WHAT IS NEGOTIATION?
Negotiation is a part of Alternative Dispute Resolution (ADR), where two or more individuals settle their dispute amicably with the help of an impartial third person called a Negotiator. It is a process of communication to help resolve disputes. Negotiation is not statutorily recognized in India. Negotiation, in general cases, involves give and take. It is done keeping in consideration the interests of both the parties.
It may be in the form of direct or indirect communication through which the parties in dispute discuss the form of action which they might take cooperatively and resolve the dispute between them. It is not compulsory on either of the party to participate in the negotiation. It is entered into voluntarily and its outcome is not binding upon the parties. Negotiation aims to benefit the parties as they have control over the outcome and procedure carried out keeping their interest in mind. It is the most flexible dispute resolution method out of all the ADR methods as it only involves those who are a party to the matter in dispute. The chances of reaching to an agreement is high by negotiating their terms and demands.[1]
WHY SHOULD BE CHOOSE NEGOTIATION?
- Negotiation helps in building a relationship between the parties despite their differences as negotiation assists in finding a solution and focuses on creating goodwill and a better relationship. It helps in making further new business deals between the parties. It helps in avoiding future conflict as the parties agree to a common ground and a consensus is reached between them.[2]
- The parties are at full freedom to choose the procedure and the agendas for the negotiation. Likewise, the parties are not compelled to enter into negotiation and the outcome is not binding upon them. The parties are at free will to participate or withdraw from the entire process. Hence negotiation always prioritizes the freedom and free will of the parties.
- In negotiation, there is no unnecessary intervention of any third party unlike other ADR methods. A Negotiator can be a part of the process only at the will of the parties. Decision is in the hands of the parties unlike litigation, there is no involvement of the Court.
- Negotiation is a simple dispute resolution method and is not complex. It helps the parties to safeguard their own needs and requirement and come to an agreement accordingly. Negotiation is a hassle-free, cost efficient and speedy dispute resolution method.
- Lastly, Negotiation is an informal and flexible mode of dispute resolution as the parties can enter or withdraw from the negotiation process at their own will and the decision is not legally binding on either of the parties. [3]
WHAT ARE THE AREAS WHERE NEGOTIATION IS APPLICABLE?
Some of the areas where negotiation can be applied are:[4]
- In workplace: between managers in workplace or a team member and a manager and so on;
- In marital deadlock;
- In business negotiation;
- In contract-based negotiation;
- In international negotiation.
KEY NEGOTIATION TIPS EVERYONE SHOULD KNOW
The inspiration for this topic is taken from Deepak Malhotra, a renowned economist, who is currently the Eli Goldston Professor of Business Administration at Harvard Business School, who points out certain important negotiation tips that everyone should know. They are:
- To have a negotiation strategy meeting.
- To not to reward people in your team for coming up with the right strategy, rather reward people for the right argument.
- To assess what happens to you if there is no deal; to assess whether the impact is positive or negative; to focus on what happens to the opposite party too if there is no deal.
- To prioritize negotiation process before negotiating substance.
- To think about the questions you need to ask to the opposite party. Later, add ten more to the list.
- To prepare in advance for the toughest question the opposite party may ask.
- To not to be hesitant to make the first offer, but never let your offer speak for itself, always tell the story that comes with it.
- To negotiate multiple interests simultaneously as a package. But for the next time, do not make an offer rather consider making multiple offers as this will provide with more flexibility.[5]
- To understand and respect the opposite party’s constraints. To consider the aspect as to why they might be rejecting your legit demands.
- To ignore ultimatums. Also, ultimatums should be only made if: (a) you will follow through; or (b) you have exhausted all the better alternatives.
- To not to let the negotiations end with “NO”. They should always end with “YES”, or with an explanation.
Apart from these, five mistakes that are to be avoided while preparing for negotiation as suggested by Mr. Deepak Malhotra are:
- Having too few people/perspectives: Having too few people or perspective in a team while preparing for negotiation is a great drawback as it results in lack of diverse arguments or reasoning.
- Having too much focus on our own interest: Having too much focus on what we want and the arguments we are going to make in order to have the concede to our demands and not paying enough attention to what are the needs and wants of the other party is one of the biggest mistakes. Ignoring what they want, what are the arguments they are going to make or what they might say that might make us defenseless can be one of the biggest blunders while negotiating a deal.
