This chapter and Chapter 12 apply many of the principles of effective negotiation from earlier chapters to the workplace context. The workplace is where a lot of our negotiating will be done, and Chapter 12 will look at these negotiations from a business perspective. This chapter focuses on negotiations between management and employee representatives – normally a trade union. These negotiations can be very difficult and the consequences of reaching a deadlock can be very costly for both sides of the negotiation.

In Chapter 1, we saw that ‘negotiation is a process by which two parties with differences’ come together to resolve them. Up until now, we have kept the idea of ‘two parties’ quite simple, and for the most part considered what happens between two negotiators, one on each side. However, we have also seen that negotiations are ‘messy’. The core process of negotiation outlined in Chapter 4 is made more complex when the negotiators are acting on behalf of others. Few negotiate solely on their own account – two business development teams negotiating over a potential joint venture represent their respective companies, as does an IT manager negotiating to acquire a new system for their company. A union official negotiating a new enterprise agreement represents the membership. Members of a delegation to the local council seeking a change in the parking regulations represent their neighbours up and down their street. When the CEO of Air Berlin negotiated over lunch, then shook hands with the CEO of Airbus on a US$7 billion deal to supply aircraft, each executive had complete authority but was at the same time representing their company and all their employees (Newhouse 2000, p. 40). Similarly, with regard to ‘Brexit’, British Prime Ministers David Cameron and later Theresa May had a series of meetings with each of the European leaders over Britain’s departure from the European Union. The countries’ leaders on either side of the table would be using their personal authority to make progress but at the same time be fully conscious of the need to represent their nation’s political viewpoint. In these situations, negotiators can find themselves acting as a bridge, spanning the two sides and forming a channel of communication and accommodation. When the negotiators are not able to broker a deal this may be due more to the pressure on them than to their poor negotiating.

There was a case where two successful businessmen formed a joint venture in the social services sector – one brought marketing expertise, the other industry experience and they contributed equally with regard to finance. They both accepted that there would be a two-year period of establishing the new venture but at the end of that period it was clear that the partnership was not working and the ‘irreconcilable differences’ between them over who had ultimate control were impacting on the administration of the company. Both knew the company had real prospects but after a number of meetings to resolve their differences, they saw that there were now only two options: to wind the business up or for one party to buy the other out. They sat face to face in a private lounge in a hotel – deadlocked.

As we have mentioned in Chapter 1, negotiations are messy and often difficult to manage. Negotiations involve two or more parties, and while we can develop skills to steer a negotiation with strategy, tactics and persuasion we cannot fully control or anticipate the behaviour and decisions of other parties. Not only that, we ourselves enter the negotiation with biases, style and tendencies that we are often unaware of and that may at times present challenges to negotiation success. This chapter deals with these two important aspects of negotiating – natural tendencies of the other party(ies) and natural tendencies that we ourselves possess – with the aim of increasing our awareness of these issues and suggesting methods to manage them.

We negotiate a great deal – far more than we realise. Sometimes it goes smoothly, and sometimes it seems difficult. While there is much advice around about how to negotiate and be a winning negotiator, our actual experience does not seem as straightforward as books suggest. Why? Because negotiation is a complex process. This book grapples with these complexities while recognising the idiosyncrasies of both the negotiation process and the negotiator. There are some features of negotiation that are like its DNA and that need to be working well if the negotiation is to progress. There are also some tasks that need to be undertaken, tasks that make up the phases of the agreement-reaching process. Because the negotiation process is complex it is not easy to fully describe or understand one aspect of it without first understanding everything else – for example, how do we know what it means to be cooperative without first understanding what it means to be competitive (and vice versa)? So this opening chapter presents an overview of what the negotiation process involves which, we hope will lay a foundation for later chapters.

On a business trip to Manila, one of the authors’ first meetings was to be hosted at a restaurant. Establishing business relationships in the social environment of a restaurant is what one expects in the Philippines: it is a recognised characteristic of doing business in Asia. On another occasion, when the same author went overseas to discuss a possible joint venture, he was also hosted at a restaurant – not in Asia this time, but in New Zealand. So just how Asian is the characteristic of doing business in a social environment?

