Arkansas State University Chapter 10 Multiparty Negotiation Analysis Review Chapter 10 and the Reengineering Negotiation’s Article from EBSCOHost.Provide a

Arkansas State University Chapter 10 Multiparty Negotiation Analysis Review Chapter 10 and the Reengineering Negotiation’s Article from EBSCOHost.Provide analysis on Multiparty Negotiation: discuss the strengths, obstacles and strategies and techniques of Multiparty Negotiations.Writing RequirementsAPA format3 pages in length (excluding cover page, abstract, and reference list) Reengineering Negotiations
63
Susan Doctoroff
to make
ttegotuttions
more effective by
improving interactions both
inside and outside tfje organization.
Susan Doctoroff is vice president ol sales and marketing
at The Trainers’ Warehouse.
At the time she wrote this
article, she was a consultant
with Conflict Management.
Inc.
With reengineering has come a shift in
Ihe way managers and their staff negotiate
Ixxh inside and outside their organizations. Managers must now devise new
ways for employees to interact with each
other, with suppliers, and with customers
and clients more efficiently, more responsively, and more profitably.
Several years ago, Roger Fisher examined
the impact of a government’s or nation’s
internal negotiations on its external
negotiations.’ Fisher asserted that “internal” di.scussions frequently compromise
the effectiveness of external negotiations
and consequently undermine the ability
of designated negotiators to sati.sfy
Sloan ManHgemeni Review
Spring 199B
national interests. In this article, i extend
Fisher’s analysis from the world of international diplomacy to the corporate
world.
By examining the unique dynamics of
multiparty negotiations inside and outside organizati(jns, I hope to: (1) help
managers think about the impact of their
internal communication and negotiation
procedures on their own and their staff.s
external negotiations, and (2) identify
ways to reengineer systems of coordinated discourse between internal and external parties in order to improve the efficiency and re.suks of their organizations’
externally negotiated agreements.
DDClOTDlf
Figure 1
The World of a Client Manager
Quality Control
BUE
Staff
Team
• System Solution
Technician
Packages{SSPI
Client
Manager
/—•.^
64
– – –
Sponsor
Senior
.-^
Manager ^ b
*Senior Executive
CE
Senior
1
Line of
Business
Manager
CIO
Manaijer
Represents external negotiation
Represents internal negotiation
Internal and External Negotiations at
Alta Systems
To differentiate between internal and external negotiations, consider the case of an information technology consulting services company, Alta Systems, that
works with clients to develop specialized applications
and integrated .system solutions. The client manager’s
world might look something like that shown in
Figure 1.
Every time an Alta client manager interacts with a
client (whether trying to contain a project’s scope,
muster project resources, or navigate the politics of
a client’s organization), he or she must reconcile
the competing interests of and “mini-negtniations”
among a myriad of constituencies: within Alta —
senior and junior employees; within the client organization — project coordinators, line-of-business
sponsors, and IT resources; within a third-party
vendor, contractor, solution provider, or partner
organization — sales reps, consultants, programmers, and so on.
While this diagram represents a complex multiparty
negotiation, let us first focus on a relatively simple
negotiation in which a senior executive at Alta asks
a senior manager to contract with a subcontractor,
Sy.stem Solution Packages fSSP), to help deliver
special, high-visibility projects for significant clients
like the new pharmaceutical company, Farmitol. If
Dactaroff
we break the negotiation down, we find at least six
smaller negotiations within that single interaction:
• External — between Alta manager and SvSP sales
representative.
• Internal — between Alta manager and senior executive.
• Internal — between Alta senior executive and CEO.
• Internal — between SSP sales representative and
manager.
• External — between Alta manager and Farmilol
sponsor.
• Internal — between Farmitol sponsor and CIO.
As Alta’s senior manager and the SSP sales representative negotiate the project and contract to work
together, both companies invest considerable time
exploring the services needed and the best way to
provide them. In doing so, they engage in something
of a dance, discussing an array of issues including
time frames, scope of .services, assessment of risk,
how they will work together and interact with Alta’s
significant clients, and so forth. All the while, each
conducts frequent internal meetings about the deal
each hopes to strike and the services each wants to
receive or provide at an acceptable price or cost.
Rather than a single, discrete “at the table” negotiation, there is a series of conversations that occur over
time; each is a negotiation within the context of a
bigger negotiation.
