Analyzing an organization you know well, observe the negotiations that take place around you at work. Focus on one negotiation that appears typical for your organization. Utilizing the terms and concepts from this chapter, describe your assessment of the effectiveness of both negotiators, their negotiating styles, and provide suggestions for improvement of each person’s negotiation skills, as well as negotiation steps used. Provide an example to illustrate your answer. Do not use real names of individuals within your organization.
Life is one giant negotiation! At least my life seems to be. 🙂 I spend my days negotiating internally within my organization, externally with customers and prospects, with my children, etc… I wrote a blog (Bocchinfuso, 2017, http://bit.ly/2vbmhDZ) last year on how I leverage empirical data and analytics to aid in decisions and negotiations I face every day, the negotiation of how to keep various stakeholders satisfied knowing that my time is finite and the motivation of stakeholders is often self-serving. Regardless of the stakeholder’s motivation for me to meet my objectives, I can’t afford to alienate them, I have to manage them, and this requires negotiation. The more educated I am on the topic (preparation and planning), the stronger my platform and reasoning become and my negotiating position improves (my ability to define ground rules rooted in empirical data, my analysis, and justification). I like to use the data to support my position in a negotiation, in negotiations I tend to avoid subjective opinion and focus on objective fact. I have a process which aligns perfectly with the negotiation process depicted in by exhibit 14-6 in the text. (Robbins & Judge, 2018, p. 237)
A couple of negotiations I am involved in daily include:
- Pricing negotiations, this is a simple one, I inform the other parties involved in the negotiation of the “Triple Constraint” rule. “The Triple Constraint says that cost is a function of scope and time or that cost, time and scope are related so that if one changes, then another must also change in a defined and predictable way.” (Baratta, 2006) I expanded on the traditional triple constraint rule by explaining “The Value Triple Constraint” which introduces the idea of value provided. For instance, while reducing scope and delivery time might imply a lower cost, the value delivered may still be high and the cost reduction may not be linear or not exist at all. (Baratta, 2006)
- Opportunity cost negotiations, this is a tough one, but with stakeholders regularly focused on their objectives which often are tactical initiatives it can be a challenge to metric the opportunity cost of changing direction to focus on the tactical at the expense of the strategic. Staying focused takes a strong will and a belief that the strategy will deliver a more significant outcome than the immediate gratification of engaging in tactical tasks, this is not without risks which need to be absorbed by a leader. There is also an aspect of negotiation here which calls for influence, the more a leader can inspire others to see the vision the more they can focus on execution rather than negotiation.
So often negotiations can personify the exchange influence tactic, where the negation becomes all about a quid pro quo. I promise X if you deliver Y, “ll gladly pay you Tuesday for a hamburger today” (J. Wellington Wimpy), I’ll wash your back if you wash mine, etc… I have a general rule, I don’t negotiate to a place where the relationship is no longer logical of mutually beneficial, consistent and sustained transparency and always doing what I say (flawless execution of closure and implementation) are my best friend. (Robbins & Judge, 2018, p. 237) I know the car dealer needs to make money, I know that they are not selling me the car “below their cost”, it’s a blatant misrepresentation of the facts because the car dealer would be out of business. The goal of negotiation should be for both people to leave happier than they were before they entered into the negotiation. The text mentions that balancing ethics and the velocity with which an agreement is reached is essential. I agree, the values of an organization should always be in the forefront, concessions which disrupt these values may satiate a tactical need, but strategically they disrupt the entire organization. Distributive bargaining, in my experience, delivers perceived wins, but the intelligent loser in these situations knows they have a short-term issue that needs to be solved, but once the issue is addressed the astute loser will look to address the situation, long-term this is often a loss for the supposed winner. (Robbins & Judge, 2018, p. 235) Personally, I don’t believe in distributive bargaining; it’s a surface level win/loss scenario, there is always an unrealized loss to the so-called winner. For example, horrible customer service because there’s a note on your service record at the car dealer that you extracted every last dollar during the purchase of the vehicle. We live in the information age, every decision you make, every tweet you tweet impacts how others interact with you, these are facts. Furthermore, who knows what the “fixed pie” (Robbins & Judge, 2018, p. 236) is, car dealers have volume discounts, they have dealership incentives, etc… the same car from two different dealers can have wildly different margin profiles. Apply “The Value Triple Constraint” and the equation “value = f(scope, capability” and the perspective on a car purchase negotiation changes. Sticking with the car dealer example, which is a good negotiation use case, I think traditionally the model has looked like this:
- consumer <–> distributive bargaining <–> auto dealer <–> integrative bargaining <–> manufacturer
But the information age has changed this; individuals place more value on the relationship, they want a fair price, the ease of comparison shopping has caused market consolidation, errored margins, and created value proposition parity. I believe the more and more people are interested in integrative bargaining. The text outlines that integrative bargaining is preferred because it builds long-term relationships (Robbins & Judge, 2018, p. 237), I think that today more than ever organization and individuals are looking for a balance that satisfies the organizational needs and the needs of the individuals who make up this organization. This complex balance has moved us towards an integrative bargaining model, it’s not to say that distributive bargaining doesn’t happen, it does, but it rarely delivers long-term sustainable results and desired outcomes.
