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Chapter 9 Handle Conflict and Negotiation
Significant portions of this chapter were adapted from [citation redacted per publisher request] with permission of the authors.
[citation redacted per publisher request].
The only way to get the best of an argument is to avoid it.
Dale Carnegie
During a negotiation, it would be wise not to take anything personally. If you leave personalities out of it, you will be able to see opportunities more objectively.
Brian Koslow
Negotiation Breakdown
You are part of a team charged with negotiating the new collective bargaining agreement for your union. Your union is requesting profit sharing, a 10 percent raise for all union members and an additional week of vacation time.
When you go into the meeting with management, they present their terms, which include a 5 percent pay cut due to lower product demand and greater responsibility to cover the cost of health care for union members, which would amount to about $50 per person, per paycheck.
The lead team member laughs at management's requests and tells them they have a long way to go in order to avoid a strike. You are uncomfortable with this comment, as you believe it doesn't set the right tone for the negotiation. In addition, the statement appears to be threatening, which you know is something to avoid during negotiation.
When your team presents their items, management says there is no way they can meet those demands, so the union better get more realistic about the current economic state of the company.
As you leave the bargaining table with no progress, you know there is a long way to go before the union and management will be able to come to a resolution.
The focus of this chapter is to discuss conflict and negotiation and how to avoid situations such as this one when negotiating.
9.1 Understanding Conflict
Learning Objectives
1.Be able to explain the nature of conflict in your personal life or at work.
2.Understand the different types of conflict you may experience at work and in your personal life.
In this chapter, you’ll see that learning how to handle conflict and engaging in effective negotiation are key to successful human relations and to a successful career. Learning how to handle conflict confidently is a key component in your emotional intelligence toolkit, specifically, self-
Conflicts range from minor annoyances to outright violence. For example, one million workers (18,000 people per week) are assaulted on the job in the United States alone.National Institute for Occupational Safety and Health. (1997). Violence in the workplace. Retrieved November 14, 2008, from http://www.cdc.gov/niosh/topics/violence/. One of the major ways to avoid conflicts escalating to these levels is through understanding the causes of conflict and developing methods for managing potential negative outcomes. Negotiation is one of the most effective ways to decrease conflict and will also be examined in depth in this chapter.
Similar to how conflicts can range from minor to major, negotiations vary in terms of their consequences. A high-
ConflictA process that involves people disagreeing. is a process that involves people disagreeing. Researchers have noted that conflict is like the common cold. Everyone knows what it is, but understanding its causes and how to treat it is much more challenging.Wall, J. A., & Callister, R. R. (1995). Conflict and its management. Journal of Management, 21, 515–58. As we noted earlier, conflict can range from minor disagreements to workplace violence. In addition, there are three types of conflict that can arise within organizations. Let’s take a look at each of them in turn.
Types of Conflict
Intrapersonal Conflict
Intrapersonal conflictConflict that arises within a person. arises within a person. For example, when you’re uncertain about what is expected or wanted, or you have a sense of being inadequate to perform a task, you are experiencing intrapersonal conflict. Intrapersonal conflict can arise because of differences in roles. A manager may want to oversee a subordinate’s work, believing that such oversight is a necessary part of the job. The subordinate, on the other hand, may consider such extensive oversight to be evidence of a lack of trust. Role conflict, another type of intrapersonal conflict, includes having two different job descriptions that seem mutually exclusive. This type of conflict can arise if you’re the head of one team but also a member of another team. A third type of intrapersonal conflict involves role ambiguity. Perhaps you’ve been given the task of finding a trainer for a company’s business writing training program. You may feel unsure about what kind of person to hire—a well-
Examples of Interpersonal Conflicts
(click to see video)
Do any of these roommate interpersonal conflicts sound familiar?
Interpersonal Conflict
Figure 9.1
Of the conflict between Michael Dell (shown here) and Steve Jobs, David Yoffie, a professor at the Harvard Business School, who closely follows the computer industry, notes that the conflict may stem from their differences in terms of being from different generations and having different management styles.
Source: http://en.wikipedia.org/wiki/Image:Michael_Dell,_square_crop.jpg.
Interpersonal conflictA type of conflict between two people. is among individuals such as coworkers, a manager and an employee, or CEOs and their staff. For example, in 2006 the CEO of Airbus SAS, Christian Streiff, resigned because of his conflict with the board of directors over issues such as how to restructure the company.Michaels, D., Power, S., & Gauthier-
Intergroup Conflict
Figure 9.2
Conflicts such as the Air Canada pilot strike can have ripple effects. For example, Air Canada’s parent company threatened to cancel a $6.1 billion contract with Boeing for new planes if they were unable to negotiate an agreement with the pilots who would fly them. Conflict consequences such as these could affect those working at this Boeing Factory in Seattle, Washington.
Source: http://commons.wikimedia.org/wiki/Image:Boeing_Factory_2002.jpg.
Intergroup conflictConflict that takes place among different groups, such as different departments or divisions in a company; between union and management; or between companies, such as companies who supply the same customer. is conflict that takes place among different groups. Types of groups may include different departments, employee unions, or management in a company or competing companies that supply the same customers. Departments may conflict over budget allocations, unions and management may disagree over work rules, and suppliers may conflict with each other on the quality of parts. Merging two groups together can lead to friction between the groups—especially if there are scarce resources to be divided among the group. For example, in what has been called “the most difficult and hard-
Is Conflict Always Bad?
Most people are uncomfortable with conflict, but is conflict always bad? Conflict can be dysfunctional if it paralyzes an organization, leads to less than optimal performance, or, in the worst case, leads to workplace violence. Surprisingly, a moderate amount of conflict can actually be a healthy (and necessary) part of organizational life.Amason, A. C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: Resolving a paradox for top management teams. Academy of Management Journal, 39, 123–48. To understand how to get to a positive level of conflict, we need to understand its root causes, consequences, and tools to help manage it. The impact of too much or too little conflict can disrupt performance. If conflict is too low, then performance is low. If conflict is too high, then performance also tends to be low. The goal is to hold conflict levels in the middle of this range. While it might seem strange to want a particular level of conflict, a medium level of task-
Figure 9.3 The Inverted U Relationship between Performance and Conflict
Task conflict can be good in certain circumstances, such as in the early stages of decision making, because it stimulates creativity. However, it can interfere with complex tasks in the long run.De Dreu, C. K. W., & Weingart, L. R. (2003). Task versus relationship conflict: Team performance, and team member satisfaction: A meta-
Key Takeaways
•Conflict can be a problem for individuals and organizations.
