This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work's original creator or licensee. 1 Chapter 10 Conflict and Negotiations LEARNING OBJECTIVES After reading this chapter, you should be able to do the following: 1. Understand the different types of conflict. 2. Understand the causes of conflict. 3. Understand the consequences of conflict. 4. Understand how to manage conflict effectively. 5. Understand the stages of the negotiation process. 6. Understand how to avoid common negotiation mistakes. 7. Engage in conflict management and negotiation ethically. 8. Understand cross-cultural differences in conflict and negotiation. Negotiation Failure: The Case of PointCast In 1997, a company called PointCast Network Inc. was the hottest start-up in Silicon Valley. Its founder and CEO, Christopher Hassett, was \"the most famous guy on the Internet,\" said Hassett's former attorney, Allen Morgan. Hassett was named CNet's newsmaker of the yearan honor previously bestowed on giants such as Bill Gates of Microsoft and Larry Ellison of Oracle. The \"push technology\" that PointCast pioneered was making headlines as well as being featured on the cover of Wired as \"The Radical Future of the Media beyond the Web.\" All the attention around PointCast motivated one of the world's largest communications companiesRupert Murdoch's News Corporationto make them an offer of $450 million. Negotiations were intense and lasted weeks. With media speculation that PointCasta company with almost no revenue deserved to be valued at $750 million, some people say Hassett started 2 believing the hype and with the support of his board asked for more money. \"People involved in the company thought they'd be the next Netscape. They hung out for more,\" Murdoch said. The Murdochs, instead, lowered their initial offer to $400 million, but added incentive clauses that brought the offer close to the original $450 million if PointCast met its financial projections. PointCast also rejected that offer and News Corp walked away from the bargaining table. The timing couldn't have been worse for PointCast, as \"push\" technology became old news thanks to the maturing of alternatives such as Yahoo. By the time PointCast decided to go public in 1998, the company was valued at half of News Corp's last offer. Worse, the process of filing an initial public offering (IPO) requires the company to disclose all potential dangers to investors. PointCast's disclosuressuch as news that customers had left because of poor performancescared off so many investors that PointCast ultimately withdrew its IPO. By that time Hassett had been forced out by the board, but the company never fully recovered. In the end, PointCast was acquired in 1999 by Idealab for $7 million. In this case, stalled negotiations cost the firm a steep price of $443 million. Referring to the missed opportunity, an industry expert said, \"It may go down as one of the biggest mistakes in Internet history.\" According to Steve Lippin, writing in the Wall Street Journal, \"Merger professionals point to these euphemistically called 'social issues'ego and corporate pride, that isas among the most difficult aspects of negotiating multibillion-dollar mergers these days. Although financial issues can be vexing too, these social issues can be deal-breakers.\" In a similar and more recent situation in 2008, Yahoo CEO Jerry Yang was ousted by the Board of Directors following failed deals with Microsoft and 3 Google. Yang's behavior during negotiations indicated that he wasn't interested in bargaining as much as playing \"hard to get.\" He \"kept saying we should get more money, we should get more money, and [he was] not realizing how precarious their position was,\" says high-tech analyst Rob Enderle. In other words, even deals that look great financially can fall apart if participants fail to pay attention to organizational behavior issues such as perception, groupthink, and power and influence. Sources: Arnoldy. B. (2008, November 19). Why Yahoo's Jerry Yang stepped down. Retrieved January 20, 2009, from the Christian Science Monitor Web site:http://www.csmonitor.com/2008/1119/p02s01-usec.html; Auletta, K. (1998, November 19). The last sure thing. New Yorker; Lipin, S. (1996, August 22). In many merger deals, ego and pride play big roles in which way talks go. Wall Street Journal, Eastern edition, p. C1; Wired News Report. (1999, May 11). PointCast fire sale. Wired. Retrieved November 14, 2008, fromhttp://www.wired.com/techbiz/media/news/1999/05/19618. 10.1 Understanding Conflict LEARNING OBJECTIVES 1. Define conflict. 2. Understand different types of conflict. 3. Address whether conflict is always negative. Let's take a closer look at these social issues such as conflict to understand how they can derail companies and individuals alikeand what to do to prevent such consequences from happening to you. In this chapter, you'll see 4 that managing conflict and engaging in effective negotiation are both key for effective organizational behavior within organizations as well as daily life. Conflicts range from minor annoyances to outright violence. For example, one million workers (18,000 people per week) are assaulted on the job in the United States alone. [1] One of the major ways to avoid conflicts escalating to these levels is through understanding the causes of conflict and developing methods for managing potential negative outcomes. Negotiation is one of the most effective ways to decrease conflict and will also be examined in depth in this chapter. Similar to how conflicts can range from minor to major, negotiations vary in terms of their consequences. A high-stakes negotiation at work might mean the difference between a company's survival and its demise. On the other end of the spectrum, we deal with minor negotiations on a regular basis, such as negotiating with a coworker about which movie to see. Maybe you make a concession: \"OK, we'll watch what you want but I get to pick where we eat.\" Maybe you hold tough: \"I don't want to watch anything except a comedy.\" Perhaps you even look for a third option that would mutually satisfy both parties. Regardless of the level, conflict management and negotiation tactics are important skills that can be learned. First, let's take a deeper look at conflict. Conflict is a process that involves people disagreeing. Researchers have noted that conflict is like the common cold. Everyone knows what it is, but understanding its causes and how to treat it is much more challenging. [2] As we noted earlier, conflict can range from minor disagreements to workplace violence. In addition, there are three types of conflict that can arise within organizations. Let's take a look at each of them in turn. 5 Types of Conflict Intrapersonal Conflict Intrapersonal conflict arises within a person. For example, when you're uncertain about what is expected or wanted, or you have a sense of being inadequate to perform a task, you are experiencing intrapersonal conflict. Intrapersonal conflict can arise because of differences in roles. A manager may want to oversee a subordinate's work, believing that such oversight is a necessary part of the job. The subordinate, on the other hand, may consider such extensive oversight to be micromanagement or evidence of a lack of trust. Role conflict, another type of intrapersonal conflict, includes having two different job descriptions that seem mutually exclusive. This type of conflict can arise if you're the head of one team but also a member of another team. A third type of intrapersonal conflict involves role ambiguity. Perhaps you've been given the task of finding a trainer for a company's business writing training program. You may feel unsure about what kind of person to hirea well-known but expensive trainer or a local, unknown but low-priced trainer. If you haven't been given guidelines about what's expected, you may be wrestling with several options. Interpersonal Conflict Interpersonal conflict is among individuals such as coworkers, a manager and an employee, or CEOs and their staff. For example, in 2006 the CEO of Airbus S.A.S., Christian Streiff, resigned because of his conflict with the board of directors over issues such as how to restructure the company. [3] This example may reflect a well-known trend among CEOs. According to one estimate, 31.9% of CEOs resigned from their jobs because they had conflict with the board of directors. [4] CEOs of competing companies might also have public conflicts. In 1997, Michael Dell was asked what he would do about Apple 6 Computer. \"What would I do? I'd shut it down and give the money back to shareholders.