Sloan Managemenl Review
Spnng 1998
Managers’ reengineering of communication and negotiation procedures is not
keeping pace with their structural transformation efforts.
I’artly due to the increased number of small negotiations and partly due to changing organizational structLires, the dynamic l>etween internal and external
negotiations has also changed. LInfotiunately, managers’ reengineering of comtnunication and negotiation procedures is not keeping pace witb their structural transform;!tion efforts. To understand the problems that arise when internal and external negotiations among inultiple parties are not consciously
managed, let’s examine the negotiation between Alta
and its client, Farmitol.
The Alta Scenario
As the Alta Systetns scenario unfolds, the senior manager and senior executive seem pleased with their
deal with SSP and ready for the Farmitol client manager to share the news with the client, Farmitol. The
client manager specifies that SSP will be doing a significant amount of work with Alta during the next
five years, so the two companies will be working
hand-in-hand on a number of projects. Although SSP
is in the midst of some internal organizational change
and needs to get up to speed on new systems techNegotiation Speak
Advocate — Negotiator’s role as one who
defends or fights for a position (also partisan advocate).
Alternative — A solution to which one
party can walk away, without needing
agreement from the other side.
BATNA — Best alternative to a negotiated
agreement Of the many identified alternatives for one side in a negotiation, the
BATNA is the one that best meets the
party’s interests.
CompartmentalJzation — The act of keeping internal and external negotiations completely distinct from one another.
Decision Criteria — Objective standards,
which are outside the will of either party,
on which negotiators or critics might evalu-
Sloan Management Review
nologies, Alta is certain it Is the right partner to work
with Farmitol over the long term. SSP’s team is very
“hands on” — terrific when dealing with clients (like
Farmitol) with a limited understanding of computer
technology and limited resources.
Tlie Alta senior manager has charged the client manager with the role of negotiator. The client manager
calls Farmitol’s project manager and explains that SSP
is now the subcontractor working on the Farmitol
account. The two get into a heated debate. The clieni
feels a lack of respect and argues that Farmitol is
paying top dollar for what he feels are second-class
resources; he insists he wants Alta staff people only
and claims that Farmitol will walk away from the deal
if Alta hands the work over to SSP, Alta’s client manager, threatened by this attack and fearful of losing
this opportLinity to a competitor, caves in. Due to
what has transpired internally, the client manager
doubts that Alta wilt be able to work as well for
Farmitol without .SSP’s involvement but is unwilling
to risk blowing the whole deal. The senior manager
had clearly said, “Close the Farmitol deal.”
Inherent in tliis .scenario are several obstacles that
can undermine the value derived in negotiations. The
obstacles that emerge here typically surface when
organizations are balancing internal and external
negotiations:
1. Negotiators may walk away from good deals
becau.se the deals do not match the organization’s
articulated position.
ate the appropriateness of various agreements {also referred to as legitimacy).
External Negotiation — A negotiation between individuals from two or more distinct
organizations.
Fixed Pie — A common assumption that the
value to be derived from a negotiation is limited and that greater winnings for one party
necessarily translate into loss for the other
party.
Interests ^ Motivations for entering a negotiation, including goals, concerns, hopes, and
fears.
Intemal Negotiation — A negotiation between
individuals within a single corporate entity.
Joint Problem Solver — Negotiator’s role
as one whose mission is to work with the
other side to come up with mutually improved solutions.
Negotiation — A conversation in which
parties try to influence or persuade one
another.
Option — A possible solution that requires
the agreement of both or all negotiating
parties.
Position — A single solution or option to
which one party is prepared to commit and
demands that the other commit,
Prenegotiation — A preparatory conversation conducted before at-the-table negotiations begin. In effect, prenegotiaticns are
negotiations about process that are
stripped of fear, inhibitions, and jockeying.
Process negotiation or process issues •—
Refers to questions of procedure, including
what will be discussed and how it will be
discussed, styles of negotiating, roles of
the negotiators, and so on.
Doctoroft
65
66
2. Negotiators may agree to suboptimal deals because
tlie organization perceives any agreement as better
than no agreement.
3. Making demands and arguing over positions inhibit useful discussions about the many parties’ underlying interests.
4. Negotiators’ roles are defined and understood as
advocates rather than as joint problem solvers.