•There are several different types of conflict, including intrapersonal, interpersonal, and intergroup conflict.
•Moderate conflict can be a healthy and necessary part of organizational life.
Exercises
1.What are the types of conflicts that individuals may have at work? Which type have you experienced the most?
2.What are some primary causes of conflict at work?
3.Explain how miscommunication might be related to a conflict at work.
9.2 Causes and Outcomes of Conflict
Learning Objectives
1.Understand different causes of conflict both at work and in your personal life.
2.Learn the possible outcomes of conflict.
There are many potential root causes of conflict at work. We’ll go over six of them here. Remember, anything that leads to a disagreement can be a cause of conflict. Although conflict is common to organizations, some organizations have more than others.
Figure 9.4 Potential Causes of Conflict
Causes of Conflict
Organizational Structure
Conflict tends to take different forms, depending upon the organizational structure.Jaffe, D. (2000). Organizational theory: Tension and change. New York: McGraw Hill.
Limited Resources
Resources such as money, time, and equipment are often scarce. Competition among people or departments for limited resources is a frequent cause for conflict. For example, cutting-
Task Interdependence
Another cause of conflict is task interdependence; that is, when accomplishment of your goal requires reliance on others to perform their tasks. For example, if you’re tasked with creating advertising for your product, you’re dependent on the creative team to design the words and layout, the photographer or videographer to create the visuals, the media buyer to purchase the advertising space, and so on. The completion of your goal (airing or publishing your ad) is dependent on others.
Incompatible Goals
Sometimes conflict arises when two parties think that their goals are mutually exclusive. Within an organization, incompatible goals often arise because of the different ways department managers are compensated. For example, a sales manager’s bonus may be tied to how many sales are made for the company. As a result, the individual might be tempted to offer customers “freebies” such as expedited delivery in order to make the sale. In contrast, a transportation manager’s compensation may be based on how much money the company saves on transit. In this case, the goal might be to eliminate expedited delivery because it adds expense. The two will butt heads until the company resolves the conflict by changing the compensation structure. For example, if the company assigns the bonus based on profitability of a sale, not just the dollar amount, the cost of the expediting would be subtracted from the value of the sale. It might still make sense to expedite the order if the sale is large enough, in which case both parties would support it. On the other hand, if the expediting negates the value of the sale, neither party would be in favor of the added expense.
Personality Differences
Personality differences among coworkers are common. By understanding some fundamental differences among the way people think and act, we can better understand how others see the world. Knowing that these differences are natural and normal lets us anticipate and mitigate interpersonal conflict—it’s often not about “you” but simply a different way of seeing and behaving. For example, Type A individuals have been found to have more conflicts with their coworkers than Type B individuals.Baron, R. A. (1989). Personality and organizational conflict: Type A behavior pattern and self-
Communication Problems
Sometimes conflict arises simply out of a small, unintentional communication problem, such as lost e-
In another example, the Hershey Company was engaged in talks behind closed doors with Cadbury Schweppes about a possible merger. No information about this deal was shared with Hershey’s major stakeholder, the Hershey Trust. When Robert Vowler, CEO of the Hershey Trust, discovered that talks were underway without anyone consulting the Trust, tensions between the major stakeholders began to rise. As Hershey’s continued to underperform, steps were taken in what is now called the “Sunday night massacre,” in which several board members were forced to resign and Richard Lenny, Hershey’s then current CEO, retired.Jargon, J., Karnitschnig, M., & Lublin, J. S. (2008, February 23). How Hershey went sour. Wall Street Journal, pp. B1, B5. This example shows how a lack of communication can lead to an escalation of conflict. Time will tell what the lasting effects of this conflict will be, but in the short term, effective communication will be the key. Now, let’s turn our attention to the outcomes of conflict.
Outcomes of Conflict
One of the most common outcomes of conflict is that it upsets parties in the short run.Bergman, T. J., & Volkema, R. J. (1989). Understanding and managing interpersonal conflict at work: Its issues, interactive processes and consequences. In D. M. Kolb & J. M. Kolb (Eds.), Hidden conflict in organizations (pp. 7–19). Newbury Park, CA: Sage. However, conflict can have both positive and negative outcomes. On the positive side, conflict can result in greater creativity or better decisions. For example, as a result of a disagreement over a policy, a manager may learn from an employee that newer technologies help solve problems in an unanticipated new way.
Positive outcomes include the following:
•Consideration of a broader range of ideas, resulting in a better, stronger idea
•Surfacing of assumptions that may be inaccurate
•Increased participation and creativity
•Clarification of individual views that build learning
On the other hand, conflict can be dysfunctional if it is excessive or involves personal attacks or underhanded tactics.
Examples of negative outcomes include the following:
•Increased stress and anxiety among individuals, which decreases productivity and satisfaction
•Feelings of being defeated and demeaned, which lowers individuals’ morale and may increase turnover
•A climate of mistrust, which hinders the teamwork and cooperation necessary to get work done
Is Your Job at Risk for Workplace Violence?
You may be at increased risk for workplace violence if your job involves the following:
•Dealing with people
◦ Caring for others either emotionally or physically, such as at a nursing home
◦ Interacting with frustrated customers, such as with retail sales
◦ Supervising others, such as being a manager
◦ Denying requests others make of you, such as with customer service
•Being in high-
◦ Dealing with valuables or exchanging money, such as in banking
◦ Handling weapons, such as in law enforcement
◦ Working with drugs, alcohol, or those under the influence of them, such as bartending
◦ Working nights or weekends, such as gas station attendants
Sources: Adapted from information in LeBlanc, M. M., & Kelloway, E. K. (2002). Predictors and outcomes of workplace violence and aggression. Journal of Applied Psychology, 87, 444–53; National Institute for Occupational Safety and Health. (1997). Violence in the workplace. Retrieved November 12, 2008, from http://www.cdc.gov/niosh/docs/96-
Conflict Costs
(click to see video)
One of the biggest costs in the workplace is not managing conflict, as this video discusses.