A dispute arose over companies conducting exploratory drilling in a national park as damage was occurring to sites of Indigenous significance. This issue of whether to allow or prohibit the companies’ access to the park had the potential to become a political one so the four relevant government departments were charged with the task of finding a solution. Although the parties found themselves in deadlock over the question of access they nevertheless kept talking and eventually, by listening carefully to what was being said, and how it was being said, new perspectives emerged. It became clear that just one mining company was causing the problems; the real issue for the exploration companies was frustration with delays in getting permits. It took time for this information and these insights to emerge but once they did, it was much easier to find a workable solution that controlled the behaviour of exploration companies and so protected the Indigenous sites within the park. (This negotiation is explored further in the Negotiation in Practice box later in this chapter.) In another negotiation over the purchase of a new management information system, a key issue was timing: the buyer wanted it by June, but the producer believed it would not be ready until November. They agreed to a compromise delivery date of August. As negotiations continued on other issues it transpired that the ‘it’ meant ‘pay for it’ by June, when the buyer’s current budgetary allocation would run out. Had both parties understood this, it would have been relatively easy to establish a trust fund to hold the payment from June, until delivery occurred in November, a much better solution for both parties. (A full account of this case is provided in theat the end of this chapter.)

During the exploration phase the negotiators have hopefully uncovered more interests and issues to negotiate over, and have found potential ways to resolve their differences. This all then has to be brought together into an agreement that is acceptable to both parties, a task that constitutes the exchange phase. The negotiators on each side put together what they think is the best possible solution for their party, and then set about persuading the other party to agree. To use Lax and Sebenius’ (1986) terminology again, having created value the negotiators now move to claiming value. As might be imagined, this end-game to a negotiation typically becomes more competitive at this stage. Despite the importance of the differentiation and exploration phases, this end-game is still seen as the business end of a negotiation.

Most writers on negotiation (e.g. Cohen 2003; Fisher & Ertel 1995; Lax & Sebenius 2006; Thompson 2005) and most practitioners will acknowledge that good preparation leads to improved negotiation. However, there is little research specifically into how negotiators actually prepare. In one major commercial negotiation (the Tanker Refit case, examined more closely in Chapter 4), one of the parties invested a lot of time in collecting information to try to fully understand the situation they were negotiating about. In another major negotiation (the Telco JV case – see Chapter 12) the negotiators found themselves spending about two hours in preparation for each hour of meeting with the other party. On the other hand a team negotiating a major infrastructure contract spent very little preparation time together prior to their meeting with the potential customer (Lindholst 2015). What the negotiation literature does offer are preparation checklists that give some structure to a negotiator’s preparation (for examples, see Fisher & Ertel 1995; Fleming & Hawes 2017; Lewicki, Barry & Saunders 2015; Thompson 2005). These checklists vary in their advice, but they commonly include the need to set goals for the negotiation, as goals are believed to be an inherent aspect of planning (Futrell 2011; Wilson & Putnam 1990) and central to negotiation success.

In Chapter 1, we started this examination of negotiation by making some points about negotiation: that it is about a process as well as an issue; that its DNA comprises reciprocity, trust, information and power; that it involves a sequence of tasks and a mix of competitiveness and cooperation; that it is two-sided; and that it is messy. As a result, negotiations can’t be left to run their course – they need to be managed.

As we saw from the map of the negotiations within the engineering company in Chapter 1 (see Figure 1.1), and from the complex negotiations of Chapter 10, negotiations take place everywhere. Most people’s work role involves negotiation of some sort and so this chapter explores how the principles and practices of negotiation that we discussed in earlier chapters work themselves out in the business context. We use the term ‘business’ very broadly, and what is written here applies to public-sector negotiations and community negotiations as well as to the more commercial ones.

In Chapter 1 we provided an overview of the negotiation process – that it is two-sided, messy, a mix of competitiveness and cooperation. To remind ourselves of the definition of negotiation, it is a process by which two parties with differences that they need to resolve try to reach agreement through exploring options and exchanging offers – and an agreement. We can see from this definition that a negotiation will need to go through phases as the negotiators carry out the tasks of getting to understand their differences through exchanging information, then exploring for new options and, finally, exchanging offers. This sequence does not happen automatically so a negotiation has to be managed. Or it will manage you, with a poor outcome being the result.

If negotiators work their way through the tasks that we have explored in Chapters 5–7, then they should be confident about managing the process effectively and so achieve a good outcome. However, negotiations are both messy and complex, so they doesn’t always go according to plan. As we saw in Chapter 8, negotiations can get stuck or reach a deadlock. That chapter suggested some ways to handle a deadlock effectively and move the negotiations on towards an outcome. Another way to overcome a deadlock is to involve a mediator. It is unlikely that the reader will become a mediator, but a negotiator should nevertheless understand the nature and effectiveness of the mediation process. Therefore, this chapter examines the nature of the mediation process and the role of the mediator in helping the parties resolve their differences. The parallels between mediation and negotiation should become obvious so negotiators can improve their own skills by learning from the approach taken by good mediators.