Negotiations are one of the ways to resolve existing disputes that arise across different subject areas of business. For the most part, the concept of negotiation is closely linked to the notions of collaboration, settlement, and bargaining. Not only negotiations are a common element of business actions, but also a vital part of human existence in general as numerous circumstances require individuals to negotiate (for instance, parenting, relationships with friends, legal proceedings, marriage, and many more). In the literature, negotiations are also defined as a bridge that allows participating sides to reconcile their differences and find common grounds (Stevenson, 2018).
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Despite the simplicity of the concept of negotiations, the process itself is rather resource-intensive. It requires all parties participating in negotiations to come prepared and be able to share their point of view candidly. Expectations and aims of negotiation should always be placed at the top of the negotiation iceberg to help all parties realize what their companion wants and needs. Healthy negotiations should always end with a reciprocally congenial outcome that is beneficial to all parties involved in negotiations.
Importance of Negotiations
One of the critical reasons why negotiations are so important is that the proper mindset is going to benefit everyone involved in the discussion. When speaking of organizational matters, for example, negotiations could become an essential part of corporate discussions involving contracts (either internal or external) (Ahammad, Tarba, Liu, Glaister, & Cooper, 2016). If an employee is not sure about their role in the organization, they will always be able to negotiate it with the manager and learn more about their responsibilities without misbehaving. In this case, the company may be able to ensure that all negotiating parties acknowledge mutual responsibilities and aspirations and have adequate expectations of other parties.
On the other hand, negotiations are one of the shortest pathways toward win-win situations that go beyond merely beating the opponent to accepting one’s requirements and giving in to the unwanted outcomes. According to the literature on the subject of negotiations, the best dialog between parties is only available when all parties are expecting to create the best outcomes for every participant of negotiations (Ahammad et al., 2016).
An aggressive approach to the discussion of acceptable terms might be beneficial to at least one of the parties in the short term. However, the reality shows that the lack of benevolence is a devastatingly negative aspect of negotiations that generates issues irrespective of how great were the initial outcomes.
For small and medium enterprises, proper negotiations could be one of the shortest paths to improving the bottom line. This means that the company’s management is focused on acquiring the best outcomes possible while also considering the other side’s opinions (Ahammad et al., 2016). The rationale behind engaging in healthy negotiations lies in the fact that effective negotiations could bring an increased return on investment and improve the company’s profit margin.
Negotiations can be seen as one of the ways to increase one’s confidence. For businesses, this means that important negotiations can be ‘won’ by simply remaining confident and believing that the preset objectives are going to be beneficial to all parties (without imposing those objectives on other negotiators) (Bejinaru, Baesu, & Iordache, 2016). If company management believes that it is doing the right thing, the negotiating team will have many more chances to close the deal successfully while not damaging the other negotiators. Instead of worrying about other party’s maneuvers, the team should work on the best offer it can give and then adapt to the circumstances while remaining confident and courteous through all the stages of negotiations.
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Negotiations are unbelievably vital because they help companies build respect. Within the organizational setting, negotiations may be seen as an indicator of how much the employer respects their employees. A leader that wants their team to achieve the most is going to use negotiations to make sure that the team’s working conditions are appropriate, and salary is acceptable (Bejinaru et al., 2016). By maintaining this kind of attitude, a manager may also be able to generate respect from clients and business partners as the latter would see how the employer treats their employees. The impression that one generates after negotiations is a long-standing one, so its importance for the company’s reputation cannot be underestimated.
An additional upside to negotiations is that they enable fair play and allow all the negotiators to remain sympathetic toward each other while understanding the benefits that every party is looking for in the negotiations. The process of negotiation helps the negotiating parties to step away from the competition and gain more insight into each other’s needs (Bejinaru et al., 2016). As far as all the parties have something to offer, there will be higher chances to reach the common ground, even if with certain concessions. Every negotiation process is a chance to remain honest and fair about one’s objectives.
