Read an Excerpt
A Briefcase Book
Negotiating Skills for Managers
By Steven P. Cohen The McGraw-Hill Companies, Inc.
Copyright © 2002The McGraw-Hill Companies, Inc.
All rights reserved.
ISBN: 978-0-07-141545-3
Excerpt
CHAPTER 1
Competitive Versus Collaborative Decision Making
Negotiating is not a competitive sport.
Paul Murphy is on an extended business trip and getting pretty sick of staying in hotel rooms that all look alike even though they're in different cities. His company has a relationship with the hotel chain where he's been staying, but the business deal is for the least expensive room. How can he improve the accommodations when he checks into the next hotel?
Sally Marks manages a team in the design department of an automobile manufacturing company. A directive has arrived from the marketing department indicating the top priority for the next design cycle is to develop a vehicle that weighs no more than a ton, has space for five passengers, can cruise at 75 miles per hour for extended periods, complies with increasingly strict exhaust emission standards, and can fit into small urban parking spaces. The marketing department also wants manufacturing costs held substantially below any previous cars her group has designed—yet use high-tech materials.
Sally and her team's delivery on this combination of specifications will require the cooperation of members of teams from manufacturing, purchasing, and testing segments of the company. In addition, Sally has to cope with regulatory issues as well as external suppliers in order to accomplish her task.
When Fred and Jane Yancey and their two kids moved into their new home, it needed a lot of fixing up as well as an addition. Some of their neighbors have been very friendly—as well as understanding about the noise of construction machinery—but others have complained to the local building inspectors without talking first to Fred or Jane. The Yanceys are the first African-American family to move into the neighborhood. They wonder whether the complaints to the building inspector relate to the construction itself or whether other factors are involved.
As chief of her firm's team selling processors to a public sector utility company in China, Angela MacKenzie has to contend with competitors from the U.S. and other countries. But she is even more challenged by the process of figuring out how much progress she and her colleagues are making convincing the representatives of the Chinese utility company of the value of the processors they are selling.
Every day, all over the world, people find themselves in similar situations. They want to accomplish a particular task, clarify a relationship, or simply find resources to achieve more than they might by making a deal with someone else. They need to negotiate to get from their starting point to their objective.
Negotiating Skills for Managers is designed to help its readers understand and utilize a process that is fundamental to business—and the rest of life.
What Is Negotiation?
When people want to do something together—buy or sell an item, make a business deal, decide where to go for dinner—they need to use some sort of mechanism for reaching an agreement. Unless they agree instantly on every element of the choices to be made, they need to use a mutually acceptable process for decision making. Negotiation is one name for a variety of joint decision-making processes, although people also use such terms as making a deal, trading, bargaining, dickering, or (in the case of price negotiation) haggling.
A successful negotiation has taken place when the parties end up mutually committed to fulfilling the agreement they have reached. Fairness is a crucial element to make a negotiation process succeed. Some people negotiate as if their most significant objective is to take advantage of other parties; this is self- defeating. If any party feels unfairly treated, he or she may walk away from the negotiation with a negative feeling and a disinclination to live up to the agreement.
One way to think of negotiation is to compare knitting and weaving. When you knit something, you generally use a single strand of yarn. And although knitted fabrics may contain a variety of colors and textures, you can easily stretch them out of shape. In weaving, the fabric is created by using at least two strands coming from different directions.
Woven fabrics tend to have greater tensile strength and durability than knitted fabrics. Negotiation is more like weaving—the process takes contributions from various parties. While weaving and knitting may involve a single person's skills, negotiation calls for contributions from two or more parties. By drawing upon the knowledge, skills, and other input of the multiple parties, a good negotiation process weaves together a durable agreement whose strength derives from the fact that the parties reached agreement by working together.
What Negotiation Is Not
When your boss gives you an order and your only choice is to do what he or she says, that is not negotiation. If an outsider is brought in to make a decision between parties using arbitration, the parties are legally bound to follow the arbitrator's decision. That is not negotiation. When parties are not working together to reach an agreement, negotiation does not take place.
It's important to keep in mind that negotiation is not a competitive sport. This doesn't mean, however, that we're never in a contest with other parties. But we are not competing with the aim of making sure we crush the opposition. Rather, we are aiming to do the best we can for ourselves. Using this philosophy, we are less interested in the sporting aim of competing and more interested in looking out for ourselves. In negotiation, you want to do well for yourself, but not because you want to beat someone else. Effective negotiation is held in its proper context as a mechanism for pursuing interests.
Your dealings with customers—or suppliers, neighbors, or relatives—should not be viewed as competitions. We negotiate with people to reach an agreement that meets as many of the parties' interests as possible. Our fundamental obligation is to pursue our own interests, assuming that the other parties are doing their best to get their interests met. We need to remember, however, that if the negotiating parties aren't satisfied with the process as well as with the result, odds are that the promises constituting the agreement won't be fulfilled. Negotiation based on individual interests requires that we open our minds and our strategizing to other parties' interests as well as our own. The definition of negotiation can now be expanded to describe how parties trade things of value in a civilized manner.
Types of Negotiation
People usually view negotiation as either confrontational or cooperative. People who view negotiation as a confrontation see the process as a zero-sum game in which a limited number of bargaining chips are to be won—and they want to be the winners. The confrontational winner-take-all approach reflects a misunderstanding of what negotiation is all about and is shortsighted. Once a confrontational negotiator wins, the other party is not likely to want to deal with that person again.
Cooperative-approach negotiators see a wide range of interests to be addressed and served. They understand that negotiation is not a zero-sum game but a way to create value for all the parties involved. The cooperative negotiator understands the importance of all stakeholders winning something—this is how you build long-term mutually beneficial relationships.
The cooperative approach is known as interest-based negotiation. Interest-based negotiation is particularly effective in a marketplace characterized by diversity. We often need to reach agreemen
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Excerpted from A Briefcase Book by Steven P. Cohen. Copyright © 2002 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
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