Management of Industrial Relations

What is Negotiation and Principles of Negotiation

What is 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.

Principles of Negotiation

(1) Each Negotiation is Different – Since each negotiation is different involving particular parties and a specific set of issues – there are no universal rules for the process. The interaction between negotiators does not rely on any absolute guidelines. Just the opposite, negotiators may do anything. That is why the negotiation process can at any moment become puzzling and unpredictable.

(2) Interact Well with Other Side – Negotiation can be successful only by interacting well with the other side. To communicate effectively, one must understand the other party’s attitudes, motives, and goals, as well as how they affect him. Also, one should be careful while making decisions as poor decisions are always a trouble.

(3) Self-Discipline – Good negotiators have self-discipline. Although they are partial, they remain objective. That is because they know that personal attacks only add to problems, and that aggression breeds aggression. A result of this principle is that taking a pessimistic stance only prompts the other side to do the same. Negotiation works best when it is firm but friendly.

(4) Set Agenda – The agenda set at the start of negotiations affects the outcome of the agreement. Whoever controls the agenda has a better chance of achieving favourable results.

(5) Understand the Basic Conceptual Goal of Negotiations – To be a successful negotiator, one must understand the basic conceptual goal of the process. In any dispute that uses negotiation to resolve issues, each side has a preferred outcome and a bottom line. One might think of the distance between the parties as a continuum of each other’s desired outcomes and bottom lines.

(6) Use Strategy of Compromise to Settle Negotiation Issues – Good negotiators use a strategy of compromise to settle issues of concern and reach their desired goals. Compromise plays a crucial part in the process of negotiation because no agreement can be reached satisfactorily without it.

(7) Beware about Critical Point – In every negotiation, the parties establish minimum expectations, which may change as the process goes. This lowest level is called the party’s “critical point”. It, in turn, sets the limit of each party’s bargaining range. Agreement can only occur when each party has attained or surpassed its critical point, which usually happens when the parties believe they have extracted the final concession from each other.

(8) Establish Fall Back Positions – Clever negotiators establish fall back positions as negotiations go along, ranging from their opening stances to their bottom lines. Falling back is the inevitable result of demands and concessions, which one should always plan carefully and whose impact should be assessed in advance.

(9) Know the Way Out – Good negotiators maintain escape routes for themselves and other parties. If the opposition backs itself into a corner, a smart negotiator will help it to find a way out a gesture of help may also come as a deceptive compromise, which creates the impression that the other party negotiated its way out of difficulty. Never forget that the most important consideration is for both sides to win, in the sense that they leave the negotiating table with an agreement they can live with. That is, nothing about the agreement will come back to haunt either side.

(10) To Negotiate is not to Agree – A party’s willingness to negotiate -does not necessarily indicate its willingness to reach agreement. One side may only be interested in taking the other for all it is worth. Companies make it a point to know each other’s business, word of a deceptive negotiator travels fast. You could lose your credibility in the entire field of business. So avoid taking a chance – deceptive negotiating could backfire and ruin your reputation.

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