- Not thinking enough about the constraints on their side: It is important to consider the constraints of the other party like what are the things they can and cannot do, what are the mistakes we might make because we assume they have flexibility in certain areas, what are the opportunities we might lose out on because we do not realize they have more flexibility in other areas might be a great drawback.
- Focusing too much on substance and not enough on process: Having too much focus on give-and-take aspect and not on the entire process is a big mistake. Focusing mostly on substances like: (a) what is our offer going to be, (b) how are we going to make the offer, (c) how are we going to respond to their offer and not giving much attention to what is going to happen beyond the table, in the whole process, often leads to failing in addressing important questions in the long process like: (a) how much time should we devote to this, (b) how should we sequence different aspects of this negotiation, (c) what are the milestones we should be looking at, (d) should we have a framework agreement before we get into one element of this, (e) who are the parties that we should invite into the process and at what time. Such trivial questions play an important role in negotiating a successful deal which people often tend to overlook by focusing more on the substance and not on the process.
- Zooming out: Again, people tend to focus too much on the substance and not on the entire process which collaterally brings out the mistake that people do not think enough about how this particular negotiation is going to aid them to fulfil their broader objectives as an organization, or fails to address the question as to how negotiation is helping them in order to pursue their broader strategy.
In addition to that, four points that a person should keep in mind in order to have the right and a learning mindset to learn more about the opposite party and the whole situation which will help you negotiation better are:
- Interest: It is important to keep in mind the interest of the other party and address questions like: why are they here? What do they care about more and what do they care about less, why have they chosen to negotiate this deal and their interest behind this particular negotiation.
- Constraint: It is also important to consider the constraint of the other party: where does the opposite party has more or less flexibility, is this constraint constant or changing.
- Alternative: To consider the alternative as to what happens to the opposite if the deal does not work out, what are their alternatives and how else they might solve this problem.
- Perspectives: It is crucial to consider the perspective of the opposite party as to how are they seeing this situation, is this a big deal to them or not, their attitude towards this negotiation, do they consider you to be strong or not and what are their mindset. Considering these factors and having the right mindset would be a gamechanger in negotiating any deal.
Lastly, Mr. Malhotra suggests certain barriers that we need to overcome in order to negotiation successfully and get the better end of the deal. It helps in organizing your thinking and categorizing your strategies. They are:
- Psychological barriers: Lack of trust, lack of liking, existence of pessimism because of previous failed attempt of negotiation might get in the way of a successful negotiation.
- Structural barriers: Design of the environment, rules, time crunch, wrong set of people for the particular deal, too much media attention are certain structural barriers that might get in the way of a proper and successful negotiation.
- Tactical barriers: Actions that we actually take in the negotiation process may cause certain barriers. They might be rationale but are still a barrier in order to reach an agreement. Focusing narrowly on one or two issues where broadening your point of view or approach can help in reaching to an agreement is the wrong tactic that people often fail to correct.
[1] Riya Dani, Negotiation As A Form Of Alternative Dispute Resolution, VIAMEDIATIONCENTRE, https://viamediationcentre.org/readnews/NDI1/Negotiation-as-a-form-of-Alternative-Dispute-Resolution, (Dec 7, 2022, 7:30 PM).
[2] Indeed Editorial Team, Negotiation Skills: Definitions, Benefits and Examples, INDEED, https://in.indeed.com/career-advice/career-development/negotiation-skills, (Dec 8, 2022, 5:20 PM).
[3] STA Law Firm, United Arab Emirates: Comparative Analysis Of ADR Methods With Focus On Their Advantages And Disadvantages, MONDAQ, https://www.mondaq.com/arbitration-dispute-resolution/777618/comparative-analysis-of-adr-methods-with-focus-on-their-advantages-and-disadvantages, (Dec 8, 2022, 4 PM).
[4] Simran Shaikh, Basics Of Negotiation And It’s Process, LEGALSERVICEINDIA, https://www.legalserviceindia.com/legal/article-5049-basics-of-negotiation-and-it-s-process.html, (Dec 7, 2022, 10 PM).
[5] Katie Shonk, Top 10 Negotiation Skills You Must Learn to Succeed, PON.HARVARD.EDU, https://www.google.com/amp/s/www.pon.harvard.edu/daily/negotiation-skills-daily/top-10-negotiation-skills/%3famp, (Dec 8, 2022, 1:15 PM).
YLCC would like to thank Riya Singh for her valuable insights in this article.