\" Ten years later, Steve Jobs, the CEO of Apple Inc., indicated he had clearly held a grudge as he shot back at Dell in an e-mail to his employees, stating, \"Team, it turned out Michael Dell wasn't perfect in predicting the future. Based on today's stock market close, Apple is worth more than Dell.\" [5] In part, their long-time disagreements stem from their differences. Interpersonal conflict often arises because of competition, as the Dell/Apple example shows, or because of personality or values differences. For example, one person's style may be to \"go with the gut\" on decisions, while another person wants to make decisions based on facts. Those differences will lead to conflict if the individuals reach different conclusions. Many companies suffer because of interpersonal conflicts. Keeping conflicts centered around ideas rather than individual differences is important in avoiding a conflict escalation. Intergroup Conflict Intergroup conflict is conflict that takes place among different groups. Types of groups may include different departments or divisions in a company, and employee union and management, or competing companies that supply the same customers. Departments may conflict over budget allocations; unions and management may disagree over work rules; suppliers may conflict with each other on the quality of parts. Merging two groups together can lead to friction between the groupsespecially if there are scarce resources to be divided among the group. For example, in what has been called \"the most difficult and hard-fought labor issue in an airline merger,\" Canadian Air and Air Canada pilots were locked into years of personal and legal conflict when the two airlines' seniority lists were combined following the merger. [6] Seniority is a valuable and scarce resource for pilots, because it helps to determine who flies the newest and biggest planes, who receives the 7 best flight routes, and who is paid the most. In response to the loss of seniority, former Canadian Air pilots picketed at shareholder meetings, threatened to call in sick, and had ongoing conflicts with pilots from Air Canada. The conflicts with pilots continue to this day. The history of past conflicts among organizations and employees makes new deals challenging. Is Conflict Always Bad? Most people are uncomfortable with conflict, but is conflict always bad? Conflict can be dysfunctional if it paralyzes an organization, leads to less than optimal performance, or, in the worst case, leads to workplace violence. Surprisingly, a moderate amount of conflict can actually be a healthy (and necessary) part of organizational life. [7] To understand how to get to a positive level of conflict, we need to understand its root causes, consequences, and tools to help manage it. The impact of too much or too little conflict can disrupt performance. If conflict is too low, then performance is low. If conflict is too high, then performance also tends to be low. The goal is to hold conflict levels in the middle of this range. While it might seem strange to want a particular level of conflict, a medium level of task-related conflict is often viewed as optimal, because it represents a situation in which a healthy debate of ideas takes place. Figure 10.4 The Inverted U Relationship Between Performance and Conflict 8 Task conflict can be good in certain circumstances, such as in the early stages of decision making, because it stimulates creativity. However, it can interfere with complex tasks in the long run. [8] Personal conflicts, such as personal attacks, are never healthy because they cause stress and distress, which undermines performance. The worst cases of personal conflicts can lead to workplace bullying. At Intel Corporation, all new employees go through a 4hour training module to learn \"constructive confrontation.\" The content of the training program includes dealing with others in a positive manner, using facts rather than opinion to persuade others, and focusing on the problem at hand rather than the people involved. \"We don't spend time being defensive or taking things personally. We cut through all of that and get to the issues,\" notes a trainer from Intel University. [9] The success of the training remains unclear, but the presence of this program indicates that Intel understands the potentially positive effect of a moderate level of conflict. Research focusing on effective teams across time found that they were characterized by low but increasing levels of process conflict (how do we get things done?), low levels of relationship conflict with a rise toward the end of the project (personal 9 disagreements among team members), and moderate levels of task conflict in the middle of the task time line. [10] KEY TAKEAWAY Conflict can be a problem for individuals and organizations. There are several different types of conflict, including intrapersonal, interpersonal, and intergroup conflict. Moderate conflict can be a healthy and necessary part of organizational life. EXERCISES 1. What are the types of conflicts that individuals may have at work? Which type have you experienced the most? 2. What are some primary causes of conflict at work? 3. Explain how miscommunication might be related to a conflict at work. 10.2 Causes and Outcomes of Conflict LEARNING OBJECTIVES 1. Understand different causes of conflict. 2. Understand jobs at risk for conflict. 3. Learn the outcomes of conflict. There are many potential root causes of conflict at work. We'll go over six of them here. Remember, anything that leads to a disagreement can be a cause of conflict. Although conflict is common to organizations, some organizations have more than others. Causes of Conflict 10 Organizational Structure Conflict tends to take different forms, depending upon the organizational structure. [1] For example, if a company uses a matrix structure as its organizational form, it will have decisional conflict built in, because the structure specifies that each manager report to two bosses. For example, global company ABB Inc. is organized around a matrix structure based on the dimensions of country and industry. This structure can lead to confusion as the company is divided geographically into 1,200 different units and by industry into 50 different units. [2] Limited Resources Resources such as money, time, and equipment are often scarce. Competition among people or departments for limited resources is a frequent cause for conflict. For example, cutting-edge laptops and gadgets such as a BlackBerry or iPhone are expensive resources that may be allocated to employees on a need-to-have basis in some companies. When a group of employees have access to such resources while others do not, conflict may arise among employees or between employees and management. While technical employees may feel that these devices are crucial to their productivity, employees with customer contact such as sales representatives may make the point that these devices are important for them to make a good impression to clients. Because important resources are often limited, this is one source of conflict many companies have to live with. Task Interdependence Another cause of conflict is task interdependence; that is, when accomplishment of your goal requires reliance on others to perform their tasks. For example, if you're tasked with creating advertising for your product, you're dependent on the creative team to design the words and layout, the 11 photographer or videographer to create the visuals, the media buyer to purchase the advertising space, and so on. The completion of your goal (airing or publishing your ad) is