Bocchinfuso, R. (2017, August 31). I’m a skeptic, satiated by large raw data sets, analysis & inference. Retrieved April 13, 2018, from http://gotitsolutions.org/2017/08/31/im-a-skeptic-satiated-by-large-raw-data-sets-analysis-inference/
Robbins, S. P., & Judge, T. (2018). Essentials of organizational behavior. New York, NY: Pearson.
Baratta, A. (2006). The triple constraint: a triple illusion. Paper presented at PMI® Global Congress 2006—North America, Seattle, WA. Newtown Square, PA: Project Management Institute.
Andrew, I can certainly relate to the comment “for ‘free’ because a project is strategic and prioritized.” I frequently face this battle as well, the questions of should we allocate resource to a project or opportunity, should these resources be internal or external resources, what’s the opportunity costs, is there a quid pro quo, etc., are consistent debate/negotiation topics.
Power is a funny thing; it’s a delicate balancing act. I find your comment on the “pool of ‘free’ resources” interesting. Is there such a thing as free? Are the “free” resources underutilized resources? I have always struggled with this concepts, struggled to grasp the idea of underutilized that is. There is so much to do an learn, and things are changing so quickly that while a resource may not be billable, I don’t like to think of them as underutilized. IMO making the general assumption that an unbillable resource is always better off billable is a short-term view, where decisions are made using “flat earth thinking.” Interested in who is making the plea in your scenario? Are these internal stakeholders, are they salespeople looking for resources for customer projects or some other stakeholder? In my case, they are typically salespeople looking to “help” our customer for “free.” Salespeople are shrewd negotiators; they speak using terms like “our customer” intentionally because they feel it is more persuasive than the term “their customer.” The plea is always “this an opportunity to demonstrate our value”; my initial response is “if it’s free what tangible value does it have?” The answer is almost always a desire to create a quid pro quo. Sometimes I say, yes, if I feel there is upside opportunity, but more often than not I think free is a synonym for valueless, and I say, no.
Whimp Junction (http://bit.ly/2EMV8a3) is a critical crossroads. (Bellington, 2010, p. 12)
Like you, I need to maintain relationships, salespeople need me, and I need them, we need each other to be successful, so I try to remain sympathetic, offer alternatives and find solutions that address our mutual needs without being self-serving to either party. I always make my expectations clear; if there is a quid pro quo, it’s essential that the sale person know I will expect to see the quid pro quo materialize. I demand accountability for commitments, I execute and then track the other parties execution, because, without the ability to deliver on our mutual commitments we lack trust (Robbin & Judge, 2018, p. 202) and without trust, there is no way we can develop or sustain a relationship. I suspect that if I were to conduct a Big Five Personality test on salespeople, many of them would not rate high on equity sensitivity (aka benevolence).
Bellington, A. (2010, April 22). Wimp Junction Presentation For Sandler Sales Training. Retrieved April 15, 2018, from https://www.slideshare.net/SalesCoachAB/wimp-junction-presentation-for-sandler-sales-training-3823266
Lee, E. (2007). The effects of equity sensitivity and personality on transformational leadership behavior
Robbins, S. P., & Judge, T. (2018). Essentials of organizational behavior. New York, NY: Pearson.