Bargaining Strategies: A Piece of the Pie

This weeks lecture focused on negotiation and bargaining strategies, something I'm beginning to become quite good at myself according to my boyfriend and his father who were very impressed last time we did a car boot sale. That said my first attempt at a car boot sale didn't go well. My negotiation skills were non-existent which led to me coming away with very little profit and feeling rather deflated after practically giving away my possessions for pennies. So when the next car boot sale opportunity came up I did not want the same thing to happen again. I am pleased to say that my second attempt was a success. I was confident and focused and what can I say, it certainly paid off!

Thompson (2005) defines negotiation as "the interpersonal decision-making process necessary whenever we cannot achieve our objective single-handily". His definition suggests that if my initial desired response is not accepted (like when I put the price of an item to the customer at the car boot sale) I should re-valuate in my own mind, a price that would suit both parties (myself and the customer).

I resorted to Fisher and Williams' concept of BATNA for further explanations on this. BATNA refers to the "Best Alternative to Negotiated Agreement". These theorists explained that negotiation results can be greatly improved by identifying "the best alternative" to completing the deal and then carefully evaluating the negotiated agreement against that alternative. Ultimately, they say if the negotiated agreement is better, make the deal BUT if the alternative is better, don't close the deal, walk away! (Harvard Business School Press, p119).

Thinking about what I had learned about negotiation in the previous lecture, this ideal confused me some what. The BATNA approach seemed to change the very foundations of negotiation. This approach means that the negotiators no longer see their role as producing agreements but as making sound choices and if the negotiators don't reach an agreement, they don't see this as a failure, instead, if the negotiators reject a deal because it falls short of their company's BATNA they have succeeded. 

On reflection, I can relate this theory to my car boot experience. I wanted to sell an old mobile phone (that was still fully functioning I'll have you know!) for £55 but I had a BATNA (Best Alternative to Negotiated Agreement) of £40. A man took a liking to the phone and offered the buying price of £25. Sticking to my guns, I said No. The man said that £55 was too much. After some negotiation I said that he could buy the phone for £50 backing up my offer by saying that the phone was only one year old and still in excellent condition, which he could see it was. The man raised his offer to £35. This was a bit more like it, but remember my BATNA was £40. I then threw in the fact that the mobile phone came with a phone charger and SIM card, hoping this would increase the man's offer. He offered £40. I said "£45 and you have yourself a deal". The phone and money were then exchanged. I BEAT MY BATNA :)

So, the key things when it comes to BATNA are:

1. Assess your BATNA and improve it (I wanted £55 for the mobile phone; my best alternative was £40).
2. Determine your resistant point but DON'T reveal it (I didn't let out that I would take £40 for the phone) 
3. Research the other parties BATNA and estimate their resistant point (I thought about other influences as well as price to seal the deal)
4. Set high aspirations/ targets (be optimistic but not wild, you will only lose trust and respect)
5. Make the offer first (be patient and use silence to your advantage)
6. Make the counter offer in a timely fashion (I lowered my price to £50 and threw in other influential factors, i.e. the phone was in good condition) 
7. Plan your concessions
8. Use an objective-appearing rational to support your offer (the phone charger and SIM card)
9. Appeal to norms of fairness
10. Do not fall into the 'even split' ploy

Thompson (2005)

As well as BATNA we learned about the notions of Distributive and Integrative Bargaining Strategies.

Distributive bargaining is also known as "win-lose" bargaining simply because it is the competitive negotiation strategy which is primarily used to decide how to distribute a fixed source such as money. Both of the parties involved in distributive bargaining assume that there is not enough of the pie to go round and they cannot "expand" the pie. So in theory, the more one parties gets, the less the other party gets which can potentially lead to animosities. Some theorists however believe that this type of bargaining is unnecessary. They argue that any conflict can be solved co-operatively through integrative bargaining.

Integrative bargaining is based on the belief that there exists one or more settlements that can create positive outcomes for both parties involved in the interaction. This strategy involves ways of "expanding the pie" and builds long-term relationships and facilitates working together in the future. You can read about my experiences of Integrative and Distributive Bargaining Strategies in my next blog post. In the meantime, take a look at this slideshow which presents the key elements to consider during all negotiation processes. Enjoy!