3. Internal and external negotiations are compartmentahzed.
6. The parties do not discuss the process explicitly,
apart from the substance of the negotiation.
An important goal of internal negotiations is to agree on what the organization
will do if forced to break a deal.
Given these obstacles, how can managers improve
their processes so that their external negotiators can
systematically achieve more profitable agreements? To
answer this question, we must first understand the
nature of the obstacles.
Obstacles 1 and 2: Walking Away from a
Deal
The possibility of an optimal outcome for both Alta
and Farmitol is threatened by tactical games (threats
and concessions) bet^veen the ivjo external negotiators. Farmitol risks walking away from an excellent
vendor and months of investment because Aita’s proposed agreement does not match its stated position.
At the same time, Alta risks accepting a deal that
would undermine its ability to serve Farmitol and
other clients in tbe best way possible.
One internal norm that promotes these games and
inhibits parties from jointly discussing their mutual
concerns is people’s tendency to engage in a series of
informal, one-on-one conversations that are independent and di.screte. While it is important for a range of
parties to be consulted in a decision-making process,
managers often neglect to systematically survey each
constituency’s interests and priorities. Without clear
discussions about underlying interest-s, what emerges
from these seemingly innocuous conversations among
internal groups is a single “lowest common denominator” position — a deal to which all parties who were
consulted can agree.
Ooctoroff
At Farmitol, a series of independent discussions may
have caused the negotiator to insist that all work
must be done by Alta. For instance, tbe IT manager
may have warned, “We need to minimize the number
of contacts we have,” and the CFO may have said,
“As soon as third parties arc brought in, the price
increases enormously, I can guarantee we’ll pay a
surcharge.” Then the line-of-business manager may
have insisted, “Be careful about getting hooked into a
third party. I ve had had experiences in the past.
And, if this project runs amok because of subcontractors, don’t come crying to me. It’s on your shoulders.” With those internal conversations in the background, the Farmitol negotiator is certainly going to
insist that Alta do all tbe work.
While Alta s performance of all work may be the
appropriate outcome, the decision on whether
Farmitol’s negotiator or any other external negotiator
walks away from a deal is best based on an in-depth
understanding of the company’s and constituencies’
interests and ability to satisfy those needs through
some alternative to the negotiated agreement. Neither
negotiator deeply explored underlying interests, and
neither used that understanding to evaluate the option
on the table compared to the “best alternative to a
negotiated agreement.” This internal shortcoming
pushes external negotiators to form hasty, ill-informed
conclusions.
Choose Wisely between Options and Alternatives
Any agreement that a negotiator makes should be
better than the company’s walk-away alternative.
Without understanding their organization’s best alternative, negotiators cannot make wise choices about
when to walk away. Negotiators should have as
much information as possible about the strengths and
weaknesses of their best alternative in order to effectively use it as a benchmark to evaluate options (possible solutions requiring both parties’ agreement). An
important goal of internal negotiations is, therefore, to
agree on what the organization will do if forced to
break a deal. Furthermore, managers should ensure
that the internal team continues to explore ways to
improve the organization’s best alternative so the
negotiator’s benchmark is as high as possible. In that
way, the organization will eventually choose the best
option or alternative possible. Such conversations promote internal alignment, so that if and when the other
side tries to go over one negotiator’s head to solicit a
preferred response from someone more senior, the
negotiator will have some backup.
SiDan ManagemenI Review
Spring 1998
Without full knowledge or understanding
of both sides’ interests, negotiators cannot he relied on to achieve extraordinary,
or even consistent results.
when recngi nee ring the internal negotiation process,
managers slioiild use internal prenegotiati^n conversations to gain alignmenl on the hest alternatives and
to clarify the negotiators role and authority with
respect to gathering information, sharing interests and
alternatives, and quitting the deal or committing. As
managers attempt to define the negotiator’s role in
(.•omniiuing or walking ;iway. tliey should (•nnsicier
the tensi(.)n between a negotiator’s power to eommil
to a deal on the table and his or her ahility to generate creative options. The more authority that negotiators have to commit to an option or position, the less
practical ability they have to constructively brainstorm
options — the key to optimizing value in negotiation.