Without negotiations, no organization will be able to close any given deal successfully. Constant negotiations allow the management to train its sense of creativity and timing when working on the requirements and offers that can be beneficial for all the negotiators. Some authors perceive negotiations similarly to chess, as every negotiator has to think down the line in order to get their point across and remain active (Ahammad et al., 2016). Even if that cannot be expected from another party, it is recommended to take progressively smaller steps when getting more in-depth into negotiation. There will always be differences that negatively affect negotiating parties, but the idea of negotiations is to come prepared and make beneficial offers that are not going to be denied.
With the help of negotiations, any organization will be able to achieve the best outcomes possible without imposing irrational outcomes upon other negotiators. The value that one desires to have can only be achieved through negotiation, as ineffective deals are going to deteriorate the state of affairs in the longer term (Ahammad et al., 2016). Reasonable negotiation skills are going to bring high-quality services, excessive rewards, and an immaculate status to the organization. A disproportion between what the company receives and gives will always lead to adverse outcomes. This is why a negotiation table is the best place to showcase fair play, awareness, and confidence.
The last hint at the importance of negotiations is the ability to accumulate accomplishments and invest in the company’s future. Given that almost every corporate decision is a negotiation, the majority of procedures will require many resources (including time, workforce, money, and even emotions) (Bejinaru et al., 2016). To evade adverse outcomes, organizations should negotiate with the intention of protecting available assets and positioning themselves correctly. Without knowing how to negotiate, an organization is going to lose its position in the market rather quickly, leaving it up to opponents to decide the future of the original company.
Process of Negotiation
Throughout the stage of prenegotiation, the company has to select the team members that are going to participate in the upcoming negotiation process. As the overall outcome would be influenced by the attitude of negotiators toward the process, it is critical to establish specific approaches that should be used by the team when preparing for negotiations. The business environment is a competitive field where only a positive mindset is allowed, leading negotiating teams to develop an affirmative view of the upcoming negotiation process (Matsushima & Shinohara, 2019).
During the process of preparing for negotiations, team members should make everything in their power to support each other and unquestionably follow the leader’s example. In addition to being highly positive about the outcomes of negotiations, the leader should carefully acknowledge the interests of all parties participating in the negotiation process and pay close attention to the past experiences and performance of team members who made it to the negotiation team.
Actually, during the prenegotiation stage, team members may only be allowed to discuss the negotiation process with the team leader. The responsibility of the leader is also to restrain employees from any unnecessary facial expressions or words to create a positive image for the process of negotiation and contribute to the potentially optimistic outcomes of the subsequent negotiations (Matsushima & Shinohara, 2019). Before the negotiations start, no team member should be contacting the other side’s arguments or claims, as it is the leader’s accountability to speak out and protect the team’s best interests.
The prenegotiation stage also includes the completion of a sitting arrangement that has to be respected for the adequate coordination of the negotiation process and expectable conduct from all the team members participating in negotiations. Before beginning the negotiations, the leader should get in the central position and surround themselves with technical and commercial experts who will become the leader’s helping hand throughout the negotiations (Matsushima & Shinohara, 2019).
The negotiation area should be set up in a way that would avert any eye-to-eye contact between the alleged opponents. The location of negotiations is also crucial as the place for the meeting should be a neutral place that is distant from each of the negotiators. The fact that the team chooses the best setting for negotiations might also contribute to positive negotiation outcomes.
During the formal stage, all parties participating in the negotiations are exposed to the key two processes: information exchange and bargaining. The former relates to the process of communicating certain data that can be of interest to the other party while receiving similar information from the other side. Business benefits and objectives should be included in the list of top discussion topics for any negotiations as the future of any negotiating party depends on it (Rojot, 2016).
Also, every negotiator should come up with the list of potential gains that they expect to obtain as a result of the negotiation process. The idea behind the information exchange step is that while sharing some critical information with the other side, the team could get similar information in return. There are many more chances to close the negotiations successfully if all parties are aware of the needs and interests of their opponents.
All negotiating parties should recurrently make several assessments. First, there is a need to analyze the opponent’s claims for trustworthiness. In the case where the proposed conditions are not trustworthy, it will not make sense to collaborate and give out specific information to the team that does not show any respect toward the other party’s interests. Another essential assessment is the evaluation of the other side’s competency. If the other negotiator is not competent enough, closing the deal successfully could lead to adverse outcomes for the other sides of the negotiation process (Rojot, 2016). The next assessment is the evaluation of the opponent’s congeniality.
