Integration of Concepts and Reflection on Negotiation: cases of Twin Lakes Mining Company and Harborco - Term Paper Example

?Integration of Concepts and Reflection on Negotiation Negotiation can be observed everywhere in strong and subtle ways – people selling products andservices; a young boy asking his parent for a raise in allowance; a man proposing to his future bride, a real estate agent showing a property to prospective buyers, etc. In this course, negotiation was formally discussed. I found out that there is more to negotiation than mere compromise. Reading the negotiable cases of Twin Lakes Mining Company and Harborco overwhelmed me with so much information to consider when dealing with issues concerning companies, the environment, public welfare and government. These issues were strongly represented in both cases and made it so much more complicated than the negotiable issues I encounter in my personal life. I’ve always thought I was a good negotiator because when faced with a deal, I usually come up with a persuasive suggestion and sell it successfully to the other party. However, these are small deals like simple sales of certain items, exchanging favors with friends and making simple compromises. These all seemed so trivial compared to the negotiations portrayed in the two sample cases. In class, negotiation is defined as “an interaction that occurs when 2 or more parties attempt to agree on a mutually acceptable outcome in a situation where their preferences for outcomes are negatively related.” Lax and Sebenius (1986) add that in negotiation, a better outcome through joint action is achieved rather than when each party would act independently. The element of conflict also arises due to varying preferences and priorities of the different parties. Negotiation becomes a way to resolve such conflicts and compromise on a joint decision, usually, the middle ground stand. McGrath (1984) claims that negotiation is a mixed-motive process - the negotiating parties cooperate to reach an agreement and at the same time, compete to fulfill their own interests. From these definitions of negotiation, it is apparent that negotiators should possess several skills in order to be successful in getting what they bargain for. At the same time, negotiation entails multiple processes that occur simultaneously within each negotiating party such as decision making, research, critical judgment and effective communication, among others. The cases of Twin Lakes Mining Company and Haborco are special cases that involve the government and private companies. I realized these entities are often in conflict where public welfare is concerned. A great deal of the conflict comes from environmental issues because it concerns everybody. The Twin Lakes Mining Company was placed in a situation where their business, which places great risks to the air and water quality of the town of Tamarack, is obliged to clean up the ongoing mess their company is producing, to the detriment of the townspeople. Faced with the reality of their civic responsibility, the officials of Twin Lakes have no choice but to comply with the mandate of the government, but are at a loss as to how to come up with the money to spend for the clean-up. Thus, they sought negotiations with the Town Council to help them out. The Town Council is aware of the revenue Twin Lakes provides for the town as well as its great role in providing employment to their people. The town council is willing to help out, but is constrained by the government’s ruling of “clean sheets” balances for budgetary allocations. This means that whatever revenue the town gets should just be enough for its expenditures. No deficits are allowed. This puts them in a bind in going all the way in helping the company out in their financial predicament. The three main issues in the negotiating process in the Twin Lakes case are the following: upgrading water quality by building a new water filtration plant, paving roads damaged by Twin Lakes with their business operations and consequently controlling the dust to improve air quality, and finally, the allegedly enormous taxes Twin Lakes need to pay the local government for their land. In our role-play, I was assigned to be on the side of the town council. Although each of the group members had a specific role to play, and understandably should argue for their side, we all maintained an objective frame of mind after being acquainted with the case. Perhaps, it was because it was just role-playing, that we managed to remain calm with our arguments, but there was a prevailing understanding of each negotiating party’s situation. The town council’s proposed position on the foregoing issues are the following: That Twin Lakes Company shall be responsible for the water cleanup by building a water filtration plant at the expense of the company. That Twin Lakes Company shall be responsible for road paving in order to also clean up the air of too much dust. The town council agrees to shoulder all future maintenance costs. That Twin Lakes Company shall pay an annual land tax of $800,000.00 and a flat rate of $400,000.00 for right-of-way use of the town’s roads. It also offers the land for sale to the company for $2.2 million to $2.4 million. On the other hand, Twin Lakes Mining Company’s proposed position prices for the foregoing issues are the following: That the building of the water plant should be a joint venture of the company and the town of Tamarack. That the expenses for road pavement and maintenance be shared by both the company and the town council. That the town council waive the land taxes for two years to augment the company’s expenses for the building of the water plant. Upon presentation of the proposals of both negotiating parties, each group congregated to brainstorm on their decisions for the negotiation. It is this part of our role-playing when much of the theories, concepts, readings and the discussions learned from the class are applied. Each negotiating party, becoming aware of the other party’s proposed stand now tread into the bargaining zone, which is the space between their reservation prices and the assumed reservation price of the other party. They come up with their own