PART OF UNIT 7NEGOTIATION

Learning Outcomes• After the lecture the student should:- Discuss and explain the term negotiation- List and discuss the various types of negotiations- Identify the various internal and external factors

impacting negotiations- Discuss and explain various negotiating strategies and

tactics- Explain and discuss the negotiating process

Key vocabulary• Negotiation- process whereby parties with differing wants

and objectives reach mutually agreed outcome based on compromise

• Consultation-seeking for ideas/opinions• Coerce-compel/force without regard for individual wish• Tactics-manoeuvres to achieve an aim• Compromise-settlement of dispute by concession/ midway

between different things

Introduction • Negotiation –central process of collective bargaining and

dispute resolution• Should be granted special attention in labour relations• A daily reality in every relationship• Everyone is always in a negotiation• With education and training one can become a better

negotiator• A complex process with many forces coming into play

Introduction • Communication, power, strategy, brinkmanship and bluff

are important components of a negotiator’s tactics• Specific economic conditions, as well as industrial and

environmental settings have an impact on outcomes• Simple negotiation immutable /unchanging rule: all

negotiators ask for more than they expect to get, and offer less than they know they will have to give.

Definition -negotiation• Coming together of parties in the employment relationship

in order to try to resolve their differences and reach a mutually acceptable outcome.

• Negotiation occurs when parties differ on desired outcome• Neither party has right or ability to unilaterally enforce this

outcome on other• Mutually acceptable solutions sought (no matter how far

away from real wishes)

Definition • In consultation management retains right to make final

decision• ‘’management prerogative’’ – or ‘’the right to manage’’-

means managers’ unfettered ability to determine what happens in the workplace

• Once the matter becomes negotiable then this unquestionable unchallenged power falls away

• This is a fundamental challenge that unions pose to employers

• This is what unions disputes are all about• Once it is conceded that a matter is negotiable it remains

so - one of unwritten rules of fair bargaining .

Definition • *One of unwritten rules of fair bargaining is whatever is

set by negotiation may only be changed by negotiation (What does that mean?)

Four approaches to negotiating (Katz & Kochan, 2000: 176-178) • Distributive bargaining• Integrative bargaining• Intra-organisational bargaining• Attitudinal structuring• Chamberlain and Kuhn came up with collaborative and

conjunctive collective bargaining• Recently Fisher and Ury of Harvard Negotiation Project

coined terms ‘’Principled negotiation’’ and ‘’interest bargaining.’’

Distributive bargaining• Typified in win-lose interaction• One party makes a gain at the expense of the other • Negotiation associated with division of scarce resources• A wage for employees must be a loss of profits for the

employer• Adversarial by nature, each party seeks to protect its

share of the pie or increase the share• This takes place at the expense of other party• Distributive bargaining seen as a negative process

Integrative bargaining• Parties try to get a mutually beneficial outcome• This is a win-win situation • Parties seek to make the pie bigger rather squabble over

each other’s share• Experience shows that even if the pie is made bigger

there is always a fight of who gets the larger slice of the enhanced pie.

Intra-organisational bargaining• Refers to the process of establishing consensus within

each party to the negotiating table• Different interest groups within each constituency want

their positions represented • Hence it is important that common ground is found before

negotiations• This is the process of mandate getting in labour

negotiations• Union needs to obtain instructions from members it

represents to preferred outcomes and limits to which negotiators should go

Attitudinal structuring and building relationships• Name given to the conduct each party will display either in

a tacit or deliberate fashion to condition the other party to be more accepting of their own position

• The process is complex, involves the study and understanding of human behaviours

• While other negotiators do it instinctively, not all understand precisely the process involved.

Attitudinal structuring and building relationships• Attitudes in labour relations are shaped and structured

due to the fact that the relationship is enduring• Once they have reached an agreement, the parties know

that they have to co-exist for the life of the agreement, may meet to negotiate other agreements

• For above reasons no party uses extreme power tactics and fail to make concessions.

Attitudinal structuring and building relationships• Part of focus of this process is to build a relationship• Although a relationship is built, the union and

management need not share common vision• Where negotiating teams build rapport, it facilitates the

negotiations.• Where parties build a credible relationship possibility

integrated bargaining is enhanced , & chances of a win-win outcome are higher.

Conjunctive and collaborative bargaining (Chamberlain and Kuhn)• Cooperative bargaining is analogous to integrative

bargaining• The most distinction lies in their recognition of the real

dynamics of collective bargaining• Integrative bargaining implies parties share a common

goal, are able to negotiate in an environment with a degree of comfort & that the end result is mutually desirable

Conjunctive and collaborative bargaining• The observed reality for Chamberlain and Kuhn was that

management and unions did not share a common ideology, purpose or goal

• Conjunctive bargaining describes situation where the parties realise they have different goals, & they would never share them, but understand that the only way to get more of what they want , is to allow the other party to get more of what it wants

Conjunctive and collaborative bargaining• Most experienced negotiators realise that this is closer to

reality• Trying to win an ideological debate with a socialist union

organiser on how beneficial capitalism is to his members is a futile exercise.