Negotiation and Bargaining for the Coffee Business Owner

View more presentations from Andrew Hetzel.

The Dreaded 'Witch' and 'What' Exercise

Yesterday's Persuasive Communications lecture started with all of the students forming a circle, the "Head of Communications" was selected from the circle and given two pens; one green and one orange. The green pen (representing 'What') was passed around one way of the circle, while the orange (representing 'Witch') was passed around the other side of the circle. Each time the pens were passed to a member of the circle, each person would have to say "This is a Witch /What (depending on the pen they received). The person receiving the pen would then have to say "It's a what?" and this message would have to be passed back through the circle members to the Head of Comms who would then have to say "It's a Witch/ What". This message was then passed back along the circle, allowing the message to move forward on to the next member... (I hope I haven't confused you too much!)

So like the little conformists we are we started the game without questioning what would happen the pens met. Up until this point the game was going quite well (despite the Head of Comms being a little confused) then... the "crisis" struck. The person who received both pens was suddenly bombarded with different messages, leaving her feeling very confused, hardly surprising since the other circle members started shouting orders at her as to what she should do!

Our lecturer left us to battle it out for a bit and finally caved in.

"Did anybody not anticipate what would happen and think about intervening before this crisis happened?" our lecturer asked. Suddenly the class realised that this exercise was never going to work and really she was hoping that someone would step forward, intervene and re-structure the circle formation, allowing us to effectively complete the task.

It showed us that in many cases, it is important to empower the employees to say that it was a 'Witch' or a 'What' rather than constantly checking back with the manager; which as we learned, only results in confusion let alone time-wasting. It also occurred to us of the need to step in and voice our concerns when we can see that something is going to go wrong.

Following this exercise we looked at Conflict and the Four Frames of Reference.

1. Unitarist: Harmony is a positive force in organisations whereas conflict is a negative force. 
2. Pluralist: Conflict is inevitable, it's not harmful.
3. Interactionist: Conflict is positive and a necessary force for effective business performance.
4. Radical: Conflict is an inevitable outcome of capitalism.

As someone who studied A Level Sociology I was eager to find out more about the Radical (Marxist) Conflict Theory. This perspective refers to "the basic inequalities and power differentials characterising industrial capitalist society and relates work conflicts back to these structural patterns" (Watson, p.279).

For more pragmatic distinctions of conflict we can look at:

• Functional Conflict: Sharpens understanding of goals, prevents premature resolution problems, stimulates a sense of urgency and enhances understanding between groups of employees.
• Dysfunctional Conflict: Blocks an organisation from reaching its goals, lacks innovation and the generation of new ideas, creates tension and anxiety and may lead to "group think".

When writing cover letters in the past I have often written the phrase 'eager to work with like-minded people' (or something along those lines). But come to think of it, this would be my worst nightmare! When I leave university I want to work for an innovative organisation that encourages a healthy level of conflict. I now understand that conflict is important since it's allows people to bring new ideas to the table. If we all thought the same way and did not question people's ideas, "conformed to the norms" if you like, than how boring would that be? Conflict allows for all ideas to not be stamped on but praised and developed in order to boost organisational success.

The Key to a Successful Organisation is...Conflict??

Those who know me know that I am not one for arguing, confrontation or negativity - in fact; I avoid it at all cost. So when my lecturer said that actually, organisational conflict can have positive outcomes in the working environment, well... it confused me. Up to this point we were taught about harmony and teamwork making for a successful organisation. Surely organisational conflict can have only a negative impact, right? Apparently not.

Conflict is: "the process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something the first party cares about" (Huczynski and Buchanan, 2007).

The first semester of our Persuasive Communications unit focused on persuasion theories put forward by Freud et al, but this semester we are studying persuasion and its association with conflict resolution and negotiation in the workplace. Over time, we will learn to understand the principles and processes that affect the way we deal with situations where participants are seeking different outcomes in a common situation - a really interesting topic of study.

Everybody negotiates something everyday, at work and in our personal lives. For instance, at the moment I am trying to organise my 21st birthday party - i know, how exciting right! Obviously, I want to get the best deal which is value for money. I understand that the party venue want to make a decent profit and arrange a deal that suits them, therefore we have to negoitate and compromise on a solution that suits both parties.