BATNA or their “best alternative to a negotiated agreement”, a brilliant conception by Fisher & Ury (1981). Thompson and Leonardelli (2004) explain that this is the fall back alternative that negotiators have when they fail to reach an agreement with the current negotiation. In deciding what one’s BATNA is, the reservation price, market information and aspiration levels must be considered. Market information is the prevailing information regarding certain values related to the negotiation. This information will provide a safe anchor in the negotiation. Aspiration levels are a negotiating party’s most ideal situation, the best ever deal he can get. These reference points should be considered both for one’s party and the other negotiating party. Knowing the other party’s alternatives will help facilitate one’s decision-making process if these are compared with one’s own alternatives (Buelens & Van Poucke, 2004). Allowing time for decision framing results in better thought-out decisions for negotiation. This involves much thinking and introspection on the part of the decision-makers and reflects their views and insights. When our group discussed the points for negotiation, I felt that we had to analyze how we saw the negotiation process. Given a challenging case like Twin Lakes, we wanted to end up with a win-win situation. Thus, we have chosen to implement integrative strategies in our negotiation process. Following the steps in the Integrative Negotiation Process we learned from class, our group identified the problems presented and generated alternative solutions. We discussed all possible reasons for the alternatives we come up with, its consequences and ramifications on various populations concerned in the issues. We tried to place ourselves in the position of the company as well as in our position as town council. We realize that the company is heavily burdened by finances not only in complying with the government’s mandate to clean up their mess but also to keep their business afloat. We were concerned about the possible shut down of the company if they go bankrupt and the result could be devastating to our town –loss of revenues for the whole town and loss of jobs for our people. On the other hand, if we give in too much to their proposal of sharing the expenses for the water plant and the paving of roads as well as waiving their taxes for the next two years, it will also drain our resources. We wanted to keep to the government’s rule of no deficits at the end of the year. We know that it is a good practice to stick to. It was time to make concessions to resolve the presenting problems. Our brainstorming session allowed for creative solutions, so our group thought “out of the box”. However, in the end, we needed to frame our options, so we selected the most feasible ideas. In coming up with our options, we were conscious of Fisher and Ury’s (1981) teachings in their book “Getting to Yes”. As we entered the evaluation process of the integrative negotiating strategies, we needed to come to the table with open minds, and free ourselves of judgments. We needed to see the officials of Twin Lakes as separate from the problem. They are mere actors in behalf of the company and it is not really them causing the problems. Another teaching from that book is to focus on interests and not positions. It is important to thresh out our interests in the case – how will the problem affect our town? How will it affect the people? We are responsible for our constituents and should always put their best interests in coming up with a position. This was our interpretation of the quote “Your position is something you have decided upon. Your interests are what caused you to decide”. It is my belief that negotiations should achieve mutual gains for both parties. This is especially true with integrative strategies. Thompson and Leonardelli (2004) explain Fisher and Ury’s four obstacles in achieving mutual gains. One is the fixed-pie perception. In negotiation, one must subscribe to the abundance theory that there is enough to go around for everyone. If one’s view is that there are very limited resources, the tendency is to be greedy and work for a bigger slice of the pie. Such tendency does not work for mutual gains but only for one’s own benefit in the deal. The second obstacle is holding premature judgments. Once a negotiator closes his mind to a decision that was prematurely made, he might find it too late to change his position and might miss out on a greater opportunity that comes after he has made his decision. Usually, such decision was made under time pressure when he is forced to come up with a decision even if he is not entirely sold on it. It is ideal that negotiations be given enough time so negotiating parties are not pressed into coming up with a half-hearted decision which they could regret later. The third obstacle is searching for a single answer. Being one-track minded is not healthy for negotiations because it closes oneself to a wealth of possibilities if only one is patient enough to search for them. That is why my group mates and I struggled to keep our options open and entertained various combinations of possible solutions to the problem so we have a wide spectrum of choices to evaluate to come up with our final BATNA. Finally, the obstacle of one negotiator assuming that the other party is responsible for meeting and satisfying his interests prevents both negotiators from considering the other’s perspective and therefore the opportunity to overcome conflicting interests is lost. However, it potential outcomes can serve everyone’s interests, then everyone is motivated to search for options that achieve mutual gains. This is the goal of integrated strategies of negotiation. Going back to the role playing of the negotiation, our group presented our own counter-offer to the Twin Lake Company’s proposal. In consideration of their circumstances and our own, and knowing that both parties are in great need of resources to fund our own interests, we felt that the following ideas proposed by the Town Council are fair enough and would bring about mutual gains: 1. The Town council’s BANTA is to cut down the company’s taxes to only 50% for the next 5 years, and after such time, they can re-negotiate. This will give the company enough breathing space to be able to finance the water plant, which the Town will also help in financing. Although the town council cannot give in to the company’s request of going tax-free for the next two years because it will be a heavy drain on the town’s finances, in the long run, the company still gets to only pay what they can but spread out to a longer period of time. 2. With regards to the building of the water filtration plant, the town will share in the expenses if the company will pay the bond required. It will also help the company in sourcing additional revenues from the water filtration plant. Upon further negotiations from the company, it was settled that for the first year of building the water plant, the town will waive the bond and contribute to the water filtration expenses. 