CONNECT - Group 6
Group Experimental Exercise 2: Arriving
at a Win Win Negotiation Outcome
MGT 6209 Group Assignment, Dr Kuo Frank
Yu, Semester B, 2013
Background:
Joseph was promoted to the position of
“Unit Head” for three years without big jump in the salary. Recently, everyone
got bonus, excluding those above supervision positions. Worse still, the rest
of the Unit Head earn HKD$5,000 more than me.
Now, it is the time to start the salary
negotiation with his boss.
Negotiation approach in the process
Integrative approach is
the one where two or more parties sit together and negotiate for the aim to
find out all possible solutions to one particular problem. At last, both agree
to it. In other words, negotiators
create value with respect to one negotiated outcome by finding another outcome
that all prefer (Thompson 2009). Commonly, it is classified as win-win
situation because all the involved parties are getting benefit in the conflict
resolving process.
Build
up an integrative negotiation relationship - CCTV
C - Cooperation
C - Creative problem solving
T - Trust
V - Value concession
1/
Focus on problems instead of personalities
Joseph always reminds himself that he
is of focusing on the personal characteristics of his boss. More importantly, he
would concentrate on the negotiation issue for the “Big money”. There is no
tendency to attack his boss even the negotiations are uncomfortable to him.
Keep in mind it is that person’s position that he disagree with, however, not
his boss personally.
2/
Create a mutual trust atmosphere
To create a win-win salary negotiation,
it is necessarily better to create an open and trusting climate. During the
process, as a skilled negotiator, he should ask more questions to the boss,
concentrate arguments in a direct way and less defensive. This results in
increasing likelihood that they could achieve our instrumental goals. Keeping
positive affectivity could reach more agreements. Some good outcomes are
possibly due to better making processes, for example, creative problem solving
skills, appreciation on the perspectives from boss, willingness to take some
risks.
3/ More focus on Win-Win solutions
Once she found the supportive
conditions, she will look for the integrative solutions. To illustrate, both
Joseph and his boss must appropriately share as much information as they could
have a full picture on others’ interests. Thus, mutual cooperation is
inevitable. Besides, Joseph would find some solutions to the problems from his
boss; For instance, he could make offer of lesser value, which gives his boss something,
which the company needs. As a result, the problems could be integrated into
positive solutions after realizing the objectives.
The
voice from Employer
Joseph (the employee) asked for an
appointment with me and I heard from my secretary that Joseph is going to talk
with me about the bonus cut and the salary increment. It was in his mindset
that he got a monthly base salary of HK$5,000 less than other unit head and probably
HK$5,000 is the target he wants to negotiate. To be honest, it is not possible
to offer him this amount in monthly base salary. It was a challenge for me,
from a Department Head’s perspective, to turn the conversation with Joseph
about her unpaid promotion into a positive one. Joseph has been in the current
position for 3 years. The company has given many opportunities to him and he
also appreciated the career development here. The increased responsibility
accelerated the growth of Joseph that he should value this benefit outside of
the financial reward.
Tactics
from Employer for the Negotiation
Lack of transparency is the root cause
for Joyce’s dissatisfaction and the bonus cut catalyze him vigorous reaction.
Sharing of “key facts” from company perspective with Joseph will provide him more
information:
Key
facts about Company Performance
In the past 3 years, it was tough
environment for the organization that we were just able to meet the target on
operational profit expected from the head quarter. Thus, the company can only
afford a nominal increment for the salary review, which was more or less with
the inflation rate. The operating cost in 2012 increased significantly that we
did not deliver the number. There is no other alternative but cutting the bonus
of all the unit heads.
Compensation
Philosophy
Each year, the CEO, Finance Controller
and HR Director decided the overall budget for annual salary review based on
company financial performance. HR Director will inform Department Heads the
target number for annual salary review.
The Department Head will then work on the salary increase for each
individual employee in the department according their performance rating. From
the employer perspective, company financial performance and individual
performance rating are the two critical factors to determine pay raise
percentage. Our company is not a listed company that we normally will not
disclose the company-wide salary increment to the public and thus our employee.
This resulted in lack of transparency for employee to understand the company
situation. The inflation rate was 4.7% in 2012. Being the Department Head, the
HR Director shared with me that the target percentage for my department is 4.5%
for 2013. I have the flexibility to decide a range from 3% to 7% according to
the performance rating.
Employee
basic information
Joseph is at 86% compa-ratio of market
benchmarking. Though it was 14% lower than the industry average for this
position, he has just been in her current position for 3 years. Having said
that Joseph is inexperienced in him role as a unit head, he has been achieving
a “Successful” performance rating last year and has great potential to excel in
the company.
