UNIT 4 - NEGOTIATION

Negotiation in ADR: Meaning and Theory

Negotiation, within the context of Alternative Dispute Resolution (ADR), plays a

crucial role in reaching mutually agreeable settlements for disputing parties. Here's
a breakdown of its meaning and underlying theories:

Meaning:

 Negotiation in ADR refers to a collaborative process where parties in

conflict engage in direct or indirect communication to find a solution
acceptable to everyone involved.

 It's distinct from litigation, which involves a third-party judge imposing a

decision.

 In ADR negotiations, parties have control over the process and outcome,
fostering greater ownership and satisfaction.

THEORIES OF NEGOTIATION
 Distributive Bargaining Theory: Distributive bargaining theory, a fundamental
concept in the realm of negotiation, centers around the idea of a “fixed pie” where
one party’s gain is perceived as directly offsetting the other party’s loss. In essence,
it’s the classic scenario of dividing a limited resource, and it’s often referred to as
“win-lose” negotiation. Key Features:  Competitive and adversarial.  Used in
one-time interactions or when resources cannot be expanded.  Often relies on
tactics like anchoring, concessions, and hard bargaining. Example: Two parties
negotiate the price of a car, where every dollar the buyer saves is a penny the seller
loses.
 Integrative Negotiation Theory: It is a negotiation theory that stands in stark
contrast to the win-lose approach of distributive bargaining. Instead of viewing the
negotiation table as a battlefield for dividing a fixed pie, integrative bargaining
seeks to enlarge the pie, creating opportunities for all parties to achieve their
objectives collaboratively and achieve mutual gains Key Features:  Cooperative
and problem-solving-oriented.  Encourages creativity to explore shared benefits
and trade-offs.  Builds long-term relationships. Example: A supplier and retailer
negotiate a long-term partnership by bundling discounts, advertising collaboration,
and shared logistics.
 Positional bargaining negotiation: It is a negotiation strategy where each party
takes a specific position or stance on an issue and then argues for that position,
often making concessions to reach a mutually acceptable agreement. It focuses on
the positions of the parties involved rather than their underlying interests or needs.
Key Features:  Each party defines its position upfront (e.g., "I want X" or "I offer
Y").  The negotiation revolves around modifying these positions through offers
and counteroffers.  The ultimate goal is to reach a settlement acceptable to both
parties, though often at the expense of exploring deeper interests. It is
characterized by a zero-sum mindset, where one side's gain often equates to the
other side's loss.
 Principled Negotiation Theory (Interest-Based Negotiation): Principled
negotiation theory, also known as interest-based negotiation, is a highly regarded
approach within Alternative Dispute Resolution (ADR) that places emphasis on
identifying and addressing underlying interests and needs. In principled
negotiation, parties engage in a dialogue aimed at uncovering the interests,
concerns, and priorities that drive their positions. By doing so, they move beyond
adversarial posturing and seek solutions that satisfy everyone’s underlying needs,
often resulting in a “winwin”.

STYLES IN NEGOTIATION: There are five most common approaches or styles which a negotiator adopts to
achieve their desired goal

 Accommodating: Accommodating negotiators prioritize maintaining the relationship between the

negotiating parties. Those who exhibit the accommodating style seek to satisfy the other party's needs
while minimizing the level of conflict involved in the negotiation.
 Avoiding: Negotiators with an avoiding style prefer to remain objective and avoid creating tension.
They’ll often defer responsibility to a counterpart in an attempt to remain neutral. They do not actively
pursue their own interests or the interests of the other party.

 Collaborating: The collaborative negotiation style is a joint problem-solving technique. It aims to create
a win-win scenario. Collaborative negotiators are great at finding innovative solutions to complex
problems. By working together with the other party, those exhibiting the collaborating style aim to find
creative solutions that satisfy the needs of all parties involved.

 Competing: Competitive negotiators are results-oriented and focused on getting their own way. They
do not focus on the relationship with the other party or maintaining a good rapport. Those with a
competitive negotiation style are usually less willing to compromise and, in extreme cases, can be
aggressive.

 Compromising: The compromising style aims to find a middle ground that is mutually beneficial to all
parties. However, it is different from the collaborative style in that it does not aim for a win-win scenario.
Instead, compromising negotiators seek a solution in which both parties sacrifice part of what they want
for resolution. Think of haggling for a lower price at a flea market—the buyer offers the seller a lower
price, hoping they’ll meet somewhere in the middle. In this situation, neither party gets everything they
want, but they walk away with their need or desire partially fulfilled.

