NEGOTIATIONS

ESSENTIAL IN ERPresented By:-

Pooja Bhayani – 05

Shruti Poddar – 24

Case Study – Due Diligence

Conflict

• Conflict is a necessary part of human life. • All conflicts are not bad.• The way you resolve the conflicts determine the

value of the outcome.

Conflict occurs whenever:• Disagreements exist in a social situation over issues

of substance.• Emotional antagonisms cause frictions between

individuals or groups.

View of Conflicts

1. Functional (or constructive) conflict.

• Results in positive benefits to individuals, the group, or the organization.

• Likely effects.• Surfaces important problems so they can be addressed.• Causes careful consideration of decisions.• Causes reconsideration of decisions.• Increases information available for decision making.

• Provides opportunities for creativity.

2. Dysfunctional (or destructive) conflict.

• Works to the disadvantage of individuals, the group, or the organization.

• Likely effects:• Diverts energies.

• Harms group cohesion.• Promotes interpersonal hostilities.

• Creates overall negative environment for workers.

How to manage conflicts???

• Direct conflict management approaches are based on the relative emphasis that a person places on assertiveness and cooperativeness.– Assertiveness.• Attempting to satisfy one’s own concerns.• Unassertive versus assertive.

– Cooperativeness.• Attempting to satisfy the other party’s concern.• Uncooperative versus cooperative.

Avoidance

• Unassertive and uncooperative.

• Downplaying disagreement.

• Failing to participate in the situation and/or staying neutral at all costs.

Accommodation & Smoothing

• Unassertive and cooperative.

• Letting the other’s wishes rule.

• Smoothing over differences to maintain superficial harmony.

Compromise

• Moderate assertiveness and moderate cooperativeness.

• Working toward partial satisfaction of everyone’s concerns.

• Seeking acceptable rather than optimal solutions so that no one totally wins or loses.

Competition & Authoritative Command

• Assertive and uncooperative.

• Working against the wishes of the other party.

• Fighting to dominate in win/lose competition.

• Forcing things to a favourable conclusion through the exercise of authority.

Collaboration & Problem Solving

• Assertive and cooperative.

• Seeking the satisfaction of everyone’s concerns by working through differences.

• Finding and solving problems so everyone gains as a result.

Negotiation

• Negotiation involves discussion to make agreements where the parties involved have some difference of interest or simply negotiation of how a task or project will be carried out.

• Negotiation involves a greater level of democracy in decision making than consultation. In a negotiation there may be considerable uncertainty about what the outcome will be. In contrast managers who consult their employees may already have decided the core of what they intend to do from the outset.

• Managers will negotiate with trade unions and with individual employees over work related issues.

Main features of Negotiation

• 2 or more parties

• Something of value or interest to the parties

• Desire to engage in interaction

• Atleast some desire to accommodate

• Authority to honour the agreement or settlement

Negotiation Goals & Outcomes

• Substance goals.–Outcomes that relate to content issues.

• Relationship goals .–Outcomes that relate to how well people

involved in the negotiations and any constituencies they represent are able to work with one another once the process is concluded.

Effective Negotiation

• Occurs when substance issues are resolved and working relationships are maintained or improved.

• Criteria for an effective negotiation.–Quality.–Harmony.– Efficiency.

1. Distributive Negotiation

• The key questions is: “Who is going to get this resource?”

• “Hard” distributive negotiation.– Each party holds out to get its own way.

• “Soft” distributive negotiation.– One party is willing to make concessions to the

other party to get things over.

Strategies involved in Negotiation

• Bargaining zone.– The range between one party’s minimum

reservation point and the other party’s maximum reservation point.–A positive bargaining zone exists when the

two parties’ points overlap.–A positive bargaining zone provides room

for negotiation.

2. Integrative negotiation.

• The key questions is: “How can the resource best be utilized?”

• Is less confrontational than distributive negotiation, and permits a broader range of alternative solutions to be considered.

• Opportunity for a true win-win solution.

• Range of feasible negotiation tactics.–Selective avoidance.–Compromise.–True collaboration.

Common Negotiation Pitfalls

• The myth of the fixed pie.• The possibility of escalating commitment.• Negotiators often develop overconfidence in

their positions.• Communication problems can cause

difficulties during a negotiation.– Telling problem.–Hearing problem.

Third Party Role in Negotiation

• Arbitration.–A third party acts as a “judge” and has the

power to issue a decision that is binding on all disputing parties.

• Mediation.–A neutral third party tries to engage the

disputing parties in a negotiated solution through persuasion and rational argument.

Situations Requiring Negotiations

• Informal Situations

• Formal Situations

• Unstructured Situations

• Structured Situations

Informal Situation

• Allocation of work

• Problem solving meetings

• Target setting

• Performance counselling

• One – to – one discipline meetings

• Routine meetings

• Bipartite committee meetings

Formal Situation

• Performance – review discussions• Appraisal interviews• Selection interviews• Budgetary meetings• Grievance meetings• Works committee meetings• Joint council meetings• Agenda – based meetings• Pre – decided bipartite meetings

Unstructured Situation

• Problem solving meetings

• Target setting

• Performance counselling

• One – to – one discipline meetings

• Routine meetings

• Bipartite committee meetings

Structured Situation

• Performance review discussion• Appraisal interviews• Selection interviews• Budgetary meetings• Works committee meetings• Joint council meetings• Agenda – based meetings• Pre – decided bipartite meetings

Negotiation Process

• Preparation

• Opening

• Bargaining

• Closure

Case Study – A salary negotiation

A department manager of XYZ Ltd. was asked by his secretary for a rise of 10% in her salary. She was worth it. The problems was that 10 percent represented a large raise compared to the 5% other employees had received. Was there a creative both-win way out of this problem? As they explored the possibilities, several ideas emerged. The company starts work at 8am and closes at 5pm. The manager learned that his secretary encountered heavy traffic every evening on the way home. They agreed to have her work from 7:30am to 4:30pm. This saved her at least 20-25 minutes driving time. Certainly a benefit to her at little or no expense to the company. They then studied her job in detail. Before long they jointly developed a new description which gave her more responsibility, and, at the same time, more interesting work. Both parties benefitted from the changed scope of work. The raise itself was then discussed. A compromise was reached by agreeing on a 6% raise for three months and then an additional 2% later if the new responsibilities were adequately performed.

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