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The Negotiating Process

Based on Chapter 23 of Human Resource Management in a Business Context (2nd Edition) by Alan Price - published by Thomson Learning

Negotiation is an ancient art. It is important in fields as diverse as diplomacy, buying and selling, arranging relationships (marriages, business partnerships) as well as employee relations. Negotiation is a form of decision-making where two or more parties approach a problem or situation wanting to achieve their own objectives - which may or may not turn out to be the same. In the employee relations arena, negotiation usually takes place within the collective bargaining environment.

Participants enter the process with widely different views: some - typically on the employee side - will view it as being fundamental to industrial democracy, fairness and good business conduct; others see it as a barrier to efficiency - a view more prevalent on the management side. The latter view sees negotiation as compromise and second-best to winning: possibly worse than giving in! As can be seen from table 23.2 (in the book), the process also has its own jargon.

Negotiation is not simply a matter of 'splitting the difference' so that neither side achieves what it wants. It can produce an outcome that meets both sets of goals. In negotiating, both sides must have some goals in common and some that conflict. For example, employers and employees will all want the business to survive and expand. However, employers might resist high pay rises to keep costs down, whereas the staff side will want increases to boost employee morale. Usually, bargaining takes place because neither side has the power or the authority to force a decision on the other and preserve a harmonious working atmosphere at the same time.

Therefore, both sides will open negotiations knowing that they will have to move from the opening position and that there will have to be sacrifices on one item to achieve advantages on another. Even in those ideal circumstances, such as the German model, where deliberate confrontation is not acceptable, there will be an element of conflict between the two sides.

There is also an implicit assumption that the two parties have the same amount of power in the bargaining situation. This is almost certainly not the case and the degree of power will change during the process of negotiation; the location of greatest power may well switch backwards and forwards between the two sides as they achieve positions of advantage. Whatever the actual degree of power, advantages will come from both sides preserving the appearance or illusion of power. There is value, therefore, in playing a game of bluff.

Many texts imply that the methods of bargaining can only be learned through experience and may well suggest that negotiation, like most interpersonal skills, is instinctive rather than learned. Perhaps, the basic requirement is a combination of a competitive, assertive style with a devious and resilient personality. In fact, study of the bargaining process indicates regular patterns and processes which people tend to go through. Studies of industrial negotiations have indicated that many disputes worsen because of: -

  • lack of clarity of aims or goals by one or both sides
  • poor understanding of the detailed situation.
  • the apparent dispute is not the real problem.

Relevant articles

Consultation Framework
July 7 2003 - The government is required to implement the EU Directive on Information and Consultation. The Directive takes effect for firms with 150 employees or more in 2005, those with 100 or more in 2007, and those with 50 or more in 2008.

Women Ask For Less
July 7 2003 - A study by Lisa A. Barron, assistant professor at the University of California, Irvine's Graduate School of Management, indicates that women who negotiate job offers generally ask for lower initial salaries than do men.

Managers lack 'soft skills'
January 4 2003 - A recent study of study of 35,000 Australian and New Zealand managers found that managers regularly deny responsibility, withdraw from threatening situations or people, resort to aggressive tactics to get their way, stick to established rules and procedures - and are characterized by a fear of failure.

HRM Textbooks

Human Resource Management

Human Resource Management, 4th edition
by Alan Price
 Covers all the key aspects of HRM. Available from:
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Fundamentals of Human Resource Management

Fundamentals of Human Resource Management
 Shortened version of Human Resource Management - concise analysis for non-specialists and one-semester courses.
More information and prices from:
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