Fisher and Ury-Getting to Yes• They described positional and interest bargaining• Their approach begins with understanding the opponent’s

case• Positional bargaining typically win-lose in nature

Fisher and Ury• Each party takes up a position, and proceeds to defend it

from the other party’s attack, while at the same time attacking the other party’s position, which in turn is protected vigorously. These attacks turn into ‘’attack –defend spiral’’, where the stronger the attack, the greater the resistance , and vice versa.

Fisher and Ury• Fisher and Ury discovered that parties to a negotiation

took positions to protect their interests• Fisher and Ury concluded that it would be profitable to

identify the other party’s interests and then jointly develop possible solutions- moving away from traditional negotiating without hijacking the opponent’s belief system

Internal factors that impact on negotiations• Bargaining power- Negotiations are about concessions and movement- Concession –movement of previously held or stated

position - Determinant of movement is bargaining power

Internal factors that impact on negotiation• Amount of bargaining power held by a party determines

ability to win concessions or shifts in position from their bargaining partner, as well as the extent of resisting pressure

Bargaining Power • It is metaphysical in nature (based on abstract reasoning)• If you are unable to persuade your bargaining partner that

you have it, even if you do not, it is of value to you. Similarly, if you have bargaining power, but you are unable to convince your opponent of its nature and extent, then it is of little use to you.

Bargaining Power• Large part of manoeuvring and exchanges in run up the

opening stages, are about demonstration and establishment of bargaining power

• Bargaining power is ethereal (delicate) in nature and come and goes – it is dynamic

• Power dynamics can change during negotiations leaving a party stranded high and dry.

Bargaining Power• Power – defined as having the ability or means to

influence someone, or to induce a shift in a previously held position

• The employment relationship hinges on a balance of power

• Each party has the means to exert sufficient influence to swing this balance in their favour

Bargaining power• Employers as providers of work opportunities and wages

wield power by threatening to withhold work, and by controlling and manipulating financial resources, thereby limiting the amount available from which to pay the workforce.

Bargaining Power• Employees can exert pressure by threatening collectively

to withhold their labour, affecting production processes and profitability of company.

• Negotiators to be well aware of their potential and their ability to influence the opposition

Different kinds of power negotiators can have• Legitimate power- Directly linked to position held in the company- Power is a function of status of individual - Ability to influence others is derived from status/position

Different kinds of negotiating power - Legitimate power may be respected or not by the

opposition - Including someone with legitimate power might be taken

as a way to intimidate other party.

Referent power• Attributed to strength of character • Also the degree to which one is revered/admired• Such power gives one ability to positively influence people

through strength of personality

Expert Power• Derived from one’s knowledge of specific discipline

(expertise)e.g. Financial Director, Marketing, IT etc.• Skills and knowledge place them in position to make

critical decisions regarding the organisation-they have information power

• LA provides for this by conferring the right to access to information to unions

• Employees at the coalface are also privy to information that management is unaware of.

Coercive Power• An individual’s ability to threaten, cajole or coerce

someone into conforming is evidence of coercive power• Experienced negotiators avoid coercion power , it can

hasten breakdown in negotiations and lead to industrial action

• The best way to apply it is to put in questions form, ‘’Have you considered the impact of your wage proposal on job security?’’

Reward Power• Stems from individual’s ability to provide rewards for

desired outcomes• Rewards include monetary and non-monetary• Negotiators to avoid indicating approval of particular

points made by the opposition • They concede vital ground by nodding, or verbally

agreeing

Reward Power • Also they should repeat the mantra “Do not take my

silence as approval.’’• Negotiators switch between these powers depending on

tone and context of proceedings

External factors that impact on negotiations• There are several of these external factors• Important to understand these • Have knowledge of particular conditions obtaining at time

of conditions• These factors are;- Economic climate- Socio-political conditions, and- technology

Economic climate• The following have an impact on negotiations:- Inflation- Economic growth rates- Comparative levels of wage settlements- Macro-economic policies

Political conditions• During apartheid employers deemed more aligned to the

apartheid regime and so negotiations had politics of ‘’struggle’’ elements

• Where there are labour or social govts., organised labour has close links with the governing party

• There also tends to be a sympathetic environment for trade unions

Political conditions• There is a correlation between incidence of industrial

action and the political stability of a country• This is measured by elections and the run up to them

Political conditions• Labour and labour policies are contentious issues and will

impact on the negotiating environment• If governments are hostile to unions, employees are

emboldened in approach• Political considerations determine government’s labour

policy which explains degree of union power, which explains how unions are assisted by labour legislation-there can be legislation which is union hostile.