Strategy
to arrive win-win
Taking into the consideration of the
market benchmarking date and potential retention issue, I decided to make a
package deal instead of single-issue offers to Joseph. The monthly base salary
of Joseph will be increased by 7% to HK$32,100. An education subsidy reimbursement
of HK$30,000 and 3 days of study leave will be offered to him as a package deal
to perceive the total annual increment which is equivalent to almost HK$60,000.
Estimated costs per year
|
|
Current
|
Offer
|
|
1/ Annual
base increment - 7%
|
-
|
HK$25,200
|
|
2/ Education
subsidy
|
NA
|
HK$30,000 reimbursement
|
|
3/ Study
leave - 3 days
|
NA
|
HK$4,500
|
|
|
HK$59,700
|
|
Basic salary
comparison
|
|
Before
|
After
|
|
Monthly
base salary
|
HK$30,000
|
HK$32,100, 7% increase
|
Benefits from both Employee and
Employer
Employee:
Ø 7% increment in monthly base salary
which is equivalent to HK$2,100, above inflation rate and the company target
percentage
Ø HK$30,000 education subsidy and paid
study leave allows me to apply external course that can be value added to my
job responsibility
Employer:
Ø 7% increment is within the range that I
can manageable
Ø HK$30,000 can receive tax deduction
from the Inland Revenue Department
Ø Manage the retention issue well and
save the potential cost on recruitment and training
Make
a conclusion
Many people find negotiation is
stressful and thus try to escape from it. Always be reminded that we were born
to start negotiation when we were born to walk and talk. Obviously, we are
negotiating everyday when we talk to our friends, family members, and stakeholders
at our workplace.
Remember, it is likely that your
opposite party is as nervous as you are. So, don’t miss the opportunities and
start negotiation. Repeatedly, more negotiation tactics can be obtained, for
example, offering priorities, multiple equivalent simultaneous package deals.
The next step is to “CONNECT” all these tactics together. It greatly paves a
smooth path to the win-win negotiation.
Take
away after our sharing
To get a successful negotiation, always
remember, “CHAMP”
C - Confidence on yourself
H - High aim setting and never
underestimate oppositions
A - Achieve max benefit in the best way
M - Maintain self-control
P - Planning and preparation
Reference:
1.
Leigh L.
Thompson (2009). “The Mind and Heart of
the Negotiator”, Chapter 4, Win-Win Negotiation: Expanding the Pie
Negotiators
who make multiple equivalent offers enjoy more profitable negotiated outcomes
and are evaluated more favourably by the other party. Specifically, they are
seen by the other side as being more flexible, and they are more satisfied at
the end of the negotiation. Multiple offers increase the discovery of
integrative solutions.
2.
Sebenius,
J. (2002). The Hidden Challenge of Cross-Border Negotiations. Harvard Business
Review, 80(3).
How
Negotiation-specific expectations shape the process
3. Gregory E. Kersten. Modeling
Distributive and Integrative Negotiations. Review and Revised Characterization.
Group Decision and Negotiation, Volume 10, Number 6 (November 2001), pp.
508-511, http://ejournals.ebsco.com.ezproxy.cityu.edu.hk/direct.asp?ArticleID=557HHRK4YU26PGQCJCCX
Exchange
of rich information may put a party at a disadvantage. It is also a costly and
time-consuming process. This may be a reason for many negotiators to engage in
distributive negotiation.
4. PAUL W. PAESE, ANN MARIE SCHREIBER AND
ADAM W. TAYLOR. (2003). “Caught Telling
the Truth: Effects of Honesty and Communication Media in Distributive
Negotiations”, pp560-562
It
seems likely that many real world negotiators would be susceptible to the
effects of unconditional honesty observed here. The trouble, of course, is that
“honesty” is often very difficult to discern.
5.
Mark
Klein.(2003). “Negotiating Complex
Contracts”, pp120-123
We
have also demonstrated that negotiation with inter-dependent issues produces a
prisoner’s dilemma game, and that introducing a mediator that stochastically
ignores agent preferences and enforces running parity in agent influence
resolves this dilemma. These results, we believe, are potentially relevant to
any collaborative decision-making task involving interdependent decisions.
6. Hans Weigand. (2003). “B2B Negotiation Support: The Need for a
Communication Perspective”, pp16-19
Goal-oriented
negotiations do not aim at achieving obligations via authorizations, but
assumes that the parties (whether human or software agents) are motivated by
goals. Hence, if a deal can be defined that meets the goal of the other party,
this will motivate him or her to agree.
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