Page 104 - DMGT519_Conflict Management and Negotiation Skills

Conflict Management and Negotiation Skills

Notes 4.22 Negotiation Process

Wage negotiation was once described by a trade union leader as it was a movement wherein
“both the sides are walking towards each other” to reach a mutually acceptable position. He said
he aimed to get the employer’s to walk faster and with bigger steps. This can be illustrated

through a simple diagram.
Figure 4.1: Negotiating Continuum

Ideal (A)
Limit

Bargaining Arena

Ideal (B)

Limit

It is implied in negotiation to move from somewhere and to move somewhere. In negotiation
parties involved move from their ideal position to a settlement point, which is mutually
Figure 1: Negotiating Continuum
acceptable. The position of this settlement point depends on the relative bargaining strength
and skill of the negotiator. In this situation one of the parties may have to move or less as
compared to the other one.
If we assume there are two parties to the negotiation, A and B, each given freedom of choice
would select the position most favorable to one’s interest, i.e. one’s ideal point. However, both
being aware that it is unlikely to persuade the other party to one’s ideal, it becomes imperative
for both to move a little way towards the other party’s position. There is, however, a limit to this
movement, sometimes referred to as the ‘Break Point’-where the parties would prefer to break
off the negotiation rather than to settle beyond their fallback or the ‘Worst Case’. This may be
the limit of the negotiation authority i.e. the range of settlement authorized to the negotiator
lies between his idea and break point. In Figure 4.1 the overlapping portions of both the lines
indicate the ‘Bargaining Arena’. The settlement can be reached anywhere within this area.
As the negotiation proceeds, the negotiator may see the cause to review their limit and may seek
the authority to move the limit. But in case going beyond the authority, would lead to the
repudiation of the negotiated settlement. If they contemplate settling beyond their negotiating
limit it may attract disapproval or repudiation. Thus the limit (authority) works as a constraint
upon the negotiator and it is most likely that they would seek authority to do so.

Postponement of a decision for seeking fresh instructions is a legitimate reason. Trade Union
generally insist that their agreement is subject to endorsement by their members, even though
they are settling well within their limits. Commercial negotiators regularly insist that their
agreement is subject to approval of the board. Negotiators generally talk about the ‘rooms for
manoeuvre’, which refers to the range of possible settlements open to them.
There are other possibilities too. The two may negotiate to their limits, but since their limits do
not overlap, they can not reach to any settlement, in this circumstance, the negotiation may
become deadlocked.

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