In the lecture we learned about factors to negotiate when we go for job interviews. Pay (not surprisingly), was the first factor that the group felt was the most important to negotiate. Other factors included: 

• Roles and responsibilities
• Progression /promotional opportunities
• Travel expenses
• Mentor (to support professional development), and
• Lunch breaks (even these can cause conflict if they are not negotiated properly).

We then learned that conflict is a force governing all aspects of life and that actually negotiation gets the best results. Negotiation is the "process of resolving conflict between two parties where both modify their demands to achieve a mutually acceptable compromise" (Kennedy, 1987)

The traditional view of conflict is that it is bad for an organisation; it's disruptive and unnatural and represents behaviour that should be controlled and changed. New approaches however say that for organisational success, conflict should be welcomed and encouraged. As Mullins (2005) argues "conflict is an agent for evolution and change".

It seems that I adopted the traditional view of conflict. But without even realising, conflict has produced positive outcomes in some of the group projects I have been involved with. By reflecting back on some of my own personal experience I now realise that a healthy level of conflict can allow for clarification of individual views and is used to produce better ideas. Unhealthy conflict however, can have some negative outcomes which often leaves people feeling demeaned and defeated resulting in; a decrease in employee morale, distance between employees and resistance rather than teamwork.

To get your ideas across persuasively and to reduce the risk of unhealthy organisational conflict: 

1. Listen actively to the person you are trying to persuade (What do they believe in, try to understand what's important to them).

2. Win yourself a hearing (para-phrase their points and get them to listen to you. They can't disagree with your feelings).

3. Work to a joint solution.

So, next time I am working in a group I will use these techniques and see where they get me. I will acknowledge conflict as a positive element but I will remain precautious as I now understand that there is a fine line between conflict which produces positive results and conflict which produces negative results.

What are your experiences of conflict in the workplace? Can you provide any further advice on how to get your ideas and thoughts across persuasively without causing unhealthy conflict?

Outsourcing: Two company's, one crisis...who gets the blame?

Welcome, this blog post aims to explore people's opinions towards the process of outsourcing. I am trying to establish who gets the blame when an issue or crisis occurs - the organisation who has outsourced the service/(s), or the contractor who is now responsible for the service? An interesting topic of discussion, I'm sure you will agree.

For those of you like me who love definitions, here's a good one! "Outsourcing is the contracted use and leverage of third-party resources, assets and skills. It involves delivering services previously provided in-house".

In 2003, outsourcing companies around the world took in over $3 trillion and the market for these services tripled from 2000 to 2003. Research indicates that outsourcing is becoming a phenomenon and an enterprise that it set to benefit the UK’s economy. Even the Conservative party are campaigning that once in power, they will reduce Britain’s huge budget deficit by outsourcing more services to save money.

Despite its growing status as a mainstream business activity however, the process of outsourcing is under-researched and poorly understood -with more companies set to outsource more of their services this doesn’t look promising!

There is vast amount of literature supporting the opportunities that outsourcing creates but what are the reputational risks and challenges associated with the notion?

The government are seen to be outsourcing more of their services to third parties. Personally, I don’t see this as a problem, if they are not up for the task than it makes sense to contract out the service to an organisation who can carry out the task, right? However, some people argue that the government should be taking more responsibility over its services; providing better control and efficient mitigation if a crisis occurs.

In your view, when a crisis occurs during a third party association who is responsible? Is the contractor solely responsible? Or the organisation who has chosen to ‘contract-out’ that service? Are they both responsible for the crises? In terms of reputation, who is most affected?

To help you with you decision, here is a quick scenario to consider:

The MOD decided to outsource the servicing of a helicopter to a third party. The helicopter crashed causing three deaths. Investigations into the incident later found that this was due to poor maintenance/ servicing carried out on the helicopter. In this case, who is responsible and should carry the blame? Would this incident have happened if the service remained under the government’s control? What are the reputational implications associated with this crisis?

I look forward to reading your views on this highly debatable topic!

National Grid's Christmas Gas Crisis

I've just completed a presentation which analysed National Grid's Christmas Gas Crisis campaign - which was awarded a gold award in Crisis Communications by the CIPR earlier this year. I am now trying to work out what made this campaign 'best practice' and could do with your help...