Given these negative outcomes, how can conflict be managed so that it does not become dysfunctional or even dangerous? We’ll explore this in the next section.
Key Takeaways
•Conflict has many causes, including organizational structures, limitations on resources, task interdependence, goal incompatibility, personality differences, and communication challenges.
•Outcomes of well-
•Jobs that deal with people are at higher risk for conflict.
Exercises
1.What are some primary causes of conflict at work?
2.What are the outcomes of workplace conflict? Which types of job are the most at risk for workplace violence? Why do you think that is?
3.What outcomes have you observed from conflict?
9.3 Conflict Management
Learning Objectives
1.Understand different ways to manage conflict.
2.Understand your own communication style.
3.Learn to stimulate conflict if needed.
There are a number of different ways of managing organizational conflict, which are highlighted in this section. Conflict managementResolving disagreements effectively. refers to resolving disagreements effectively.
Ways to Manage Conflict
Change the Structure
When structure is a cause of dysfunctional conflict, structural change can be the solution to resolving the conflict. Consider this situation. Vanessa, the lead engineer in charge of new product development, has submitted her components list to Tom, the procurement officer, for purchasing. Tom, as usual, has rejected two of the key components, refusing the expenditure on the purchase. Vanessa is furious, saying, “Every time I give you a request to buy a new part, you fight me on it. Why can’t you ever trust my judgment and honor my request?”
Tom counters, “You’re always choosing the newest, leading-
“But when you don’t order the parts we need for a new product, you delay the whole project,” Vanessa says.
Sharon, the business unit’s vice president, hits upon a structural solution by stating, “From now on, both of you will be evaluated on the total cost and the overall performance of the product. You need to work together to keep component costs low while minimizing quality issues later on.” If the conflict is at an intergroup level, such as between two departments, a structural solution could be to have those two departments report to the same executive, who could align their previously incompatible goals.
Change the Composition of the Team
If the conflict is between team members, the easiest solution may be to change the composition of the team, separating the personalities that were at odds. In instances in which conflict is attributed to the widely different styles, values, and preferences of a small number of members, replacing some of these members may resolve the problem. If that’s not possible because everyone’s skills are needed on the team and substitutes aren’t available, consider a physical layout solution. Research has shown that when known antagonists are seated directly across from each other, the amount of conflict increases. However, when they are seated side by side, the conflict tends to decrease.Gordon, J., Mondy, R. W., Sharplin, A., & Premeaux, S. R. (1990). Management and organizational behavior (p. 540). New York: Simon & Schuster.
Create a Common Opposing Force
Group conflict within an organization can be mitigated by focusing attention on a common enemy such as the competition. For example, two software groups may be vying against each other for marketing dollars, each wanting to maximize advertising money devoted to their product. But by focusing attention on a competitor company, the groups may decide to work together to enhance the marketing effectiveness for the company as a whole. The “enemy” need not be another company—it could be a concept, such as a recession, that unites previously warring departments to save jobs during a downturn.
Consider Majority Rule
Sometimes a group conflict can be resolved through majority rule. That is, group members take a vote, and the idea with the most votes is the one that gets implemented. The majority rule approach can work if the participants feel that the procedure is fair. It is important to keep in mind that this strategy will become ineffective if used repeatedly with the same members typically winning. Moreover, the approach should be used sparingly. It should follow a healthy discussion of the issues and points of contention, not be a substitute for that discussion.
Problem Solve
Problem solving is a common approach to resolving conflict. In problem-
Conflict-
Individuals vary in the way that they handle conflicts. There are five common styles of handling conflicts.
These styles can be mapped onto a grid that shows the varying degree of cooperation and assertiveness each style entails. As we discuss each of these, consider your own conflict management style and what benefits or negatives you receive from this style.
Figure 9.5 Conflict-
Avoidance
The avoidingAn uncooperative and unassertive conflict-
Resolving Office Disputes
(click to see video)
Tips on how to deal with workplace conflict.
Accommodation
The accommodatingA cooperative and unassertive conflict-
Compromise
The compromisingA middle-
Competition
Figure 9.6
Body language can fuel a conflict.
© 2010 Jupiterimages Corporation
People exhibiting a competingA conflict-
Collaboration
The collaboratingA conflict-
Which Style Is Best?
Like much of organizational behavior, there is no one “right way” to deal with conflict. Much of the time it will depend on the situation. However, the collaborative style has the potential to be highly effective in many different situations.
We do know that most individuals have a dominant style that they tend to use most frequently. Think of your friend who is always looking for a fight or your coworker who always backs down from a disagreement. Successful individuals are able to match their style to the situation. There are times when avoiding a conflict can be a great choice. For example, if a driver cuts you off in traffic, ignoring it and going on with your day is a good alternative to “road rage.” However, if a colleague keeps claiming ownership of your ideas, it may be time for a confrontation. Allowing such intellectual plagiarism to continue could easily be more destructive to your career than confronting the individual. Research also shows that when it comes to dealing with conflict, managers prefer forcing, while their subordinates are more likely to engage in avoiding, accommodating, or compromising.Howat, G., & London, M. (1980). Attributions of conflict management strategies in supervisor-
What If You Don’t Have Enough Conflict Over Ideas?
Part of effective conflict management is knowing when proper stimulation is necessary. Many people think that conflict is inherently bad—that it undermines goals or shows that a group or meeting is not running smoothly. In fact, if there is no conflict, it may mean that people are silencing themselves and withholding their opinions. The reality is that within meaningful group discussions, there are usually varying opinions about the best course of action. If people are suppressing their opinions, the final result may not be the best solution. During healthy debates, people point out difficulties or weaknesses in a proposed alternative and can work together to solve them. The key to keeping the disagreement healthy is to keep the discussion focused on the task, not the personalities. For example, a comment such as “Jack’s ideas have never worked before. I doubt his current idea will be any better” is not constructive. Instead, a comment such as “This production step uses a degreaser that’s considered a hazardous material. Can we think of an alternative degreaser that’s nontoxic?” is more productive. It challenges the group to improve upon the existing idea.