dependent on others. Incompatible Goals Sometimes conflict arises when two parties think that their goals are mutually exclusive. Within an organization, incompatible goals often arise because of the different ways department managers are compensated. For example, a sales manager's bonus may be tied to how many sales are made for the company. As a result, the individual might be tempted to offer customers \"freebies\" such as expedited delivery in order to make the sale. In contrast, a transportation manager's compensation may be based on how much money the company saves on transit. In this case, the goal might be to eliminate expedited delivery because it adds expense. The two will butt heads until the company resolves the conflict by changing the compensation scheme. For example, if the company assigns the bonus based on profitability of a sale, not just the dollar amount, the cost of the expediting would be subtracted from the value of the sale. It might still make sense to expedite the order if the sale is large enough, in which case both parties would support it. On the other hand, if the expediting negates the value of the sale, neither party would be in favor of the added expense. Personality Differences Personality differences among coworkers are common. By understanding some fundamental differences among the way people think and act, we can better understand how others see the world. Knowing that these differences are natural and normal lets us anticipate and mitigate interpersonal conflict it's often not about \"you\" but simply a different way of seeing and behaving. 12 For example, Type A individuals have been found to have more conflicts with their coworkers than Type B individuals. [3] Communication Problems Sometimes conflict arises simply out of a small, unintentional communication problem, such as lost e-mails or dealing with people who don't return phone calls. Giving feedback is also a case in which the best intentions can quickly escalate into a conflict situation. When communicating, be sure to focus on behavior and its effects, not on the person. For example, say that Jeff always arrives late to all your meetings. You think he has a bad attitude, but you don't really know what Jeff's attitude is. You do know, however, the effect that Jeff's behavior has on you. You could say, \"Jeff, when you come late to the meeting, I feel like my time is wasted.\" Jeff can't argue with that statement, because it is a fact of the impact of his behavior on you. It's indisputable, because it is your reality. What Jeff can say is that he did not intend such an effect, and then you can have a discussion regarding the behavior. In another example, the Hershey Company was engaged in talks behind closed doors with Cadbury Schweppes about a possible merger. No information about this deal was shared with Hershey's major stakeholder, the Hershey Trust. When Robert Vowler, CEO of the Hershey Trust, discovered that talks were underway without anyone consulting the Trust, tensions between the major stakeholders began to rise. As Hershey's continued to underperform, steps were taken in what is now called the \"Sunday night massacre,\" in which several board members were forced to resign and Richard Lenny, Hershey's then current CEO, retired. [4] This example shows how a lack of communication can lead to an escalation of conflict. Time will tell what the lasting effects of this conflict will be, but in the short term, effective 13 communication will be the key. Now, let's turn our attention to the outcomes of conflict. Outcomes of Conflict One of the most common outcomes of conflict is that it upsets parties in the short run. [5]However, conflict can have both positive and negative outcomes. On the positive side, conflict can result in greater creativity or better decisions. For example, as a result of a disagreement over a policy, a manager may learn from an employee that newer technologies help solve problems in an unanticipated new way. Positive outcomes include the following: Consideration of a broader range of ideas, resulting in a better, stronger idea Surfacing of assumptions that may be inaccurate Increased participation and creativity Clarification of individual views that build learning On the other hand, conflict can be dysfunctional if it is excessive or involves personal attacks or underhanded tactics. Examples of negative outcomes include the following: Increased stress and anxiety among individuals, which decreases productivity and satisfaction Feelings of being defeated and demeaned, which lowers individuals' morale and may increase turnover A climate of mistrust, which hinders the teamwork and cooperation necessary to get work done Is Your Job at Risk for Workplace Violence? 14 You may be at increased risk for workplace violence if your job involves the following: Dealing With People o Caring for others either emotionally or physically, such as at a nursing home. o Interacting with frustrated customers, such as with retail sales. o Supervising others, such as being a manager. o Denying requests others make of you, such as with customer service. Being in High-Risk Situations o Dealing with valuables or exchanging money, such as in banking. o Handling weapons, such as in law enforcement. o Working with drugs, alcohol, or those under the influence of them, such as bartending. o Working nights or weekends, such as gas station attendants. Sources: Adapted from information in LeBlanc, M. M., & Kelloway, E. K. (2002). Predictors and outcomes of workplace violence and aggression. Journal of Applied Psychology, 87, 444-453; National Institute for Occupational Safety and Health. (1997). Violence in the workplace. Retrieved November 12, 2008, fromhttp://www.cdc.gov/niosh/violfs.html; National Institute for Occupational Safety and Health. (2006). Workplace prevention strategies and research needs. Retrieved November 12, 2008, from http://www.cdc.gov/niosh/docs/2006-144/. Given these negative outcomes, how can conflict be managed so that it does not become dysfunctional or even dangerous? We'll explore this in the next section. KEY TAKEAWAY 15 Conflict has many causes, including organizational structures, limitations on resources, task interdependence, goal incompatibility, personality differences, and communication challenges. Outcomes of well-managed conflict include increased participation and creativity, while negatives of poorly managed conflict include increased stress and anxiety. Jobs that deal with people are at higher risk for conflict. EXERCISES 1. What are some primary causes of conflict at work? 2. What are the outcomes of workplace conflict? Which types of job are the most at risk for workplace violence? Why do you think that is? 3. What outcomes have you observed from conflict? 10.3 Conflict Management LEARNING OBJECTIVES 1. Understand different ways to manage conflict. 2. Understand your own communication style. 3. Learn to stimulate conflict if needed. There are a number of different ways of managing organizational conflict, which are highlighted in this section. Conflict management refers to resolving disagreements effectively. Ways to Manage Conflict Change the Structure When structure is a cause of dysfunctional conflict, structural change can be the solution to resolving the conflict. Consider this situation. Vanessa, the lead 16 engineer in charge of new product development, has submitted her components list to Tom, the procurement officer, for purchasing. Tom, as usual, has rejected two of the key components, refusing the expenditure on the purchase. Vanessa is furious, saying, \"Every time I give you a request to buy a new part, you fight me on it. Why can't you ever trust my judgment and honor my request?\" Tom counters, \"You're always choosing the newest, leading-edge parts they're hard to find and expensive to purchase. I'm supposed to keep costs down, and your requests always break my budget.\" \"But when you don't order the parts we need for a new product, you delay the whole project,\" Vanessa says. Sharon, the business unit's vice president, hits upon a structural solution by stating, \"From now on, both of you will be evaluated on the total cost and the overall performance of the product. You need to work together to keep component costs low while minimizing quality issues later on.