Unit 10 Negotiation Skills: Objectives
Unit 10 Negotiation Skills: Objectives
Unit 10 Negotiation Skills: Objectives
Structure
10.1 Introduction
10.2 Negotiating Process
10.3 Negotiating Models
10.4 How and Why to Negotiate
10.5 Negotiation Guidelines
10.6 Principled Negotiations
10.7 Preparation for Long-term Settlement
10.8 Skills and Traits of Negotiating Team
10.9 Tactics or Strategies in Negotiation
10.10 Summary
10.11 Case
10.12 Self-Assessment Questions
10.13 Further Readings
10.1 INTRODUCTION
Negotiations are a part of everyday life. The process of negotiating has been described
by Walton and McKersie as ‘the deliberate interaction of two or more complex social
units which are attempting to define or redefine the terms of their interdependence.’
Gottschalk defines negotiation process as “an occasion where one or more
representatives of two or more parties interact in an explicit attempt to reach a jointly
acceptable position on one or more divisive issues.” It is an explicit and deliberate
event conducted by the representatives on behalf of their respective parties –
employers and employees. The process is intended to reconcile differences between the
parties involved. Negotiation is not simply ‘ritual’ but a process, which allows the
representatives of different interest groups to reach a mutually acceptable settlement
of an issue while, at the same time, seeking to maximise the advantage to be gained
for their interest group. Negotiating is a skill that can be learned and improved upon
by anyone.
External Data
● Details of wages, allowances and benefits of comparable public and private
sectors.
● Trend of cost of living index.
● Production and productivity data for similar organisations in India and
abroad.
A collective bargaining manual may be prepared incorporating all the above
information and kept updated from time to time.
5) Remains flexible
6) Continually examines why the other party acts as it does
7) Respects face-saving tactics employed by the opposition
8) Attempts to ascertain the real interest of the other party by the priority proposed
9) Actively listens
10) Builds a reputation for having fairness and firmness
11) Controls emotions
12) Remembers to evaluate each bargaining move in relation to all others
13) Measures bargaining moves against ultimate objectives
14) Pays close attention to the wording of proposals
15) Remembers that compromise is the key to successful negotiations; understands
that no party can afford to win or lose all
16) Tries to understand people
17) Considers the impact of present negotiations on the future relationship of the
parties
Activity
Your company is negotiating a settlement at the present time. What economic, legal
and social factors might likely to exert some influence upon your negotiations?
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Collective Bargaining
10.9 TACTICS OR STRATEGIES IN NEGOTIATION
The tactics or strategies to be adopted in negotiation vary depending upon the culture
of the organisation and different environmental factors, particularly the type of union
operating in an industrial establishment. But the following are some of the common
strategies to make negotiation exercise more meaningful:
i) The management has to anticipate the demands and also understand the main
directions in which the demands are going to be placed. Grant or rejection of
demands cannot be decided upon in a vacuum; it is very much relative to the time
and place of negotiation. An adequate area survey of what comparable
organisations in the region have already conceded/or in the process of conceding
is most essential. An adequate questionnaire must be drawn up, and care must be
taken to identify the organisations that are truly comparable. Generally speaking,
negotiations are best done if both the parties do their homework well. The
representatives must come to the bargaining table equipped with the necessary
information and supportive data regarding the company’s economic status and
prospects, the prevailing rates of pay and conditions of employment in
comparable industries in the local areas. The management team should take into
consideration the financial liability involved, the past agreements, and the impact
of present negotiations in future years.
ii) It is essential that a real team spirit be maintained throughout the negotiations.
For this purpose, it is necessary that the roles to be played by each member of
the team are properly pre-assigned, and each member knows when to take over
the discussions. The team must have the confidence of facing any eventuality,
which may come up during negotiations. It is good to have a rehearsal among the
team members on such points which can be anticipated to be made forcefully by
the opposite team.
iii) Any negotiation strategy should firstly separate the personalities from the
problems for arriving at a workable and desirable agreement and secondly,
explore the possibilities for harmony and compatibility. Although labour and
management are adversarial in some respects, it is also important to avoid
concluding that they are adversaries in all respects.
iv) Negotiation is a two-way traffic. The management as well as the union must gain
out of it. Hence, the management team should also present their counter-
proposals. For instance, the union pressure for wage-hike may be matched by a
counter-demand for an increase in production, reduction in absenteeism,
avoidance of wasteful/restrictive practices, and industrial peace.
