Negotiation in Management Decision Making Essay Example for Free

Negotiation in Management Decision Making EssayHaving been approached by The Director of the Cowley Council Council ( three hundred) regarding an industrial controversy with their baulk collectors, a report has been prep ard to give insight into the field of duologue and aid the council in their talks with the refuse collectors. The dispute is primarily touch on with cccs plans to sort working practices but in that location argon overly a number of other issues regarding pay, shift patterns and recent cuts in the teaching bud express and expenses.The refuse collectors are threatening to go on strike if their demands are not met, an action that the council would undoubtedly like to avoid. According to Rubin and Brown (1975), talks refers to a process in which individuals work unneurotic to formulate agreements regarding an issue or issues in dispute. An agreement will only occur if the offers made are accepted by both of the parties (Neale Northcraft 1991) and should l ead to order and stability, foster social harmony, increase feelings of self-efficacy, reduce the probability of future conflict, and stimulate scotch prosperity (Rubin et al 1994).Getting the negotiation game right is ever important for managers as the global economy expands, as the service sector grows, as corporate restructuring continues and as employees continue to be concerned with managing their own careers (Neale and Bazerman 1992 3). The initial stages of the report will cover theory and research on the decision-analytic approach to negotiation and discuss its relevancy and potential use for CCC regarding its dispute with the Cowley refuse collectors.I will then identify potential biases and pitfalls that can act as barriers to legal negotiation that CCC should effort to avoid. Finally I will conclude and outline suggested proposals for CCC to film with the aim of assisting and improving their negotiations with the refuse collectors. The decision-analytic approach to de cision do is a more pragmatic alternative to the dominant psychological and economic perspectives, which contain a number of limitations.The individual-attribute literature fails to measure dispositions adequately, the situational literature does not consider the importance of the negotiators perceptions in interpreting situational characteristics (Neale and Bazerman 1991 20) and the game theory unrealistically assumes impeccably rational, supersmart people (Raiffa 1982, 2001). What differentiates the decision-analytic approach is its focus on how erring kinfolk like you and me actually behave rather than on how we would behave if we were smarter, thought harder, were more consistent, were all knowing (Raiffa, 1982 21).Previous psychological and economic approaches have rivet on describing how people hasten decisions or prescribing how to improve decision making. However, very little interaction has occurred between the descriptive and prescriptive camps (Neale and Bazerman 1991 20), and it is Raiffas (1982) avocation of an asymmetrical prescriptive/descriptive alliance that makes the decision-analytic approach stand out, creating a prescriptive need to descriptively understand how negotiators actually make decisions (Bazerman et al 2001).M all scholars trammel the view that the prescriptions gained from this model are more valuable than those offered by more traditional approaches (Lax and Sebenius 1986). Raiffas framework for approaching effective negotiations distinguishes three sets of info, a faction of which determines the structure of the negotiation game each parties alternative to a negotiated agreement, each parties set of interests, and the relative importance of each parties interests.To develop agreement, people need to get a good understanding of their own preferences and priorities, to communicate those to their counterpart, and to integrate information about others preferences and priorities into their own understanding of the problem at pass (De Dreu et al 2000). Before CCC enter into any negotiations with the refuse collectors, it is imperative to determine a Best Alternative To a Negotiated Agreement (BATNA), the standard against which any proposed agreement should bemeasured (Fisher, and Ury 1981).Negotiations can be greatly improved by identifying a BATNA and carefully evaluating the negotiated agreement against that alternative (Ertel 1999). This helps negotiators fix a substitute point, a lower bound, which is crucial to monitor throughout the negotiation. Agreements that win more value than the BATNA are preferred over impasse likewise any agreements that provide less than the BATNA should be rejected.A potential BATNA for CCC would be to look into other refuse solicitation companies opening up the possibility of privatisation. The privatisation of refuse collection is a serious consideration in many areas of the UK and a major debating point for the city council (Birmingham Mail 2013) in Birmingham. Waste Concern, a private refuse collection company, claims that 17% of council tax goes towards refuse collection and that privatisation would lead to a cheaper, more frequent collection service, and a more efficient recycling clay (edieWaste 2010).If CCC values the current refuse collectors, despite the current dispute, and they are reluctant to consider such an ultimatum, they could consider a more strategic diverge by introducing the proposed changes incrementally, or by altering the amount of changes being made. It is crucial for negotiators to understand each partys key interests and how they align (Reardon 2005 28).Fisher and Ury (1981) underline the importance of the distinction between a parties position, and their interests, with a position being the stated requirement that a party demands from the other side, whist an interest is the primal desire of the negotiator and the motives for their position. It can however be difficult to understand ones interests and those o f the other party. CCCs primary interests are increasing productivity and change magnitude costs, whilst the refuse collectors interests are concerned with their financial rewards.It is however important to try and understand all of the parties interests. The Personnel Director may be