-sum game or fixed size ‘pie’. Success means getting as much as possible of something contested at the expense of the other side. As a win for one represents a loss for the other, there is little concern for the relationship itself.

Distributive negotiation takes place when the resources are fixed and limited (fixed-pie situation) and each individual/party wants to get a large share for itself. Therefore, distributive negotiation becomes essentially a competition to get the maximum for oneself. The competitive negotiator views the negotiating world as one controlled by an ego-centric self-interest. Resources are limited and the distribution of these resources should be distributive in nature.

In distributive negotiation, the approach is to treat the process as a competition that is to be won or lost. These are given as follows –

  • Zero-Sum – The basic assumption of competitive negotiation is that it is a ‘zero sum game’, i.e., the people involved in it believe that there is a fixed amount to be gained which both people desire, and if one person gains then the other person loses. It is like arguing over a pie – if one person gets a piece of the pie then the other person does not.
  • Win-Lose – The outcome of zero-sum negotiation is defined in terms of winners and losers. One person gets what they want and feels smug (or maybe a bit guilty) whilst the other person gets loses out and feels cheated or a failure.
  • Substance Only – In competitive negotiation, the substance of what is being traded is the only real concern, and dealings are done in a hard and ‘what I can get’ way. A way of thinking zero-sum is to translate everything into financial terms. Thus, for example, if you are buying or selling a car, you think first in terms of its resale value. Thus, the only real negotiable for many competitive negotiators is price.
  • Unimportant Relationship – In competitive negotiation, the relationship between the people is unimportant. They do not care about one another or what the other thinks about them. For example, this may occur in one-off sales where ‘caveat emptor’ is a key rule.

To show concern for the other is to show weakness that may be taken advantage of. This can lead to trickery where false concern is shown, and reactions where any show of concern is perceived as likely trickery and can lead to attempts of two- faced double-dealing.

(2) Integrative Negotiations – Integrative negotiation is also termed as “interest-based bargaining” or “win-win bargaining”. Integrative bargaining is a cooperative approach that emphasises the quality of the relationship between the parties as well as the substantive issues at stake. Integrative bargaining is not a recipe for conceding easily to the other side, but it can generate agreements where both sides feel they have won. Power or the perception of relative power, is fundamental to bargaining processes and outcomes. This is particularly so for distributive bargaining. Thus, most bargaining processes involve parties ‘framing’ issues, as each side attempts to influence the perceptions and attitudes of the other.

Integrative bargaining occurs when both parties have the same preference for a successful outcome or are equally concerned to solve a problem. Whereas in distributive bargaining there is a clear distinction between losses and gains, resulting in a win-lose situation, integrative bargaining strives for a win-win solution. In practise it may happen that either party loses a little, but neither suffers a total loss. Overall, both parties gain. It is a case of granting concessions and gaining concessions, so that both parties move from the status quo to a better position. Because conflict is minimised, items subjected to integrative bargaining are described as problems.

In integrative bargaining, the approach is to treat the relationship as an important and valuable element. Various approaches are as follows –

  • Win-Win – The competitive approach to negotiation assumes a fixed pie, zero-sum, win-lose situation. In collaborative negotiation, it is assumed that the pie can be enlarged by finding things of value to both parties, thus creating a win-win situation where both parties can leave the table feeling that they have gained something of value.
  • Fair Process – As humans we have a deep need for fairness, and when this does not happen, even if we emerge as winners from a competitive negotiation, the result is not truly satisfying. The most comfortable result from a negotiation happens when our needs are met, including the need for fairness.
  • Joint Problem-Solving – The collaborative approach to negotiation seeks to convert individual wants into a single problem and to bring both parties together to work on solving this problem.

By converting individual positions and wants into separated problems, the people can be freed up from jealous and personal attachment to their requirements so they can then take a more objective and equitable position from which they can act in a more collaborative way.

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