Our group decided to focus on a few tactics that did work in our negotiation process from employer’s perspective. We chose to reveal the outcome of the negotiation process by a story in order for the readers to better understand our explanations.

A Chaotic Morning

We, as a Hong Kong based global real estate corporation, were busy in dealing with those fussy customers. Mr. Smith, one of our new promoted unit head, came to my office. He began conversation with one simple sentence, “I want my pay raise”. It was not the first time to have such conversation, I realized it should be solved correctively. In the afternoon negotiation, I used several strategies that work very well and we came out with a win-win deal.

Selected Tactics

Inquiry About Counter-party's Interests and Priorities

One important thing about negotiation is expanding the pie, which can be achieved by knowing other party’s interests and priorities (Bazerman & Neale, 1992). I tried as hard as I can to gather information about Mr. Smith and wanted to know him better. I assessed his behaviors and performance, reviewed his resume and talked with his colleagues to capture his valuation and expectations. While discovering his interests and priorities, I had a better opportunity to understand of his world by perspective taking, which made our negotiation moved more smoothly.

Behavior and performance appraisal:

He (Mr. Smith) had worked in our company for 5 years and was promoted 3 years ago as a unit head in marketing division during a crisis. He had handled the situation so well that even made our company’s market share grew 10%. So far, Mr. Smith's yearly raises have been nominal and while he is now getting 30,000 HKD monthly, his colleagues at the same level are getting 35,000 HKD. As human resources division said, he devoted to this job diligently and he always finish his work in time with satisfied quality. He was holding the same responsibilities compare with other unit heads. Overall, he was a good employee as well as a unit head.

Information from resume:

I found two interests concerning Mr. Smith when I read his resume. As he wrote his habits in the resume, "Mad in traveling and reading traveling articles in magazines" and "Actively in participate in industry seminars especially in marketing" (See in Appendix), I believed that although several years passed, Mr. Smith still kept his interests.

Information from his colleagues:

His colleagues spoke highly of him. His colleagues said he was energetic and full of passion. "Never too old to learn, never too late to turn" was his classic motto. He loved in attending industry seminars, and recent topic was "how to capture resources from government". He wants to find out a systematic methodology to cope with the marketing issue in real estate. However, Mr. Smith recently was somewhat distracted because of his newborn baby. I confirmed with Mr. Smith during the negotiation. He said, "I was exhausted, even I hire a babysitter I still worried about my baby, he answered, I don’t know whether my baby was treated well after we both go to work".

Besides, Mr. Smith, as one of the tutors in the company training center, was in the habit of using latest research results and findings from industry seminars he had participated. I realized that seminars helped our company as well as Mr. Smith’s knowledge base.

Providing Our Interests and Priorities

Negotiators who provide information to other party about their priorities are more likely to reach integrative agreements than negotiators who do not provide this information (Thompson, 1991). We explained two reasons of rejecting 5,000 HKD salary increase. Our first consideration was Chinese culture. As we were a Chinese company, we were influenced by Confucianism which taught us respecting seniority. Compare with other unit heads, Mr. Smith was pretty young and inexperienced for the job. Although he was doing quite well in his job, we still need to have some differentiation. What we did is pay a relatively low salary to Mr. Smith for the purpose of respecting other senior unit heads. Another consideration is about benchmarking. Comparing with other companies in real estate industry, Mr. Smith was earning as much as other unit heads in other companies. To correct Mr. Smith’s inequity feelings, I used strategies of "Change the comparison other" from Equity Theory, which is making Mr. Smith to compare to someone else close to his situation (McShane & Von Glinow, 2010). Beside above two reasons, our company holds a higher expectation for Mr. Smith. We hope each salary increase can bring us a better performance. In Mr. Smith's case, we are hoping that he can generate 10% more market share in Mainland China.

Unbundling the Issues

We tried to bring in other issues to create more parts that are negotiable. The more moving parts the better the potential deal (Thompson, 2009). Adding issues and creating new issues can transform a single-issue, fix-pie negotiation into an integrative, multi-issue negotiation with win-win potential (Lax, 2011). By knowing this fact and Mr. Smith's interests and priorities, we broke our offers into three categories; they were financial rewards, future learning opportunities and work-life balance treatment. We tried to make reasonable offers through perspective taking strategies, which helped us in the bargaining table since it enhanced our problem-solving abilities to jointly solve the problems (Richardson, Hammock, Smith, Gardner, & Signo, 1994). We tried to fulfill Mr. Smith's priorities while not hurting out own interests. However, I carefully avoided mixing perspective taking with empathy. I was considering the world from Mr. Smith’s viewpoint while not emotionally connected with him.

1) The first part of our offer was concentrating on financial rewards. We understood it was his inequity feelings made him wanted to have a paycheck raise. According to Equity Theory, there are plenty of solutions for the inequity. I used two of solutions during the negotiation and presented my offer. First, I tried to persuade him to change benchmarking target. I countered his demand by saying that his salary was as much as unit heads in other real estate companies.

However, if I took Mr. Smith’s point of view, I understood that Mr. Smith actually perform very well in his job which was reflected in his performance appraisal reported by human resources division. Therefore, I admitted that other unit heads in our company was earning more money and deserved a salary increase of 2,000 HKD, while I still needed to maintain Chinese culture in our company and respected other senior unit heads.

2) Beyond direct salary increase, we tried to brought in more issues into the negotiation, which was concerning of further development, and work-life balance. We knew that his classic motto was "Never too old to learn, never too late to turn", which indicated that he highly valued learning opportunities. Furthermore, his resume told us he actively participated in seminars and loved to use latest research result in training. From the behaviors analysis, we believe that learning opportunities may be the interests and priorities for Mr. Smith.