Traditionally, Hewlett-
Why Human Relations?
Every friendship, romantic relationship, or work situation has conflict. How we handle the conflict is what shows our positive human relations skills. Conflict management is a key skill to learn because we already know our personal happiness and career success depends on our ability to show positive human relations skills—even when conflict is present.
Conflicts can be minor disagreements or they can be major issues that can impede success among team members. Either way, the ability to handle and resolve the conflict are imperative to maintaining positive human relations in your work environment and in your personal life, too.
Conflict can be highly emotional, so having an awareness of our emotions during a conflict (self-
Key Takeaways
•Conflict management techniques include changing organizational structures to avoid built-
•Conflict management styles include accommodating others, avoiding the conflict, collaborating, competing, and compromising.
•People tend to have a dominant style. At times it makes sense to build in some conflict over ideas if none exists.
Exercises
1.List three ways to decrease a conflict situation. What are some pros and cons of each of these approaches?
2.Do you deal with conflict differently with friends and family than you do at work? If so, why do you think that is?
3.What is your usual conflict-
4.Describe a situation in which not having enough conflict can be a problem.
9.4 Negotiations
Learning Objectives
1.Be able to apply the five phases of negotiation to your work or personal life.
2.Learn negotiation strategies for use at work or in your personal life.
A common way that parties deal with conflict is via negotiation. NegotiationA process whereby two or more parties work toward an agreement. is a process whereby two or more parties work toward an agreement. There are five phases of negotiation, which are described in the following section.
The Five Phases of Negotiation
Phase 1: Investigation
Figure 9.7 The Five Phases of Negotiation
The first step in negotiation is the investigationThe first step in negotiation in which information is gathered., or information gathering stage. This is a key stage that is often ignored. Surprisingly, the first place to begin is with yourself: What are your goals for the negotiation? What do you want to achieve? What would you concede? What would you absolutely not concede? Leigh Steinberg, the most powerful agent in sports (he was the role model for Tom Cruise’s character in Jerry Maguire), puts it this way: “You need the clearest possible view of your goals. And you need to be brutally honest with yourself about your priorities.”Webber, A. (1998, October). How to get them to show you the money. Fast Company, 198. Retrieved November 14, 2008, from http://www.fastcompany.com/magazine/19/showmoney.html. Knowing your goals during the investigation phase can relate back to our earlier discussion on emotional intelligence and self-
During the negotiation, you’ll inevitably be faced with making choices. It’s best to know what you want, so that in the heat of the moment you’re able to make the best decision. For example, if you’ll be negotiating for a new job, ask yourself, “What do I value most? Is it the salary level? Working with coworkers whom I like? Working at a prestigious company? Working in a certain geographic area? Do I want a company that will groom me for future positions or do I want to change jobs often in pursuit of new challenges?”
Phase 2: Determine Your BATNA
One important part of the investigation and planning phase is to determine your BATNAStands for the “best alternative to a negotiated agreement.” Determining your BATNA is one important part of the investigation and planning phase in negotiation., which is an acronym that stands for the “best alternative to a negotiated agreement.” Roger Fisher and William Ury coined this phrase in their book Getting to Yes: Negotiating without Giving In.
Thinking through your BATNA is important to helping you decide whether to accept an offer you receive during the negotiation. You need to know what your alternatives are. If you have various alternatives, you can look at the proposed deal more critically. Could you get a better outcome than the proposed deal? Your BATNA will help you reject an unfavorable deal. On the other hand, if the deal is better than another outcome you could get (that is, better than your BATNA), then you should accept it.
Think about it in common sense terms: When you know your opponent is desperate for a deal, you can demand much more. If it looks like they have a lot of other options outside the negotiation, you’ll be more likely to make concessions.
As Fisher and Ury said, “The reason you negotiate is to produce something better than the results you can obtain without negotiating. What are those results? What is that alternative? What is your BATNA—your Best Alternative To a Negotiated Agreement? That is the standard against which any proposed agreement should be measured.”Fisher, R., & Ury, W. (1981). Getting to yes: Negotiating agreement without giving in. New York: Penguin Books.
The party with the best BATNA has the best negotiating position, so try to improve your BATNA whenever possible by exploring possible alternatives.Pinkley, R. L. (1995). Impact of knowledge regarding alternatives to settlement in dyadic negotiations: Whose knowledge counts? Journal of Applied Psychology, 80, 403–17.
Going back to the example of your new job negotiation, consider your options to the offer you receive. If your pay is lower than what you want, what alternatives do you have? A job with another company? Looking for another job? Going back to school? While you’re thinking about your BATNA, take some time to think about the other party’s BATNA. Do they have an employee who could readily replace you?
Once you’ve gotten a clear understanding of your own goals, investigate the person you’ll be negotiating with. What does that person (or company) want? Put yourself in the other party’s shoes. What alternatives could they have? For example, in the job negotiations, the other side wants a good employee at a fair price. That may lead you to do research on salary levels: What is the pay rate for the position you’re seeking? What is the culture of the company?
Greenpeace’s goals are to safeguard the environment by getting large companies and organizations to adopt more environmentally friendly practices such as using fewer plastic components. Part of the background research Greenpeace engages in involves uncovering facts. For instance, medical device makers are using harmful PVCs as a tubing material because PVCs are inexpensive. But are there alternatives to PVCs that are also cost effective? Greenpeace’s research found that yes, there are.Layne, A. (1999, November). Conflict resolution at Greenpeace? Fast Company. Retrieved November 14, 2008, from http://www.fastcompany.com/articles/1999/12/rick_hind.html. Knowing this lets Greenpeace counter those arguments and puts Greenpeace in a stronger position to achieve its goals.
Phase 3: Presentation
Figure 9.8
All phases of the negotiation process are important. The presentation is the one that normally receives the most attention, but the work done before that point is equally important.
© 2010 Jupiterimages Corporation
The third phase of negotiation is presentationThe third phase of negotiation.. In this phase, you assemble the information you’ve gathered in a way that supports your position. In a job hiring or salary negotiation situation, for instance, you can present facts that show what you’ve contributed to the organization in the past (or in a previous position), which in turn demonstrates your value. Perhaps you created a blog that brought attention to your company or got donations or funding for a charity. Perhaps you’re a team player who brings out the best in a group.
