Role Name Affiliation

Principal Investigator Prof. S P Bansal Vice Chancellor

Maharaja Agrasen University, Baddi
Co- PI Prof YoginderVerma Pro –VC, Central University of
Himachal Pradesh. Dharamshala. H.P.
Paper Coordinator Prof. IpshitaBansal Department of Management Studies
BPSMV, KhanpurKalan, Sonipat
Content Writer (CW) Prof. IpshitaBansal Department of Management Studies
BPSMV, KhanpurKalan, Sonipat
Content Reviewer (CR)
Language Editor (LE)

Items Description of Module

Subject Name Management
Paper Name Business Communication
Module Title Negotiation

Module Id Module no- 28

Pre- Verbal and Nonverbal Communication Skills, Listening
Requisites
Objectives To make the students understand approaches of negotiation.
To give them fair understanding of elements of negotiation preparation
under various situations.

Keywords Negotiation, Bargaining, Process, Qualities of Negotiator.

Quadrant 1

1. Module : Negotiation
2. Learning Outcomes
3. Introduction
4. Approaches to Negotiation
5. Fundamental Framework of Negotiation
6. Process of Negotiation
7. Common Mistakes and Barriers to Negotiation
8. Qualities of Successful Negotiator
9. Summary

1. Module: Negotiation
 2. Learning Outcomes:
By the end of this module, students will be able to understand-
• How parties resolve their conflicts through negotiation.
• Process of Negotiation.
• Qualities of Successful Negotiator.
• Elements of negotiation preparation under various situations.
•

3. Introduction

Let us never negotiate out of fear, but let us never fear to negotiate.

John. F Kennedy

Be it at home or at office, human beings are constantly negotiating sometimes with their partner, work
or family. It is communication process that helps the parties to resolve their conflict and come to
amicable terms. Henry Kissinger defined negotiation as, “a process of combining conflicting positions
into a common position, under a decision rule of unanimity”
(Kissinger, 1969).

Characteristics of negotiation: -

3.1 Two or more parties- There are two or more parties involved
in the process. They may be individuals, groups or even
organizations.
3.2 Conflict of needs and desire –The two parties involved have
differed interest due to which the conflict arose.
3.3 Hope to crack a better deal – The parties have faith that they would be able to crack a better deal
with use of influence on the other party. Figure 1
3.4 Expectation to give and take –Initially the parties put forward their demands but over the time
they modify their positions and statements by taking to one another as they try to strike amicable
decision.
3.5 Predetermined goals – The agenda is set by the parties beforehand.

4 Approaches to Negotiation
 Bargaining
Orientation

Approaches
Win-Win Lose-Lose
to
Orientation Orientation
Negotiation

Compromise

4.1 Bargaining Orientation- Here one party wins at the expense of other i.e. one party’s gain matches
the other party’s loss. It is also named as win-lose approach. Here the parties are competitive and
are determined to take advantage of each other as the interest of the parties do not match.This is
suited when compromising is not regarded as the best option.
4.2 Lose-Lose Orientation –When one party’s interest are threatened by the other; the losing party
ensures that the negotiation deal does not serve the interest of the other party too. Due to this both
parties end up being losers. This situation arises when the parties ignore each other’s needs or when
their sole motive is to hurt the other rather than coming to acceptable solution.
4.3 Compromise –To avoid the lose-lose situation sometimes negotiating partners compromise. They
giveup a part of what they previously thought and settle for something lesser. It is the best possible
way out when it’s tough to convince either the parties or when in order to partially achieve one’s
goal it is important to satisfy the other. It is healthier when the disputed resources are limited.
Example, negotiation for pay, terms between trade union and management.
4.4 Win- Win Orientation – This approach is better than other approaches as it confirms satisfaction of
both the parties. It is applicable when the needs of both the parties do not conflict.
Since win - win approach is the best approach every one should try to adopt this approach as
this leads to long term solution or maintenance of relationships.
In order to make this approach work following steps should be taken:-
 Determination of needs –Both the parties should try to understand the needs of each other in
order to come to an amicable solution. Also, it would make the process easy and smooth.
 Listing possible solutions- All the possible solutions that satisfy each other’s needs should be
listed and identified.
 Evaluation and Implementation of the solution- During this stage all the listed solutions
are evaluated and the most promising one is implemented.
  Follow Up- Once implemented the plan should be monitored. In case any party is not
satisfied and their needs are unmet, the parties can go back to problem-solving procedure and
work on better solution or rectify the one that’s implemented.