\" If the conflict is at an intergroup level, such as between two departments, a structural solution could be to have those two departments report to the same executive, who could align their previously incompatible goals. Change the Composition of the Team If the conflict is between team members, the easiest solution may be to change the composition of the team, separating the personalities that were at odds. In instances in which conflict is attributed to the widely different styles, values, 17 and preferences of a small number of members, replacing some of these members may resolve the problem. If that's not possible because everyone's skills are needed on the team and substitutes aren't available, consider a physical layout solution. Research has shown that when known antagonists are seated directly across from each other, the amount of conflict increases. However, when they are seated side by side, the conflict tends to decrease. [1] Create a Common Opposing Force Group conflict within an organization can be mitigated by focusing attention on a common enemy such as the competition. For example, two software groups may be vying against each other for marketing dollars, each wanting to maximize advertising money devoted to their product. But, by focusing attention on a competitor company, the groups may decide to work together to enhance the marketing effectiveness for the company as a whole. The \"enemy\" need not be another companyit could be a concept, such as a recession, that unites previously warring departments to save jobs during a downturn. Consider Majority Rule Sometimes a group conflict can be resolved through majority rule. That is, group members take a vote, and the idea with the most votes is the one that gets implemented. The majority rule approach can work if the participants feel that the procedure is fair. It is important to keep in mind that this strategy will become ineffective if used repeatedly with the same members typically winning. Moreover, the approach should be used sparingly. It should follow a healthy discussion of the issues and points of contention, not be a substitute for that discussion. 18 Problem Solve Problem solving is a common approach to resolving conflict. In problemsolving mode, the individuals or groups in conflict are asked to focus on the problem, not on each other, and to uncover the root cause of the problem. This approach recognizes the rarity of one side being completely right and the other being completely wrong. Conflict-Handling Styles Individuals vary in the way that they handle conflicts. There are five common styles of handling conflicts. These styles can be mapped onto a grid that shows the varying degree of cooperation and assertiveness each style entails. Let us look at each in turn. Figure 10.6 Conflict-Handling Styles 19 Avoidance The avoiding style is uncooperative and unassertive. People exhibiting this style seek to avoid conflict altogether by denying that it is there. They are prone to postponing any decisions in which a conflict may arise. People using this style may say things such as, \"I don't really care if we work this out,\" or \"I don't think there's any problem. I feel fine about how things are.\" Conflict avoidance may be habitual to some people because of personality traits such as the need for affiliation. While conflict avoidance may not be a significant problem if the issue at hand is trivial, it becomes a problem when individuals avoid confronting important issues because of a dislike for conflict or a perceived inability to handle the other party's reactions. Accommodation The accommodating style is cooperative and unassertive. In this style, the person gives in to what the other side wants, even if it means giving up one's personal goals. People who use this style may fear speaking up for themselves or they may place a higher value on the relationship, believing that disagreeing with an idea might be hurtful to the other person. They will say things such as, \"Let's do it your way\" or \"If it's important to you, I can go along with it.\" Accommodation may be an effective strategy if the issue at hand is more important to others compared to oneself. However, if a person perpetually uses this style, that individual may start to see that personal interests and well-being are neglected. Compromise The compromising style is a middle-ground style, in which individuals have some desire to express their own concerns and get their way but still respect the other person's goals. The compromiser may say things such as, \"Perhaps I 20 ought to reconsider my initial position\" or \"Maybe we can both agree to give in a little.\" In a compromise, each person sacrifices something valuable to them. For example, in 2005 the luxurious Lanesborough Hotel in London advertised incorrect nightly rates for 35, as opposed to 350. When the hotel received a large number of online bookings at this rate, the initial reaction was to insist that customers cancel their reservations and book at the correct rate. The situation was about to lead to a public relations crisis. As a result, they agreed to book the rooms at the advertised price for a maximum of three nights, thereby limiting the damage to the hotel's bottom line as well as its reputation. [2] Competition People exhibiting a competing style want to reach their goal or get their solution adopted regardless of what others say or how they feel. They are more interested in getting the outcome they want as opposed to keeping the other party happy, and they push for the deal they are interested in making. Competition may lead to poor relationships with others if one is always seeking to maximize their own outcomes at the expense of others' well-being. This approach may be effective if one has strong moral objections to the alternatives or if the alternatives one is opposing are unethical or harmful. Collaboration The collaborating style is high on both assertiveness and cooperation. This is a strategy to use for achieving the best outcome from conflictboth sides argue for their position, supporting it with facts and rationale while listening attentively to the other side. The objective is to find a win-win solution to the problem in which both parties get what they want. They'll challenge points but not each other. They'll emphasize problem solving and integration of each other's goals. For example, an employee who wants to complete an MBA 21 program may have a conflict with management when he wants to reduce his work hours. Instead of taking opposing positions in which the employee defends his need to pursue his career goals while the manager emphasizes the company's need for the employee, both parties may review alternatives to find an integrative solution. In the end, the employee may decide to pursue the degree while taking online classes, and the company may realize that paying for the employee's tuition is a worthwhile investment. This may be a win-win solution to the problem in which no one gives up what is personally important, and every party gains something from the exchange. Which Style Is Best? Like much of organizational behavior, there is no one \"right way\" to deal with conflict. Much of the time it will depend on the situation. However, the collaborative style has the potential to be highly effective in many different situations. We do know that most individuals have a dominant style that they tend to use most frequently. Think of your friend who is always looking for a fight or your coworker who always backs down from a disagreement. Successful individuals are able to match their style to the situation. There are times when avoiding a conflict can be a great choice. For example, if a driver cuts you off in traffic, ignoring it and going on with your day is a good alternative to \"road rage.