Phase 4: Bargaining
During the bargainingThe fourth phase of negotiation. phase, each party discusses their goals and seeks to get an agreement. A natural part of this process is making concessionsGiving up one thing to get something else in return., namely, giving up one thing to get something else in return. Making a concession is not a sign of weakness—parties expect to give up some of their goals. Rather, concessions demonstrate cooperativeness and help move the negotiation toward its conclusion. Making concessions is particularly important in tense union-
One key to the bargaining phase is to ask questions. Don’t simply take a statement such as “We can’t do that” at face value. Rather, try to find out why the party has that constraint. Let’s take a look at an example. Say that you’re a retailer and you want to buy patio furniture from a manufacturer. You want to have the sets in time for spring sales. During the negotiations, your goal is to get the lowest price with the earliest delivery date. The manufacturer, of course, wants to get the highest price with the longest lead time before delivery. As negotiations stall, you evaluate your options to decide what’s more important: a slightly lower price or a slightly longer delivery date? You do a quick calculation. The manufacturer has offered to deliver the products by April 30, but you know that some of your customers make their patio furniture selection early in the spring, and missing those early sales could cost you $1 million. So you suggest that you can accept the April 30 delivery date if the manufacturer will agree to drop the price by $1 million.
“I appreciate the offer,” the manufacturer replies, “but I can’t accommodate such a large price cut.” Instead of leaving it at that, you ask, “I’m surprised that a two-
“Manufacturing the products in that time frame is not the problem,” the manufacturer replies, “but getting them shipped from Asia is what’s expensive for us.”
When you hear that, a light bulb goes off. You know that your firm has favorable contracts with shipping companies because of the high volume of business the firm gives them. You make the following counteroffer: “Why don’t we agree that my company will arrange and pay for the shipper, and you agree to have the products ready to ship on March 30 for $10.5 million instead of $11 million?” The manufacturer accepts the offer—the biggest expense and constraint (the shipping) has been lifted. You, in turn, have saved money as well.Adapted from Malhotra, D., & Bazerman, M. H. (2007, September). Investigative negotiation. Harvard Business Review, 85, 72.
Phase 5: Closure
ClosureThe last part of negotiation in which you and the other party have either come to an agreement on the terms, or one party has decided that the final offer is unacceptable and therefore must be walked away from. is an important part of negotiations. At the close of a negotiation, you and the other party have either come to an agreement on the terms, or one party has decided that the final offer is unacceptable and therefore must be walked away from. Most negotiators assume that if their best offer has been rejected, there’s nothing left to do. You made your best offer and that’s the best you can do. The savviest of negotiators, however, see the rejection as an opportunity to learn. “What would it have taken for us to reach an agreement?”
Recently, a CEO had been in negotiations with a customer. After learning the customer decided to go with the competition, the CEO decided to inquire as to why negotiations had fallen through. With nothing left to lose, the CEO placed a call to the prospect’s vice president and asked why the offer had been rejected, explaining that the answer would help improve future offerings. Surprisingly, the VP explained the deal was given to the competitor because, despite charging more, the competitor offered after-
Sometimes at the end of negotiations, it’s clear why a deal was not reached. But if you’re confused about why a deal did not happen, consider making a follow-
Should You Negotiate for a Higher Salary?
Yes! According to a survey conducted by CareerBuilder.com, 58 percent of hiring managers say they leave some negotiating room when extending initial job offers. The survey also found that many of the hiring managers agree to a candidate’s request for a higher salary. “Salary negotiation has become a growing opportunity in the job acquisition process,” says Bill Hawkins, president and CEO of the Hawkins Company, a full-
Source: Adapted from information in Reed-
Negotiation Strategies
Distributive Approach
The distributive viewThe traditional fixed-
Integrative Approach
A newer, more creative approach to negotiation is called the integrative approachAn approach to negotiation in which both parties look for ways to integrate their goals under a larger umbrella.. In this approach, both parties look for ways to integrate their goals under a larger umbrella. That is, they look for ways to expand the pie, so that each party gets more. This is also called a win–win approach. The first step of the integrative approach is to enter the negotiation from a cooperative rather than an adversarial stance. The second step is all about listening. Listening develops trust as each party learns what the other wants and everyone involved arrives at a mutual understanding. Then, all parties can explore ways to achieve the individual goals. The general idea is, “If we put our heads together, we can find a solution that addresses everybody’s needs.” Unfortunately, integrative outcomes are not the norm. A summary of thirty-
Seven Steps to Negotiating a Higher Salary
•Step 1: Overcome your fear.
◦The first step is to overcome your fears. Many people don’t even begin a salary negotiation. We may be afraid of angering the boss or think that because we are doing a good job, we’ll automatically be rewarded. But just because you’re doing a good job doesn’t mean you’ll automatically get a raise. Why? If you don’t ask for one, the boss may believe you’re satisfied with what you’re getting. So why should he pay you more? Imagine going into a car dealership and being absolutely delighted with a car choice. The sticker price is $19,000. Would you pay the dealer $23,000 just because you really like the car? Of course not. You probably wouldn’t even offer $19,000. If the car was up for auction, however, and another bidder offered $20,000, you’d likely increase your offer, too.
◦That’s what salary negotiation is like. Your boss may be thrilled with you but at the same time is running a business. There’s no reason to pay an employee more if you seem satisfied with your current salary.
•Step 2: Get the facts.
◦Before you enter into the negotiation, do some background research. What are other companies paying people in your position? Check sites such as Payscale.com, Salary.com, and Salaryexpert.com to get a feel for the market. Look at surveys conducted by your professional organization.
•Step 3: Build your case.
◦How important are you to the organization? How have you contributed? Perhaps you contributed by increasing sales, winning over angry customers, getting feuding team members to cooperate, and so on. Make a list of your contributions. Be sure to focus on the contributions that your boss values most. Is it getting recognition for the department? Easing workload? If another employer has shown interest in you, mention that as a fact. However, don’t use this as a threat unless you’re prepared to take the other offer. Mentioning interest from another employer gets the boss to think, “If I don’t give this raise, I may lose the employee.” (By the way, if you don’t feel you have a strong case for your raise, perhaps this isn’t the time to ask for one.)