PHASES IN NEGOTIATION: There are 5 phases or steps in negotiation

 Preparing and Planning The primary step is the preparation and planning where the parties govern
their goals for the negotiation. Each party must decide the “best alternative to a negotiated agreement
(BATNA)” and “worst alternative to a negotiated agreement (WATNA)”. These two signify the extreme
possibilities of the situation. The better the BATNA is, the greater will be the negotiating capacity as a
suitable alternative eliminates the chances of an unsuccessful negotiation. Determining the WATNA is
equally important as it shapes the worst-case scenario if the negotiation process does not work. It
includes risks and costs.

 Defining ground rules The second step includes defining the ground rules that relate to the procedural
necessities for the negotiation. The duration of the process, venue of the proceedings and their initiation
are agreed upon in this particular step.

 Clarification and justification In the third step, parties will clear up and resolve any misunderstanding
about the situation. This step is an opportunity for informing and updating the other party on the issues
in the dispute. Both the disputants shed light on their demands to ensure that the negotiation is
properly done

 Bargaining and problem solving The fourth step is bargaining and problem-solving. Bargaining and
problem solving is the spirit of negotiation as it is where the parties may take part or cooperate as they
each pursue to fulfil their interests. There is no single approach for a negotiation style. Diverse
bargaining styles and tactics are adopted depending upon the situation.
 Closure and implementation The last step is the validation of an agreement that has been worked out
and elucidates how the parties will supervise each other’s actions to ensure that the negotiated
agreement is carried out.

Positional Bargaining: Digging Deeper

Positional bargaining, often seen as the classic tug-of-war in negotiations, is a

strategy where both parties take fixed positions and argue for them relentlessly.
Think haggling at a flea market or two competitors jockeying for market share.

Underlying Principles:

 Win-lose mentality: Each party aims to maximize their own gain, often at
the expense of the other. This creates a competitive atmosphere and can limit
collaboration.

 Focus on demands: Negotiations revolve around stating and defending fixed

demands, with little flexibility or consideration for the other party's needs.

 Limited information sharing: Parties tend to hold their cards

close, withholding information that might weaken their bargaining power.

 Threats and pressure tactics: Threats of walking away or escalation are

common to force concessions and secure a favorable outcome.

Strengths:

 Simple and easily understood: The straightforward approach makes it

accessible for beginners and non-professional negotiators.

 Can be effective in situations with clear power imbalances: The stronger

party can leverage their position to secure a favorable deal.
  Fast results: By focusing on demands and making concessions, agreements
can be reached quickly, particularly when deadlines are pressing.

Weaknesses:

 Damages relationships: The competitive nature can harm trust and lead to
resentment, hindering future collaboration.

 Inefficient and suboptimal outcomes: Fixating on positions can overlook

creative solutions and mutually beneficial compromises.

 Limited problem-solving: The focus on winning ignores underlying interests

and needs, potentially leading to missed opportunities for joint gains.

 High risk of impasse: The rigid stances can lead to deadlock and failure to
reach any agreement.

When to Use:

 Situations with clear power imbalances: If you hold strong

leverage, positional bargaining can secure a quick and favorable outcome.

 Short-term interactions: For one-off deals with no future relationship

expected, this approach can be efficient.

 Limited time constraints: When deadlines are pressing, this focused

approach can expedite an agreement.

Alternatives:

 Collaborative negotiation: Seeking mutually beneficial solutions through

open communication and understanding both parties' needs.
  Principled negotiation: Focusing on fairness, ethics, and long-term interests
to reach sustainable agreements.

 Transformative negotiation: Addressing underlying values and motivations

to create lasting change and deeper understanding.

Interest-Based Bargaining: A Collaborative Compass

Interest-based bargaining (IBB) stands in stark contrast to the tug-of-war of

positional bargaining. It's a collaborative approach that prioritizes understanding
and addressing the underlying needs and concerns of all parties involved in a
negotiation. Think of it as a joint exploration for mutually beneficial solutions,
rather than a battle for territory.

Core Principles:

 Focus on interests, not positions: IBB shifts the focus from inflexible
demands to the underlying reasons behind those demands. Identifying and
understanding each other's needs and concerns becomes the driving force.

 Open communication and active listening: IBB thrives on transparency and

trust. Both parties share relevant information freely, listen actively to each
other, and strive to understand different perspectives.

 Creative problem-solving: Traditional bargaining often settles for

compromise, while IBB encourages both sides to brainstorm and generate
new solutions that satisfy everyone's interests.

 Fairness and building relationships: IBB aims to reach fair agreements that
consider everyone's needs and leave all parties feeling satisfied and
respected. This fosters long-term positive relationships.
Strengths:

 More durable agreements: By addressing the root causes of

disagreements, IBB creates agreements that are less likely to be challenged
or undermined later.

 Preserves relationships: The collaborative nature fosters trust and

respect, strengthening your bonds with the other party even when
negotiating.

 Uncovers creative solutions: Open communication and joint problem-

solving can lead to innovative solutions that wouldn't have been possible
with fixed positions.