Characteristics of Negotiating Styles

Basis of Bargaining Compromise Win-Win Lose-Lose

Comparison

Orientation Us versus Them. Recognize that it We versus the To hurt each

is impossible to Problem. other.
control.
Approach Short term Recognize the Long-term Self-centered
approach need for civil approach approach.
focusing on outcome. focusing on
immediate amicable
problems. relationship.
Issues Only task issues Emphasis on task Task and Ignore issues and
considered. issues. relationship needs.
issues considered.
Point of View One sided view of Partially Well-versed with Ignore each
the problems. understand each each other’s view. other’s view.
other’s situation.
Adaptedfrom:Adler&Elmhorst, Communicating at Work (New Work: McGraw-Hill, 1996)144

5 Fundamental Framework of Negotiation

There are four fundamental stances related to negotiation which need to be understood.

5.1 Establishing BATNA (Best Alternative to a Negotiated Agreement): - The Bargaining power
of the parties depend upon their BATNA. One increasesone’s BATNA by brainstorming,
identifying and evaluating the alternatives available. Example, in job a candidate’s bargaining
power is dependent on number of job offers he has in hand. The next best offer he relies on is his
BATNA.
Example: - Ram earns 60,000. His company transfers him to a different location. Ram asks for hike
in the salary. Ram feels that’s if he rejects the offer he is reducing his chances for further hike in the
organization. Ram explores further options and finds a job that pays him 62,000 without making him
 leave his present city. By identifying the alternative Ram increases his BATNA from 60,000 to
62,000.

5.2 Establishing WATNA (Worst Alternative to a Negotiated Agreement): - It is also called as the
‘worst case scenario’. Here the party tries to anticipate the most damaging outcome if no agreement is
reached. It helps the party to decide how flexible one can be during the negotiation deal. In the above
example if Ram does not find another job then he will have to establish WATNA and accept the
transfer even with out the hike in the salary.

5.3 Walk AwayPoint: - It is the least favorable point at which one party accepts a
deal. Anticipating WAP beforehand helps the party to hold a stronger position in
the deal. It becomes meaningless if one party does not walk away if the price/
condition/ situationis not met. The negotiating parties will try to test each other
during the deal so it becomes all the more important for parties to be firm on their
proposed price.
Example: - Buyer and seller negotiate over used car price. Buyer decides he would not pay more than
1,00,000 whereas the seller decides he would not give away the car below 80,000. These prices
quoted are called as Walk Away Point (WAP). In such a scenario deal will not take place.

5.4 Zone of Possible Agreement (ZOPA): - It is the range in which deal can take place. Each parties
Walk Away Point (WAP) becomes
one end of ZOPA.

The figure illustrates the example of

ZOPA.

Source:http://www.9lenses.com/win
-enterprise-sales-negotiations

6 Process of Negotiation
 Establishment of
Negotiator Information
Preparation
Identities and Tone Exchange
for the Interaction

Formalizing the
Closing the Deal Bargaining
Agreement

Source : Adapted from Charles (2003)

6.1 Preparation: -
One has to prepare well in advance to be successful in the negotiation process. Information plays the
key role, the party who has done its homework well will be at better off position as compared to the
other. Parties should clearly lay the objectives along with the priorities in their mind. The objectives
should be firm but realistic. One must be aware how much one is willing to concede or compromise.
Example when one is negotiating for salary with an employer, the incumbent should check what the
similar jobs are paying so as to be at better position. Once they have gathered the information they
have to work on BATNA, WATNA, WAP and ZOPA to be well equipped.

6.2 Establishment for Negotiator Identities and Tone for Interaction: -

Once the parties are through with preparation stage, they now meet their counterparts. During the
commencement of deal the people involved are generally anxious and this frame of mind may
adversely affect the dealings. Hence, it is essential to know something about the people involved and
about the organization they belong to. This will help to smoothly sail and stir the negotiation dealings.
It is essential to take time out to create a rapport with the parties as this depicts professionalism and
confidence. Here in this stage small informal talks can take place.

6.3 Information Exchange: -

Once the rapport is build, the parties now move to substantive issues that are to be negotiated. The
parties should be cautious and should not rush stating their bargaining positions. Broad and open
ended questions should be used to accomplish information. The parties should listen to each other
carefully. Interventions should be made to clarify the theme. Judgements should be made once the
comprehensions are complete. Blocking techniques can be used by the bargainers when asked about
the areas the parties would not like to disclose. In this process tentative negotiations take place
without breaking or making the process.

