Negotiations

Summary

Negations are a part of everyday life, a useful skill in both personal and professional settings. Negotiations are highly relevant to project management as it can help ensure alignment with key stakeholders and to maintain a positive relationship with those stakeholders, it is a large part of resource allocation and is a tool for risk management for managers. Being skilled at negotiating can prevent conflict and even wars, enable us to buy our dream home or help us launch our start-up. Therefore, it is safe to conclude that the art of negotiation is a skill useful and relevant to everyone. In his article, I will review the key factors that determine the trajectory of negotiations, explore the impact of different mental models and negotiation styles. Additionally, cultural differences and their impact on negotiations are examined, a relevant topic as negotiations between parties with different cultural backgrounds become more common. Finally, this article will address the topic of ethics and professionalism in negotiations.

The Big Idea

Negotiations is when two or more parties exchange goods or services and try to come to an agreement on the exchange rate. It is a valuable tool for reaching an agreement and resolve conflict. Through series of strategies, demands, tactics, demands an agreed exchange is determined for goods or services, but what are the determining factors when it comes to the outcome – is it personality traits, a specific tactic or negotiation style and is there something that will ensure success every time?

Key Determining Factors in Negotiations

Negotiation is a complex process involving multiple factors that contribute to the outcome of the discussion. A number of studies have been conducted on that very issue for the purpose of determining the key factors that significantly influence the success of the negotiation. These factors include personality traits, power dynamics and ….

Personalities

The impact of personalities, attitudes, and motivation on the result of a negation process is a topic of interest in research. According to a review of 200 studies, personal characteristics plays a role in the negotiation process and its outcomes. Although gender differences may affect negotiation strategies, no specific character traits were found to consistently link to successful negotiation. The studies that revealed a difference in gender regarding negotiation strategies found that women were not as likely to mirror an opponent’s concessions, when bargaining with a passive counterpart, while others find no difference. A topic of interest to researchers has been how to influence the behaviour of the opposite side. The impression is that consistent high demands and low concessions by the opponent will lead to the same by the negotiator and thus lead to frequent deadlocks. On the other hand, low demands and high concessions by the opponent do not necessary lead to the same behaviour by the negotiator, but in many cases, they do. Threats and strong demands are often detrimental to productive bargaining, as they tend to result in retaliation. Recent work supports and clarifies this process, showing that such behaviours are harmful unless they are seen as legitimate, subtle, or not used to gain an advantage for the user. (1) In negotiations, the concept of egocentrism, or motivational bias, plays a significant role. This bias lead different parties to overweigh the objective that favour themselves, resulting in fairness judgments that are not entirely objective. The degree of egocentrism displayed by the parties involved can directly impact their ability to reach an agreement. Specially, research suggests that the more egocentric the parties are, the more challenging it becomes to achieve a mutually beneficial outcome. (2)

Culture

There seems to be a significant difference in how different negotiation tactics are perceived in different cultures. Western society has an emphasis on efficiency and cost-effectiveness rather than prioritizing developing a relationship with their opponents. In contrast, Eastern culture place high value on building an interpersonal relationship with the other parties. The outcomes differ as well, in relation to negotiations. Western societies tend to focus on right and wrong, while Eastern cultures prioritize goodwill. Capitalistic countries focus more on justice and equity, and socialist equality. It the parties negotiating come from the same culture, these norms will most likely influence the process but it they come from different negotiation norms, it may take longer, me more stressful and competitive. (1)

Application

The goal of negotiations should be to ensure that both parties achieve favourable outcomes, not to win at all cost. An experienced negotiator explained how they navigated the process, which included different personalities, various styles and approaches. The most important thing was to be prepared. Another key lesson was to try simply asking for what one wants, as it can obtain significant better results. It is also important to have a pre-defined definition of what success is in terms of a project or negotiation. Good negotiation involve trying to find the third alternative. We as humas often view relationships in a very “clean cut” way, and in terms of win/lose outcomes. This binary perspective compels us to approach most situations from a standpoint where winning or losing is the only option. However, it is crucial to recognize that there is often a thirds options available, which may require more effort to identify, but an option that might lead to a win-win situation, this can foster synergy and maximize the potential for a mutually beneficial outcome. When engaged in negotiations, it is important to adopt a patient and positive mindset, as well as gathering relevant information. This information may include, deadlines, decision-marking authority, alternative solution, motivations and past negotiation histories. It may be helpful to ask to “what if” questions when suggesting a different direction, as this approach makes it sounds like less of a commitment. Knowing ones status is important, as project managers may possess a significant status as the ones that are closest to the action. Buyers always have the upper hand when it comes to status and being aware is important. Knowing your opening offer and not opening can provide leverage, as it provides more room for you to negotiate, and it is very important to always know your bottom line, and never to open with it. Dealing directly with the person who makes the decision usually lead to quicker agreements. Preparation is key, and a risk management plan can help avoid surprises and decisions based on too much emotion. Finally, never reward intimidation tactics but instead be prepared to make concessions when the other party does as well. (5)

Limitations

While theory offer clear guidelines on the dos and don’ts of negotiation, in is important to keep in mind that our communication style, body language and tone significantly, impact how these strategies are perceived and play a large role in the outcome. Despite the emphasis of leaving emotion out, it is important to acknowledge that emotions are an inherent part of human decision-making.

References

• Wall Jr, J. A., & Blum, M. W. (1991). Negotiations. Journal of Management, 17(2), 273-303.
• Bazerman, M. H., Curhan, J. R., Moore, D. A., & Valley, K. L. (2000). Negotiation. Annual Review of Psychology, 51(1), 279–314. https://doi.org/10.1146/annurev.psych.51.1.279
• Crump, L. (2011). Negotiation process and negotiation context. International Negotiation, 16(2), 197–227. https://doi.org/10.1163/138234011X573011
• DRAKE, L. E. (1995). NEGOTIATION STYLES IN INTERCULTURAL COMMUNICATION. International Journal of Conflict Management, 6(1), 72–90. https://doi.org/10.1108/eb022756
• Englund, R. L. (2010). Negotiating for success: are you prepared? Paper presented at PMI® Global Congress 2010—EMEA, Milan, Italy. Newtown Square, PA: Project Management Institute.
• Magenau, J. M., & Pinto, J. K. (2007). Power, influence, and negotiation in project management. The Wiley Guide to Project Organization and Project Management Competencies, 2, 89.
• PERDUE, B. C., DAY, R. L., & MICHAELS, R. E. (1986). NEGOTIATION STYLES OF INDUSTRIAL BUYERS. Industrial Marketing Management, 15(3), 171–176. https://doi.org/10.1016/0019-8501(86)90026-X
• Craddock, W. T. (2010). Five things every project manager should know about negotiation. Paper presented at PMI® Global Congress 2010—North America, Washington, DC. Newtown Square, PA: Project Management Institute.

Key reference

• Program Management: The standard for program management, 4th Edition (2017)