 Greater efficiency: By focusing on underlying needs, IBB can avoid

unnecessary back-and-forth and reach faster agreements.

Weaknesses:

 Requires more time and effort: Building trust and understanding takes time
and investment compared to the quicker exchanges of positional bargaining.

 Not always applicable: IBB may not be effective in situations with power
imbalances, extreme time constraints, or bad faith actors.

 Requires specific skills: Effective IBB practitioners need strong

communication, empathy, and active listening skills, which can be
challenging to develop.

When to Use:
 Complex negotiations: When the issue at hand is multifaceted and involves
diverse interests, IBB can help untangle the complexities and find solutions.

 Long-term relationships: If you value building a positive and lasting

relationship with the other party, IBB is the ideal approach.

 Collaborative environments: This style thrives in situations where both

parties are genuinely interested in finding common ground and working
together.

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QUALITIES OF A NEGOTIATOR

A negotiator is someone who either gets to an agreement with someone else or assists others in
reaching such an accord. In the 1500s, the term negotiator simply meant “businessperson,”
derived from the Latin root negotium, which means “a business or occupation.” A good and
skilful negotiator can make the deal fall in this favour. Following are few qualities of a negotiator:

 Efficient speaking – Clear understanding of facts and stating personal views efficiently as well as
stating the wants and the necessary terms in front of the respective group or party is a prime
quality that a negotiator must possess. There should be effective and fluent and understandable
communication as well as confidence.

 Efficient listening – Effective listening help in better communication and negotiation in the best
possible way. Being attentive and noting parties point and listening to the party to know what
they want for business and profits as well as good will is of extreme importance.

 Positive attitude – Positive attitude is very important both in ethical and contractual sense. It is
the attitude to want the deal and to do everything possible to negotiate and get the deal in
favour. It makes the view that the individual is interested in the deal and will work efficiently.
  Respect for other parties – One must show respect for the opposing side while also keeping in
view that they are in the business of making a profit and will only bargain when they stand to
gain something. A negotiator must be ethical and respectful in his work.

 Sense of humour – Its important for the negotiator to possess traits of humour so that both
parties are comfortable with one another, when things deviate in the wrong direction, the
negotiator must inject his sense of humour and think from both parties’ perspective.

 Effective Planning and Knowledge of the fact – These two factors are pivotal because they
enable the moderator to make informed opinions about how important to offer in a given
situation. Knowing about once deals that are similar to this bone also aids in knowing when to
walk down.

 Tolerance – Every aspect should be precisely examined with great care, and one needs to give
the other party time to make a decision as we want to seize the deal and also desire deals in the
future. It’s also important to make a common understanding so that no party loses out. Few
additional qualities:

 Emotional intelligence

 Creativity 

Persistence 

Patience/Tolerance 

tone- confidence

Collaborative communication skills are the essential tools for fostering fruitful
interactions and achieving shared goals within a team. They go beyond basic
communication, emphasizing empathy, shared responsibility, and a focus on
building consensus. Here are some key components of these skills:

Active Listening:
  Full attention and engaged presence: Give your undivided attention to your
team members, both verbally and non-verbally. Maintain eye contact, avoid
distractions, and show genuine interest in what they have to say.

 Seek understanding, not judgement: Listen to grasp the essence of their

message, their intent, and the emotions behind their words. Avoid
interrupting or jumping to conclusions, and ask clarifying questions when
needed.

 Paraphrase and summarize: Demonstrate your understanding by rephrasing

key points and summarizing their message in your own words. This ensures
clarity and fosters a sense of being heard.

Expressing Yourself Clearly and Concisely:

 Articulate your ideas and thoughts effectively: Communicate your message

with clarity and precision, avoiding jargon or ambiguous language. Tailor
your communication style to your audience and ensure your message
resonates.

 Be open to feedback and willing to adapt: Embrace constructive criticism

and be willing to refine your communication based on feedback from your
team members. This shows flexibility and a commitment to shared
understanding.

 Focus on "we" instead of "I": Emphasize teamwork and collaboration by

using inclusive language. Show that you're part of a collective effort and
value everyone's contribution.

Giving and Receiving Feedback:

  Focus on behavior and impact: Provide feedback that is
specific, actionable, and focused on behavior rather than
personalities. Highlight the impact of their actions and offer suggestions for
improvement.

 Deliver feedback constructively and positively: Be respectful and empathetic

when giving feedback. Focus on helpful suggestions and encourage their
growth. Be open to receiving feedback as well, seeing it as an opportunity to
learn and improve.

 Create a safe space for open communication: Foster a safe environment

where team members feel comfortable sharing their thoughts, ideas, and
concerns without fear of judgment. Actively encourage participation and
diverse perspectives.

Conflict Resolution and Decision-Making:

 Emphasize problem-solving over blame: When conflicts arise, focus on

finding solutions together instead of assigning blame. Be willing to
compromise and find common ground.