\" However, if a colleague keeps claiming ownership of your ideas, it may be time for a confrontation. Allowing such intellectual plagiarism to continue could easily be more destructive to your career than confronting the individual. Research also shows that when it comes to dealing with conflict, managers prefer forcing, while their subordinates are more likely to engage in avoiding, accommodating, or compromising. [3]It is also likely that individuals will 22 respond similarly to the person engaging in conflict. For example, if one person is forcing, others are likely to respond with a forcing tactic as well. What If You Don't Have Enough Conflict Over Ideas? Part of effective conflict management is knowing when proper stimulation is necessary. Many people think that conflict is inherently badthat it undermines goals or shows that a group or meeting is not running smoothly. In fact, if there is no conflict, it may mean that people are silencing themselves and withholding their opinions. The reality is that within meaningful group discussions there are usually varying opinions about the best course of action. If people are suppressing their opinions, the final result may not be the best solution. During healthy debates, people point out difficulties or weaknesses in a proposed alternative and can work together to solve them. The key to keeping the disagreement healthy is to keep the discussion focused on the task, not the personalities. For example, a comment such as \"Jack's ideas have never worked before. I doubt his current idea will be any better\" is not constructive. Instead, a comment such as \"This production step uses a degreaser that's considered a hazardous material. Can we think of an alternative degreaser that's nontoxic?\" is more productive. It challenges the group to improve upon the existing idea. Traditionally, Hewlett-Packard Development Company LP was known as a \"nice\" organization. Throughout its history, HP viewed itself as a scientific organization, and their culture valued teamwork and respect. But over time, HP learned that you can be \"nice to death.\" In fact, in the 1990s, HP found it difficult to partner with other organizations because of their culture differences. During role plays created to help HP managers be more dynamic, the trainers had to modify several role-plays, because participants simply said, \"That would never happen at HP,\" over the smallest conflict. All this probably 23 played a role in the discomfort many felt with Carly Fiorina's style as CEO and the merge she orchestrated with Compaq Computer Corporation, which ultimately caused the board of directors to fire Fiorina. On the other hand, no one is calling HP \"too nice\" anymore. OB Toolbox: How Can You Stimulate Conflict? Encourage people to raise issues and disagree with you or the status quo without fear of reprisal. An issue festering beneath the surface, when brought out into the open, may turn out to be a minor issue that can be easily addressed and resolved. Assign a devil's advocate to stimulate alternative viewpoints. If a business unit is getting stagnant, bring in new people to \"shake things up.\" Create a competition among teams, offering a bonus to the team that comes up with the best solution to a problem. For example, have two product development teams compete on designing a new product. Or, reward the team that has the fewest customer complaints or achieves the highest customer satisfaction rating. Build some ambiguity into the process. When individuals are free to come up with their own ideas about how to complete a task, the outcome may be surprising, and it allows for more healthy disagreements along the way. KEY TAKEAWAY Conflict management techniques include changing organizational structures to avoid built-in conflict, changing team members, creating a common \"enemy,\" using majority rules, and problem solving. Conflict management styles include accommodating others, avoiding the conflict, collaborating, competing, and compromising. People tend to have a dominant style. At times it makes sense to build in some conflict over ideas if none exists. EXERCISES 24 1. List three ways to decrease a conflict situation. What are some pros and cons of each of these approaches? 2. Do you deal with conflict differently with friends and family than you do at work? If so, why do you think that is? 3. What is your usual conflict-handling style at work? Do you see it as effective or ineffective? 4. Describe a situation in which not having enough conflict can be a problem. 10.4 Negotiations LEARNING OBJECTIVES 1. Learn the five phases of negotiation. 2. Learn negotiation strategies. 3. Avoid common mistakes in negotiations. 4. Learn about third-party negotiations. A common way that parties deal with conflict is via negotiation. Negotiation is a process whereby two or more parties work toward an agreement. There are five phases of negotiation, which are described below. The Five Phases of Negotiation Figure 10.8 The Five Phases of Negotiation 25 Phase 1: Investigation The first step in negotiation is the investigation, or information gathering stage. This is a key stage that is often ignored. Surprisingly, the first place to begin is with yourself: What are your goals for the negotiation? What do you want to achieve? What would you concede? What would you absolutely not concede? Leigh Steinberg, the most powerful agent in sports (he was the role model for Tom Cruise's character in Jerry Maguire), puts it this way: \"You need the clearest possible view of your goals. And you need to be brutally honest with yourself about your priorities.\" [1] During the negotiation, you'll inevitably be faced with making choices. It's best to know what you want, so that in the heat of the moment you're able to make the best decision. For example, if you'll be negotiating for a new job, ask yourself, \"What do I value most? Is it the salary level? Working with coworkers whom I like? Working at a prestigious company? Working in a certain 26 geographic area? Do I want a company that will groom me for future positions or do I want to change jobs often in pursuit of new challenges?\" Phase 2: Determine Your BATNA If you don't know where you're going, you will probably end up somewhere else. Lawrence J. Peter One important part of the investigation and planning phase is to determine your BATNA, which is an acronym that stands for the \"best alternative to a negotiated agreement.\" Roger Fisher and William Ury coined this phrase in their book Getting to Yes: Negotiating without Giving In. Thinking through your BATNA is important to helping you decide whether to accept an offer you receive during the negotiation. You need to know what your alternatives are. If you have various alternatives, you can look at the proposed deal more critically. Could you get a better outcome than the proposed deal? Your BATNA will help you reject an unfavorable deal. On the other hand, if the deal is better than another outcome you could get (that is, better than your BATNA), then you should accept it. Think about it in common sense terms: When you know your opponent is desperate for a deal, you can demand much more. If it looks like they have a lot of other options outside the negotiation, you'll be more likely to make concessions. As Fisher and Ury said, \"The reason you negotiate is to produce something better than the results you can obtain without negotiating. What are those results? What is that alternative? What is your BATNAyour Best Alternative 27 To a Negotiated Agreement? That is the standard against which any proposed agreement should be measured.