•Step 4: Know what you want.
◦Set your target salary goal based on your research and the norms of what your organization will pay. Now ask yourself, if you don’t get this figure, would you quit? If not, are there other alternatives besides a salary increase that you’d consider? For example, would you accept a higher title? More vacation time? Paid training to learn a new skill? Flexible hours?
•Step 5: Begin assertively.
◦Start the discussion on a strong but friendly tone. “I think I’m worth more than I’m being paid.” List the ways you’ve contributed to the company.
•Step 6: Don’t make the first offer.
◦Let your boss name the figure. You can do this by asking, “How much of a raise could you approve?” However, if the boss insists that you name a figure, ask for the most that you can reasonably expect to get. You want to be reasonable, but you need to allow room to make a concession. Your boss will assume your opening number was high and will offer you less, so asking for the actual figure you want may leave you feeling disappointed.
◦If the boss opens with, “The salary range for this position is $66,000 to 78,000,” ask for the high end. If your goal was higher than that range, challenge the range by explaining how you are an exception and why you deserve more.
•Step 7: Listen more than talk.
◦You’ll learn more by listening rather than talking. The more you listen, the better the boss will feel about you—people tend to like and trust people who listen to them.
◦If you can’t get a raise now, get your boss to agree to one in a few months if you meet agreed-
Sources: Adapted from information in Brodow, E. (2006). Negotiation boot camp. New York: Currency/Doubleday; Nemko, M. (2007, December 31). The general way to get a raise. US News & World Report, 57.
Avoiding Common Mistakes in Negotiations
Failing to Negotiate/Accepting the First Offer
You may have heard that women typically make less money than men. Researchers have established that about one-
Letting Your Ego Get in the Way
Thinking only about yourself is a common mistake, as we saw in the opening case. People from the United States tend to fall into a self-
Having Unrealistic Expectations
Susan Podziba, a professor of mediation at Harvard and MIT, plays broker for some of the toughest negotiations around, from public policy to marital disputes. She takes an integrative approach in the negotiations, identifying goals that are large enough to encompass both sides. As she puts it, “We are never going to be able to sit at a table with the goal of creating peace and harmony between fishermen and conservationists. But we can establish goals big enough to include the key interests of each party and resolve the specific impasse we are currently facing. Setting reasonable goals at the outset that address each party’s concerns will decrease the tension in the room, and will improve the chances of reaching an agreement.”Rothenberger, C. (2008, September 11). Negotiation 201: Refine your skills. Fast Company. Retrieved January 11, 2008, from http://www.fastcompany.com/articles/team/prob_podziba.html. Those who set unreasonable expectations are more likely to fail.
Getting Overly Emotional
Negotiations, by their very nature, are emotional. The findings regarding the outcomes of expressing anger during negotiations are mixed. Some researchers have found that those who express anger negotiate worse deals than those who do not,Kopelman, S., Rosette, A. S., & Thompson, L. (2006). The three faces of Eve: An examination of the strategic display of positive, negative, and neutral emotions in negotiations. Organizational behavior and human decision processes, 99, 81–101. and that during online negotiations, those parties who encountered anger were more likely to compete than those who did not.Friedman, R., Anderson, C., Brett, J., Olekalns, M., Goates, N., & Lisco, C. C. (2004). The positive and negative effects of anger on dispute resolution: Evidence from electronically mediated disputes. Journal of Applied Psychology, 89, 369–76. In a study of online negotiations, words such as despise, disgusted, furious, and hate were related to a reduced chance of reaching an agreement.Brett, J. M., Olekalns, M., Friedman, R., Goates, N., Anderson, C., & Lisco, C. C. (2007). Sticks and stones: Language, face, and online dispute resolution. Academy of Management Journal, 50, 85–99. However, this finding may depend on individual personalities. Research has also shown that those with more power may be more effective when displaying anger. The weaker party may perceive the anger as potentially signaling that the deal is falling apart and may concede items to help move things along.Van Kleef, G. A., & Cote, S. (2007). Expressing anger in conflict: When it helps and when it hurts. Journal of Applied Psychology, 92, 1557–69. This holds for online negotiations as well. In a study of 355 eBay disputes in which mediation was requested by one or both of the parties, similar results were found. Overall, anger hurts the mediation process unless one of the parties was perceived as much more powerful than the other party, in which case anger hastened a deal.Friedman, R., Anderson, C., Brett, J., Olekalns, M., Goates, N., & Lisco, C. C. (2004). The positive and negative effects of anger on dispute resolution: Evidence from electronically mediated disputes. Journal of Applied Psychology, 89, 369–76. Another aspect of getting overly emotional is forgetting that facial expressions are universal across cultures, and when your words and facial expressions don’t match, you are less likely to be trusted.Hill, D. (2007). Emotionomics: Winning hearts and minds. Edina, MN: Adams Business & Professional; Holloway, L. (2007, December). Mixed signals: Are you saying one thing, while your face says otherwise? Entrepreneur, 35, 49.
Letting Past Negative Outcomes Affect the Present Ones
Research shows that negotiators who had previously experienced ineffective negotiations were more likely to have failed negotiations in the future. Those who were unable to negotiate some type of deal in previous negotiation situations tended to have lower outcomes than those who had successfully negotiated deals in the past.O’Connor, K. M., Arnold, J. A., & Burris, E. R. (2005). Negotiators’ bargaining histories and their effects on future negotiation performance. Journal of Applied Psychology, 90, 350–62. The key to remember is that there is a tendency to let the past repeat itself. Being aware of this tendency allows you to overcome it. Be vigilant to examine the issues at hand and not to be overly swayed by past experiences, especially while you are starting out as a negotiator and have limited experiences.
Tips for Negotiation Success
• Focus on agreement first. If you reach an impasse during negotiations, sometimes the best recourse is to agree that you disagree on those topics and then focus only on the ones that you can reach an agreement on. Summarize what you’ve agreed on, so that everyone feels like they’re agreeing, and leave out the points you don’t agree on. Then take up those issues again in a different context, such as over dinner or coffee. Dealing with those issues separately may help the negotiation process.