 Facilitate discussion and encourage participation: Involve everyone in the

decision-making process. Actively seek out diverse perspectives and ensure
everyone feels heard and valued.

 Be open to compromise and finding win-win solutions: Look for solutions

that benefit everyone involved, not just individual team
members. Remember, collaboration is about finding the best outcome for the
collective.
Beyond these core skills, developing emotional intelligence, being mindful of non-
verbal communication, and celebrating team successes are crucial for building trust
and strengthening collaborative communication within your team.

Negotiating skills are like a Swiss army knife for navigating life's complex
interactions. They equip you to reach agreements, resolve conflicts, and achieve
your goals in situations where different interests collide. Whether it's securing a
raise, striking a business deal, or simply resolving a disagreement with a
roommate, honing your negotiation skills can empower you in countless situations.

Here's a breakdown of key aspects to consider:

Core Skills:

 Communication: Active listening, clear and concise communication, and

storytelling are vital for conveying your needs, understanding the other
side, and building rapport.

 Preparation and Planning: Knowing your goals, priorities, and bottom

line, researching the other party and potential scenarios, and formulating
your arguments are crucial for a confident and effective approach.

 Problem-Solving: Identifying the underlying interests and needs of both

parties, brainstorming creative solutions, and finding common ground are
key to reaching mutually beneficial agreements.

 Emotional Intelligence: Managing your emotions, empathizing with the

other side, and maintaining composure under pressure are essential for a
smooth negotiation process.
  Flexibility and Adaptability: Be prepared to adjust your approach based on
the situation and the other party's responses. Don't be rigid in your
tactics, but stay true to your core objectives.

Additional Tips:

 Body Language: Maintain confident posture, eye contact, and a positive

demeanor. Non-verbal cues can significantly impact the negotiation process.

 Ask open-ended questions: Encourage the other party to share their

perspectives and motivations. Understanding their needs is crucial for
reaching a fair agreement.

 Concessions and Trade-offs: Be prepared to make concessions but do so

strategically and only in exchange for reciprocal offers from the other side.

 Know your walk-away point: Define the minimum acceptable outcome

you're willing to accept. Walking away is a legitimate option if the deal is
not in your best interest.

"Power to negotiate" encompasses a multifaceted concept, weaving together

individual skills, situational dynamics, and external factors. It's the ability to
influence an outcome in your favor within a negotiation, but the degree and nature
of that power can vary greatly.

Sources of Power:

 Personal Skills: These are the tools you wield directly, like:
 o Communication: Strong communication skills, including active
listening, clear arguments, and persuasive storytelling, give you the
capacity to sway the other party and build trust.

o Preparation and Planning: Knowing your goals, research, and options

equips you to navigate the negotiation with confidence and leverage
opportunities.

o Emotional Intelligence: The ability to manage your

emotions, understand the other side's perspective, and adapt your
strategies is crucial for successful negotiation.

o Problem-Solving: Identifying shared interests, finding creative

solutions, and proposing win-win scenarios strengthen your position
and influence the outcome.

 Situational Dynamics: The context of the negotiation can provide varying

degrees of power, such as:

o Information Asymmetry: Possessing superior knowledge or

information gives you leverage and the ability to shape the direction
of the negotiation.

o Urgency and Deadlines: Holding a pressing deadline or offering a

scarce resource can give you bargaining power and limit the other
side's options.

o Relationships and Reputation: Established relationships, goodwill, and

a strong reputation can foster trust and make the other party more
willing to accommodate your needs.
  External Factors: Beyond personal control, these elements can influence the
power equation:

o Market Forces: Supply and demand dynamics, economic

conditions, and industry trends can tilt the power balance in favor of
certain parties.

o Legal Framework: Regulations and laws might constrain options or

grant specific rights, impacting negotiating positions.

o Social and Cultural Norms: Power dynamics within a culture or social

group can affect negotiating styles and expectations.

Navigating Power Dynamics:

 Identifying your leverage: Recognize your personal skills, situational

advantages, and any external factors that strengthen your position.

 Understanding the other side's power: Analyze their skills, resources, and
external factors that might influence their negotiating stance.

 Building trust and collaboration: Even with significant power, prioritize

building a positive relationship and seeking mutually beneficial solutions.

 Knowing your walk-away point: Define your minimum acceptable outcome

and be prepared to walk away if necessary.

 Seeking ethical solutions: Avoid manipulative tactics and strive for fair and
sustainable agreements that benefit all parties in the long run.

Remember, "power to negotiate" is not a fixed, one-dimensional concept. It's a

dynamic interplay of personal skills, situational factors, and external influences. By
honing your skills, understanding the context, and employing ethical strategies,
you can enhance your power to advocate for yourself and achieve your desired
outcomes in various negotiation scenarios.

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