Interest-based negotiations achieve better outcomes than position-based negotiations

Negotiation is an important communication skill through which a manager or an employee can create new opportunities for attainment of business goals  (Kasper, 2015). Negotiation is an art through which a manager is able to arrive at an agreement with the other parties without any disruptions; in a way which creates an advantage for one or all the parties concerned  (Maude, 2014). Negotiation skills are required in business in a wide range of situations like marketing, sales, recruitment, employee compensation etc. Negotiation in business can be addressed through various approaches. Two of them are position based negotiation approach and interest based negotiation approach.

Able negotiator is one who can strike a deal without any major conflict  (Lewicki & Hiam, 2011).  Interest based and position based approaches have contrasting methodologies to arrive at a business agreement  (Baum, 2013). Under positional negotiation, the negotiator takes a fixed position regarding any deal and argues in favour of that position. This approach generally involves a win-loose situation. Under interest based negotiation there is no fixed position that the negotiator takes. However, the parties in the negotiation try to find mutually beneficial solutions to the dispute based on interests  (Hughes, et al., 2013). Hence, this approach focuses more on the win-win scenario.

An example of positional approach is a salesman and a customer negotiating over price of the product. Both take a position on the monitory value of the product which is a fixed position and then negotiate on the price. Gain of one will be the loss of other in terms of monetary value (Hughes, et al., 2013). Therefore, position based negotiation may lead to statement or breakdown of the deal due to its focus on win loose. On the other hand, interest based negotiation focuses on win-win scenario where a mutually beneficial solution is sought  (Sarkar, 2010). Positional approach involves hard bargaining involving fear, threats and intimidation. Conversely, in interest based approach, a manager tries to give priorities to concerns and needs of the parties and tries to remove and address their fears pertaining to the deal (Salacuse, 2010). Under this approach interests are the basic criterion of negotiation. Therefore, it is argued that interest based negotiation is a better approach to negotiation as it can get better outcomes in terms of win-win for most parties.

It can be further said that, positional negotiation approach may lead to complete breakdown of the deal or it may do a lasting damage to the relationship of the parties leading to severing of ties between the two parties. For example, in a hard bargain on pricing a sales man may succeed in getting a price nearer to his fixed position but it may hamper the likelihood of the customer ever trusting the salesman with another deal. The customer may also create negative word of mouth publicity  (Baum, 2013). Therefore, it is better to use the interest based approach where a sales man will try to interrogate the interest of the customer and may pitch different products to him based on his interests.

Position-based approach can lead to complete breakdown of the deal or harm business relationship

Position based approach to negotiation is a rigid approach with no scope of any alternatives. In this approach one person has to definitely loose  (Feingold, 2016). Such an approach to negotiation has the risk of confrontation, rigidity, arguments and ugly debates. On the other hand, in interest based approach of negotiation all parties may get something to gain. This is a more amicable form of negotiation which tries to take care of some amount of gain of all parties. Positional negotiation may lead to impasse or no result  (Cellich, 2012). Conversely, interest based negotiation has more chances of arriving at a solution which is liked by all parties.

Interest based approach is more collaborative in nature compared to positional approach which has more conflict orientation (Baum, 2013). However, it should only be used if both the parties are ready to collaborate and are willing to emerge at a consensus.

Positional approach to negotiation is based on zero sum game; where one person’s gain is other person’s loss. Such an approach may lead to only one person benefitting from the negotiation. Such negotiation may also include threats and have an atmosphere of tension (Lumineau, 2012). This negotiation may also lead to no results, conflict and end of business relationship of the two parties. Positional approach gives rise to competitive feeling which may become fierce and ugly (Feingold, 2016). This approach can create bitterness between two parties along with total impasse with no chance of any further negotiation. Outcome of the positional approach can be distrust and disregard (Feingold, 2016). Due to its hard bargaining this approach can close the doors of any mutually beneficial solution.

Hence, positional approach should be used with caution. Additionally,   it should only be used if there is no chance of using the interest based approach (Kasper, 2015). This approach should be considered as a secondary method of arriving at a solution, if interest based approach fails or cannot be used.

Interest based approach to negotiation is a more amicable method of approaching negotiation as it tries to take care of interests of all parties (King, 2010). This approach tries to emphasise on collaboration and mutual benefits of all negotiators. The interest based approach gives rise to trust and transparency and leads to better cooperation and relationships (King, 2010). This approach also keeps the doors open for future negotiations.