Conservative managers tightly confine the exercise of
individuals’ power in order to protect themselves
against poor judgment calls. The following guidelines
can help managers avoid ihis piifall:
• Give negotiators full authority to explore and discuss interest-s, options, decision criteria, relationships,
eomniLinieation processes, and alternatives, as they see
fit (based on understanding of internal interests).
• Limit negotiatt>rs’ authority to commit to a position
(at least early in the negotiation).
• Entourage nei^oliators to determine whether to walk
away solely on the basis of comparison to the organization’s alternative.
By limiting the authority of Alta’s and Farmitol’s negotiators to commit to an option early in the negotiation,
ihe managers will, in effect, enhance their negotiators’
abilities to explore interests and generate optimal
agreements later. The two will surely commit in the
tViture, after exploring many options.
Ohstacles 3 and 4: Poorly Defined Mission
and Role
In the Alta case, the client manager is in the midst of
negotiations with Farmitol. Alta has caved in and
agreed to .staff the project with Alta resources only.
Had Alta iasisted it woukl do the work only in
Slaan Management Review
Spring 199B
JLinclion with SSP, the two parlies might have deadlocked, each waiting to see who would flinch or make
the first move, Hach party’s failure to examine interests
internally undermined each one’s ability to decide
wisely when to walk away from or commit to the
deal. Another mistake is Alta’s failure tti tliscuss interests externally. Hy sticking to positions and staking
t laims (i.e.. Alta insisted on using SSP, Farmitol insi.sted
Alta must do all the work), the two parties Ixjcame
locked into positions. They lost the capacity to see the
other’s persjx’ctive and the ability to examine other
creative ways to satisfy their range of similar, compatible, and differing interests.
Frequently, negotiators fall into this situation because
managers create internal prtKesses in which they conckic’l a lot of re.search and analysis early on and arrive
ai a solution tliey know is reasonable, workable, and
safe. The problem rests in the inherent difficulty to
create an optimal solution with only half a picture.
That is, without full knowledge or understanding of
Ixith sides’ interests, negotiators cannot be relied on to
achieve extraordinary, or even consistent, results.
Managers and negotiators tend to stake out an opening position so that they can: (1) structure plenty of
negotiating roam (that is, state an extreme opening
position that can be adjusted as negotiatic^ns proceed
ihrough each party’s trading of concessions), and (2)
know that their representatives are clearly advocates of
the organization’s best interests. While these tendencies are understandable, they can be counterproduclive in enaliling a manager to achieve the goal.
Trading concessions, for instance, causes an already
fixed pie to (]Liickly get eaten away, minimi/ing the
amount of value that negotiators are able to derive
from the deal. Also, advocates, skilled in not budging
from what may be a reasonable position, may never
discover a key solution. A key solution for Alta’s and
Farmitol’s advocates would be one that gi’es the client
a feeling of security, top resources, and insiimi access
to help. However, in arguing for their positions and
advocating their single perspectives, the iwo negotiators would never unct)ver a solution. Furthermore, the
negotiators’ focus on their own interests and concerns
would likely undermine their attention to the interests
ot the other parties they represent — a common mistake in multiparty negotiations.
Change Negotiator’s Role
what can a nianaiicr do differently to enable negotiators to find creative solutions? Managers need to treat
Daclorotf
67
Figure 2
Two Approaches to Negotiations
Partisan Advocates
versus
Joint Problem Solvers
Company B
Negotiator
Negotiator
Campany B
tor
Neg
Negotiators can act as partisan advocates, pushing their side’s
postion, or act as joint problem solvers, working with the other
side to develop a solution that is better for both organizations
than either one could develop independently.
negotiators as “handyiiien.” disking them lo Lindcrtakc
different tasks at different times. This takes a transformation of internal and external negotiation processes.
When reengineering tlie internal process, managers
and negotiators must recognize all the parties
involved and engage in broad prenegotiation discussions to clarify the negotiator’s role and the types of
information sharing, exchange, or commitment to
strive for at different junctures during external interactions. Tn addition to articulating individual and
shared goals, interests, and fears, a prenegotiation
meeting should produce a negotiation strategy. Alta’s
strategy statement might specify, for example:
• liuilding a relationship by establishing the ground
rules and a timeline for negotiations.
• Defining all constiiuencies’ interests.
• Brainstorming a range of options to meet all parties’ objectives.
• Narrowing t…
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