ASSIGNMENT

NEGOTIATION SKILLS

The definition of negotiation has been described as “an occasion where one or more representatives of
two or more parties interact in an explicit attempt to reach a jointly acceptable position on one or
more divisive issues.” It is an explicit and deliberate event conducted by the representatives on behalf
of their respective parties – employers and employees.
NEGOTIATING PROCESS
There are two primary purposes to negotiating in the industrial relations context: first, to reconcile
differences between managements and unions; and second, to devise ways of advancing the common
interest of the parties. Among managements and trade unions that deal with each other on an on-going
basis, negotiating may at the outset take the character of mutual problem solving. The process
involves the recognition of the common interests of the parties, the areas of agreement and
disagreement and possible solutions, to the mutual advantage of both sides.
Needs are at the root of all negotiations. Needs are not necessarily the same for the two sides, nor is it
important that they should be. What is essential, if the negotiation is to have any chance of success, is
that the needs be or become compatible. Incompatible needs makes reaching agreement virtually
impossible. Negotiation is a mutual act of coordinating areas of interest. One party dictating to the
other is not negotiation. One party manipulating the other with no concern for the other’s needs is a
cynical travesty of negotiation. At the heart of negotiation is the recognition that each side is entitled
to its own priorities. The whole art of negotiation lies in persuading a second party to make a
commitment.
Negotiation is more a learning process than a form of instruction. Both parties are engaged in
discovering each other’s views and needs. Both are exploring possibilities for combining energies in a
new way. Gathering information and fact-finding constitute a part of negotiating process. Negotiation
is concerned with resolving conflict between two or more parties, usually by the exchange of
concessions. It can be competitive, known as win-lose negotiations, or it can be co-operative, known
as win-win. Negotiation should be regarded as a potentially beneficial activity for both parties.

NEGOTIATION GUIDELINES
The following are the guidelines for negotiation:
● don’t be afraid to negotiate. “Let us never negotiate out of fear. But let us never fear to negotiate.”
(John F. Kennedy)
● don’t negotiate when you have nothing to bargain with, or when broader objectives might be
prejudiced.
● Mutual respect and trust are fundamental requirements, especially with a win-win strategy.
● the style of negotiation will depend in part on the qualities and skills of the parties involved. Skilled
negotiators will conclude better deals.
● Identify the decision-maker on the other side.
● Identify the concessions you might offer and extend maximum benefit to the other side with the
least cost to you.
● Remember, concessions should always be traded, not donated. Encourage the other side to give you
concessions by setting deadlines.
● Recognise that a win-win outcome can never be assumed until the other side also signals its
compliance.
Select your team carefully, allocate the key tasks, and specify authority levels.
● Leave the other side thinking that they have won a good deal.
● In order to win the best result from a negotiation, a blend of three important attributes is necessary:
skill, aspiration, and power.
●You have nothing to lose by asking for a better deal.
●most things are negotiable.
● Make specific proposals, solutions or remedies. Don’t just complain.
● Prepare fully, and with care. Preparation and planning lie at the heart of a successful negotiation.
Don’t negotiate if you are not prepared.
● Don‘t negotiate unless you have something to gain. Make initial concessions small and tentative.
● Listen carefully to the words and analyse.
● Keep the meeting on the track.
● don’t react too unfavourably to your own mistakes.
● Make promises with caution.
● don’t worry about the end result.

PRINCIPLED NEGOTIATIONS
A process called principled negotiations was developed by the Harvard Negotiations Project and
published in a book titled Getting to Yes. The essential element of the process is to be “hard on the
merits, soft on the people.” The goal is to decide the issues presented at the negotiating table on their
merits. Under the principled negotiations model, the first objective is to separate the people from the
problem. Attacking the problem is the second objective of principled bargaining. The parties are to
focus on interests, not positions. Once interests are identified, the third objective is for both parties to
seek as many options as possible in solving their conflicting interests. The fourth objective in
principled negotiating is to have the validity of each party’s proposals judged by objective criteria.
The “principled negotiations” approach is highly desirable in on-going labour relations.
Unfortunately, however, it is difficult to apply principled negotiations where a party maintains a “hard
bargaining posture.” Principled negotiation is a characteristic of more mature bargaining relationship
unlike the hard bargaining approach which is frequently found in the less matured relationship.
For success of negotiation:
●Always do your homework.
●Always feel free to ask questions.
● Listen to what other person has to say.
● Maintain an attitude of respect for your opposite at all times.
● Honour whatever commitments made.
● Adopt a friendly tone.
● Recognise your opposite’s ego needs.
● Display an open mind and willingness to compromise.
● Avoid coercive or pressure tactics.