Therefore, it can be inferred that, interest based approach is a better approach for achievement of desired and mutually beneficial outcomes (Feingold, 2016). Positional approach should only be used in selective cases like high stake single issue cases when there is no concern for the future

Conclusion

Interest based approach to negotiation leads to better understanding and results. Therefore, interest based approach to negotiation produces better outcomes in terms of actual results, trust, collaboration and future negotiation possibilities. Therefore, in comparison with position based approach, interest based approach is a better approach to negotiation.

Feed Forward Exercise (Summary)

From my research on approaches of negotiation, I have learnt that, negotiation is the art of reaching an agreement over any deal. I have understood that, negotiation is a major skill of business communication which can help me to reach a breakthrough in business situations such as, marketing or a sales deal or a recruitment negotiation with a prospective employee.

Positional approach to negotiation is a rigid approach with no scope of any alternatives

My research brought to light that, there are two major approaches of negotiation. These are, position based approach and interest based approach. Both approaches take contradicting viewpoint regarding the way in which negotiation should be done.

I have learnt that, positional approach is based on zero sum game where one person’s win is another person’s loss. In this approach a fixed position is taken by the negotiator and then negotiation is done from that position. After the negotiation process is complete one person would have deviated from his stated position in order for other person to win his stance. Therefore, I have realised that, in this approach one person’s gain is another person’s loss.

Major learning from my research on position based approach has taught me that there can only be one outcome in this negotiation approach; that is, victory or loss. Therefore, in my opinion, such a negotiation approach can lead to an impasse where bath or all parties are not ready to vacate their position.

As per my understanding, positional approach can also hamper any future negotiation or future relationship between me and the other party. If I use this negotiation technique, other parties may feel cheated. Therefore, in any future business deal I should use this approach when only one solution is possible; stakes are high and no concern for future relationships are there.

On the other hand, my research on interest based approach reveals that, this approach tries to keep all parties’ interest in focus. There is no fixed position and that solution is sought which benefits maximum concerns and interests of the negotiators.

Additionally, to my understanding, interest based approach to negotiation helps in fostering ties of trust and transparency among all parties. This approach is not based on a single solution or win and loss. It is based on the best possible or the optimal solution which can be arrived at.

Interest based negotiation can help me in forming a bond of cooperation and collaboration with other parties in the negotiation. It can help me in inculcating a feeling of friendliness.

In any future negotiation, interest based approach can help me in focusing on consensus and mutually beneficial outcomes. Interest based approach will help me in making the atmosphere of the negotiation friendlier. This will help in making the parties feel that their interests are being guarded. Consequently, they may even become keen on trading off on one of the issues. Therefore, when there are multipole issues involved and there is a concern for future relationship I would like to use interest based approach as it has better methodology and results.

Hence, it can be inferred that, interest based approach can give me better outcomes while negotiating any business deal.

References

Baum, M., (2013) Strategic Negotiation in Business and Managemen. Norderstedt: GRIN Verlag,.

Cellich, C., (2012) Practical Solutions to Global Business Negotiations. New York: Business Expert Press.

Feingold, L., (2016) Structured Negotiation: A Winning Alternative to Lawsuits. Chicago: American Bar Association.

Hughes, D., Bon, J. & Rapp, A., (2013) Gaining and leveraging customer-based competitive intelligence: the pivotal role of social capital and salesperson adaptive selling skills. Journal of the Academy of marketing Science, 41(1), pp. 91-110.

Kasper, J., (2015) Negotiation Management. A Case Study on Strategy Selection. Norderstedt: GRIN Verlag,.

King, C., (2010) Beyond Persuasion The Rhetoric of Negotiation in Business Communication. Journal of business communication, 47(1), pp. 69-78.

Lewicki, R. J. & Hiam, A., (2011) Mastering Business Negotiation: A Working Guide to Making Deals and Resolving Conflict. New Jersey: John Wiley & Sons.

Lumineau, F. a. H. J., (2012) The influence of relational experience and contractual governance on the negotiation strategy in buyer–supplier disputes. Journal of Operations Management, 30(5), pp. .382-395..

Maude, B., (2014) International Business Negotiations Principles and Practice. Hampshire: Barry .

Sarkar, A., (2010) Navigating the Rough Seas of Global Business Negotiation: Reflection on Cross-Cultural Issues and Some Corporate Experiences. International Journal of Business Insights & Transformation, , 3(2), pp. 47-61.