If the other party is not approachable enough, successful bargaining is not going to happen. The last assessment that the team should perform is whether the negotiating sides would be able to find common ground based on how much they have in common. Without any connection between the negotiating parties, the result of negotiations is going to be harmful to at least one of the parties involved.
The process of bargaining is another part of the formal stage of negotiations. At this point, the parties have to communicate to find a compromise on something that all parties involved are expecting to acquire. The two pillars of the bargaining process are creativity and cooperation. If a party expects to get something in return, they should give something up to gain access to the improved negotiation conditions (Rojot, 2016). Becoming creative throughout the negotiation process is essential because bargaining is rather dynamic and cannot be paused at any given moment. The options for contract extension and alteration are commonly discussed before negotiations.
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At the same time, bargaining opponents should realize the objectives of their opponents in order to get the most from closing the deal successfully. This is vital in the cases where a secondary plan would be required to satisfy the needs of the opponent that is not contented with some aspects of the negotiation agreement (Rojot, 2016). Accordingly, the team has to bargain for altered conditions on the spot while also keeping the original requirements in mind so as not to proceed to its detriment.
The stage of the agreement also consists of two essential processes that cannot be ignored when interacting with negotiation opponents: closing the deal and completing follow-up activities. As for the fact of closing the deal, when all parties reach a compromise, they will have a list of essential items that they are going to share with the opponent while receiving something in return that is of value to them exclusively. The negotiation stage ends as soon as opponents close the deal and choose to agree on specific terms that are beneficial to every party involved in the negotiation process (Ahammad et al., 2016).
If at least one of the parties raises some concerns regarding the quality of the deal, the bargaining process can be reiterated to support the notion of fair play in business negotiations. Trivial negotiation conditions can be discussed without going back to bargaining, with one of the parties merely editing the actual contract in real-time. During the process of closing the deal, negotiating opponents might also be seen discussing specific legal items (for instance, fair dispute resolution) that have an immediate effect on the future of the organization.
The process of completing follow-up activities for business negotiations is also critical because it provides all negotiating parties with the ability to go beyond merely drafting and approving the negotiation contract. At this point, negotiating opponents are legally concomitant and willing to see how the post-negotiation period is going to affect their sides. If the project runs smoothly, all negotiating parties will leave the negotiation process and continue working on improving their state of affairs. In the case of one of the opponents being unfair to other negotiators, the remaining sides should carefully predict the risks and mitigate them while not interfering with the opponent if no legal proceedings have been violated (Matsushima & Shinohara, 2019).
Any unforeseen events should be included in the follow-up agreements related to the original negotiation process, as it is going to protect all negotiators from exposing their organizations to the negative aspects of negotiation that could not have been predicted during the prenegotiation and formal stages. It may be safe to say that negotiation follow-up activities should be in place for the negotiations due to the collective contract amendments occurring right after a deal has been closed.
Ethical Dilemmas in Negotiation
The first ethical dilemma that affects the majority of negotiating parties is the lure of acting dishonestly to achieve better negotiation outcomes. The problem here consists in the fact that the majority of negotiators are taken away by the idea of lying to their opponents in the case where the rewards are lucrative from their point of view (Kennedy, Kray, & Ku, 2017). An honest estimate of the negotiation conditions is improbable in the case where at least one of the negotiators is biased and only pays attention to one-way profits. However, the lure to lie grows in direct dependency on the size of the reward. This is why some of the negotiators even accept bribes in order to achieve their personal benefits while giving up the company’s information to the opponent.
Another ethical dilemma in the process of negotiations is whether to follow the uncertainty of impulsive decisions or not. The more a negotiator gives in to vagueness, the more chances remain for them to behave unethically. When a negotiator does not know all the details regarding the material facts, they are prone to become unethical as they start doubting the other party’s honesty for no reason (Kennedy et al., 2017).
When the outcomes of negotiation cannot be estimated with a great deal of certainty, negotiating parties are most likely to start lying to their opponents and pursue their own objectives instead of finding common ground. Such aggressiveness is going to provoke even more aggression from the negotiating opponent and cause multiple false claims being stated for the sake of extracting personal benefits only.