under bosom to cut costs in order to stick to a budget so her personal interests may have more focus on acting her job in order to maintain it. The interests of the refuse collectors also concern HR aspects such as, work life balance and training and development. These interests are motives bottom the position of their threat of strike, and further scrutiny may offer CCC potential areas to focus on during negotiation.Focussing on deeper interests can provide a more reasonable negociate platform and a creative and practical solution to a negotiation. Once the interests of each party have been gear uped, it is important for negotiators to try and value the relative importance of each partys interes ts. This then allows the parties to effectively trade-off less important issues to gain more important issues. If CCC can establish that, for example, the refuse collectors desire a better work life balance as well as sufficient financial goods, there may be potential for a medium ground to be reached offering a certain amount of each.The importance of interests often comes down to economic factors, thus job security is frequent consideration. In this instance the job security of the refuse collectors is at risk as there is a misadventure of redundancies if they do not cooperate. This information provides the building blocks for thinking analytically about a negotiation (Bazerman and Moore 2009154) and prepares the parties for the two primary tasks of negotiation creating and claiming value (Lax and Sebenius 1986). It is crucial for negotiators to establish the reservation points of both parties.That is the worst possible outcome they will accept earlier a negotiation is impasse. With both reservation points established, a positive bargaining zone is created, which allows negotiators to aim for a resolution that is barely acceptable to the other party (Bazerman and Moore 2009 156) by getting as close to their reservation point as possible. It is however, also vital for both parties to try and cooperate in creating value in the negotiation, as there is often opportunity to considerably enlarge the pie originally cutting it into shares for each side to enjoy (Raiffa 2002 91).Lax and Sebenius (1986) stress that differences must be seen as opportunities, as opposed to barriers, that can be explored to find the most efficient solution rather than just satisficing (Simon 1956). According to Schmidt and Tannenbaum (1960) differences can help to increase the range and variety of alternatives suggested and even potentially enrich ones own goals, ideas, and methods. So CCC must capitalise on the differences in the party preferences (Pruitt 1983) by evaluating thepos ition of the refuse collectors, and looking into finer detail at the interests behind these positions, before attempting to develop novel alternatives through creative problem solving (Neale and Bazerman 1991 24). Negotiation then depends fundamentally on parties ability to trade issues against each other (Froman Cohen 1970) and step forward demands and formulate concessions to foster agreements that meet their own goals, while avoiding that the counterpart leaves the situation (De Dreu et al 2000). CCC could for example offer certain alternative benefits to the refuse collectors if the changes are implemented.Perhaps an investment in more efficient equipment and machinery would be appealing. There are certain tools that negotiators can use in order to aid their efforts in collecting information and subsequently increase the probability of creating value. It is certainly the case that deception is often used in negotiation (Schweitzer 1997) and can be an effective strategy for inc reasing ones own outcomes (OConnor and Carnevale 1997). However in this instance, both parties must also note that building trust and initiating a needy flow of information is critical to finding and integrative agreement (Johns and Saks 2011)).In heated negotiations this is far easier said than done, as neither side wants to give away too much information on their stance on particular issues. However, CCC is in the position to try and create a trustworthy relationship in order to improve their informational position. The director could inform the refuse collectors of the councils pressures and financial limitations that are the driving factor behind the need to change the working practices and make cuts. If no suitable solution is agreed upon, then there may have to be redundancies, as the council cannot overspend.Another tactic could be to strategically concede some information. As behaviours in negotiation are often reciprocated (Lewicki and Litterer 1985), this may prompt the refuse collectors to open up and start revealing information which may facilitate the negotiation process. CCC must also ask a lot of questions to increase the chances of ascertaining critical information. According to Bazerman and Moore (2009 162) asking questions and listening actively are the keys to collecting important new information from the other side but it also important for negotiators to remember that information can be gained from what is not said, as well aswhat is said.An alternative to trading issues would be for CCC to arrange some kind of contingency contract to verify atmospheric condition their plans to change working practices is fair or weather it is being rightly disputed by the refuse collectors. CCC could assess a weeks worth of collection rounds and together with the refuse collectors, formulate weekly targets in terms of time and productivity. A weeks trial on this type of contingency contract could easily establish weather CCCs planned changes are justi fiable or not.There are a number of ways in which contingent contracts can benefit the outcomes to negotiations as outlined by Bazerman and Gillespie (1999). Firstly organising the implementation of a contingency contract can identify bluffs by insincere parties. This will aid CCC initially with regard to their uncertainties over issues such as the number of staff needed on each collection round, shift patterns and pay. Contingency contracts are also a useful tool in incentivising performance. It may provide more motivation for the refuse collectors to start working at or above the levels specify in the contract.