Wherever people work together, there is a potential for conflict. This is particularly true in organizations where the needs and focus of the different stakeholders often are often in opposition. Conflict can negatively impact an organization's performance and effectiveness. Negotiation is a process used to help conflicting parties reach a mutually acceptable agreement. There are two primary factors that can affect the effectiveness of negotiations: The skill of the negotiator in conflict management skills and various situational variables. To be successful in negotiations, good preparation is essential. There are a number of tactics that a negotiator can use to help become better prepared for the negotiating table including information gathering about the strengths, weaknesses, and assumptions of the opponent. In addition, it is important for the negotiator to be mentally prepared for the negotiating table through an understanding of his/her own strengths, weaknesses, and assumptions as well.
In many ways, globalization has revolutionized the way that many organizations do business. The practice of off-shoring enables organizations to relocate part of their operations to another country with lower costs or to outsource functions or activities to other companies with lower rates both around the country and around the world. Typically, this work was previously performed by domestic employees. However, these practices are often necessary to combat another result of globalization: the increased competition from other organizations at home that are able to charge less because of outsourced work or around the world and are able to compete in the global marketplace. Although organizations potentially have a greater, global marketplace in which to market their products or services, this marketplace is also populated by more competitors than ever before.
Most organizations have multiple stakeholders -- persons or groups that can affect or be affected by a decision or action. These may include the organization's employees, suppliers, distributors, and stockholders. Often the interests of the different stakeholders are in conflict. For example, most stockholders will be primarily concerned with earning a high return on their investment. In the abstract, keeping labor prices down or raising the sales price of widgets in the marketplace are equally able to do this. Workers, of course, have a different view of the situation. They want an income that not only represents a living wage but a fair one as well. Therefore, keeping down the organization's costs by keeping down employee wages (particularly vis a vis comparable wages within the industry) is likely to harm rather than help the organization's bottom line in the long run as workers leave for organizations with better compensation packages. Another group with a stake in organizational operations is management. This group is often more likely to take the long view of organizational effectiveness, realizing that holding down wages will lead to worker unrest and dissatisfaction and have a negative impact on the viability of the organization. However, they typically also realize the need to stay competitive in the global marketplace with its increased competition and potentially cheaper labor rates.
The needs and focus of the different constituencies within the organization often lead to conflict -- the situation where one or more parties believes that its interests are negatively affected by another party. For example, conflict can arise between labor and management over a wage increase. One of the goals of management is to keep costs down, and wages are one of the costs of doing business. Employees, on the other hand, are more concerned about their own costs and taking care of their families, so they seek higher wages in order to do this effectively. There are two ways that such a situation can be viewed. In the win-lose orientation, one or more of the parties in the conflict look at the situation as a fixed pool of resources that can be divided among the parties. In this view of conflict, the more one side receives, the less the other side receives. So, for example, labor might balk at the implementation of a new research and development department because they view it as increasing the number of employees that needs to be paid from a limited source of funds for wages. Management, similarly, might view this as a win-lose situation because the more that they have to pay the current workers, the less money they will have available to support the proposed research function that theoretically can develop new products that will gain more income for the company with which they may be able to give workers higher compensation in the long term.
However, in many conflict situations, it is not necessary for there to be a winner and a loser. In the win-win orientation, one or more of the parties to the conflict believe that it is possible to arrive at a mutually beneficial solution for all parties involved. Continuing with the example of a conflict over wages, a win-win orientation might mean that both sides are cognizant of the fact that having a nominal cost of living raise in the short term so that more monies can be devoted to research and development efforts may mean an overall higher wage in the long term after the success of the research and development efforts.
Resolving Organizational Conflict
One of the ways that conflict between groups within an organization is often resolved is through negotiation. This is an interactive process between two or more conflicting parties in which the parties attempt reach a mutually acceptable agreement about an issue or issues of mutual interest. In negotiation, the conflict is redefined in terms of interdependence of the parties. For example, in the illustration above, although the employees could push for the highest raise possible, if that action would cause the organization to go out of business, neither side would win. Similarly, if the organization refused to listen to the employees' arguments for a raise and only paid minimum wage, they might soon lose not only the current employees but the possibility of hiring new employees at that rate. The employees, similarly, would lose the security of their current job and have to look for new work. Again, both sides would lose because both sides are dependent on each other. Because of this fact, negotiation between the two parties in the wage dispute discussed above would have as one of its goals to move both parties from a win-lose orientation to a win-win orientation. So, the employees might settle for a cost-of-living increase for the next year with a promise of a greater increase after the new research and development effort increases the organization's cash flow or some other agreement in which both sides win.
Approaches to Effective Negotiation
It is generally agreed that competition, accommodation, or other win-lose strategies are not typically effective in negotiations. Although some theorists posit that collaboration is the best negotiating approach, others believe that other win-win orientations can also be effective. One must be careful of adopting a collaborative approach until mutual trust can be established between the parties. In addition, collaboration requires the sharing of information between the parties in the conflict. However, complete transparency in negotiations can be ill advised. Information is power, and if one side in the negotiation has too much power, the situation can quickly become win-lose rather than win-win. Most skilled negotiations tend to share information slowly, particularly at the beginning of the negotiation. This allows trust to be built. In addition, although a win-win approach is typically preferable, if it becomes apparent that such an approach will not work, it may be necessary to switch to a win-lose approach.
As shown in Figure 1, negotiation is a process in which the goal is to move the position of the parties involved to a point where a mutually acceptable agreement can be reached. This...
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