As you may know, National Grid is an international gas and electricity company that provides energy to millions of customers across Great Britain. They are known for doing this in a safe, reliable and efficient manner. But this wasn't the case in December last year.

On 22nd December 2008 engineers were working to repair a gas leak in Lancashire when disaster struck. The gas ignited and caused a 'jet-fire' fuelled at a gas pressure 200 times more than we have in our homes. The flames were so intense; they partly melted a nearby pylon and overhead wires. As a result, local power supplies were cut off and 18,000 homes were affected just days before Christmas.

National Grid needed to react quickly, not only for the sake of the residents but also to avoid damaging the reputation they have worked so hard to build. Somehow, they needed to turn the crisis into a 'good news' story.


What did they do?

First of all, they apologised to all of the residents who were affected and explained that they would be helping vulnerable customers first. They recognised the need for frequent progress updates and made sure to keep all of the residents informed about what was going on. NG stressed that public safety was their utmost importance and they discouraged the residents from tampering with the gas supplies themselves.

Other staff; managed the media, conducted hourly conferences, co-ordinated interview requests, issued press releases, updated the web and liaised with government departments.

Because of the scale of the task involved, the National Grid team were presented as heroes; they came from all over the country to help out and worked around the clock, reconnecting all of the gas supplies over the Christmas period and sacrificing their holidays.

97% of news coverage was favourable or highly favourable. Employees played a huge part in turning the crisis into a positive news story but what other elements do you think made the campaign so successful?

In your view, what are the three most important things that companies need to consider when carrying out a Crisis Communications campaign?

Thanks for stopping by; I look forward to reading your comments...

Greenwashing: Is it all bad news?

Green washing is the term that is used to describe the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service (http://sca21.wikia.com/wiki/Greenwash). It's hardly surprising that more and more companies today are jumping on the "green bandwagon" and exaggerating their green credentials. Even the branding of many top companies now incorporates their commitment to their 'green-ness'. Take BP for example, it's obviously not the most environmentally friendly company but it's logo of the green flower-like image leads us to believe just the opposite. But are these practices really unethical? We need to make efforts to cut down the amount of pollution we humans create so it could be argued that both sustainable companies and their green washing counterparts have an important role in contributing to this and shaping consumer behaviour. Don't get me wrong, I'm not in support of companies who lie about how green they are, I think that it can have adverse effects, particularly when it makes people sceptical about those companies who are practicing genuinely. However, I think those influential companies who may be green washing have the power to reach a mass audience and inspire them to think about their individual actions and influence them to change their behaviour. It works to sharpen consumer consciousness and acts as a positive means of getting consumers to think seriously about environmental issues. What do you think?

Work Placement: A Short Reflection

In the summer of 2009 I completed a three week work placement in the South of England. During this time I work shadowed the Head of Internal Communications but I also worked closely with the company's PR and Marketing professionals. I found the placement to be really useful since I got to experience what it was like to work for a very corporate and innovative company.

I learned so much from my mentor and I am very thankful to her for taking me under her wing and sharing her wisdom and knowledge of the company and her role within it. I admit however, the first couple of days were tough, ok, maybe the first few weeks. This was just because the company is so large and complex that often I felt confused and found myself just nodding along to what people were telling me. But further questioning and research meant that by the end of the three weeks I had managed to gain a firm understanding of the company and (more importantly) what it's like to work in Internal Comms.

There were many moments where I thought "Yes, this definitely the career for me" but the most memorable one has to be attending an employee engagement conference in London. I got to hear from loads of PR and Communications professionals about how they had engaged/ failed to engage their employees when going through an organisational change program. This is an area of interest for me, so as you can imagine, I was in my element. At lunch I had the opportunity to test out my networking abilities and they seemed to work since I came away with a few contacts that day. I remember talking to a group of professionals on the hotels terrace overlooking the busy City. It made me think about what I want to be doing in my future career.

My placement has given me confidence in my abilities. I have picked up many transferable skills from university and I can't wait to put these into practice next year when I get a full-time job! I'm still unsure as to what career path I will take but what I learnt from my placement is that I work best in a well-structured, professional environment. So, I'll wait with anticipation to see what the future holds...


Are you a sucker for a Corporate environment too, or do you prefer the more creative and sociable working environment?