3. It was agreed that the company will pay for the expenses of road paving, and the town will pay for the annual maintenance. However, in consideration of the company’s already heavy expense, it was agreed that the company will work on a staggered basis in fixing the roads. They will fix half of what needs to be paved this year and the other half for the next year. The negotiations took a long time and I felt that all the group members were preoccupied with the case. All our minds were busily working for solutions to the problem and attending to the smallest detail. There were some things we did not understand in the case such as the concept of bonds. That is why we did not rule on that. I learned that it is important for everyone in the negotiation team to fully understand what is being discussed and negotiated because losing out on some details may prove to be detrimental to the negotiation. Part of the integrative behaviors is asking questions especially if there are things that are unclear. In the role play, it helps that everyone is controlled in how they express their opinions, no matter how they dislike the ideas of others. Tension may be felt when there are disagreements, but if the negotiators keep a cool head on their shoulders, then issues are resolved. I also observed that when things heat up, humor is used to disperse the tension. We learned from class that distinctions between the parties are blurred when the problem is depersonalized. This means that although we were on opposite sides, we worked on solutions to the problem together. Good communication skills are essential in negotiation. Negotiators should be careful in choosing their words well in order not to be misunderstood. Verbal communication, or speaking out to another person is often accompanied by non-verbal language which includes facial expressions, gestures, posture, body language and tone of voice. Sometimes, such non-verbal expressions say more than the verbalizations of a person. The way one communicates and receives information matters much in the quality of relationships he or she has with others. Effective communication takes practice and hard work especially for those who are not skilled in interpersonal relations. LeFebvre (2008) advises that when speaking, one must also be aware of body language and tone and inflection of voice. She notes that different ideas may be conveyed by simply emphasizing different parts of the statement. Being an active listener helps one understand the message being relayed to him. As the listener, one should hold his response until the speaker is done, and keenly observe nonverbal cues expressed. It must always be remembered that communication is a give and take process. One must learn to wait his turn to be the speaker and the listener. However, in negotiation, listening to what others have to say should be viewed as a learning process and not just part of the give and take process. Negotiations entail much dialogue, and this is defined as “a sustained collective inquiry into the processes, assumptions and certainties that compose everyday experience” (Isaacs, n.d., np.). Such dialogues help in clarifying issues relating to the problem being discussed. Dialogues are used to have a “meeting of minds”, extracting what each member believes and coming up with an agreed decision that takes into account those beliefs, Members think together, analyzing causes and effects, and end up understanding a shared meaning. Usually, they reach greater heights in idea-storming that as individuals, they could not have thought of. This is contrasted with the construct of consensus building wherein people “seek some rational means to limit options and focus on the ones that are logically acceptable to most people.” (Isaacs, n.d.). Usually, the final consensus is reached if only to end the discussion, and that is what the group can “live with for now”. There is no guarantee that whatever factor initially leading some members to disagree will just vanish after the consensus has been made. It is likely that some members walk away in resignation but not in total satisfaction. In integrative negotiation, however, one goal is for all parties to be satisfied with the deal especially when one party is more powerful. It is inevitable that fundamental tensions come to surface during negotiations. There may be cooperation vs. competition. For example, the town council agrees to cooperate with the Twin Lakes company to solve the environmental problems it caused Tamarack. At the same time, there is competition between the two parties in pushing their own interests to prevail in the settlement. In our role play, the tension between soft and hard bargaining styles was observed with my group mates. One group member seemed to dominate the discussion, and came in too strong, but he tried to balance it by being a soft bargainer. This meant he showed the tendency to give in easily to the demands of others. Some of the group members also showed defensiveness by giving a lot of argument for their position. At first, they tried to be hard bargainers, but in the course of the negotiation, they also yielded to the negotiated agreement seeing that the deal was more in their favor. Fisher and Ury (1981) explain that negotiators should not choose between being a hard or soft bargainer but instead be