Industrial Relations Negotiations and Commercial Negotiations - Research Paper Example

 Industrial relations’ negotiations and ‘commercial’ negotiations Introduction Negotiation as a process has long been followed over the centuries. Even in our daily life we have to do negotiation in every situation. Negotiation as a process means discussion or arguments that occurs between two parties and that ultimately leads to a logical conclusion. In a negotiation the aim of the parties is to arrive at a logical conclusion through mutual discussion. The parties that sit on the negotiation table have their own self interest to look after and so when both the parties sit on the negotiation table they try as much as they can to be the maximum benefiter out of the negotiation process. However a negotiation process cannot be successful if both parties only look after their own benefits and do not come towards a win-win situation in which both the parties benefit from the negotiation process. Negotiation in general is of two types that are industrial negotiation and commercial negotiation. These two types of negotiation are different from each other in terms of their focus and the parties to the negotiation. Negotiation as a process also differs in different cultures. In the course of this essay first negotiation as a concept is defined and then the process involved in negotiation are taken into account. After this part differences of the negotiation in two types of setting is discussed. At the end the effect of culture and other elements that are specific to countries on the negotiation process is discussed. The effect of culture on negotiation is important to note in view of the concept that when people of different cultures sit to negotiation this is the most important factor that has to be taken into consideration. Literature review Negotiation According to the authors Frow, Marginson and Ogden negotiation means discussion or agreements between two parties for making an acceptable and joint decision. Sometimes in this process legal documents and rules are involved. In these process people settle their differences. The authors say that interests of parties are solved by making effective negotiation. Conflict also arises in the process of negotiating any matter. Two main elements are involved in negotiation. One is constructive compromise and another one is purposeful persuasion. The main purpose of negotiation is to make an agreement by solving debates. Various factors of the parties are taken into consideration for establishing an agreement. Effective negotiation provides several advantages to all the parties involved in the process. As per these authors by discussing and solving different issues, best possible outcome or result is obtained. There are different types of negotiation which are implemented to solve various situations. Some important stages are involved in making a negotiation. First the negotiating parties do preparations for settling down issues. Then they discuss over those issues in details. Various goals related to those issues are clarified. After all these steps the parties determine the best possible outcome for solving those issues. The authors say that the parties negotiate on different terms and conditions for getting a positive result and to win situation. They implement their actions and plans according to the negotiation (Frow, Marginson and Ogden, 2005). Principal differences between these two forms of negotiations Industrial negotiation As per the writers Rogers and Streeck, industrial relations negotiations mean the process where trade unions and management teams are involved for negotiating on any issues. In industrial relation negotiation, trade union team forms agreement with the company or management for making the situation or their condition better. Many members are involved in this process. Negotiating teams are lead by a leading person and other members of the teams support him. Presence of many people sometimes create chaotic situation while negotiating issues. Industrial relation negotiation is influenced by power and threat. The authors say that trade unions express their demands by holding various meetings. Employees use the weapon refusal to work if their demands are not fulfilled in the negotiation. The teams of trade union represent a huge number of people. This process represents collective effort of employees or persons involved in trade unions. Parties associated with this negotiation process bargains with each other for negotiating various terms and conditions. Managers and different other organizational members play a vital role in industrial relation negotiation process. Sometimes mediator is present during negotiation. He tries to solve different issues of negotiation in a peaceful way. Mediator carries out message to various management level of the company. He listens to both the parties and comes to an effective solution or agreement (Rogers and Streeck, 2009). Commercial negotiation As per the authors Taylor and Armstrong, commercial negotiation is different from industrial relation negotiation. In this type of negotiations, the parties involved in negotiation process can walk way which is not possible in industrial relation negotiation. The contract which is formed by commercial negotiation process is legality accepted. The whole process of negotiation is implemented as per legal rules and regulations. Industrial relation negotiations are conducted by doing face to face discussion. But in case of commercial negotiations face to face discussion is not mandatory. Discussion also takes place from distance. Negotiating parties are directly involved in commercial negotiations. Line managers of the company take responsibility of this process. The authors say that industrial relation negotiation is not a continuous process. It occurs frequently and adjournments are used. Commercial negotiation is conducted on a continuous basis. Main parties involved in this negotiation process are buyer and sellers. Different systematic process and operations are used in this negotiation process. Services, products