PREPARATION FOR LONG-TERM SETTLEMENT

The preparation for the long-term settlement should start from the same date when the last agreement
was signed. Continuous collection of data on work practices, norms of productivity, grievances, and
their analysis to identify the causes, are necessary for preparing for the next settlement. The following
may serve as a checklist: Internal Data
● Analysis of previous charter of demands and previous agreements.
● Analysis of the charter of demands raised for the current agreement.
● Collection and analysis of the record of the grievances and classifying them.
● Number of accidents stagnating at various levels, pay scales and slabs, categorywise, age-wise and
shift-wise.
● Details of existing allowances and the employees covered under each.
● Details of existing facilities and employees covered.
● Details of the labour cost and break-up of the expenditure on each item like basic pay, dearness
allowance, incentive, overtime, fringe benefits, and so on.
● Incentive plan and incentive earnings.
● Man-days data indicating the break-up in
Man-days worked - Man-days lost due to absenteeism - Man-days lost due to strikes - Man-days lost
due to sickness - Man-days lost due to political bandhs - Man-days lost due to slow-down - Man-days
lost due to lockouts
● Details of overtime incurred department-wise.
● Production and productivity data - Labour cost per tonne of product - Labour cost as percentage of
wages - Labour cost as percentage of production per man/year - Labour cost as percentage of sales -
Capacity utilisation of plants/departments - Value added per rupee of wages
● Financial Data - Wages to salary ratio - Profitability - Expansion/diversification programme - Cost
implications of demands External Data
● Details of wages, allowances and benefits of comparable public and private sectors.
● Trend of cost of living index.

Attributes of Negotiating Team

● Negotiating team should consist of three to four persons.
● Leader of the team must have a good command on the language because an extra word here and
there can do irreparable damage.
●The team must have complete knowledge of the operations, material flow and processes of the
company.
●The team must know the details and implications of all the demands.
●The team must know the total historical perspective of the company, what happened in the previous
last agreement, union dynamics, and so on.
●The team must have the confidence of facing any eventuality, which may come up during
negotiations.
●The team must have the power of taking decisions.
●The team must consist of people who have confidence of the workforce and unions. Credibility is
the most important asset it must possess in abundance.

TACTICS OR STRATEGIES IN NEGOTIATION

The tactics or strategies to be adopted in negotiation vary depending upon the culture of the
organisation and different environmental factors, particularly the type of union operating in an
industrial establishment. But the following are some of the common strategies to make negotiation
exercise more meaningful:
i. The management has to anticipate the demands and also understand the main directions in
which the demands are going to be placed. Grant or rejection of demands cannot be decided
upon in a vacuum; it is very much relative to the time and place of negotiation. An adequate
area survey of what comparable organisations in the region have already conceded/or in the
process of conceding is most essential. An adequate questionnaire must be drawn up, and care
must be taken to identify the organisations that are truly comparable. Generally speaking,
negotiations are best done if both the parties do their homework well. The representatives
must come to the bargaining table equipped with the necessary information and supportive
data regarding the company’s economic status and prospects, the prevailing rates of pay and
conditions of employment in comparable industries in the local areas. The management team
should take into consideration the financial liability involved, the past agreements, and the
impact of present negotiations in future years.
ii. It is essential that a real team spirit be maintained throughout the negotiations. For this
purpose, it is necessary that the roles to be played by each member of the team are properly
pre-assigned, and each member knows when to take over the discussions. The team must have
the confidence of facing any eventuality, which may come up during negotiations. It is good
to have a rehearsal among the team members on such points which can be anticipated to be
made forcefully by the opposite team.

iii. Any negotiation strategy should firstly separate the personalities from the problems for
arriving at a workable and desirable agreement and secondly, explore the possibilities for
harmony and compatibility. Although labour and management are adversarial in some
respects, it is also important to avoid concluding that they are adversaries in all respects.

iv. Negotiation is a two-way traffic. The management as well as the union must gain out of it.
Hence, the management team should also present their counterproposals. For instance, the
union pressure for wage-hike may be matched by a counter-demand for an increase in
 production, reduction in absenteeism, avoidance of wasteful/restrictive practices, and
industrial peace.

v. It is a good practice always to classify the various demands raised by labour representatives
distinguishing the real from the unreal. A thorough analysis and understanding of different
items in the charter of demands will enable negotiators to arrive at a proper judgement.

vi. It is a good tactic to total the cost of all the union proposals and to take up the non-cost items
first or items on which it is easy to come to an agreement so that a suitable atmosphere is
created for negotiating on more serious items which have financial implications.