Technology

• Workers may feel threatened by technology• Ill prepared employees can be made redundant, they are

substituted• Irony is that technology makes organisation more flexible ,

more productive and enhance its internal and external capabilities

Technology• Employees need to be empowered to be equipped with

necessary skills• In negotiation both approaches to introduction of new

technology need to be considered before formulating a position.

Bargaining in good faith• Collective bargaining not in a vacuum• Labour relationships continue on daily basis• Experiences of one of these negotiations becomes part of

common history that influences attitudes and perceptions of the parties to each other

Bargaining in good faith• To this end the relationship between the two parties is an

important determinant of the nature of their relationship, and explains why successful negotiators take cognisant of this in their approach to conducting negotiations

Bargaining in good faith• Bargaining in good faith determines whether or not the

bargaining experience will be relatively more positive or not

• Duty to bargain not enforceable by the LA• Courts endorsed the notion of good faith bargaining• Refusal to bargain, or bargaining in bad faith became an

unfair labour practice

Characteristics of good faith bargaining• Open-mindedness on part of participants• Willingness to genuinely consider positions put forward• Where possible reach an agreement• No party to show pre-determined approach• Parties to be prepared to shift positions and reach

compromise• However, duty to bargain in good faith does not translate

to duty to agree.

Some unwritten rules in negotiation• That which is set by negotiation, can only be changed by

negotiation• Representatives should not be bypassed• Information that is once accepted as being so may not

later be denied, e.g. silence being taken as agreement.• Agreement on an issue once reached may not be

retracted, unless clearly contingent

Unwritten rules in negotiation• Parties engage through a chief negotiator on each side.

Neither party owns the process• Normal conventions of polite interaction should prevail• Conflict is not personalised• Off -the – record interactions remain just that-confidences

are never breached• Keep-talking as long as parties around the table are

seeking agreement• Be willing to move.

Arguments used in collective bargaining• Affordability • Comparability• Cost of living• Productivity• Public policy

Affordability• Relates to employer’s ability to meet financial impact of

wage increase• An employer cannot pay a wage increase he /she cannot

afford• Argument on affordability is inseparably linked to

disclosure of information

Comparability• Does not deal with what the employer cannot pay but

what the job is paid elsewhere• The notion of going rate in labour market also considered• The debate centres on whether the comparison is fair and

proper• It is not proper to compare wages in the public and private

sector as fair comparison

Cost of living• Compelling argument• Relates to inflationary periods, especially to the erosion of

wages• The purchasing power is eroded by increase in CPI• Argument is employees to not face decrease in

purchasing power and drop in standard of living through no fault of their own

Productivity• Employer’s response to employee’s cost of living

argument• Argument is if one wants more one must produce more

Public policy• Generic term used for arguments about pay equity, pay

levels, or wage exploitation• Never public policy that employees are paid below the

breadline or subject to exploitation and abuse of the employer

• Relates wage and employment conditions to a social context

• In times of high inflation or periods of pay restraint employer could argue that unions demands are ‘’irresponsible.’’

Negotiating tactics• Negotiators mostly use persuasion, deception and bluff• Experienced negotiators know outcomes before the

negotiation encounter begins but nevertheless the charade goes on

• Studies however show that the process serves a purpose in the overall scheme of the collective relationship and democracy at work

• Helps in the procedural resolution of employment disputes.

Manipulation of data• Statistical data useful when making stronger your

argument• Trends are highlighted and forecasts are made• Data is manipulated• Financial information is massaged when negotiating on

downsizing and restructuring• Production figures are downplayed to justify

retrenchments and wage offers

Misleading the opposition• Leading the opposition through misinformation, untruths

and red herrings is common negotiation tactics• Negotiating party deliberately try to trick its opposition by

feeding it with wrong /incorrect information or blatant lies to make strong its position (this is contrary to bargaining in good faith)

• Can end up in lose-lose situation (break up of negotiations

Emotive ploys• Playing on emotions of other party• Important when negotiator is in a fix• Negotiator can pretend to be tired to have proceedings

continue the next day• This gives negotiators time to re-group and collect their

thoughts and come up with a fresh attack or better defend their positions without giving concessions

• Such tactics not to be recommended, can backfire.

Switching roles• Switches between aggressive and passive postures• Attack to force opponent to go into back foot and make

concessions• Similar out-come got by being placatory and down-playing

aggression• Need for negotiating team to consider which posture to

use depending on situation

Negotiating strategies• Research on the following and report to the class your

findings:• Walking away• Dual concerns• Contingent outcomes and the ‘’prisoner’s dilemma’’• The negotiation process