a principled one whose goal is "a wise outcome reached efficiently and amicably" (p. 13). Another observation during our negotiation session is that it is useful to refer to a well-organized document and stick to the agenda. The details of the case of Twin Lakes were just too many and too confusing to put to memory. The written document was very helpful. However, during the active discussions, it cannot be helped that people jump from one issue to another and then go back to where they started. It is more organized to run through everything first and then focus on specifics so these get done before moving on to the next item in the agenda. I think it is normal for the group to digress and go on small group discussions. Usually, it becomes very noisy, but it is at that time that we clarify issues better because we are in smaller, more concentrated groups and we are more free to ask questions without fear of judgment unlike in the big group. However, such digression from the main group should be limited and we should all go back to the main group discussion so as to come up with a whole group resolution. I believe the whole role-play exercise was helpful in integrating all the things we’ve learned in class as a group. I am not even sure if the negotiated agreements we came up with are feasible in the real world, but I know it is the process of coming up with the solutions that was valuable. If our behaviors during the negotiation are clues to how we will be as future negotiators, then I believe there is much hope for us. We were able to work as a team, catching each other’s drift and following through with each other’s arguments. There were times when we got into a bind and were confused with some figures, but listening to our recorded session with an objective stance, our negotiation was believable. This course has given me an enormous amount of knowledge on some business practices. It has also made me reflect on my own growth as a business professional. From the role playing activity alone, I learned the there is need to be assertive and confident of your position. In discussions, there is usually one or two who dominate and their ideas are the most heard. If one does not speak up about a disagreement to the idea, then the idea of the dominant person is carried through. Not being comfortable in confronting situations, I need to develop assertiveness skills. In the business world, I know that power-tripping situations are common and I should be able to deal with those without being stepped on. In other words, I should learn to handle bullies who will try to dominate me to succumb to their positions or unwillingly agree to the deal. At the same time, I should be adept in the art of persuasion. Mere charm and pleasant looks is not enough to close a deal. Being persuasive is not being sweet-tongued in order to gain another’s favor. I need to be able to prove that what I believe in is worth believing in too by making sound arguments about it. Thorough knowledge on my position thanks to valuable research should give me enough confidence to share it to another person and answer any question he may raise about that position. Although I may have expertise in the subject, I shouldn’t claim to know everything. Being credible does not mean I know everything. If there are things I do not know, then I should be able to admit it with grace. That is why I should not be in a position of boastfulness because if another person sees a loophole in my knowledge, then it is a painful fall from grace. In negotiating something, persuasion involves getting the other party to see what I see. Success at creating a vision for them and convincing them of its value will score points for me. At the end of the negotiation, my goal is to have them sharing the same vision with me. I believe I would gain coalitions this way. Forming strong coalitions likewise strengthens my negotiating base. I should learn to be more open to possibilities. Sticking to the tried and true solutions will not get me anywhere. Taking risks is something I should be more comfortable with. The Framing-prospect theory contends that people become risk-averse when they are in the domain of gains. That is, being in a very ideal position already. Who would want to risk that? When one is in the domain of losses, people are more likely to take risks. This just means that people are motivated to be in an ideal position and if that is the outcome of the risk then they are likely to take it. That is when persuasion will be effective. Showing the other party the gains that will be achieved in the proposed position, and comparing how much more beneficial it would be for him or her to submit to such a position will most likely be successful. Being a successful negotiator can be very fulfilling. However, it is also vulnerable to a lot of temptations. Those who give in usually end up corrupt. Personally, I should hold on to my values and avoid situations which may put me in a position where I am asked to compromise my values just to close the deal. I still have a long way to go in being an expert negotiator. For now, I am learning more and more about it and this knowledge will take me to the road that gets me there. References Buelens, M. & Van Poucke, D. (2004) Determinants of a Negotiator’s Initial Opening Offer, Journal of Business and Psychology, Vol. 19, No. 1, Fall 2004 Fisher, R., & Ury, W. (1981). Getting to yes: Negotiating Agreement Without Giving In, Boston: Houghton-Mifflin. Isaacs, W.,(n.d.) Taking flight: Dialogue, collective thinking and organizational learning. Organizational Dynamics Lax, D. A., & Sebenius, J. K. (1986). The manager as negotiator: Bargaining for cooperation and competitive gain. New York: Free Press. LeFebvre, K.B. (2008) Strengthen Your Verbal and Nonverbal Communication Oncology Nursing Society CONNECT September 2008 Lewicki, R., Tasa, K., Barry, B. & Saunders, D. (2010) Essentials of Negotiation. McGraw-Hill Ryerson Higher Education McGrath, J. E. (1984). Groups: Interaction and performance. Englewood Cliffs, NJ: Prentice Hall. Thompson, L. & Leonardelli, G.J. (2004) The big bang: The evolution of negotiation research. Academy o/ Management Executive. Vol. 18, No. 3 Read More