Being brilliant in bargaining

I just finished teaching my summer course on negotiation skills. I used the text book ‘Bargaining for Competitive Advantage’ by Richard Shell. Upon reflecting on its contents, I see much relevance to Sri Lankan managers. After all, bargaining has become part and parcel of both our personal and professional fronts. It can bring mega or meagre results depending on the way you perform. Managers can excel when they are good at it in multiple fronts. Let’s explore further on being brilliant on bargaining.

Overview

Online dictionaries describe bargaining as an agreement between parties settling what each gives or receives in a transaction between them or what course of action or policy each pursues in respect to the other. Also, it can be stated as an agreement between parties fixing obligations that each promises to carry out. It also can involve a deal, with sale or exchange of goods or services.

Bargaining is an essential part of negotiations. All of us negotiate almost daily. Children and adults alike engage in negotiations. It is a kind of communication, and a special one. Experts define negotiation as an interactive communication process that may take place whenever we want something from someone else or another person wants something from us. One tends to influence the other in obtaining what he/she wants. Bargaining takes place for both parties involved to get a better stake.

Bargaining characteristics

We demonstrate two key bargaining characteristics with regard to negotiations. They are named as cooperativeness and assertiveness. Much research on the people factor in negotiations has centred on these two, highlighting the strengths and shortcomings of them.

Cooperativeness essentially deals with relationships. You want to build a better relationship with the other party. In doing so, you would demonstrate better willingness to listen to the other party’s genuine interests. Some people are high on this by nature, readily offering a welcome hand. The downside is that you may end up being too accommodative in giving in to other party’s demands. It was Franklin Roosevelt who said, “if you treat people right, they will treat you right – at least 90% of the time.”

Assertiveness is simply the ability to say what you mean. In psychology, it is considered as a form of behaviour characterised by a confident declaration or affirmation of a statement without need of proof. When you demonstrate it to a high level, there can be a tendency to compete, in attempting to defeat the other party.

The best way of incorporating cooperativeness and assertiveness is to collaborate with each other. This is popularly known as the “win-win” approach. The best-seller on negotiation by Roger Fisher and William Ury, titled ‘Getting to Win,’ highlights this key point.

Collective vs. Collaborative bargaining

Let’s focus more on the business front. Perhaps we are more familiar with the term collective bargaining. Many firms with unionised labour would engage in this painstaking activity. Collective bargaining can be described as a process of negotiations between employers and a group of employees aimed at reaching agreements that regulate working conditions.

The interests of the employees are commonly presented by representatives of a trade union to which the employees belong. The collective agreements reached by these negotiations usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms and rights to participate in workplace or company affairs.

While collaborative techniques do not eliminate the conflict inherent in collective bargaining, they do provide a different way to manage it. By enhancing communication between the parties, highlighting mutual interests and applying a problem-solving strategy, conflict may be channelled into more productive means.

Based on a study involving the Oregon School Boards Association in the USA, successful collaborative bargaining has shown key positive outcomes. They can be listed as follows:

• Focus on joint resolution of problems
• Promote greater mutual respect and trust
• Broaden participation by employees and their organisations
• Manage the parties’ inherent conflict and prevent uncontrolled escalation of the conflict
• Achieve contracts that are acceptable to both parties
• Increase the quality and quantity of communication
• Recognise negotiations as a single step in the labour relations process

Successful collaborative bargaining can result in increased productivity and improved relationships and provide a platform to develop high performance organisations. Equally true, this type of bargaining is not an easy method to use. Despite its positive results, the collaborative bargaining approach has a number of challenges associated.

Collaborative bargaining challenges

“In all negotiations of difficulty, a many may not look to sow or reap at once, but must prepare the business and so ripen it by degrees.” Sir Francis Bacon said so way back in 1597. This highlights the need to have high commitment of both time and resources. The time commitment is increased by training required before the parties begin bargaining.

Its methods are based on communication and trust. Such a trust-based process carries inherent risks and may be vulnerable to deception and manipulation, i.e., hidden agendas.

Consequently, some collaborative efforts include not only procedural ground rules but trust agreements governing behaviours during the process. Because of these factors, motivation to establish mutual cooperation and sustain successful relationships must be relatively high and sustained. Take the case of a politicised union having a tough negotiation with an equally adamant management team, collaborative bargaining will be a challenging task.

When the ongoing relationship between the parties is in balance with the content or results of the ultimate agreement, there is a greater chance for success using a collaborative approach. However, when relationship issues start to outweigh content issues, a number of pitfalls appear.

Relationship issues are elevated to offer high concessions in the name of cooperation. These concessions can lead to situations where more and more is given as a way of cooperating. The only questions that remain in such negotiations are “How much?” and “When?” This form of “hug-me, mug-me” collaborative bargaining, by either side, is a misuse of the process.

Also, the parties focus on the process more than the contents. There are constant disputes and discussions on the precise problem-solving model to be used. Disagreements and endless discussions on small details are so extreme that ultimately very little is accomplished.

The relationship between the parties is so positive that groups tend to talk issues into the ground and prolong the negotiations. The focus is on eliminating conflict and defining common goals rather than achieving workable solutions to problems. This form of feel-good bargaining is typical of groups that lack focus, leadership and training – perhaps not a very uncommon scene in Sri Lanka.

Success factors of collaborative bargaining

“Make every bargain clear and plain/That none may afterwards complain” – An English rhyme says so. Many success factors for collaborative bargaining have been identified through extensive research. Following are a few.

Motivation: The parties must be sufficiently motivated to engage in a collaborative process. They should believe either that some fundamental change or improvement is needed in their relationship or that a good relationship should not deteriorate. A high level of motivation is vital because it is the degree of commitment to the process and its goals of mutual respect and trust that can carry the parties through the stressful phases of bargaining. Also, this commitment should extend beyond the bargaining table, assuring that the new relationships continue for the duration of the contract. While this motivation cannot be externally placed on the parties, training and education can provide the necessary supportive functions.

Realistic expectations: Collaborative bargaining is a process, not a guarantee to a better contract or better relationship between the parties. It merely provides an avenue for increasing the chances of reaching a wise agreement. It’s critical for all parties involved to understand and have realistic expectations of the process from the outset.

Collective benefits: The collaborative bargaining approach has a better chance of success if the parties believe there is some goal that can benefit both sides. An example is restructuring insurance programs for maximum employee benefits while providing cost containment advantages for the employer.

Communication: Look at the level, scope, style and accuracy of communication between the parties. Communication and attitudes based on rumour, innuendo and a lack of face-to-face meetings can signal trouble for collaborative bargaining.

Relationship: Assess the current relationship between the parties. Parties engaged in traditional bargaining often have an adversarial, or at best, cautious relationship. The probability of success must be evaluated with the personalities of the participants in mind.

“Do not be so sweet that people will eat you up, not so bitter that they will spit you out.” That’s how a Pakistani folk song tells us the importance of right relationships. The key word here is balance.

Way forward

“Everyone lives by selling something” – Robert Luis Stevenson’s remark is valid to us Sri Lankans as well. Managers particularly, amidst a hub of activities, should be smart negotiators. This is true for public sector administrators as well as private sector executives. Bargaining should never be a novice game, but a professional one. Sri Lankan managers can perform better in being brilliant in bargaining. In doing so, “win-win” will not be just rhetoric but reality.



(Dr. Ajantha Dharmasiri works at the Postgraduate Institute of Management. He can be reached on [email protected] or www.ajanthadharmasiri.info.)