v) There is a greater necessity on the part of the management representatives to
give a patient hearing to the demands of the union and not to react even if there is
a threat of strike or work stoppage. A rational well-reasoned approach can
achieve better results than an emotionally charged loud-mouthed approach.
vi) It is also a bad strategy to depute persons of low rank without authority to
commit the management on the negotiating table. Such a step may give an
impression to the union that the management does not take the negotiating
process with all the seriousness that it deserves.
vii) It is a good practice always to classify the various demands raised by labour
representatives distinguishing the real from the unreal. A thorough analysis and
understanding of different items in the charter of demands will enable negotiators
to arrive at a proper judgement.
viii) It is a good tactic to total the cost of all the union proposals and to take up the
non-cost items first or items on which it is easy to come to an agreement so that a
suitable atmosphere is created for negotiating on more serious items which have
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ix) Any negotiating strategy must result in a good agreement or settlement, the Negotiation Skills
characteristics of which are:
a) it must strike a proper balance between the various factors that go into its
making in order to ensure its workability;
b) it must be viewed as a whole and the inter-relation of its parts must be
balanced one against the other;
c) it must be based upon experience, logic and principles rather than on
coercive tactics, propaganda and force;
d) it must be fair and reasonable to the employees as regards their
emoluments and service conditions; to the management in terms of
improved production and productivity; and to the consumers in respect of
better quality goods and services; and
e) it must be complete and coherent in all respects without any ambiguity.
x) As a measure of follow-up: (a) evaluate prevailing environmental changes and
cultivate a healthy pragmatic approach; (b) train and develop rank and file
working group to inculcate in them individual effectiveness and professionalism
in negotiation; and (c) develop specific action-plans for negotiation based on
prevailing situation.
10.10 SUMMARY
Negotiation is a goal-oriented process. In negotiation, preparation and planning are
essential for moving in the desired direction. Negotiation is a process between people,
and so personal needs and feelings have to be taken into account constantly. Always
remember that the objective of negotiation is to come to an agreement. In the event of
no agreement, various pressures are brought to bear upon management by the union
such as strikes, go-slow, and boycotts. Contract negotiation is an art and a science,
but its practice is dependent upon the issues and the personalities involved and the
circumstances under which the negotiations are conducted. Trust and honesty in action
is central to the negotiating process. There are two ways to negotiate: soft or hard.
The soft negotiator wants to avoid personal conflict and so make concessions readily
in order to reach an agreement. The hard negotiator views any situation as a contest
and wants to win. The principled negotiation approach looks for areas of mutual gain
and objective standard decisions.
10.11 CASE
Manager as Negotiator
A bright young MBA fresh from one of the top management institutes took over his
father’s responsibilities as president in a manufacturing company. The company
employed approximately 1,000 persons in the production division. It had never faced
with a demand for collective bargaining. None of its employees were union members.
The new president, after three years of climbing the ladder to his position, had a
conference with three long-term employees, who explained that they and their
associates had been discussing the desirability of bargaining collectively. The
employees had not voiced any strong criticism of management, but they held several
meetings and had invited representatives of a national union to talk with them. They
concluded that they ought to try collective bargaining and hence formed a union and
enlisted a majority of production employees as members. The three representatives
had been elected to the bargaining committee in order to present a written statement to 25
Collective Bargaining the president with a request for a collective bargaining agreement. The three
representatives handed over a series of issues carefully spelled out by the union to the
president.
The young executive received them cordially and listened carefully. He accepted their
memorandum and suggested that he would like to take time to study it carefully. He
proposed a meeting with them on Friday of the following week.
When committee members returned, the president reminded them that the company
had been careful to maintain wages and working conditions at least on a par with
those in unionised companies in the same industry and region. He expressed the
opinion that the specific proposals they had presented seemed to him quite reasonable
and appropriate. He also told them that he had been thinking of many of the same
changes and would probably have made them without their request. He was pleased to
hand them their memorandum with a notation indicating his acceptance. The
committee members were quite satisfied with the effectiveness of their negotiations
and promised to get back to the president after getting the proposals ratified by rank
and file union membership.
One week later, the president found the same group of representatives waiting to see
him. They appeared somewhat crestfallen and embarrassed. They reported that they
had gone to the membership and presented a full report of their discussions with him,
explaining his attitude, and recommended formal ratification of the memorandum as a
new collective bargaining agreement. After extensive discussion, when the motion for
ratification came up for a vote, a majority of the membership voted against
ratification.
Discussion Questions
1. What is the problem in this case?
2. Why did the members refuse to ratify the agreement?
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