Another ethical dilemma is whether to act virtuously or not when the opponent has more power than the other party. In order to protect itself from being forced to accept unfavorable conditions, the weaker opponent is going to behave unethically, trying to find the loopholes in the agreement to win by deceiving the stronger opponent. In the case where the number of outside options tends to zero, the probability of unethical behavior is even higher (Kennedy et al., 2017).
This relates to the idea that a redefined position of power is going to force the stronger negotiator to review their interests and let the weaker side choose how to close the deal effectively. The problem is that if the stronger opponent finds out about the deceptive practices exercised by their weaker opponent, they are going to extract from the agreement and leave the opponent lacking for resources and information.
The last ethical dilemma reviewed within the framework of the current paper is whether to involve anonymous victims in the negotiation process or not. This relates to the idea that there is a leader that may behave unethically on behalf of the whole organization, compromising even those staff members who have nothing to do with the negotiation process (Kennedy et al., 2017). Therefore, many negotiators are often exposed to a scenario where they have to invent misleading information in front of groups of people while not being able to behave unethically when negotiating with just one person. Yet, there is nothing that can justify the improper interactions with the negotiating opponents when other people’s future is at stake.
Within the framework of the current paper, the process of effective negotiations have been discussed in addition to the most common ethical challenges that could affect negotiation outcomes. It was established that business negotiation is a vital process that involves parties with different needs and requires them to cooperate in order to achieve the best outcomes possible for both themselves and the opponent.
The intention to achieve mutually beneficial results stands at the forefront of the negotiation process, as no party is allowed to impose its interests on the opponent. From personal to business interactions, effective negotiations are everywhere because they make life easier. On a bigger scale, the process of negotiation creates opportunities for individuals and organizations to share information and receive something valuable in return without being forced to give up on specific assets. For business proceedings, negotiations are also essential because they might be applied to almost anything: from reducing the cost of products and services to discussing lease and sale prices of whole business initiatives.
It is critical to remember that healthy negotiations only have a positive impact on businesses. This happens for several essential reasons that are directly linked to the organizational mindset and the leader’s ability to remain in line with the needs of the organization even when opponents propose unfavorable conditions. For instance, proper negotiation is one of the easiest ways to build positive relationships with customers and other companies.
The organization will be seen as mature, and it is going to attract even more dividends. On the other hand, effective negotiations serve as the shortest route toward long-lasting business solutions that benefit every negotiator and satisfy the majority of stakeholders, even outside the original negotiations. In addition to this, any organization that is aware of how to negotiate effectively will be able to avoid conflicts with the industry and prevent issues based on mistrust and unfairness.
It is also to remember that negotiations require organizations to give first instead of taking something with no compensation. A company will be able to achieve the highest level of constructive interaction with other stakeholders when it defines the concept of effective negotiations and starts acting in line with it, courteously and vigilantly. Negotiations can be considered as such merely in the case where the win-win conditions were created for all parties involved.
Otherwise, concessions are going to seem forced and unnecessary, leading to disproportionate gains on the opponent’s side. To conclude, negotiation practices should be based on goodwill if the company expects to close deals successfully while gaining access to the information of interest without displaying dishonesty toward the opponents.
Ahammad, M. F., Tarba, S. Y., Liu, Y., Glaister, K. W., & Cooper, C. L. (2016). Exploring the factors influencing the negotiation process in cross-border M&A. International Business Review, 25(2), 445-457.
Bejinaru, R., Baesu, C., & Iordache, S. (2016). Contextual strategies for conducting effective negotiation. The USV Annals of Economics and Public Administration, 15(22), 148-156.
Kennedy, J. A., Kray, L. J., & Ku, G. (2017). A social-cognitive approach to understanding gender differences in negotiator ethics: The role of moral identity. Organizational Behavior and Human Decision Processes, 138, 28-44.
Matsushima, N., & Shinohara, R. (2019). Pre-negotiation commitment and internalization in public good provision through bilateral negotiations. Journal of Public Economics, 175, 84-93.
Rojot, J. (2016). Negotiation: From theory to practice. New York, NY: Springer.
Stevenson, W. (2018). Operations management (13th ed.). New York, NY: McGraw-Hill.