6.4 Bargaining: -
This stage is heart of the negotiation process. Here the parties claim value for themselves by
maximizing their interest. Having clarity of objectives is of utmost importance. Parties should try and
visualize the changes that may conclude with deals. Parties can make initial offer and try to get to the
midpoint of their positions. Patience and silence are essentially important. People who talk more tend
to disclose more information. People involved should try to gauge the emotional words of the people
around.
Bargainers debate over the value of the item to be exchanged. Buyers lower the value of the item
while the sellers amplify the value. Focus should be on the concession pattern as it will help to assess
the positional changes that may take place during the deal.
Consensus-Building is essential as it induces commitment and supports agreement and its
implementation.
Bargaining Tactics
Snow Job: - Bargainers load the party with so much information that it gets tough for the party to
decide what to include and what to exclude. Technical jargons are used to exaggerate the information
and make it more presentable.
Nibble: - Small concessions are asked by the parties just before the closure of the deal. Example can
be the party can plead by saying to other “just add this thing”.
Flinch: - In this tactic the party shows negative physical reaction through gestures to a proposal.
Example, gasping of air, expression of shock etc. This could be done consciously or unconsciously.
Bogey: - Here the bargainers show that the issue of little importance to them is very important. This
could be traded for a major concession later.
Brinkmanship: - One party aggressively pushes the other negotiating party to either agree or walk
away. It is hard nut approach. Successful brinkmanship persuades the other party that there is no other
alternative but to accept the offer.
Deadlines: - One party gives actual or artificial deadline to the other so as to push them to make
decision. This method exerts pressure on the other.

6.5 Closing the Deal: -

Towards the end of bargaining stage the parties try to assess the agreement that will be entered soon.
Clarity is reached with respect to what will be given and what will be received by each of the parties.
This is the most delicate part of the process. It is observed that less competent bargainers quickly
move towards concluding the transaction. Though it’s human to appreciate certainty but one should
 not rush in to the process. During this stage the parties should be calm and composed rather than
being anxious. While closing the deal long term benefits should be seen.
Reaching Consensus
Every human being is unique and so are his ways to define consensus. In negotiation process
consensus is defined as a substantive agreement on key issues. Parties should be able to live with the
outcome of negotiation. It is also considered as hardest part of the process as parties involved may
have different views, feelings and attitudes about the result. Consensus aims to please as many as
possible.
Building Agreement
Once the consensus is reached, it requires expert skills to convert the generalities into specifics. Fair
agreement should be documented that accurately interprets the consensus of the parties.
Setting the Terms of Agreement
Dissatisfaction and chaos is created if the terms of the agreement aren’t clearly laid.
For Example - builder instructs the contractor to lay the flooring of the building. A week passes by
and nothing is being worked. Contractor waited for the written agreement while the builder assumed
the work has been started. This lead to loss of men and material. So to make the agreement successful
it is essential to have clarity at each step.
6.6 Formalizing the agreement:
Once the parties agree on a tentative agreement, they shake hands to end the negotiation discussion
and make it public by signing a document.

7. Common Mistakes and Barriers to Negotiation

There are several pitfalls that negotiators fall prey to. One must be aware of them so as to consciously
address them during and before the deal.
7.1 Common Mistakes in Negotiation
Mistake Causes Result
Irrational  Wanting to win at all costs Continuing a selected course of action
escalation of • Impression management (ego) beyond what is considered rational, and
commitment • Perceptual biases in spite of contrary information
Mythical fixed pie  Lack of creativity in problem solving There is a set amount on the table and
one party has to win and the other lose
Winner’s curse  Lack of preparation Making a quick high offer and feeling
 Lack of expertise cheated when the offer is accepted
• One party having more information than
the other
Overconfidence  Lack of information Overestimating your ability to be
 • Arrogance correct
• Distorted perception
Source: Based on information in Bazerman, M. H., & Neale, M. A. (1992). Negotiating rationally.
New York, NY: Free Press.

7.2 Barriers to Negotiation Agreement

The ability to negotiate well with

others is not a cake walk, sometimes
Barriers great negotiators also fail to crack a
•Communication Problems deal. The common barriers that
•Die Hard Bargainers
•Lack of Trust become hurdle in negotiation deal
•Gender and Cultural Differences
are explained below:-
•Spoilers