\" [2] The party with the best BATNA has the best negotiating position, so try to improve your BATNA whenever possible by exploring possible alternatives. [3] Going back to the example of your new job negotiation, consider your options to the offer you receive. If your pay is lower than what you want, what alternatives do you have? A job with another company? Looking for another job? Going back to school? While you're thinking about your BATNA, take some time to think about the other party's BATNA. Do they have an employee who could readily replace you? Once you've gotten a clear understanding of your own goals, investigate the person you'll be negotiating with. What does that person (or company) want? Put yourself in the other party's shoes. What alternatives could they have? For example, in the job negotiations, the other side wants a good employee at a fair price. That may lead you to do research on salary levels: What is the pay rate for the position you're seeking? What is the culture of the company? Greenpeace's goals are to safeguard the environment by getting large companies and organizations to adopt more environmentally friendly practices such as using fewer plastic components. Part of the background research Greenpeace engages in involves uncovering facts. For instance, medical device makers are using harmful PVCs as a tubing material because PVCs are inexpensive. But are there alternatives to PVCs that are also costeffective? Greenpeace's research found that yes, there are. [4] Knowing this lets Greenpeace counter those arguments and puts Greenpeace in a stronger position to achieve its goals. OB Toolbox: BATNA Best Practices 28 1. Brainstorm a list of alternatives that you might conceivably take if the negotiation doesn't lead to a favorable outcome for you. 2. Improve on some of the more promising ideas and convert them into actionable alternatives. 3. Identify the most beneficial alternative to be kept in reserve as a fall-back during the negotiation. 4. Remember that your BATNA may evolve over time, so keep revising it to make sure it is still accurate. 5. Don't reveal your BATNA to the other party. If your BATNA turns out to be worse than what the other party expected, their offer may go down, as PointCast learned in the opening case. Sources: Adapted from information in Spangler, B. (2003, June). Best Alternative to a Negotiated Agreement (BATNA). Retrieved November 12, 2008, from http://www.beyondintractability.org/essay/batna/; Conflict Research Consortium, University of Colorado. (1998). Limits to agreement: Better alternatives. Retrieved November 12, 2008, from http://www.colorado.edu/conflict/peace/problem/batna.htm; Venter, D. (2003).What is a BATNA? Retrieved January 14, 2008, from http://www.negotiationeurope.com/articles/batna.html. Phase 3: Presentation The third phase of negotiation is presentation. In this phase, you assemble the information you've gathered in a way that supports your position. In a job hiring or salary negotiation situation, for instance, you can present facts that show what you've contributed to the organization in the past (or in a previous position), which in turn demonstrates your value. Perhaps you created a blog that brought attention to your company or got donations or funding for a charity. Perhaps you're a team player who brings out the best in a group. 29 Phase 4: Bargaining During the bargaining phase, each party discusses their goals and seeks to get an agreement. A natural part of this process is making concessions, namely, giving up one thing to get something else in return. Making a concession is not a sign of weaknessparties expect to give up some of their goals. Rather, concessions demonstrate cooperativeness and help move the negotiation toward its conclusion. Making concessions is particularly important in tense union-management disputes, which can get bogged down by old issues. Making a concession shows forward movement and process, and it allays concerns about rigidity or closed-mindedness. What would a typical concession be? Concessions are often in the areas of money, time, resources, responsibilities, or autonomy. When negotiating for the purchase of products, for example, you might agree to pay a higher price in exchange for getting the products sooner. Alternatively, you could ask to pay a lower price in exchange for giving the manufacturer more time or flexibility in when they deliver the product. One key to the bargaining phase is to ask questions. Don't simply take a statement such as \"we can't do that\" at face value. Rather, try to find out why the party has that constraint. Let's take a look at an example. Say that you're a retailer and you want to buy patio furniture from a manufacturer. You want to have the sets in time for spring sales. During the negotiations, your goal is to get the lowest price with the earliest delivery date. The manufacturer, of course, wants to get the highest price with the longest lead time before delivery. As negotiations stall, you evaluate your options to decide what's more important: a slightly lower price or a slightly longer delivery date? You do a quick calculation. The manufacturer has offered to deliver the products by April 30, but you know that some of your customers make their patio furniture 30 selection early in the spring, and missing those early sales could cost you $1 million. So, you suggest that you can accept the April 30 delivery date if the manufacturer will agree to drop the price by $1 million. \"I appreciate the offer,\" the manufacturer replies, \"but I can't accommodate such a large price cut.\" Instead of leaving it at that, you ask, \"I'm surprised that a 2-month delivery would be so costly to you. Tell me more about your manufacturing process so that I can understand why you can't manufacture the products in that time frame.\" \"Manufacturing the products in that time frame is not the problem,\" the manufacturer replies, \"but getting them shipped from Asia is what's expensive for us.\" When you hear that, a light bulb goes off. You know that your firm has favorable contracts with shipping companies because of the high volume of business the firm gives them. You make the following counteroffer: \"Why don't we agree that my company will arrange and pay for the shipper, and you agree to have the products ready to ship on March 30 for $10.5 million instead of $11 million?\" The manufacturer accepts the offerthe biggest expense and constraint (the shipping) has been lifted. You, in turn, have saved money as well. [5] Phase 5: Closure Closure is an important part of negotiations. At the close of a negotiation, you and the other party have either come to an agreement on the terms, or one party has decided that the final offer is unacceptable and therefore must be walked away from. Most negotiators assume that if their best offer has been rejected, there's nothing left to do. You made your best offer and that's the 31 best you can do. The savviest of negotiators, however, see the rejection as an opportunity to learn. \"What would it have taken for us to reach an agreement?\" Recently, a CEO had been in negotiations with a customer. After learning the customer decided to go with the competition, the CEO decided to inquire as to why negotiations had fallen through. With nothing left to lose, the CEO placed a call to the prospect's vice president and asked why the offer had been rejected, explaining that the answer would help improve future offerings. Surprisingly, the VP explained the deal was given to the competitor because, despite charging more, the competitor offered after-sales service on the product. The CEO was taken by surprise, originally assuming that the VP was most interested in obtaining the lowest price possible. In order accommodate a very low price, various extras such as after-sales service had been cut from the offer. Having learned that the VP was seeking service, not the lowest cost, the CEO said, \"Knowing what I know now, I'm confident that I could have beaten the competitor's bid. Would you accept a revised offer?\" The VP agreed, and a week later the CEO had a signed contract. [6] Sometimes at the end of negotiations, it's clear why a deal was not reached. But if you're confused about why a deal did not happen, consider making a follow-up call. Even though you may not win the deal back in the end, you might learn something that's useful for future negotiations. What's more, the other party may be more willing to disclose the information if they don't think you're in a \"selling\" mode. Should You Negotiate for a Higher Salary? Yes! According to a survey conducted by CareerBuilder.com, 58% of hiring managers say they leave some negotiating room when extending initial job 32 offers. The survey also found that many of the hiring managers agree to a candidate's request for a higher salary. \"Salary negotiation has become a growing opportunity in the job acquisition process,\" says Bill Hawkins, president and CEO of The Hawkins Company, a full-service executive search firm with offices in Los Angeles and Atlanta. \"Candidates who fail to make a counteroffer could forfeit significant income.