Exercise 2: Arriving at a Win Win Negotiation Outcome                               

NEGLECT YOU NOT!    

Introduction

One employee, works as manager in marketing division, comes to her boss’s office and would like to discuss about her salary increase.  The background of the employee was that she was promoted from ‘Acting’ to ‘Substantive’ manager and has been working as manager for three years.  She thinks it’s time to request for pay rise from her boss.  Based on the following five approaches, it is to define out two different positions have two different perceptions:

	Employer	Employee
1.     1.  Valuation	l   - want skillful employee with experience	- want good prospect with good salary and good benefit
2.     2.  Expectations	l   - unit head to be more experienced to the job	- some salary as other unit head
3.     3.  Risk attitude	l   - good employee leaving -       - affect team spirit	-     - bad image -     - lose support from the boss -      - find a new job
4.     4.  Time preferences	- want more time to prove the capability of the employee	- want quick adjustment to the salary
5.     5.  Capabilities	-       - skilled negotiator   - fully understand the remuneration package of each staff	- MBA qualification - well understand the - workflow of the company -       handled the crisis well

Our group would like to present the scenario in two phases, here are the conversations:

First phase :

Employee        :     Hi boss, I would like to discuss about my salary increase…

Boss               :     Please tell me more why I have to give you pay raise

Employee    :         I was substantively promoted to manager.  It’s time to have pay increase.  As well, I have obtained the Master degree in MBA.

Boss                :     In fact, qualification is not commensurate by salaries, you have three years

                              experience in managerial grade which is not enough.  As you may

                              understand that academic is only the advantage of promotion, not for

                              salary increase.  Also, the academic requirement for recruitment is

                              the basic requirement, good academic is good for future prospect, not for

                              now.

Employee        :     But I have got the promotion to substantive manager.  Why there is no

                              incentive pay, as least I have help company to go through the crisis

                              situation.

Boss                :     The aim of doing so is assume to test your ability to the grade from

                              'Acting' to 'Substantive'.  Moreover, the outcome was contributed from

                              the group and not your sole performance.  Therefore, the annual

                              performance assessment during ‘acting’ period is not all-rounded, it is still

                              too limited of time to testify your ability and it need further consolidation.

                              As long as a promotion can gain an intangible value such as power,

                              ranking and superior.

WIN-LOSE SITUTATION

Situation 1

This is the 1st part of negotiation between employer and employee to make hard bargaining which means only one can be the winner and the other will get lost. Due to different valuation, capabilities and expectation, it is difficult for employer to make a compromise with her subordinate. Meanwhile, some negotiation tactics such as false conflict, fixed-pie perception, single-issue offers to create win-lose situation.

Item of negotiation tactics
Differences in the valuation:	Negotiators have different strengths of preference for each issue
Differences in expectation of uncertain events:	Negotiators differ in their forecast, or beliefs, about what will happen in the future.
Differences in risk attitudes:	Negotiators agree on the probability of future events but feel differently about taking risks
Differences in Time preferences:	People may value the same event quite differently depending on when it occurs.
Differences in capabilities:	People differ not only in their tastes, probability assessment, and risk preferences.
Single- issue offers	They only focus on the topic of increase in the salary.
False conflict	Due to different valuation, capabilities and expectation, it is difficult for employer to make a compromise with her subordinate.
Competition – Distributive (win-lose) bargaining	Ø   In asking for a raise is to know the employer’s pay practices and the market pay rate for their job. Ø   The employee should familiarize with their employer's pay practices, the market pay rate for their job and job requirement for promotion. Ø   An employee performance is just doing what employer wants them to do, so it is arguably that other than the pay, should they get additional bonuses? Ø   To measure of the employee’s market value, the existing economic conditions within the industry. Ø   We will just tell the employee how lucky he/she is to have this job.

Second phase :

Employee          :     (being disappointed) (I think : this company is not fair to me. I wanna

                                quit immediately)

Boss                  :     Do you want to get promoted to the higher level?

Employee          :     Of course!

Boss                  :     I think you have potential to be the head of our organization but now you

                                are so young and inexperience. So, I recommend you should try to deal

                                with different aspects to make you become comprehensive.

Employee          :     You are right!

Boss                  :     Regarding pay rise, I have one suggestion. If you can achieve the certain

                                amount of sales such as $3,000,000 and then you can get 5 per cent bonus

                                from the net profit instead of pay rise.

Employee          :     Really, thank you very much!

WIN-WIN SITUTATION     

Situation 2

The employer tries to provide another interest and priorities and offers information and priorities to make her subordinate not only focus on pay rise and other interests such as promotion. She uses multiple equivalent simultaneous package deals and unbundling of issue to create win-win negotiation. One special phenomena happens on this conservation is regarding the principles of “getting to yes” which means the boss would make close question to her/his subordinate only to say yes.

Item of negotiation tactics
The principles of ‘getting to yes’	Use some negotiation tactic in conversation to make the replier only reply ‘yes’ even though the replier disagree with.
Unbundle the issues	Ø   Understand employee’s need, let her know I am open to discuss with the account or HR department for her request to make suitable adjustment Ø   ew policy is not subjected to change but we can work out another workable terms
Make package deals, not single-issue offers	Ø   i)  if the sales of her team achieve $3M next year, she will rebate 5% as bonus Ø   ii)  at this moment, we can offer a better medical insurance package (e.g from the superior to premium superior package) Ø   iii)  provide education allowance
Offering information and priorities	A negotiator could ask the other party in a negotiation to find any other information and priorities for new directions
Multiple equivalent simultaneous package deals	The strategy of making multiple offers of equivalent value simultaneously can be effective even with the most uncooperative of negotiators
Collaboration – Integrative (win-win)	If you encourage a person to accept pay and terms that are genuinely lower than they deserve, by giving a vague assurance of a review sometime in the future, the expectations for something that will be moderately difficult to deliver or it is not a big problem for the future. However, the employee seems to have got the promise. Ø   Using benefits as leverage examples of these might include insurances (health, life), a laptop computer, home broadband or extra telephone line, car allowances, subscriptions, training and development, relocation, better/ larger office space, title, flexi - time. These benefits either cost the employer nothing or are tax deductible. Ø   Showing responsibilities of good management are coaching and developing others, and helping employee to do a better job. E.g. If you have not sufficient working experience, you cannot handle the difficult clients; as a result, our company will lose money.

I CARE ABOUT YOU!

Conclusion

In fact, skill negotiator knows how to use the problematic negotiation tactics to take more advantage. For example, the employer use hard negotiation method to make her employee feel disappointed first and then give another hope for her is one of the good negotiation skill. The employer should show she is concerning her staff.

Salary negotiation affects everyone from time to time. Everyone wants to be paid fairly, but if your organization freely hands out salary increases, your organization may eventually need to cut back on some of those same salaries. Keep in mind that your organization may have a very small, or no budget for salary increases.

References :

E. Wertheim, Northeastern University. Negotiations and Resolving Conflicts: An Overview.

Leigh L. Thompson 2009.  The Mind and Heart of the Negotiator.

Deepak Malhotra and Max H. Bazerman 2008.  Psychological Influence in Negotiation: An Introduction Long Overdue.  Journal of Management

James K. Sebenius 2002.  The Hidden Challenge of Cross-Border Negotiations.