and its different attributes play a significant role in commercial negotiation. Environment of this negotiation process is characterised with competition. Various factors of product and services influence the agreement or settlement of commercial negotiation. Both relational and objective aspects are present in this negotiation process. Commercial negotiation process ends with the close of a deal (Armstrong and Taylor, 2014). Negotiators of commercial negotiation have to follow commercial laws and regulation of the country. Those rules and regulations are the basic guideline of commercial negotiation process. Negotiation in different countries Negotiation is a process that has a fundamental linkage to culture. How a person negotiates depends a lot on the culture to which he or she belongs. Brett concludes in his research that when negotiations breakdown in between parties that is of different cultures it is often attributed to the cultural differences in between the parties that are doing the negotiation. Although all the breakdowns in negotiation cannot be said to be linked to culture all the time, sometimes it is so. The researcher argues that in order to understand the effect of culture on negotiation it is required at the first place to form a mental model of negotiation. However if culture really has an impact on negotiation then these mental models may not be uniform but dependent on the culture (Brett, 2000). In order to analyze the effect of culture on negotiation the researchers formed a model of negotiation keeping in view one particular culture and then contrast the elements of this model with that from the other cultures. The researchers argue that although there are different elements of culture, not all of this relate to negotiation. The cultural elements that are relevant to negotiation are individualism vs. collectivism, direct vs. indirect communication and egalitarianism vs. Hierarchy (Brett, 2000). According to Hurn Negotiating across border differs in a lot of extent from negotiating domestically. When the negotiations are taking place across borders then there are many factors that have to be considered like language, cultural sensitivity, tax regimes, laws, legalities etc. The researcher therefore suggests that before commencing negotiations it is important to conduct a cultural review or audit of the culture of the party with whom the negotiation is set to occur so as to avoid pitfalls that are likely to be caused by insensitivities to other culture (Hurn, 2007). According to Culpepper, Stephen and Akgunes cultures has a major impact on determining the success of negotiations internationally. The researchers take the example of Chinese and American cultures and tell that these two cultures have lot of differences in between them between how they negotiate. The cultures are different from each other by the way they have been shaped throughout the history and so are their traditions, rituals and body language. They differ in the philosophy that they believe in, the assumptions that they make the strategies that they undertake, their operational styles and tactics (Akgunes, Stephen, and Culpepper, 2012). So when the two cultures interact it is important that they cooperate and understand each other so as to bridge the gap and accommodate differences. Negotiation that occurs in industrial relations also varies across cultures. According to Kuruvilla and Erickson; during the last 10 years, labour relations were viewed by governments in different countries as a way to prevent or minimize conflict. Whereas in South East Asia the way to achieve this was through mechanism to prevent and settle disputes that are external to the enterprise; the south Asian countries achieved this through curbing freedom of employers in certain matters such as termination of or transfer of employees (Kuruvilla and Erickson, 2002). On the contrary, in countries like Australia and New Zealand the focus has been on centralized industrial relations. Management impact on negotiation process Management forms an important party to negotiation, especially in industrial relation negotiations. According to Gelfand and Brett Over the last years the researchers have focussed their attention on the understanding of fundamental psychological processes of negotiation. The various elements that the researchers have focussed on are emotion, cognition, motivation, social processes including communication, power and also on the context of negotiation (Gelfand and Brett, 2004). Through this research by the scholars a lot of insight has been gained on negotiation. This insight has helped formulate training methods that have been designed to train the managers on how to negotiate effectively. The researchers argue that few other areas have developed so rapidly and widely as the field of negotiation. In accessing the management impact on negotiation it is assumed that the strategy that is applied to the negotiation table is a reflection of the long term strategy for the management of the organization. Westphal and Khanna state that the directors who support changes that results in greater board control over actions by management are subjected to informal restrictions that are imposed upon them by the directors of other boards. The researchers also state that the directors facing such restrictions are prevented from participating in governance changes affecting and threatening the interest of top managers. Arriving at a ‘win-win’ situation with either (one) of these two negotiation methods Establish trust The way to arrive at the win-win situation in any negotiation process is through the process of establishing trust. The way to achieve success in any motivation is through this process of developing trust. If in any negotiation processes the two parties that are taking part in the negotiation process trust each other then the probability of achieving success in negotiation process increases many fold. However, the important and most puzzling part is to define that elusive trust and to bring that most element of trust in the negotiation process. Understanding