Therefore, we supported and sponsored a project for Mr. Smith and encouraged him to cooperate with Professor Jefferson, the distinguishing marketing professor in University of Hong Kong. The topic of the project was about the industry environment and trend in real estate. We considered that it is an excellent opportunity for Mr. Smith to develop himself and he could apply these theories in his real work. If Mr. Smith chooses this offer, he should agree that our company would have ⅓ ownership of the research results and absolute right to use it inside the company.

3) Another issue we brought into the negotiation was work-life balance treatment. From perspectives taking concept, we should consider the interests and priorities of Mr. Smith in order to achieve the win-win negotiation. Just as Mr. Smith mentioned in the bargaining table, "I was exhausted, even I hire a babysitter I still worried about my baby. I don’t know whether my baby was treated well after we both go to work". We surely concluded that his baby caring problem was one of his top priorities. Therefore, work-life balance treatments were offered to Mr. Smith.

We offered him workplace flexibility as we had well-developed information system to facilitate him to access his working station at home. We can also arrange internet meeting instead of face-to-face meeting. However, not all issues and job duties can be solved while he is at home, in this circumstance, we offered him a work-life balance policy with following details. Mr. Smith can choose working half-day in office and the other half-day at home, and this policy only last for 3 years since a 3-year-old child needs relatively much less care compare with a newborn child.

In exchange of above benefits, Mr. Smith also needed to fulfill our interest. As a profit oriented company, I would like Mr. Smith to expand our company’s market share by 10% in Mainland China by next year.

Making Multiple Equivalent Offers

Since we had expanded the pie for negotiation, we offer our multiple equivalent offers to Mr. Smith. Negotiators need to avoid single-issue offers because single-issue offers do not allow negotiators to make trade-off between issues (Thompson, 1991). Therefore, we provided following options cover mix offers for Mr. Smith in exchange for 10% market share growth in Mainland China.

Option 1: Work-life balance treatment + Direct salary increase

Option 2: Work-life balance treatment + Learning opportunity through project

Option 3: Learning opportunity through project + Direct salary increase

Final Solution

Mr. Smith chose the option 1 at the bargaining table, in exchange for 10% increase in Chinese market share. He explained, "Right now my first priority is to take care of my baby and I don’t think I have enough time doing a new and time consuming project". Both parties were happy, since Mr. Smith had more time to spend on his baby and our company will have a significant market share increase in Mainland China.

Inhibitors Overcame

Ideally speaking, all negotiators want to reach an integrative agreement, however, most of them failed. In reality, people are usually not aware that the outcome is destructed by illusory conflict and fixed-pie perception.

Through the whole negotiation process, our team did learn a lot. At the beginning stage, we had to notice and overcome some inhibitors. Fixed-pie perception was the first thing we had to overcome. Our negotiation began as a single-issue (salary conflict) negotiation. However, single-issue negotiation is not win-win because whatever one party gains, the other party lose (Thompson, 2009).

Another important thing was finding the icebreaker. In the negotiation, we found that Mr. Smith understood in our concerns for respecting seniority, but he still insisted on some amount of salary increase or other equivalent offers. From our company side, we considered that Mr. Smith was a good employee as well as a unit head. He was a valuable human capital to our company and we did not want to lose him. Under this circumstance, both parties needed to find an optimal answer, while not heating each other’s outcomes.

Lessons Learned

When preparing this negotiation, we have reviewed many negotiated tactics, such as perspective-taking, inquiry about others’ interests and priorities, offering information and priorities, unbundling of issues, multiple equivalent simultaneous package deals, and avoidance of single-issue offers. The first priority as an employer is to exchange both parties’ interests from any possible way, which help in capture differences in valuation, expectations, risk attitude, time preferences, and capabilities.

In this case, we brought in future learning opportunities because it was the most important driver of employee engagement we can control in China (Leung & Yu, 2010). Work-life balance treatment was brought in since many consulting firms such as Blessing & White proved that it would increase employees’ satisfaction, which leads to a higher employee engagement and maximum contribution to the organization (BlessingWhite, 2011). These two new aspects allowed us expanding the pie to a much bigger size while capturing two parities’ different valuation, expectation and time preferences, and helped us to reach a win-win outcome. While keeping those tactics in mind, we also have to be very flexible when facing different negotiation.

References

[1] Bazerman, M., & Neale, M. (1992). Negotiating Rationally. New York: Free Press.

[2] BlessingWhite. (2011). Employee Engagement Report 2011. BlessingWhite Research.

[3] Lax, D. (2011). Manager as Negotiator. Free Press.

[4] Leung, & Yu. (2010). 350 full-time HK employees surveyed in Chinese. Hong Kong: City University of Hong Kong.

[5] McShane, S., & Von Glinow, M. (2010). Organizational Behavior. McGraw-Hill/Irwin.

[6] Richardson, D., Hammock, G., Smith, S., Gardner, W., & Signo, M. (1994). Empathy as a cognitive inhibitor of interpersonal aggression. Aggressive Behavior, 275-289.

[7] Thompson, L. (1991). Information exchange in negotiation. Journal of Experimental Social Psychology, 161-179.

[8] Thompson, L. (2009). The Mind and Heart of the Negotiation. Prentice Hall.

2013_6209_UPSTAIRS

Tuesday, February 05, 2013

Team 4 Assignment #1