• Be patient. If you don’t have a deadline by which an agreement needs to be reached, use that flexibility to your advantage. The other party may be forced by circumstances to agree to your terms, so if you can be patient you may be able to get the best deal.
• Whose reality? During negotiations, each side is presenting their case—their version of reality. Whose version of reality will prevail? Leigh Steinberg offers this example from the NFL, when he was negotiating the salary of Warren Moon. Moon was forty-
• Deadlines. Research shows that negotiators are more likely to strike a deal by making more concessions and thinking more creatively as deadlines loom than at any other time in the negotiation process.
• Be comfortable with silence. After you have made an offer, allow the other party to respond. Many people become uncomfortable with silence and feel they need to say something. Wait and listen instead.
Sources: Adapted from information in Stuhlmacher, A. F., Gillespie, T. L., & Champagne, M. V. (1998). The impact of time pressure in negotiation: A meta-
When All Else Fails: Third-
Alternative Dispute Resolution
Alternative Dispute Resolution (ADR)Includes mediation, arbitration, and other ways of resolving conflicts with the help of a specially trained, neutral third party without the need for a formal trial or hearing. includes mediation, arbitration, and other ways of resolving conflicts with the help of a specially trained, neutral third party without the need for a formal trial or hearing.New York State Unified Court System. (2008, October 28). Alternative dispute resolution. Retrieved November 14, 2008, from http://www.courts.state.ny.us/ip/adr/index.shtml. Many companies find this effective in dealing with challenging problems. For example, Eastman Kodak Company added an alternative dispute resolution panel of internal employees to help them handle cases of perceived discrimination and hopefully stop a conflict from escalating.Deutsch, C. H. (2004, August 24). Race remains a difficult issue for many workers at Kodak. New York Times.
Mediation
In mediationA process in which an outside third party (the mediator) enters the situation with the goal of assisting the parties to reach an agreement., an outside third party (the mediator) enters the situation with the goal of assisting the parties in reaching an agreement. The mediator can facilitate, suggest, and recommend. The mediator works with both parties to reach a solution but does not represent either side. Rather, the mediator’s role is to help the parties share feelings, air and verify facts, exchange perceptions, and work toward agreements. Susan Podziba, a mediation expert, has helped get groups that sometimes have a hard time seeing the other side’s point of view to open up and talk to one another. Her work includes such groups as pro-
You Know It’s Time for a Mediator When…
• The parties are unable to find a solution themselves.
• Personal differences are standing in the way of a successful solution.
• The parties have stopped talking with one another.
• Obtaining a quick resolution is important.
Sources: Adapted from information in Crawley, J. (1994). Constructive conflict management. San Diego: Pfeiffer; Mache, K. (1990). Handbook of dispute resolution: Alternative dispute resolution in action. London: Routledge.
Arbitration
Figure 9.9
As a last resort, judges resolve conflicts.
Source: http://upload.wikimedia.org/wikipedia/commons/4/44/Supreme_Court_Front_Dusk.jpg.
In contrast to mediation, in which parties work with the mediator to arrive at a solution, in arbitrationA process that involves bringing in a third party, the arbitrator, who has the authority to act as a judge and make a binding decision to which both parties must adhere. the parties submit the dispute to the third-
Arbitration-
It is common to see mediation followed by arbitration. An alternative technique is to follow the arbitration with mediation. The format of this conflict resolution approach is to have both sides formally make their cases before an arbitrator. The arbitrator then makes a decision and places it in a sealed envelope. Following this, the two parties work through mediation. If they are unable to reach an agreement on their own, the arbitration decisions become binding. Researchers using this technique found that it led to voluntary agreements between the two parties 71 percent of the time versus 50 percent for mediation followed by arbitration.Conlon, D. E., Moon, H., & Ng, K. Y. (2002). Putting the cart before the horse: The benefits of arbitrating before mediating. Journal of Applied Psychology, 87, 978–84.
Key Takeaways
•Negotiation consists of five phases that include investigation, determining your BATNA, presentation, bargaining, and closure.
•Different negotiation strategies include the distributive approach (fixed-
•Research shows that some common mistakes made during negotiations include accepting the first offer made, letting egos get in the way, having unrealistic expectations, getting overly emotional, and letting past negative outcomes affect the present ones.
•Third-
Exercises
1.What are the negotiation phases and what goes on during each of them?
2.When negotiating, is establishing a BATNA important? Why or why not?
3.What are the third-
9.5 Ethical and Cross-
Learning Objectives
1.Consider the role of ethics when negotiating with others.
2.Consider the role of national culture in your negotiations.
Ethics and Negotiations
Are hardball tactics OK to use? Sometimes a course of action is legal but is questionable in terms of ethics. A good rule of thumb is that hardball tactics should not be used because the negotiation is likely not to be the last time you will interact with the other party. Therefore, finding a way to make a deal that works for both sides is preferable. Otherwise, if you have the complete upper hand and use it to “destroy” the other party, it’s likely that at a future date the other party will have the upper hand and will use it to retaliate mercilessly against you. What’s more, your reputation as a negotiator will suffer. As J. Paul Getty said, “My father said: ‘You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.’”Quote retrieved January 29, 2009, from http://www.saidwhat.co.uk/keywordquotes/money.
Ethics establish a way of doing what is right, fair, and honest. If your counterpart feels you are being unfair or dishonest, he or she is less likely to make any concessions—or even to negotiate with you in the first place.
Here are some tips for ethical negotiations:
•Be honest.
•Keep your promises.
•Follow the Platinum Rule. The Golden Rule tells us to treat others the way we want to be treated. Author Tony Alessandra goes a step further with the Platinum Rule: “Treat people the way they want to be treated.” Caring about others enough to treat them the way they want to be treated helps build long-
Negotiation around the Globe
Not understanding cultural differences is another common mistake. Some cultures have a higher or lower threshold for conflict. For example, in countries such as Japan or Korea, the preference is for harmony (called wa in Japan) rather than overt conflict.Lebra, T. S. (1976). Japanese patterns of behavior. Honolulu, HI: University Press of Hawaii. Americans and Germans have a much higher tolerance for conflict as a way of working through issues. In a study of Japanese, German, and American cultures, it was found that almost half of the preference for different conflict management styles was related to the country in which participants were raised.Tinsley, C. (1998). Models of conflict resolution in Japanese, German, and American cultures. Journal of Applied Psychology, 83, 316–23.