\" Source: Adapted from information in Reed-Woodard, M. (2007, April). Taking money off the table. Black Enterprise, 37(9), 60-61. Negotiation Strategies Distributive Approach The distributive view of negotiation is the traditional fixed-pie approach. That is, negotiators see the situation as a pie that they have to divide between them. Each tries to get more of the pie and \"win.\" For example, managers may compete over shares of a budget. If marketing gets a 10% increase in its budget, another department such as R&D will need to decrease its budget by 10% to offset the marketing increase. Focusing on a fixed pie is a common mistake in negotiation, because this view limits the creative solutions possible. Integrative Approach A newer, more creative approach to negotiation is called the integrative approach. In this approach, both parties look for ways to integrate their goals under a larger umbrella. That is, they look for ways to expand the pie, so that each party gets more. This is also called a win-win approach. The first step of the integrative approach is to enter the negotiation from a cooperative rather than an adversarial stance. The second step is all about listening. Listening develops trust as each party learns what the other 33 wants and everyone involved arrives at a mutual understanding. Then, all parties can explore ways to achieve the individual goals. The general idea is, \"If we put our heads together, we can find a solution that addresses everybody's needs.\" Unfortunately, integrative outcomes are not the norm. A summary of 32 experiments on negotiations found that although they could have resulted in integrated outcomes, only 20% did so. [7] One key factor related to finding integrated solutions is the experience of the negotiators who were able to reach them. [8] OB Toolbox: Seven Steps to Negotiating a Higher Salary Step 1: Overcome your fear. The first step is to overcome your fears. Many people don't even begin a salary negotiation. We may be afraid of angering the boss or think that because we are doing a good job, we'll automatically be rewarded. But, just because you're doing a good job doesn't mean you'll automatically get a raise. Why? If you don't ask for one, the boss may believe you're satisfied with what you're getting. So why should he pay you more? Imagine going into a car dealership and being absolutely delighted with a car choice. The sticker price is $19,000. Would you pay the dealer $23,000 just because you really like the car? Of course not. You probably wouldn't even offer $19,000. If the car was up for auction, however, and another bidder offered $20,000, you'd likely increase your offer, too. That's what salary negotiation is like. Your boss may be thrilled with you but at the same time is running a business. There's no reason to pay an employee more if you seem satisfied with your current salary. Step 2: Get the facts. Before you enter into the negotiation, do some background research. What are other companies paying people in your position? Check sites such as 34 Payscale.com, salary.com, and salaryexpert.com to get a feel for the market. Look at surveys conducted by your professional organization. Step 3: Build your case. How important are you to the organization? How have you contributed? Perhaps you contributed by increasing sales, winning over angry customers, getting feuding team members to cooperate, and so on. Make a list of your contributions. Be sure to focus on the contributions that your boss values most. Is it getting recognition for the department? Easing workload? If another employer has shown interest in you, mention that as a fact. However, don't use this as a threat unless you're prepared to take the other offer. Mentioning interest from another employer gets the boss to think, \"If I don't give this raise, I may lose the employee.\" (By the way, if you don't feel you have a strong case for your raise, perhaps this isn't the time to ask for one.) Step 4: Know what you want. Set your target salary goal based on your research and the norms of what your organization will pay. Now ask yourself, if you don't get this figure, would you quit? If not, are there other alternatives besides a salary increase that you'd consider? For example, would you accept a higher title? More vacation time? Paid training to learn a new skill? Flexible hours? Step 5: Begin assertively. Start the discussion on a strong but friendly tone. \"I think I'm worth more than I'm being paid.\" List the ways you've contributed to the company. Step 6: Don't make the first offer. Let your boss name the figure. You can do this by asking, \"How much of a raise could you approve?\" However, if the boss insists that you name a figure, 35 ask for the most that you can reasonably expect to get. You want to be reasonable, but you need to allow room to make a concession. Your boss will assume your opening number was high and will offer you less, so asking for the actual figure you want may leave you feeling disappointed. If the boss opens with, \"The salary range for this position is $66,000 to 78,000,\" ask for the high end. If your goal was higher than that range, challenge the range by explaining how you are an exception and why you deserve more. Step 7: Listen more than talk. You'll learn more by listening rather than talking. The more you listen, the better the boss will feel about youpeople tend to like and trust people who listen to them. If you can't get a raise now, get your boss to agree to one in a few months if you meet agreed-upon objectives. Sources: Adapted from information in Brodow, E. (2006). Negotiation boot camp. New York: Currency/Doubleday; Nemko, M. (2007, December 31). The general way to get a raise. U.S. News & World Report, 57. Avoiding Common Mistakes in Negotiations Failing to Negotiate/Accepting the First Offer You may have heard that women typically make less money than men. Researchers have established that about one-third of the gender differences observed in the salaries of men and women can be traced back to differences in starting salaries, with women making less, on average, when they start their jobs. [9] Some people are taught to feel that negotiation is a conflict situation, and these individuals may tend to avoid negotiations to avoid conflict. 36 Research shows that this negotiation avoidance is especially prevalent among women. For example, one study looked at students from Carnegie-Mellon who were getting their first job after earning a master's degree. The study found that only 7% of the women negotiated their offer, while men negotiated 57% of the time. [10] The result had profound consequences. Researchers calculate that people who routinely negotiate salary increases will earn over $1 million more by retirement than people who accept an initial offer every time without asking for more. [11] The good news is that it appears that it is possible to increase negotiation efforts and confidence by training people to use effective negotiation skills. [12] Letting Your Ego Get in the Way Thinking only about yourself is a common mistake, as we saw in the opening case. People from the United States tend to fall into a self-serving bias in which they overinflate their own worth and discount the worth of others. This can be a disadvantage during negotiations. Instead, think about why the other person would want to accept the deal. People aren't likely to accept a deal that doesn't offer any benefit to them. Help them meet their own goals while you achieve yours. Integrative outcomes depend on having good listening skills, and if you are thinking only about your own needs, you may miss out on important opportunities. Remember that a good business relationship can only be created and maintained if both parties get a fair deal. Having Unrealistic Expectations Susan Podziba, a professor of mediation at Harvard and MIT, plays broker for some of the toughest negotiations around, from public policy to marital disputes. She takes an integrative approach in the negotiations, identifying goals that are large enough to encompass both sides. As she puts it, \"We are 37 never going to be able to sit at a table with the goal of creating peace and harmony between fishermen and conservationists. But we can establish goals big enough to include the key interests of each party and resolve the specific impasse we are currently facing. Setting reasonable goals at the outset that address each party's concerns will decrease the tension in the room, and will improve the chances of reaching an agreement.