Being the Employer doesn’t mean you’re the boss!

Blog 2 – Negotiation Inhibitors
Assignment 1
Employee & Employer Negotiation Exercise

This blog elaborates the role playing negotiations of the Pyracle Group. We found that the negotiation between employer and employee are complex. Deterrence in the process occurs quite frequently. Therefore, this blog assignment focuses on elaborating two major pitfalls and providing preventative measures and will end with short elaborating how we capitalized on identifying differences.

Employer's Dos and Don'ts

We will start by elaborating the aspects that didn’t work well and linking them to how we should have managed it. To start, the fixed pie perception remains a serious pitfall. Even though it is in the back of your mind, the first attitude tends towards looking at opposites. However, we found especially that asking questions about employee’s priorities and interests were very helpful in enabling perspective taking. Why does he want that salary? Are we missing anything in his reasoning? In addition, providing information on the employer’s perspective enabled the employee to understand the company’s reasoning. These two starting strategies turned out to be essential (Thompson, 2009).

Secondly, making assumptions on the underlying view of the process is not recommended (Sebenius, 2002). It is very risky to assume that the employee will not want to lose his job and therefore will not be too competitive. This source of negotiation failure is called overconfidence bias, explaining the over-belief in individual success of the employer in this case (Carnevale & Pruitt, 1992). Furthermore, it also increases the chance for the employer to become prey of misrepresentation tactics of the employee. The employee can use the ignorance of the employer to strategically negotiate an outcome more favorable to himself (O’Connor & Carnevale, 1997). A possible effective solution would be to enable pre-negotiation to take place in order set boundaries, create a better agenda and to positively affect the outcome of the negotiation (Stein, 1989). A lack of sufficient information before starting to negotiate will negatively influence the outcomes.

Conclusively, this table shows how we capitalized on identifying differences in the negotiation process:

Perspective of	Employer	Employee
Differences in
Valuation	Company’s value and long-term development	Personal value and value of own contribution to company's value
Expectations	Maintain profitability, but also keep attractivity for talents	Salary increase and career opportunities
Risk attitude	Employees can be replaced easily; Invest higher costs into new talents; however keep potential talents	Salary increase demand may impact relationship to employer; if no concessions => Resign
Time preferences	More time to assess employee’s capability to handle the job	Quick adjustment of salary according to the position and responsibility taken
Capabilities to achieve a win-win situation	Skilled negotiator; Knowledge of employee’s background and capabilities <=> Negotiation advantage	MBA from a leading Management school; prepared  and trained for negotiations

Finally, we obtain our negotiation's outcome. Our employee accepted the offer of a 4 year plan: Increase in monthly salary of 1250 HKD every year plus the bonus. After year 4, the employee earns 35000 HKD per month, the amount the employee demanded initially. If the employee overperforms in the 4 years and gets promoted, there is the option of new negotiations about his salary. Through the stepwise salary increase the employer saves costs and gains time to assess employer's ability and skills, before paying him the full salary of 35000 HKD per month. Furthermore, the employer keeps the talented employee, who was performing above average in the previous years and sustains attractivity for the employee and his future development. The employee gets most of his demand accepted, except for the extended time frame. However, in addition he has the incentive to work hard and do well, since he obtained the opportunity to get promoted and gain a further salary increase.

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A Theoretical Approach: What does Win-Win mean?
Bargaining Zone Model of Negotiation: A Win-Win Negotiation Model

A win-win negotiation to large extent relies on the understanding of both sides’ needs and at least the reservation point of each side----the bottom line of each. The bargaining zone is the area of possible agreement between parties in a negotiation. In other words, it's the area between parties' reservation points (Daniel Lipson, 2012).

While there is some wiggle room within the bargaining zone, since any agreement inside of the bargaining zone is preferable to both parties' BATNAs, any agreement in the bargaining zone is a "win-win" situation. This is one area where individuals often approach negotiations incorrectly. The wiggle room within the bargaining zone simply allows for more of a "more win" vs. "less win" situation, but since any agreement between the two reservation points will still be preferable to each party's BATNA, it's still a "win-win" situation. Both parties do better than their alternative. (Daniel Lipson, 2012)

 

Why is our outcome a Win-Win?

Talking about tactics in our salary negotiation, perspective-taking is cognitive and emotional, for from employer’ perspective with focus on inhibitators, we made decisions within the bargaining zone to make multiple offers of equivalent value simultaneously for both negotiator sides, meanwhile we gave more offer tendency towards negotiator one----the employer. The goal is a win-win outcome, so we shouldn’t go beyond the bargaining zone. The parts we did well are that we unbundled the issues, i.e. we explored both sides’ needs firstly----the employee tried to get a “big jump” in his salary, while the employer wants more time to prove an competent unit head. After catching the issue, we can find ways to deal with it. We gained more information on each side’s interests and priorities, background knowledge of both sides, then we moved on to give our outcome meanwhile the outcome doesn’t reveal both sides’ BATNA.

Reference list

[1] Carnevale, P. J., & Pruitt, D. G. (1992). Negotiation and mediation. Annual review of psychology, 43(1), 531-582.

[[2] O'Connor, K. M., & Carnevale, P. J. (1997). A nasty but effective negotiation strategy: Misrepresentation of a common-value issue. Personality and Social Psychology Bulletin, 23(5), 504-515.

[3]Thompson, L. L. (2009). The mind and heart of the negotiator, 5^th Edition, Upper Saddle River, NJ: Prentice Hall

[4]Sebenius, J. K. (2002). The hidden challenge of cross-border negotiations. Harvard Business Review, 80(3), 76-85.

[5]Stein, J. G. (1989). Getting to the Table: Processes of International Prenegotiation. International Journal, 44(2), 231-236.

[6] Daniel Lipson. Negotiating 101. The Fundamentals, July, 2012.

Introduction of Roy Heitzer

Hi there,

My name is Roy Heitzer, proud member of the Pyracle group. I am originally from Holland, but for this semester I'm studying as a postgraduate exchange student in Hong Kong. In my spare time I enjoy doing sports such as fitness, soccer, squash and hiking. I took the course High Performance Collaborations, so I can enhance my knowledge about the ins and outs of collaborating with people and groups. I look forward to a great semester.

The picture you see is taken on Lions Rock, Hong Kong. In my first week here, I discovered that I loved exploring the wonders of nature Hong Kong has to offer.

All the best, 

Roy Heitzer