Roger Clarke's Fundamentals of Negotiation

meetings (same-time/same-place communications);
remote meetings supported by telephone, video-conference or workstations (same-time/different-place communications); and/or
asynchronous communications supported by recorded voice-messages, fax, letter or email (different-time communications).

Each of the parties who participate in negotiation may be a principal, or an agent for a human principal or for a legal entity such as a corporation.

Negotiation may be straightforward and quick, if the wishes of all parties are satisfied by the first proposal put by one of them.

Where the wishes of all parties are not satisfied by the first proposal, discussions are likely to lead to variations to it, or the creation of counter-proposals. This process will generally be quicker if the parties provide information to one another about their wishes.

In some cases, it is possible for a proposal to be generated which satisfies the needs of all parties. This is commonly referred to as a collaborative process leading to a 'win-win' situation.

In other circumstances, one or more parties may have to accept less than they wished for when they entered the negotiation, i.e. to compromise their objectives in the interests of reaching an agreement. Such an environment involves some degree of competition among the parties.

In some circumstances, the fulfilment of the wishes of one party may be directly detrimental to the fulfilment of the wishes of another party, e.g. in bargaining over the price of goods or services. This is referred to as a 'win-lose' situation (in the language of salesmen), or a 'zero-sum game' (in the context of operations research and game theory).

During negotiations, the parties may reach a 'stand-off', whereby no commonly acceptable point along a single dimension (such as price) can be found, or a 'dead-lock', whereby the parties' demands on one another are mutually unacceptable along several different dimensions.

Pre-Conditions for a Successful Negotiation

a set of parties who are, or at least may be, capable of satisfying one another's needs
knowledge by the parties of one another's existence
interest by the parties in achieving an outcome
interest by the parties in entering into negotiations
adequate mutual recognition and respect among the parties
a basis for communication among the parties, including:
- shared language
- the ability to meet together
- the availability of infrastructure to support communications over time and space
power of the parties to commit, or arrange the commitment of, the principals
power of the parties to deliver on the commitment

Major Factors in Negotiation Strategy

Power, i.e. the ability to exercise control

having options, i.e. not wanting any particular outcome too much
other parties not having options
precedent and legitimacy
expertise and judgement in the area
confidence / credibility / comfort / persistence
persuasive capacity

Time

the urgency for each party to achieve a result

Information

the wishes of each party
the urgency for each party to achieve a result
the cue clusters emanating from each party
the pattern of concessions behaviour of each party

Conflict Management Approaches

This is what to do when the party gets rough ...

avoid apparent reactions, i.e. don't take it personally (even if it was meant to hurt), maintain your composure and keep your voice at the same level
avoid statements which directly disagree with the other party's statement
acknowledge that you have heard the message
agree with parts of the message that you accept
seek clarification of the parts of the message that you do not accept

Key Factors which Influence the Course of a Negotiation

the parties':
- cultural backgrounds (e.g. Asians are less concerned about urgency than European cultures; and the Latin temperament demands visible drama)
- weltanschaungen (e.g. racial or class superiority)
- mindsets (e.g. the capitalist or simple-minded economic rationalist expectation that everyone else maximises their own advantage)
- negotiating styles (e.g. the bullying of Kerry Packer or Bronwyn Bishop versus the sweet reason of Desmond Tutu or Mother Teresa)
the inherent bargaining power (or 'leverage') which some parties have at the commencement of the negotiation. In particular, it may be more important, or more urgent, for one party to reach an agreement, than for the others. By refusing to compromise, parties with bargaining power may be able to force other parties to accept relatively disadvantageous terms. Common examples include circumstances in which sellers have monopoly power, or buyers monopsony power, even if the power is quite localised or short-term; and where one party has regulatory authority over one or more of the others
the additional bargaining power which the parties may be able to generate during the course of the negotiations
advocacy, or persuasiveness of argument, by parties to the negotiation, and by influential persons and organisations external to the negotiation process (e.g. a politician, or an industry association)
any prior experiences in negotiating among the parties, which may be positive (e.g. knowing when to trust and when to doubt; and being able to read cue clusters) or negative (e.g. having reason to distrust, or seeking revenge)
subconscious and semi-conscious psychological factors, such as the physical 'presence' or appearance, aggressiveness, confidence, amenability, etc. of the parties to the negotiation
prior and future relationships among the principals (e.g. established business partners may not fully exploit one another's negotiating weaknesses in in the hope of avoiding similarly predatory behaviour in a subsequent negotiation) and relationships among the agents (who have similar interests, e.g. solicitors in a small country town)

Negotiation Strategies

Always commence collaboratively, in order to avoid missing a simple but advantageous solution, and to build up the other parties' investment in the proceedings

In a win-win situation, continue to use consensus and collaboration

In a win-lose situation, where other parties have the upper hand, look for opportunities to avoid or defer the proceedings, or at least to convince the other parties that you can do without a result for the moment

In a win-lose situation, where you have the upper hand, choose between:

competition, i.e. exploiting your strengths and their weaknesses
compromise, i.e. giving up some of your advantage to secure the agreement
accommodation, i.e. giving up more than is necessary

Which is appropriate depends primarily on the urgency to you of achieving a result, and the anticipated longevity of your relationships with the other parties

Some Key Negotiation Tactics

Clearly distinguish between:

firm offers
conditional offers
hypothetical discussions

Avoid making unilateral concessions

Sustain credibility through consistent behaviour and signals

Record key information which arises during the negotiation

Don't use an Ultimatum until and unless the following Pre-Conditions exist:

there is strong commitment by the other parties to achieving a result
it is as pleasantly expressed as possible, i.e. not demeaning but palatable
it is backed up by legitimacy ('my principal has gone as far as he can go')
it is expressed as a choice among alternatives ('the pink one or the blue one')

Document the outcomes by way of a Minute, an Agreement, a Contract, or a Memorandum of Understanding among the parties

Characteristics of a Successful Negotiator
Personal Knowledge

clarity as to the principal's wishes
a preliminary understanding of the wishes of the other parties
an understanding of the cultural backgrounds, weltanschaungen, mindsets and negotiating styles of the other parties

Personal Skills

communications skills, particularly verbal
an ability to 'read' the other parties' speech and body-signals in meetings, and in remote meetings and asynchronous communications, and to detect and interpret 'cue clusters' (i.e. individual statements and body-signals are convey little information unless they form part of a pattern)
ability to avoid becoming excited and emotive
ability to suppress disadvantageous verbal and non-verbal cues, and where appropriate to send misleading cues in order to support a bluff
ability to cope with conflict and emotion
self-confidence and self-assertivenss, but without unnecessary aggressiveness
coolness, robustness and resilience under pressure
patience and flexibility
ability to quickly assess the impact of variations and counter-proposals on the principal's interests
ability to generate variations and counter-proposals

Commencing Position

bargaining advantages
no apparent bargaining disadvantages

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Created: 26 June 1998 - Last Amended: 26 June 1998 by Roger Clarke - Site Last Verified: 15 February 2009
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