\" [13] Those who set unreasonable expectations are more likely to fail. Getting Overly Emotional Negotiations, by their very nature, are emotional. The findings regarding the outcomes of expressing anger during negotiations are mixed. Some researchers have found that those who express anger negotiate worse deals than those who do not, [14] and that during online negotiations, those parties who encountered anger were more likely to compete than those who did not. [15] In a study of online negotiations, words such as despise, disgusted, furious, and hate were related to a reduced chance of reaching an agreement.[16] However, this finding may depend on individual personalities. Research has also shown that those with more power may be more effective when displaying anger. The weaker party may perceive the anger as potentially signaling that the deal is falling apart and may concede items to help move things along. [17] This holds for online negotiations as well. In a study of 355 eBay disputes in which mediation was requested by one or both of the parties, similar results were found. Overall, anger hurts the mediation process unless one of the parties was perceived as much more powerful than the other party, in which case anger hastened a deal. [18] Another aspect of getting overly emotional is forgetting that facial expressions are universal across cultures, and when your words and facial expressions don't match, you are less likely to be trusted. [19] 38 Letting Past Negative Outcomes Affect the Present Ones Research shows that negotiators who had previously experienced ineffective negotiations were more likely to have failed negotiations in the future. Those who were unable to negotiate some type of deal in previous negotiation situations tended to have lower outcomes than those who had successfully negotiated deals in the past. [20] The key to remember is that there is a tendency to let the past repeat itself. Being aware of this tendency allows you to overcome it. Be vigilant to examine the issues at hand and not to be overly swayed by past experiences, especially while you are starting out as a negotiator and have limited experiences. Tips for Negotiation Success Focus on agreement first. If you reach an impasse during negotiations, sometimes the best recourse is to agree that you disagree on those topics and then focus only on the ones that you can reach an agreement on. Summarize what you've agreed on, so that everyone feels like they're agreeing, and leave out the points you don't agree on. Then take up those issues again in a different context, such as over dinner or coffee. Dealing with those issues separately may help the negotiation process. Be patient. If you don't have a deadline by which an agreement needs to be reached, use that flexibility to your advantage. The other party may be forced by circumstances to agree to your terms, so if you can be patient you may be able to get the best deal. Whose reality? During negotiations, each side is presenting their casetheir version of reality. Whose version of reality will prevail? Leigh Steinberg offers this example from the NFL, when he was negotiating the salary of Warren Moon. Moon was 41 years old. That was a fact. Did that mean he was hanging on by a thread and lucky to be employed in the first place? \"Should he be grateful for any money that the team pays him?\" Steinberg posed, \"Or is he a 39 quarterback who was among the league leaders in completions and attempts last year? Is he a team leader who took a previously moribund group of players, united them, and helped them have the best record that they've had in recent years?\" All those facts are true, and negotiation brings the relevant facts to the forefront and argues their merit. Deadlines. Research shows that negotiators are more likely to strike a deal by making more concessions and thinking more creatively as deadlines loom than at any other time in the negotiation process. Be comfortable with silence. After you have made an offer, allow the other party to respond. Many people become uncomfortable with silence and feel they need to say something. Wait and listen instead. Sources: Adapted from information in Stuhlmacher, A. F., Gillespie, T. L., & Champagne, M. V. (1998). The impact of time pressure in negotiation: A metaanalysis. International Journal of Conflict Management, 9, 97-116; Webber, A. (1998, October). How to get them to show you the money. Fast Company. Retrieved November 13, 2008 from http://www.fastcompany.com/magazine/19/showmoney.html. When All Else Fails: Third-Party Negotiations Alternative Dispute Resolution Alternative Dispute Resolution (ADR) includes mediation, arbitration, and other ways of resolving conflicts with the help of a specially trained, neutral third party without the need for a formal trial or hearing. [21] Many companies find this effective in dealing with challenging problems. For example, Eastman Kodak Company added an alternative dispute resolution panel of internal employees to help them handle cases of perceived discrimination and hopefully stop a conflict from escalating. [22] 40 Mediation In mediation, an outside third party (the mediator) enters the situation with the goal of assisting the parties in reaching an agreement. The mediator can facilitate, suggest, and recommend. The mediator works with both parties to reach a solution but does not represent either side. Rather, the mediator's role is to help the parties share feelings, air and verify facts, exchange perceptions, and work toward agreements. Susan Podziba, a mediation expert, has helped get groups that sometimes have a hard time seeing the other side's point of view to open up and talk to one another. Her work includes such groups as pro-choice and pro-life advocates, individuals from Israel and Palestine, as well as fishermen and environmentalists. According to the U.S. Equal Employment Opportunity Commission, \"Mediation gives the parties the opportunity to discuss the issues raised in the charge, clear up misunderstandings, determine the underlying interests or concerns, find areas of agreement and, ultimately, to incorporate those areas of agreements into resolutions. A mediator does not resolve the charge or impose a decision on the parties. Instead, the mediator helps the parties to agree on a mutually acceptable resolution. The mediation process is strictly confidential.\" [23] One of the advantages of mediation is that the mediator helps the parties design their own solutions, including resolving issues that are important to both parties, not just the ones under specific dispute. Interestingly, sometimes mediation solves a conflict even if no resolution is reached. Here's a quote from Avis Ridley-Thomas, the founder and administrator of the Los Angeles City Attorney's Dispute Resolution Program, who explains, \"Even if there is no agreement reached in mediation, people are happy that they engaged in the process. It often opens up the possibility for resolution in ways that people had not anticipated.\" [24] An independent survey showed 96% of all respondents 41 and 91% of all charging parties who used mediation would use it again if offered. [25] You Know It's Time for a Mediator When... The parties are unable to find a solution themselves. Personal differences are standing in the way of a