In Japan, much like Pakistan, the tendency is not to trust what is heard from the other party until a strong relationship is formed. Similarly, in China, conversations start out with innocuous topics to set a mood of friendliness.US Commerce Department. (2007). Retrieved November 11, 2008, from http://www.Buyusa.gov. This differs a great deal from American negotiators who tend to like to “get down to business” and heavily weigh first offers as reference points that anchor the process as both sides make demands and later offers.
There are also differences in how individuals from different cultures use information and offers during the negotiation process. Observations show that Japanese negotiators tend to use offers as an information exchange process.Adair, W. L., Weingart, L., & Brett, J. (2007). The timing and function of offers in the US and Japanese negotiations. Journal of Applied Psychology, 92, 1056–68. Research has found that American negotiators tend to reveal more information than their Japanese counterparts.Adair, W. L., Okumua, T., & Brett, J. M. (2001). Negotiation behavior when cultures collide: The United States and Japan. Journal of Applied Psychology, 86, 371–85. Japanese negotiators might learn little from a single offer, but patterns of offers over time are interpreted and factored into their negotiations. Since Japan is a high-
Even the way that negotiations are viewed can differ across cultures. For example, the Western cultures tend to think of negotiations as a business activity rather than a social activity, but in other cultures, the first step in negotiations is to develop a trusting relationship. Negotiators in Brazil, for example, seriously damaged relationships when they tried to push negotiations to continue during the Carnival festival. “The local guys took that as a disrespectful action,” said Oscar Lopez, commercial director for Hexaprint, SA De CV in Mexico. “It took several weeks to restore confidence and move on.”Teague, P. E. (2006, August 17). Collaboration trumps negotiations. Purchasing, 135(11), 58.
Also keep in mind what agreement means in different cultures. For example, in China, nodding of the head does not mean that the Chinese counterpart is agreeing to what you are proposing, merely that they are listening and following what you are saying. “Culturally, Chinese companies and workers do not like to say no,” says a buyer at a manufacturer based in the United States. Here’s how to overcome the problem. Instead of phrasing a question as, “Can you do this for us?” which would put the Chinese official in an uncomfortable position of saying no (which they likely would not do), rephrase the question as, “How will you do this for us and when will it be done?”Hannon, D. (2006, May 18). DO’s and DON’Ts of doing business in China. Purchasing, 135(8), 52.
Cross Cultural Negotiations
(click to see video)
Each country has its own rules in negotiation. Before negotiation overseas, you will want to consider the norms of that culture.
Key Takeaways
•Being honest during negotiations, keeping your promises, and treating others as you would like to be treated all help you negotiate ethically.
•Not understanding the culture of a person or group of people you are negotiating with can be a major mistake.
•Try to learn as much as you can about the culture of others involved and be sure to clarify key points along the way.
•Also, keep in mind that agreement (e.g., nodding one’s head up and down or saying “yes, yes”) may not mean the same thing in all cultures.
Exercises
1.Is the goal of negotiation to maximize your economic outcome at all costs? Why or why not? Is it ethical to do so?
2.What are some similarities and differences in conflict management preference and negotiation practices among different countries around the globe? Have you had any experiences with individuals from other cultures? If so, how did it go? How might it have gone better?
9.6 Chapter Summary and Case
Chapter Summary
•Conflict can run the gamut from minor annoyances to physically violent situations. At the same time, conflict can increase creativity and innovation, or it can bring organizations to a grinding halt.
•There are many different types of conflict, including interpersonal, intrapersonal, and intergroup.
•Within organizations, there are many common situations that can spur conflict.
•Certain organizational structures, such as a matrix structure, can cause any given employee to have multiple bosses and conflicting or overwhelming demands. A scarcity of resources for employees to complete tasks is another common cause of organizational conflict, particularly if groups within the organization compete over those resources.
•Of course, simple personality clashes can create intrapersonal conflict in any situation.
•Communication problems are also a very common source of conflict even when no actual problem would exist otherwise.
•When conflict arises, it can be handled by any number of methods, each with varying degrees of cooperation and competitiveness. Different situations require different conflict handling methods, and no one method is best.
•Negotiations occur during many important processes, and possessing astute negation skills can be an incredible tool.
•A key component to negotiations involves having a BATNA, or “best alternative to a negotiated agreement.”
•Negotiations typically move through five phases, including investigation, determining your BATNA, presentation, bargaining, and closure.
•During a negotiation, it is important not to make any number of common mistakes. These mistakes can include accepting the first offer, letting ego get in the way, having unrealistic expectations of the outcome of the negotiation, becoming too emotional during the process, or being weighed down by previous failures and letting the past repeat itself.
•It is important to keep in mind that many cultures have preferential methods for handling conflict and negotiation. Individuals should understand the cultural background of others to better navigate what could otherwise become a messy situation.
Chapter Case
A Case of Listening: When Silence Is GoldenDevine, W. (2002, September 30). Anatomy of a deal-
Listening can be an effective tool during negotiations. William Devine was representing a client on a land purchase. “The owner and I spent 2 hours on the phone horse-
“My impulse was to say something in response to the silence, and I started to speak, then stopped. As I hesitated, I sensed that if I said, ‘My client can pay all cash,’ or ‘It’s still a good deal for you,’ then the owner would take my comment as an invitation to joust, we would battle over the hundred grand, and my client would end up having to pay some or all of that sum. The owner had not asked a question or proposed a compromise, so no response was required from me at that moment. I decided to remain silent. After what felt like days but was probably less than 30 seconds, I heard, ‘But I guess it’s good for us [i.e., his company] to just get this deal done, so we’ll do it.’”
Devine saved his client $100,000 by staying silent.
Questions to Think About
1.What does this case suggest about the role of silence in negotiations?
2.Have you ever had a similar experience when saying nothing paid off?
3.Are there times when silence is a bad idea? Explain your answer.
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