The Power of Bargaining in negotiations

The Power of Bargaining in negotiations

In negotiations bargain power plays an necessary evil roll and it is often seen as a contest between negotiators. Depending upon the power of the negotiators it can have one of below three out comes

1. One winner and one looser

2. Two Winners

3. No winners

Case 1: One winner and one looser

Most of the time in negotiations this kind of scenario comes as the outcome i.e. one party in the negotiation wins and the other has to lose out. The process of negotiation proceeds as follows

Here Each party independently recognizes the problems and looks for solutions to the problem.

But each party independently decides on a solution to the problem that fulfils its own needs.

Each party tries to force its solution on the other party. The party with the most power wins that’s the party having the most bargaining power comes out as the clear winner. The other party loses.

Case 2: Two Winners

This kind of scenario occur in case of ideal negotiations where there are both sides and parties win. The negotiation process proceeds as follows:

Each party creates a list of needs as they relate to the problem. Solutions are not discussed at this point. The parties share their lists with each other. Parties engage in problem solving to develop solutions that satisfy the needs of both parties. Parties make a joint decision on the solution to the problem and take action based on the decision. The agreement is monitored and adjusted accordingly, again based on the needs of both parties. Here though bargaining do remain in the discussion but both parties remain flexible on their demands and tries out the middle way which suits the most to both parties without hurting each other.

Case 3: No winners

It occurs when a negotiation becomes unsuccessful. There is no clear winner and the outcome does not come out of the discussion. The negotiation process proceeds as follows:

Here Each party independently recognizes the problems and looks for solutions to the problem.

And also each party independently decides on a solution to the problem that fulfils its own needs. Each party tries to force its solution on the other party. The party that seems to lose out does not agree upon the solution and puts up resistance to the solution. This resistance is often concealed, but does undermine the solution. Then both parties become losers in the negotiation and process of negotiation fails.

Now taking the example of the Australian cricket umpire Darrel Hair’s mail to the ICC regarding the none negotiable offer, he first tried to be clear winner by showing his supremacy and higher bargaining power because of dearth of skilful umpires in the cricketing arena and as also as he was member of the elite umpiring panel. Also he was regarded as the one of the best umpires of all time that was clearly evident as Hair was voted Umpire of the Season in a poll carried out by The Wisden Cricketer, with more than a third of the votes. A leaked ICC report showed that immediately before the Oval incident, Hair was ranked the second-best umpire in the world overall and number one in terms of decision-making statistics.

Because of all these achievements and the higher influence of western cricketing governing bodies he could strongly exercise his bargaining power while negotiating with the ICC. So the outcome was seemed to be a one winner and one looser scenario.

But aftermath due to heavy lobby by the Asian cricketing councils the IIC had to ban him from umpiring without agreeing on his demands. Hair also announced he was suing the ICC and the Pakistan Cricket Board on grounds of racial discrimination. Here both sides could reach upon a feasible solution and the negotiation failed. So it became a no winners situation.

However, on 9 October 2007 Hair dropped his discrimination case. The ICC said Hair would undergo a development programme over the next six months seemingly with the goal to place him back into top level matches. During this six month period he will continue to officiate in second tier ICC associate matches. The ICC restored Hair to the Elite Umpiring Panel on 12 March 2008. However, on 22 August 2008 Hair handed in his resignation to the ICC in order to take up a coaching role after he was only allowed to officiate in two tests in May and June 2008 between England and New Zealand. Hair was allowed a respectable exit from his work and it became a Two winner scenario and the negotiation become successful one and ideal one.

Sources: http://en.wikipedia.org/wiki/Darrell_Hair

So for successful negotiations between two parties the following things are strongly needed

1. Positive Climate where mutual trust and reliability lies. The negotiators should not be suspicious about each other’s intention. For a positive climate following things are needed:

a. Use descriptive terms.

b. Be calm and straightforward, use neutral terms, and avoid value or judgement statements.

c. Be flexible. Be open to any reasonable alternatives.

2. Timing is most important while doing the negotiations. So the timing of the discussion should be appropriate for both the parties in order to get a win -win situation.

3. Association can align both the parties and the negotiators negotiation power can be hence enhanced.

4. Authority allows the negotiators to review the deal prior to approval.

Enhance Your Bargaining Power Position

There are many ways to enhance a negotiator's position in the negotiation. Understand the sources and try to know which all options available to each negotiator are. Negotiators can strengthen their position in the negotiation by improving their position of power in the negotiation. This is especially required for negotiators with limited skill and experience in negotiation.

In order to exercise power in a negotiation in a more efficient way, all parties in the negotiation must believe that the dominant party possesses the power and will use it if necessary.