 Communication
Problems: - Communication is
considered successful when a party
is able to communicate its head and
heart and the message is interpreted in the same manner by the other. Mere hearing of words
and observing the body language is not communication.
How to Handle?
Know your Subject: - One must be fully equipped with informational details about the deal, people
involved etc. this would help in clearly conveying the message without overloading or undermining
the information.
Focus on Purpose: - The objective of the deal should be clear in minds of the people, unless it is
clear the parties will keep moving on the periphery without focusing on core area.
Know your Audience: - One must understand the audience in order to convey the message
effectively. It will be better to know their background, age and their status. Example, if there are cross
cultural deals one must be aware of their biases and practices so as to have better connect with them in
order to close the deal.
 Die-Hard Bargainers: - These people consider the deals as battle.
How to handle?
Understand their moves: - Don’t let them overpower. Be proactive to understand their unreasonable
offers and body language.
Keep a check on what information to be disclosed.
Show them that you can walk away: - This helps to keep a check on difficult behavior of the parties
and may make them cooperative.
 Lack of Trust: - Sometimes our own prejudices and beliefs make us suspect the side even though
they may not have any ill intention.
How to handle?
Be Objective: - Avoid jumping to conclusions and be open mind to receive the information well.
Don’t be too fast in making judgements, delve deeper into data. Consciously try to keep your
concerns and biases at bay.
Request documents and insist on enforcement mechanisms.
Be Clear: - The party must clearly know the purpose of the deal. If either of party is unclear, they
may fumble and wander around rather than coming to central idea.
 Gender and Cultural Differences: - Globalization has made organizations view the world as a single
market. Now a days cross cultural deals are common. Being aware of other party’s culture goes a long
way. Example, managers from masculine culture will be more assertive and dominating. U.S
believing in individualism sill iterate on self-interest while Japan relying on collectivism will
emphasize on building relationships.
How to handle?
Research: - Efficient managers do their homework well by researching available literature about
other party’s culture.
Understand Assumptions: - Each party may come with their pre-conceived notions to table. It is
important to identify and validate them. Else they may prove as a barrier to effective communication
too.
Focus on deal and not try to bully the other party: - The group need not be manipulative or
coercive to the other. Trying to show that one has greater power or wealth may make the other party
defensive.
 Spoilers: - When the other party thinks they will lose the deal, few amongst them try to resist and
spoil the atmosphere in order to distract the other party.
How to handle?
Identify the potential spoilers: - This will help the party to estimate their power to affect an
agreement and also will them (the party) to chalk out a plan for them.
Identify their interest and communicate the benefits: - explaining them the benefits and the
matters in detail will help in clear communication. This will also help them in removing additional
bag gages that they might would have carried along.
Coalition: - Building rapport and coalition may lead to amicably closing the deal in one’s favor.
8 Qualities of Successful Negotiator

Each negotiation is unique but there are some basic traits that should be present in the negotiator in
order to make the process effective. Also it is easier to deal with person who have the following
traits in them.


Empathizer: -
Imagine when people show lack of understanding,
Organised interest and concern; it’s observed that the other person
becomes defensive. An effective Negotiator
Patient Empathizer
understands the other party and responds to them rather
than just speaking his own ideas. The idea is to keep
oneself in other’s shoes and then imagine the situation.
Fair Flexible This helps to smooth out the rough edges and make the
process simpler.

Interesting Perceptive

Flexible: -
An effective Negotiator is not rigid and is be ready to
compromise on some issues for long term benefit of both the parties.
 Patient: -

A good Negotiator patiently tries to listen to what offer the other party desires to make. He does not
switch off when the message seems dull or boring. Close mind represents to other person that one is
not interested to listen and doesn’t seem bothered about the topic being discussed. A good Negotiator
makes sure that the other party is comfortable too.
 Fair
A good negotiator is fair in his /her approach. None of us wants to be deceived. People become
defensive and offended when they realize they are being cheated by the other person. So while
negotiating, party in a stronger position should not totally ignore the needs of the other party as it will
result in ill will and even if a deal pertaining to win – lose situation is the agreement is not likely to
last long.

 Perceptive: -
A good negotiator is very perceptive at picking up cues. He look for the speaker’s main idea and
focuses on speaker’s voice quality and body language as they provide vital clues. Also they help to
 decipher the emotional content of what speaker wishes to claim. It is seen that we think faster than we
speak. An effective Negotiator uses this gap by consistently reviewing what speaker has claimed.
 Interesting: -
An effective Negotiator is lively and has the ability to stimulate the minds of others too. He is able to
capture the attention of all the negotiating persons. In order to retain the interest of the other party he
practices voice modulation as a dull monotone induces mental lethargy amongst the participants.

 Organized: -
An effective negotiator is always very organized with respect to his thoughts, the information and
setting priorities. Gathering information about the participants and deal equips oneself to organize
material in an efficient manner. For Example, if the negotiator is unaware about the statistics and
financial position of the organization it will be difficult to set realistic deals. The messages conveyed
should be in logical and understandable form rather than being broken and distorted.

9. Summary
Over the course of this module we understood nitty-gritty of negotiation.
Negotiation cannot be learnt while following a set procedure and applying them to all. Variety of
approaches should be analyzed as per the situation. One must be alert to verbal as well nonverbal
clues and they play a major part in negotiation process. Communication is always essential in any
interactive process. One must hear and be heard, also person should be able to read between the lines
to decipher the information accurately.