others point of view Another important factor to achieve success in negotiation process is to understand the other’s point of view. The main aim in any negotiation process is to achieve the desired aim but at the same time understand the other’s point of view. Understanding other’s culture, body language, language, etiquettes, religious views and developing tolerant attitudes towards them is also important to achieve success in negotiation. For example it is important to understand the body language of the counterpart as the people of different cultures have different body languages that they have developed over many years. For example an individual from America would like to look into the eyes of their counterpart when talking. On the contrary an individual from china would like to avoid staring into the eye and instead look at the ground as a mark of respect. Ambiance of the negotiation is also different from one country and one culture to another. For example in England ambiance of the negotiation do not matter and so also does not matter the food that is served during negotiation process However for the people of France the negotiation process is almost like a get together and so they value the ambiance and food very much in the negotiation process. How people act in different cultures The process of how people greet in different countries also varies. While in some countries the way to greet is through formal handshakes and a polite greeting, in other countries the touching gesture is normally avoided and the way to greet is through Namaste or hands folded in respect. In some cultures which are highly contextual most of the communication is not implicitly said but actually understood or implied. However in certain other cultures nothing is implied but has to be explicitly communicated. All these points are necessary to keep into mind while dealing with a different people or negotiating with the counterpart. Personal life situation In my personal life too I have faced problems with negotiation and have tried my level best to achieve at the win-win situation in negotiation process. Previously I was wary of negotiation and used to accept the goods at the price at which the seller offered it because at that time I considered that it was not worthwhile to engage in negotiation. However then I learned through hard luck that by not engaging in negotiation I was ending on the losing side. So from the next time I went to negotiate I decided to perform a thorough background check regarding the price of the goods available in the market and the amount of discount that was possible. This ensured that from the next time I was in a better position to negotiate and bring the negotiation to win-win position. Conclusion Negotiation is practiced in the society for a long period of time. The process of negotiation is very important for settling any matter or dispute. Two or more parties are involved in negotiation process. In many cases legal rules and regulations are followed in making agreements and settlements. Two major types of negotiations process are present in the society. These are industrial relation negotiation and another one is commercial negotiation. These two types of negotiations process are different from each other. Negotiation as a process also differs from one culture to another. Cultures have an impact on both the aspects of negotiation that is industrial relation negotiation and commercial negotiation. Although all elements of a culture do not have the same effect on negotiation, some elements really does have impact and sometimes more impact than other. The elements of culture which have more impact on negotiation than other elements are individualism vs. Collectivism, direct vs. indirect communication and egalitarianism vs. hierarchy. These elements of culture and body language are specific to the peoples of a country and have been shaped by long periods of history. The elements of body language and culture should be carefully taken into account while engaged in cross cultural negotiation. For success of the cross cultural negotiation the negotiator should first understand the culture of their counterpart, their body language, their behaviour, their language so that the negotiation is effective and fruitful. If the researchers are cooperative and develop an understanding and respect for each other’s culture then there is no reason that the negotiation should fail. References Akgunes, A., Stephen, F. and Culpepper, R., 2012. Negotiations between chinese and americans: examining the cultural context and salient factors. The Journal of International Management Studies, 7 (1), pp. 191-200. Armstrong, M. and Taylor, S., 2014. Armstrong's Handbook of Human Resource Management Practice. Philadelphia: Kogan Page Publishers Brett, J. M., 2000. Culture and negotiation. International Journal of Psychology, 37(2), pp. 97-104. Fomichov, V. A., 2005. Standard K-languages as a powerful and flexible tool for building contracts and representing contents of arbitrary E-negotiations. In E-Commerce and Web Technologies, pp. 138-147. Frow, N., Marginson, D., and Ogden, S., 2005. Encouraging strategic behaviour while maintaining management control: multi-functional project teams, budgets, and the negotiation of shared accountabilities in contemporary enterprises. Management Accounting Research, 16(3), pp. 269-292. Gelfand, M.J. and Brett, J.M., 2004. The Handbook of Negotiation and Culture. Stanford: Stanford University Press. Hurn, B.J., 2007. The influence of culture on international business negotiation. Journal Of Industrial And Commercial Training, 39(7), pp. 354-360. Kuruvilla, S., Erickson, L., 2002. Change and Transformation in Asian Industrial Relations. [Online]. Available at [Accessed 9 March 2015] Rogers, J., and Streeck, W., 2009. Works Councils: consultation, representation, and cooperation in industrial relations. Chicago: University of Chicago Press. Westphal, J.D., Khanna, P., 2003. Keeping directors in line: Social distancing as a control mechanism in corporate elite. Admin. Sci. Quart. 48(3), pp. 361-398. Read More