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Negotiating Through Change

6/20/2012-

by Alex Alusheff, for SIOP

New Organizational Frontiers book discusses negotiating tactics in a new age

By Alex Alusheff, for SIOP

People negotiate every day, whether it’s deciding which coworker is leading the carpool this week or discussing a multi-million dollar business deal, lives and organizations revolve around it. However, globalization and a greater dependence on technology continue to shape the context in which we negotiate.

The 21st century raises many questions about contextual changes that may affect negotiating, like an increasingly diverse workforce, flatter organizational structures, communication through technology, and globalization, said Barry Goldman, an associate professor at Eller College of Management at University of Arizona. Due to factors like globalization, negotiations are taking place over different mediums and between different cultures.

“However, the theories associated with negotiating were formulated more than 20 years ago at a time when the Internet didn’t exist,” added SIOP member Debra Shapiro, Clarice Smith Professor of Management at the R.H. Smith School of Business at the University of Maryland. “The nature of negotiation has changed so much that it’s time to revisit assumptions predating the 21st century workplace.”

These changes have made the need for updated research paramount, said Goldman and Shapiro, editors of The Psychology of Negotiations in the 21st Century Workplace: New Challenges and New Solutions (Routledge, 2012), a recent addition to the SIOP Organizational Frontier series, which explores challenges and new approaches to workplace negotiations on both an individual and organizational level.

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Negotiating is generally defined as two parties attempting to reach an agreement that yields something they cannot achieve by themselves, Goldman explained. The Psychology of Negotiating in the 21st Century Workplace is divided into four main sections that discuss negotiating through types of fairness, emotions, group-related issues, and issues involving the entire organization.

The book’s contributors range from industrial-organizational professionals to business professors to economists. The main concept of the book is to inject new ideas about negotiating into research and consequently into practice, Goldman said. This is why Goldman and Shapiro looked for scholars likely to give different viewpoints, those whose expertise regards issues outside, yet related to, the areas of applied negotiations.

The chapters resulting from the choice of scholars represent negotiation issues at the micro end of the spectrum of negotiation (e.g., how to manage perceptions of fairness and emotions during the negotiation process) to the macro end of the spectrum of negotiation (e.g., how to design organizations to enhance organization-wide learning of negotiations, especially when participants likely change before the negotiations are complete).

Negotiations play a larger role in the workplace compared to 20 years ago because organizations are increasingly structuring work assignments around teams, Shapiro said. When employees work with peers, it’s harder to discern aspects of fairness and workload because there is no “boss” who will set the rules of distribution for them.

One method of improving negotiation outcomes that has long been championed by scholars can be found through “integratively oriented negotiations” between parties, the book suggests. This concept is illustrated by the classic tale found in the work of management theorist Mary Follett Parker regarding two sisters who want an orange. They compromise and, therefore, cut the orange in half. Then one sister uses the peel of her half to bake a cake and the other squeezes her half into a glass and drinks it. Had the sisters explored the interests underlying their request for the orange, each could have negotiated for an outcome better than compromise, hence a “‘win-win’ (or an integrative outcome), with one getting all of the peel and the other getting all of the juice.”

“By recognizing that parties value multiple issues differently, which is often the case, you can trade extremes of one issue for the extremes of another,” Goldman added.

Negotiating for better-than-compromise agreements requires creativity, openness to new ideas, and, also, trust. This is why strategies that build trust, including perceptions of fairness, are also identified in several chapters of Goldman and Shapiro’s book. Trust leads to better outcomes in negotiations. This can also lead to economic benefits for the company.

“If a business is perceived as fair by the employees,” Shapiro explained. “They are likely to spread those feelings to the customers, who in turn are more eager to buy from them.”

Negotiating integratively and building trust can be implemented on the individual and organizational scale. But, this type of advice is only the jumping off point for this book.

“The chapters in the book start from the superb ideas provided us by negotiation scholars to date and asks: ‘What are the gaps in the negotiation research literature? What are some areas of research that can help move the field further, to help negotiators, like the concept of integrative negotiations?)’” Goldman noted.

Employees who improve their negotiating skills can be more successful at their jobs, get a better salary, get better business deals, and even negotiate their marriages better, Goldman said. Relationships, not just outcomes, are often strengthened when people resolve differences as trust-earning and fair-minded negotiators, Shapiro added.

To improve one’s skills in negotiating, Goldman said one of the most important aspects is to be prepared.

“Eighty percent of the time spent negotiating should be in preparation,” he said. “Most people think of negotiating as two gunslingers eyeing each other down the street, but the advantage goes to the one who’s prepared and listens well to achieve both parties’ success.”

And when that happens, many parties benefit, as do the organizations they represent, because satisfied customers typically mean there will be repeat business and many positive referrals.

Negotiating integrative win-win outcomes in the 21st century workplace remains important, said Goldman and Shapiro, but how to do this in light of the 21st century’s complexities of fewer face-to-face and more Internet-mediated transactions; globalized competitors for labor, products, and services; more culturally diverse participants; and flatter, or more team-based, structures is the challenge pursued by all chapter contributors in their book.

Goldman and Shapiro hope the micro-to-macro spectrum represented by the chapters in this book can change future approaches to negotiation research. They hope scholars recognize the need to study at multiple levels of analysis, such as examining how the effect that negotiators’ emotions and fairness-related perceptions have on negotiation processes and outcomes often depends on the communication medium or other technological resources (like security-checking software programs) being used during negotiation, the cultural norms that guide the values and preferred behaviors of the negotiators and the units they represent, the structure and size of negotiators’ organizations, and the interaction effects of these variables.

“There are so many variables that need to be examined that they can’t be recreated in a controlled environment, such as a negotiation simulation, making it necessary to study real-world exchanges,” Shapiro explained. “Scholars typically study negotiating at one level of dyadic (two-party) exchange. But that’s only one slice of the onion.”